<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996
Commission File No. 0-17316
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 64-0518209
-------------------------------- -----------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
200 South Lamar Street, Mtel Centre, Jackson, Mississippi 39201
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(601) 944-1300
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ______
-------
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
54,259,697 shares of Common Stock,
par value $.01 per share, as of
April 30, 1996
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets--March 31, 1996 and December 31, 1995.
Consolidated Statements of Operations--Three Months Ended March 31,
1996 and 1995.
Consolidated Statements of Cash Flows--Three Months Ended March 31,
1996 and 1995.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
----------
2
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 7,064,832 $ 9,612,734
Accounts receivable, net 56,983,808 46,313,031
Other receivables 37,075,920 5,488,392
Other current assets 13,231,924 3,700,019
------------- -------------
TOTAL CURRENT ASSETS 114,356,484 65,114,176
------------- -------------
MESSAGING NETWORKS
Property and equipment, net 312,583,442 294,626,442
Certificates of authority and license cost 160,467,375 159,101,539
Network construction and development costs 89,505,828 88,145,489
------------- -------------
TOTAL MESSAGING NETWORKS 562,556,645 541,873,470
------------- -------------
GOODWILL 87,501,825 88,144,574
INVESTMENT IN UNCONSOLIDATED INTERNATIONAL VENTURES 69,654,387 68,043,591
OTHER ASSETS
Securities restricted for debt service 56,407,789 64,101,245
Other 21,510,917 24,136,475
------------- -------------
TOTAL OTHER ASSETS 77,918,706 88,237,720
------------- -------------
$ 911,988,047 $ 851,413,531
============= =============
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,275,011 $ 1,278,426
Accounts payable and accrued liabilities 125,086,841 93,281,635
------------- -------------
TOTAL CURRENT LIABILITIES 126,361,852 94,560,061
------------- -------------
LONG-TERM DEBT 363,104,781 333,258,720
MINORITY INTEREST 48,260 54,501
STOCKHOLDERS' INVESTMENT
Preferred Stock, par value $.01 per share;
25,000,000 shares authorized; 3,750,000
shares of
$2.25 Cumulative Convertible Exchangeable
Preferred Stock outstanding in 1996 and 1995;
30,000 shares of 7.5% Cumulative Convertible
Accruing PIK Preferred Stock outstanding
in 1996 37,800 37,500
Common stock, par value $.01 per share;
75,000,000 shares authorized; shares issued:
54,160,711 in 1996 and 54,134,711 in 1995 541,607 541,347
Additional paid-in capital 587,983,856 557,837,759
Accumulated deficit (164,067,060) (133,383,935)
Cumulative translation adjustment (2,023,049) (1,492,422)
------------- -------------
TOTAL STOCKHOLDERS' INVESTMENT 422,473,154 423,540,249
------------- -------------
$ 911,988,047 $ 851,413,531
============= =============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1996 1995
------------- ------------
<S> <C> <C>
Revenues $ 80,584,096 $ 50,628,191
Expenses:
Operating 28,881,557 11,904,344
Selling, general and administrative 56,087,543 36,918,588
Depreciation and amortization 21,751,243 7,105,054
------------- ------------
106,720,343 55,927,986
------------- ------------
Operating income (loss) (26,136,247) (5,299,795)
Interest income 1,436,310 4,200,776
Interest expense (9,989,762) (3,177,027)
Gain (loss) on sale of assets 6,649,408 (973)
Other income 30,148 443,705
------------- ------------
Income (loss) before income taxes
and equity income (losses) (28,010,143) (3,833,314)
Provision for income taxes 620,823 167,212
Equity in income (losses) of
investments 57,208 (7,960)
------------- ------------
Net income (loss) ($28,573,758) ($4,008,486)
Preferred dividend requirement 2,109,375 2,109,375
------------- ------------
Net income (loss) available to common stockholders ($30,683,133) ($6,117,861)
============= ============
Net income (loss) per common share ($0.57) ($0.13)
============= ============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASHFLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($28,573,758) $ (4,008,486)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 21,751,243 7,105,054
Provision for losses on accounts receivable 4,453,909 1,622,838
Amortization of debt issuance costs 560,041 36,715
Foreign currency transaction (gain) loss (23,907) 9,764
(Gain) loss on sale of assets (6,649,408) 973
Losses attributable to minority interests (6,241) (453,468)
Equity in (income) losses from investments (57,208) 7,960
Change in assets and liabilities:
(Increase) in accounts receivable (15,124,686) (7,146,138)
(Increase) in other receivables (1,612,404) -
(Increase) decrease in other current assets (9,531,905) 2,977,555
Increase in accounts payable and accrued liabilities 31,805,206 7,171,322
------------- ------------
Net Cash Provided By Operating Activities (3,009,118) 7,324,089
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 8,981,877 -
Capital expenditures, net (41,087,146) (46,226,492)
(Increase) in investment in unconsolidated international ventures (2,106,733) (3,932,014)
(Increase) decrease in other assets 6,744,499 (2,202,625)
(Increase) in short term investments - (25,984,079)
------------- ------------
Net Cash (Used In) Investing Activities (27,467,503) (78,345,210)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 30,000,000 41,288
Principal payments on long-term debt (133,447) (5,960,118)
Payment of dividends on preferred stock (2,109,375) (2,109,375)
Sale of stock and exercise of options 171,541 3,104,261
------------- ------------
Net Cash Provided By (Used In) Financing Activities
27,928,719 (4,923,944)
------------- ------------
Net (decrease) in cash and cash equivalents (2,547,902) (75,945,065)
Cash and cash equivalents - beginning of period 9,612,734 145,620,779
------------- ------------
Cash and cash equivalents - end of period $ 7,064,832 $ 69,675,714
============= ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION; RISKS AND UNCERTAINTIES
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is
a leading provider of nationwide messaging services in the United States.
Mtel's wholly-owned subsidiary, SkyTel Corp. ("SkyTel"), operates a one-way
nationwide messaging system whereby subscribers can be reached in thousands of
towns and cities in the United States by means of two dedicated 931 MHz
frequencies licensed by the Federal Communications Commission ("FCC"), a ground-
based transmitter system, leased satellite facilities and proprietary network
software.
On September 19, 1995, the Company launched commercial operation of
SkyTel 2-Way/TM/, the first two-way nationwide wireless messaging network in the
United States, which enables subscribers to send and receive two-way messages
through the use of a new class of small low-power, light-weight devices, as well
as laptop and palmtop computers, without the need to know the location of the
sender or receiver at the time of transmission. SkyTel 2-Way/TM/ utilizes a
proprietary system architecture designed and developed by Mtel and offers a
broad range of communications services, including acknowledgment paging,
wireless two-way messaging and information services. Mtel's 100%-owned
subsidiary Destineer Corp. owns the FCC license utilized by the SkyTel 2-Way/TM/
network.
Mtel, through its 100%-owned subsidiary Mtel International, Inc. ("Mtel
International"), operates or has investments in entities that operate one-way
wireless messaging systems in various countries worldwide. Mtel also provides
its subscribers with access to an international messaging
6
<PAGE>
network that utilizes Mtel's proprietary technology and interconnects the
systems operated by Mtel and its joint ventures with systems in Canada,
Singapore and other countries.
Mtel is also engaged in a variety of other telecommunications-related
businesses including air-to-ground telecommunications operations and telephone
answering services.
Mtel operates primarily through three business segments: SkyTel one-way
messaging, SkyTel 2-Way (TM) and international messaging operations. For the
first quarter of 1996, SkyTel one-way messaging, the Company's principal
operating segment, reported revenues of $72.2 million, operating income of $13.1
million and net income of $11.9 million. SkyTel 2-Way, (TM), which commenced
commercial operation in September 1995 and is currently in a start-up phase,
reported revenues of $2.0 million, an operating loss of $31.6 million and a net
loss of $41.2 million for the first quarter of 1996. Mtel's international
operations reported revenues of $4.1 million, an operating loss of $5.8 million
and a net loss of $7.5 million from its majority-owned ventures for the quarter
ended March 31, 1996. For purposes of reporting operating income (loss) for the
Company's business segments, certain indirect operating and selling, general and
administrative costs are allocated among the business segments based on the
percentage of time spent by personnel on each segment's activities.
See Note 1 of Notes to Consolidated Financial Statements in Mtel's Annual
Report on Form 10-K for the year ended December 31, 1995 for a discussion of
certain risks and uncertainties involving the Company's ability to generate
future positive operating cash flows and operating income, the March 1996
amendment of the bank credit facility and the impact of certain events and
transactions required by such amendment on the availability of the capital
resources needed by the Company to complete its business plans.
2. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Mtel and
its majority-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
The Company's consolidated financial statements for the three months
ended March 31, 1996 and 1995 have not been audited by independent public
accountants. However, in the opinion of management, these financial statements
include all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation. The results for the period are not
necessarily indicative of the results for the year ending December 31, 1996.
7
<PAGE>
3. EARNINGS (LOSS) PER SHARE
Loss per share for the first quarter of 1996 and 1995 is calculated by
dividing the net loss (after deducting preferred stock dividends) by the
weighted average number of shares of common stock outstanding during the period
with no effect given to common stock equivalents arising from stock options,
convertible subordinated debt and convertible preferred stock because such
effect would be antidilutive. The weighted average number of shares of common
stock outstanding in the first quarter of 1996 and 1995 was 54,146,216 and
48,847,963, respectively.
4. FOREIGN CURRENCY
The assets and liabilities of international subsidiaries are translated
into U.S. dollars using the period-end exchange rates. Revenues and expenses are
translated at the average rates during the periods presented. Translation
adjustments are charged to a separate component of stockholders' investment.
5. BANK CREDIT FACILITY
In December 1995, SkyTel established a $250.0 million secured revolving
credit facility with a syndicate of financial institutions. As part of the bank
credit facility, SkyTel is also provided with access to letters of credit in an
amount up to $20.0 million. Borrowings under the credit facility may be used
for capital expenditures, working capital and other general corporate purposes.
As a result of higher than projected capital expenditures in the fourth
quarter of 1995, primarily related to the purchase of pagers to support one-way
sales, the purchase of Flex pagers to alleviate capacity constraints on the
Company's one-way messaging network and higher than
8
<PAGE>
expected development costs associated with the SkyTel 2-Way/TM/ network, SkyTel
incurred higher than expected borrowings under its bank credit facility. The
capital expenditures and resulting borrowings caused SkyTel to be in violation
of a capital expenditure covenant in its bank loan agreement as of December 31,
1995 and a leverage maintenance covenant during the first quarter of 1996, and
resulted in a temporary suspension of the Company's borrowing availability under
the bank credit facility. On March 29, 1996, the lending banks waived these
covenant violations and agreed to certain amendments to the bank loan agreement
to provide additional operational flexibility under the bank credit facility.
As a result of the amendment, the interest rate on borrowings under the
credit facility through March 31, 1997 will bear interest at the alternate base
rate plus 1 3/4% or the London Interbank Offered Rate ("LIBOR") plus 2 3/4%, an
increase of 25 basis points from the interest rates set forth in the original
loan agreement. Thereafter, the rate of interest on borrowings will return to
the level set forth in the original loan agreement. In addition, the amendment
requires the Company to complete the following transactions on or before the
dates indicated: (i) on or before May 15, 1996, the Company is required to
complete the sale of such number of shares of PIK Preferred Stock (as defined in
Note 6) as will result in the Company receiving gross proceeds of $50.0 million;
(ii) on or before June 30, 1996, the Company is required to complete its
previously planned sale of its 29% equity interest in Mercury Paging Ltd.
("MPL"), which operates in the United Kingdom, and its previously planned sale
of equity securities of a subsidiary formed for the purpose of holding
9
<PAGE>
the Company's investments in operations in Latin America for certain minimum
proceeds; and (iii) on or before December 31, 1996, the Company is required to
complete its previously planned sale of equity securities of a subsidiary to be
formed for the purpose of holding the Company's investments in operations in
Asia for certain minimum proceeds. The Company has satisfied the condition
requiring the sale of equity securities of the Company described above through
the sale of PIK Preferred Stock. See Note 6.
Management of the Company believes that all of the remaining transactions
described above required under the amended loan agreement will be concluded by
the dates prescribed in the amended loan agreement. However, the failure to
meet any of these requirements would result in an event of default under the
amended loan agreement.
6. PIK PREFERRED STOCK
In March 1996, the Company entered into agreements to sell 30,000 shares
of its 7.5% Cumulative Convertible Accruing PIK Preferred Stock (the "PIK
Preferred Stock") for an aggregate purchase price of $30.0 million, the proceeds
from which were received by the Company by April 3, 1996. A receivable in the
amount of $30.0 million, representing the gross proceeds from the sale of the
PIK Preferred Stock, was recorded as Other Receivables on Mtel's Consolidated
Balance Sheet as of March 31, 1996. In addition, in April and May of 1996, the
Company sold 22,500 additional shares of PIK Preferred Stock for an aggregate
purchase price of $22.5 million. See Note 5. The proceeds from the sale of the
PIK Preferred Stock will be used for general corporate purposes including the
continued development and optimization of the SkyTel 2-Way/TM/ network.
10
<PAGE>
7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid by Mtel was $1,359,000 and $403,000 during the three months
ended March 31, 1996 and 1995, respectively. No federal income taxes were paid
during these periods.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of Mtel for the quarters ended March 31, 1996 and 1995 and
certain factors that will affect Mtel's financial condition. See Note 1 of
Notes to Consolidated Financial Statements in Mtel's Annual Report on Form 10-K
for the year ended December 31, 1995 for a discussion of certain risks and
uncertainties involving the Company's ability to generate future positive
operating cash flows and operating income, the March 1996 amendment of the bank
credit facility and the impact of certain events and transactions required by
such amendment on the availability of the capital resources needed by the
Company to complete its business plans.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations, which are not historical facts,
are forward-looking statements under the Private Securities Litigation Reform
Act of 1995 that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in the forward-looking
statements. Among the factors that could cause actual future results to differ
materially are competitive pressures, the timing and technique used in marketing
by third-party distributors and the market acceptance of certain services.
RESULTS OF OPERATIONS
REVENUES
Revenues on a consolidated basis increased 59% in the first three months of
1996 as compared to the first three months of 1995, primarily due to the 55%
increase in SkyTel one-way
12
<PAGE>
messaging revenues in the first three months of 1996 as compared to the first
three months of 1995. As of March 31, 1996, SkyTel had 967,700 one-way messaging
units in service, an increase of 62% over the 597,300 one-way messaging units in
service as of March 31, 1995. In the first quarter of 1996, SkyTel one-way
messaging units in service increased by 60,500 net units as compared to 93,900
net unit additions in the fourth quarter of 1995. The lower rate of net unit
additions in the first quarter of 1996 as compared to the fourth quarter of 1995
resulted from lower sales by resellers, including MCI, and the termination of
certain agent relationships. Revenues from one-way messaging operations
increased 8% in the first quarter of 1996 as compared to the fourth quarter of
1995 due to a shift in product mix to increased alpha-numeric products and
because a significant portion of the net unit additions in the first quarter of
1996 were placed in service through the Company's direct sales force. The
Company expects to experience increased churn rates in 1996 as a result of the
termination of these agent relationships and the churn rates being experienced
by its resellers, including MCI, although the Company cannot predict the extent
to which net unit additions in 1996 will be adversely affected by such churn
rates.
Mtel's consolidated revenues include revenues recorded by the Company's
wholly-owned subsidiary in Argentina which commenced commercial operation in
April 1994, its 98%-owned subsidiary in Colombia which commenced commercial
operation in June 1994, its 100%-owned subsidiary in Hong Kong which commenced
commercial operation in June 1995 and its 90%-owned subsidiary in Uruguay which
was acquired in September 1995. During the first three months of 1996, revenues
recorded by the Company's consolidated international operations provided
approximately 5% of Mtel's revenues as compared to 3% in the first quarter of
1995.
During the first three months of 1996, SkyTel provided approximately 90% of
Mtel's revenues as compared to 92% in the first three months of 1995. SkyTel 2-
Way/TM/ provided 2.5% of consolidated revenues during the first quarter of 1996.
Other Mtel operations provided approximately 3% of revenues in the first three
months of 1996 as compared to 5% in the first three months of 1995.
13
<PAGE>
EXPENSES
Expenses include operating, selling, general and administrative, and
depreciation and amortization.
Operating expenses primarily consist of salaries, telephone costs and
transmitter and receiver site rentals associated with the Company's one-way and
two-way messaging operations in the United States and international messaging
operations as well as expenses associated with the maintenance of the Company's
operating equipment and facilities. These expenses on a consolidated basis
increased 143% in the first three months of 1996 as compared to the first three
months of 1995. This increase primarily reflects increased telephone and system
costs associated with the increasing one-way messaging subscriber base and
operating expenses attributable to the SkyTel 2-Way/TM/ network. As a percentage
of consolidated revenues, operating expenses increased to 36% in the first three
months of 1996 as compared to 24% in the first three months of 1995. Mtel
expects to continue to incur increased operating expenses during 1996 as a
result of the inclusion of operating expenses related to the SkyTel 2-Way/TM/
network for a full year which, because of system design and functionality, have
significantly higher fixed operating expenses than the Company's one-way
operations. In addition, the Company expects to incur increased operating
expenses during 1996 as a result of the continuing expansion of the one-way
messaging subscriber base and the addition of transmission facilities in the
second half of 1996 in certain major metropolitan areas in the United States to
supplement the capacity of the one-way messaging network in the United States.
Selling, general and administrative expenses include marketing and
advertising costs related to domestic and international messaging operations,
personnel costs associated with SkyTel's direct
14
<PAGE>
sales and marketing staff and customer support operations and corporate overhead
costs, primarily salaries and administrative expenses. These expenses on a
consolidated basis increased 52% in the first three months of 1996 as compared
to the first three months of 1995. This increase primarily reflects selling
expenses related to the SkyTel 2-Way/TM/ network and additional costs associated
with customer support operations, such as customer service, operator dispatch
billing and collections related to the continuing increase in units in service
on the SkyTel one-way messaging system and the one-way resale efforts of MCI. As
a percentage of consolidated revenues, selling, general and administrative
expenses decreased to 70% in the first three months of 1996 as compared to 73%
in the first three months of 1995. On a consolidated basis, selling, general and
administrative expenses are expected to continue to increase during 1996
primarily as a result of the continuing increase in one-way messaging units in
service and the inclusion of such expenses related to the SkyTel 2-Way/TM/
network for a full year.
Depreciation and amortization increased 206% in the first three months of
1996 as compared to the first three months of 1995, primarily reflecting
depreciation and amortization of the network infrastructure, spectrum costs and
other capitalized costs related to the SkyTel 2-Way/TM/ network and depreciation
of one-way messaging units in service. As a percentage of revenues, depreciation
and amortization expenses increased to 27% in the first three months of 1996 as
compared to 14% in the first three months of 1995. The Company expects
depreciation and amortization expenses to continue to increase during 1996 as a
result of the inclusion of depreciation and amortization of network
infrastructure, spectrum costs and other capitalized costs related to the SkyTel
2-Way/TM/ network for a full year and the construction of additional
15
<PAGE>
transmission facilities on a third frequency in certain major metropolitan areas
to supplement the Company's one-way messaging capacity.
OPERATING INCOME (LOSS)
Mtel reported a consolidated operating loss of approximately $26.1 million
for the first three months of 1996 as compared to an operating loss of
approximately $5.3 million for the first three months of 1995. For the three-
month period ended March 31, 1996, one-way messaging operations recorded
operating income of $13.1 million, which was offset by an operating loss of
$31.6 million from SkyTel 2-Way/TM/ operations and an operating loss of $5.8
million from international operations.
The Company expects to report operating losses on a consolidated basis
during 1996 and 1997 as a result of the inclusion of operating losses related to
SkyTel 2-Way/TM/ operations for a full year and continuing losses from
international messaging operations. However, the Company expects SkyTel's one-
way messaging business to continue to report operating income in 1996 and
future periods as a result of continued growth in units in service.
INTEREST INCOME (EXPENSE)
Interest expense increased 214% in the first three months of 1996 as
compared to the first three months of 1995 primarily due to interest accrued on
borrowings under the Company's bank credit facility established in the fourth
quarter of 1995 and the significant decrease in capitalized interest related to
the development and construction of the SkyTel 2-Way/TM/ network since the
Company ceased capitalizing such interest upon commencement of commercial
operation in September
16
<PAGE>
1995 except as described below. As of March 31, 1996, the Company had $95.5
million principal amount outstanding under the bank credit facility. In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 34, the
Company capitalizes interest expense related to equity investments and the
purchase of certain assets which constitute activities preliminary to the
commencement of the investee's or purchaser's planned principal operations. The
Company capitalized approximately $5.9 million and $2.5 million in interest
costs in the first three months of 1995 and 1996, respectively. Capitalized
interest decreased in the first quarter of 1996 as compared to the first quarter
of 1995 since the capitalization of interest related to the development and
construction of the SkyTel 2-Way/TM/ network ceased upon commencement of
commercial operation in September 1995, except for capitalized interest related
to the cost of a PCS license acquired in 1994 that is not currently being
utilized.
Interest income totaled $1.4 million in the first three months of 1996 as
compared to $4.2 million in the first three months of 1995. This decrease is
primarily attributable to a decrease in cash available for investment and a
reduction in the aggregate amount of securities restricted for debt service
related to the Senior Notes.
PROVISION FOR INCOME TAXES
Mtel recorded a provision for income taxes of $621,000 and $167,000 in
the first three months of 1996 and 1995, respectively, relating to state and
local income taxes. The Company reported net losses for federal income tax
purposes during the three month periods ended March 31, 1996 and 1995 and,
accordingly, no provision for federal income taxes has been made for such
periods.
17
<PAGE>
PREFERRED STOCK DIVIDENDS
The Company accrued approximately $2.1 million in each of the quarters
ended March 31, 1996 and 1995 which represents dividends on the Company's $2.25
Cumulative Convertible Exchangeable Preferred Stock (the "$2.25 Preferred
Stock"). Although dividends on the $2.25 Preferred Stock are not treated as an
expense on the Company's consolidated statements of operations and, therefore,
do not affect reported net income, such dividends are deducted from net income
for the purpose of determining net income (loss) per common share. See Note 6
of Notes to Consolidated Financial Statements for information on the issuance of
PIK Preferred Stock.
NET INCOME (LOSS)
Mtel recorded a net loss of approximately $28.6 million in the three
month period ended March 31, 1996 which, combined with the effect of the
preferred stock dividends, resulted in a net loss per common share of $0.57 for
such period. This compares to a net loss of approximately $4.0 million, or $0.13
per common share, in the first three months of 1995. The net loss in the first
quarter of 1996 was offset by a gain of approximately $6.6 million from the sale
of a portion of the Company's investment in American Mobile Satellite Corp. The
Company expects to incur net losses during the remainder of 1996 and 1997 as a
result of continuing start-up losses from its SkyTel 2-Way/TM/ and international
operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company invested $25.9 million in the first quarter of 1996 to
procure messaging units to support SkyTel's increasing one-way messaging
subscriber base and, to a lesser extent, in
18
<PAGE>
connection with the development and expansion of the SkyTel one-way messaging
system. In addition, in the first quarter of 1996, Mtel incurred capital
expenditures for equipment, development costs and construction costs related to
the SkyTel 2-Way/TM/ network of $13.5 million, which related to the Company's
efforts to improve and expand the coverage of the SkyTel 2-Way/TM/ network in
certain major metropolitan areas, continued efforts to optimize and improve the
performance and reliability of the SkyTel 2-Way/TM/ network and the purchase of
two-way personal messaging units. Capital expenditures in the first quarter of
1996 were funded with cash generated from SkyTel's one-way messaging operations,
proceeds from borrowings under SkyTel's bank credit facility and proceeds from
the sale of certain non-strategic assets.
In December 1995, SkyTel established a $250.0 million secured
revolving credit facility with a syndicate of financial institutions. As part
of the bank credit facility, SkyTel is also provided with access to letters of
credit in an amount up to $20.0 million. Borrowings under the credit facility
may be used for capital expenditures, working capital and other general
corporate purposes.
As a result of higher than projected capital expenditures in the fourth
quarter of 1995, primarily related to the purchase of pagers to support one-way
sales, the purchase of Flex pagers to alleviate capacity constraints of the one-
way network and higher than expected development costs associated with the
SkyTel 2-Way/TM/ network, SkyTel incurred higher than expected borrowings under
its bank credit facility. The capital expenditures and resulting borrowings
caused SkyTel to be in violation of a capital expenditure covenant in its bank
loan agreement as of December 31, 1995 and a leverage maintenance covenant
during the first quarter of 1996, and resulted in a temporary suspension of the
Company's borrowing availability under the bank credit facility. On March 29,
1996, the lending banks waived these covenant violations and agreed to certain
19
<PAGE>
amendments to the bank loan agreement to provide additional operational
flexibility under the bank credit facility.
As a result of the amendment, borrowings under the credit facility
through March 31, 1997 will bear interest at the alternate base rate plus 1 3/4%
or the LIBOR rate plus 2 3/4% through March 31, 1997, an increase of 25 basis
points from the interest rate set forth in the original loan agreement.
Thereafter, the rate of interest on borrowings will return to the level set
forth in the original loan agreement. The amendment requires the Company to
complete the following transactions on or before the dates indicated: (i) on or
before May 15, 1996, the Company is required to complete the sale of such
number of shares of PIK Preferred Stock as will result in the Company receiving
gross proceeds of at least $50.0 million; (ii) on or before June 30, 1996, the
Company is required to complete its previously planned sale of its 29% equity
interest in MPL, which operates in the United Kingdom, and its previously
planned sale of equity securities of a subsidiary formed for the purpose of
holding the Company's investments in operations in Latin America for certain
minimum proceeds; and (iii) on or before December 31, 1996, the Company is
required to complete its previously planned sale of equity securities of a
subsidiary to be formed for the purpose of holding the Company's investments in
operations in Asia for certain minimum proceeds. The Company has satisfied the
condition requiring the sale of equity securities of the Company described above
through the sale of PIK Preferred Stock as described below.
As of March 31, 1996, SkyTel had $95.5 million in borrowings outstanding
under the bank credit facility. Letters of credit in the amount of $3.4 million
have been issued under the credit facility as of March 31, 1996, and the credit
available under the facility has been reduced by a corresponding amount.
20
<PAGE>
Borrowings under SkyTel's bank credit facility are limited by certain
covenants contained in the indenture relating to the 13.5% Senior Notes due 2002
(the "Senior Notes"), which limit the total indebtedness that may be incurred by
the Company based in part on the number of one-way and two-way messaging units
placed in service since September 30, 1994. As of March 31, 1996, the Company
had additional allowable indebtedness as defined in the indenture of
approximately $16.4 million, which will increase to $21.3 million as of May 15,
1996. The Company intends to solicit the consent of the holders of the Senior
Notes in 1996 to amend certain covenants which, if approved, would, among other
things, result in an increase of the total indebtedness authorized under the
indenture. If such consents are not obtained or are delayed, the Company's
ability to borrow under SkyTel's bank credit facility could be limited. Any
amendment to the indenture relating to the Senior Notes will required the
consent of the lending banks.
In April and May of 1996, the Company sold an aggregate of 52,500 shares
of PIK Preferred Stock for an aggregate purchase price of $52.5 million to
certain investors, including Microsoft Corporation, Kleiner Perkins Caufield &
Byers and certain executive officers and directors of the Company, including
John N. Palmer, Chairman of the Board and Acting Chief Executive Officer. The
proceeds from the sale of the PIK Preferred Stock will be used for general
corporate purposes including the continued development and optimization of the
SkyTel 2-Way/TM/ network. Holders of the PIK Preferred Stock will be entitled to
receive dividends out of funds legally available therefor at an annual rate of
7.5% (or $75 per share of PIK Preferred Stock), payable quarterly on each March
15, June 15, September 15 and December 15. The Company will have the option,
however, to pay dividends on the PIK Preferred Stock through the later of the
fifth anniversary of the date of issuance or until cash dividends are permitted
under the Company's bank
21
<PAGE>
credit facility and the indenture relating to the Senior Notes in the form of
additional shares of PIK Preferred Stock. Dividends on the PIK Preferred Stock
will be cumulative and will accrue from the date of original issue.
The PIK Preferred Stock will rank junior in right of payment to the
Company's outstanding $2.25 Preferred Stock. In the event of any liquidation,
dissolution or winding up of the Company, holders of PIK Preferred Stock will be
entitled to receive, following payment in full to the holders of the $2.25
Preferred Stock of all amounts to which such holders are entitled, a liquidation
preference in the amount of $1,000 per share of PIK Preferred Stock, plus
accrued and unpaid dividends, before any payment is made or assets are
distributed to holders of Mtel Common Stock or any other class of stock of the
Company ranking junior to the PIK Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Company. Except as required by law or with
respect to the creation or amendment of senior classes of preferred stock,
holders of PIK Preferred Stock will not have voting rights unless quarterly
dividends on the Company's $2.25 Preferred Stock are in arrears for two
consecutive quarters, in which case, the number of directors of the Company will
be increased by one and the holders of PIK Preferred Stock, voting separately as
a class, will be entitled to elect one director until the dividend arrearage has
been paid. In the event quarterly dividends on the Company's $2.25 Preferred
Stock are in arrears for four consecutive quarters, the number of directors of
the Company will be increased again by one, and the holders of PIK Preferred
Stock will be entitled to elect an additional director.
Each share of PIK Preferred Stock will be convertible at the option of
the holder into shares of Mtel Common Stock at conversion prices ranging from
$17.90 per share to $19.09 per share of Mtel Common Stock, subject to adjustment
upon the occurrence of certain events.
22
<PAGE>
Following the second anniversary of the date of issuance of the PIK Preferred
Stock, the Company may redeem, in whole or in part, the outstanding PIK
Preferred Stock at a price of $1,000 per share plus accrued and unpaid
dividends. The bank credit facility, as amended, and the indenture relating to
the Senior Notes prohibit the voluntary redemption of the PIK Preferred Stock.
Commencing on the seventh anniversary of the date of issuance of the PIK
Preferred Stock and continuing through the tenth anniversary thereof, the
Company must redeem 7,500 shares of PIK Preferred Stock at a price of $1,000 per
share, along with accrued and unpaid dividends thereon.
Although the Company believes that the sources of capital described above
will be sufficient to meet projected capital expenditures through 1997, the
Company may be required to engage in other financings, the timing, nature,
amount and source of which cannot be determined. Factors that may affect the
need for additional financing include the Company's operating results, its
borrowing availability under the bank credit facility and the indenture relating
to the Senior Notes, the successful completion of sales of equity securities in
subsidiaries formed for the purpose of holding the Company's investments in
operations in Latin America and Asia and sales of certain non-strategic assets.
23
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
During April and May 1996, the Company issued 52,500 of PIK
Preferred Stock for an aggregate consideration of $52.5 million. The PIK
Preferred Stock ranks junior to the Company's outstanding $2.25 Preferred Stock
in terms of rights to receive cash dividends and upon a liquidation of the
Company. The PIK Preferred Stock ranks senior to the Common Stock in right of
payment of cash dividends and upon a liquidation of the Company. As a result,
the holders of Common Stock may not receive any dividends in respect thereof
until all accrued and unpaid dividends on the PIK Preferred Stock and the $2.25
Preferred Stock have been paid in full. Furthermore, no amounts can be paid to
the holders of Common Stock upon a liquidation of the Company until the
liquidation preference of $1,000 per share to which the holders of the PIK
Preferred Stock and the $2.25 Preferred Stock are entitled has been paid in
full.
Item 3. Defaults upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
The following Exhibits are filed as part of this Quarterly Report on Form
10-Q:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Certificate of Designation relating to the Series A
7.5% Cumulative Convertible Accruing Pay-In-Kind
Preferred Stock
4.2 Certificate of Designation relating to the Series B
7.5% Cumulative Convertible Accruing Pay-In-Kind
Preferred Stock
4.3 Certificate of Designation relating to the Series C
7.5% Cumulative Convertible Accruing Pay-In-Kind
Preferred Stock
10.1 Form of Stock Purchase Agreement relating to the
Sale of the Series A, Series B and Series C 7.5%
Cumulative Convertible Accruing Pay-In-Kind
Preferred Stock
10.2 Stockholder Agreement dated as of March 29, 1996
by and between the Company and Microsoft Corporation
10.3 Form of Registration Rights Agreement relating to
the Series A, Series B and Series C 7.5% Cumulative
Convertible Accruing Pay-In-Kind Preferred Stock
</TABLE>
(b) Reports on Form 8-K
None
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
Dated: May 14, 1996 By /s/ John N. Palmer
------------------------------------------
John N. Palmer
Chairman of the Board
and Acting Chief Executive Officer
Dated: May 14, 1996 By /s/ John E. Welsh, III
------------------------------------------
John E. Welsh, III
Vice Chairman and
Acting Chief Financial Officer
25
CORRECTED
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
THE SERIES A 7.5% CUMULATIVE CONVERTIBLE
ACCRUING PAY-IN-KIND PREFERRED STOCK
OF
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
_____________________________________________
Pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware
_____________________________________________
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
(the "Company"), a company organized and existing under
and by virtue of the provisions of the General
Corporation Law as of the State of Delaware (the "DGCL"),
certifies as follows:
FIRST: On April 1, 1996, the Company filed
with the Secretary of State a Certificate of Rights and
Preferences of Series A 7.5% Cumulative Convertible
Accruing Pay-In-Kind Preferred Stock (the "Certificate of
Designations").
SECOND: A reference to "one or more" (in
place of "a") in the fourth line of the resolution that
appears in paragraph THIRD of the Certificate of
Designations was omitted. A Reference to "the "Series A
PIK Preferred Stock," together with all other series of
the Company's 7.5% Cumulative Convertible Accruing Pay-
In-Kind Preferred Stock," and a reference to "The Series
A PIK Preferred Stock together with all other series of
the PIK Preferred Stock will, in the aggregate," (in
place of "which will") in Section 1 of the Certificate of
Designations were omitted.
THIRD: A reference to "Series A" was omitted
on the first line of Section 2, on the 33rd line of
Section 3(i), on the first line of Section 8(a) and on
the second line of Section 8(b) of the Certificate of
Designations.
FOURTH: A reference to "PIK" was omitted on
the seventh line of the second paragraph of Section 5(d),
the second line of Section 5(e), the 26th, 30th, 34th and
37th lines of Section 6(a) and the sixth line of Section
8(c) of the Certificate of Designations.
FIFTH: A reference to "April 1, 1996" (in
place of "the date of issuance of the PIK Preferred
Stock") was omitted on the 28th line of Section 3(i) of
the Certificate of Designations.
SIXTH: The foregoing corrections were
prepared in accordance with the provisions of Section
103(f) of the General Corporation Law of the State of
Delaware.
SEVENTH: Set forth below is the text of the
Corrected Certificate of Designation:
FIRST: The Company was incorporated in the
State of Delaware on October 21, 1988;
SECOND: The Certificate of Incorporation of
the Company authorizes the issuance of 25,000,000 shares
of Preferred Stock, par value $.01 per share and,
further, authorizes the Board of Directors of the Company
(the "Board of Directors"), by resolution or resolutions,
at any time and from time to time, to divide and
establish any or all of the unissued shares of Preferred
Stock into one or more classes or series, and without
limiting the generality of the foregoing, to fix and
determine the designation of each such class or series,
the number of shares which shall constitute such class or
series and certain relative rights and preferences of the
shares of each class or series so established.
THIRD: The Board of Directors of the Company
pursuant to authority conferred upon the Board of
Directors under the Restated Certificate of Incorporation
(the "Certificate of Incorporation") filed with the
Secretary of State of Delaware on December 27, 1988 and
at a meeting that was duly called on March 27, 1996, at
which a quorum was present and acting throughout, did
duly adopt the following resolutions authorizing the
issuance of one or more series of the Company's Preferred
Stock, par value $.01 per share, and setting forth the
terms and provisions of said Preferred Stock:
RESOLVED, that the Board of Directors, pursuant
to authority vested in it by the provisions of
the Certificate of Incorporation, hereby
authorizes the creation and issuance of one or
more series of the Company's Preferred Stock,
par value $.01 per share, which shall in the
aggregate consist of up to 130,000 shares of
the 25,000,000 shares of Preferred Stock that
the Company now has authority to issue, and
hereby fixes the powers, designation, dividend
rate, redemption provisions, voting powers,
right on liquidation or dissolution, and other
preferences and relative participating,
optional or other rights, and the
qualifications, limitations or restrictions
thereof (in addition to those set forth in said
Certificate of Incorporation) as follows:
1. Designation. The Preferred Stock of the
Company created and authorized for issuance hereby shall
be designated as "Series A 7.5% Cumulative Convertible
Accruing Pay-In-Kind Preferred Stock" (the "Series A PIK
Preferred Stock," together with all other series of the
Company's 7.5% Cumulative Convertible Accruing Pay-In-
Kind Preferred Stock, hereinafter the "PIK Preferred
Stock"). The Series A PIK Preferred Stock together with
all other series of the PIK Preferred Stock will, in the
aggregate, consist of 130,000 shares of such PIK
Preferred Stock. 2. Priority. The Series A PIK
Preferred Stock
shall, with respect to dividend rights and rights on
liquidation, winding up or dissolution, whether voluntary
or involuntary, whether now or hereafter issued, rank (i)
on parity with any other series of PIK Preferred Stock
and any other series of Preferred Stock established
hereafter by the Board of Directors, the terms of which
shall specifically provide that such series shall rank on
parity with the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution, (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks on parity are at all
times collectively referred to as "Parity Securities")
(ii) junior to the Company's $2.25 Cumulative Convertible
Exchangeable Preferred Stock (the "Exchangeable Preferred
Stock") and any other series of Preferred Stock
established by the Board of Directors, the terms of which
shall specifically provide that such series shall rank
senior to the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks junior, including the
Exchangeable Preferred Stock, are at times collectively
referred to herein as the "Senior Securities"), and (iii)
senior to the Company's Series C Junior Participating
Preferred Stock, $.01 par value per share (the "Series C
Preferred Stock"), the Company's Common Stock, $.01 par
value per share (the "Common Stock"), and, subject to
clauses (i) and (ii) hereof, any other equity securities
of the Company, with respect to dividend rights and
rights on liquidation, winding up or dissolution (all of
such equity securities of the Company to which the PIK
Preferred Stock ranks senior, including the Series C
Preferred Stock and the Common Stock, are at times
collectively referred to herein as the "Junior
Securities"). Notwithstanding the foregoing, the Company
shall not establish, create, authorize or issue any
shares of Parity Securities (other than additional series
of PIK Preferred Stock) or Senior Securities nor issue
any subordinated debt (other than in connection with any
refinancing, exchange or similar transaction with respect
to the existing Senior Notes (as defined herein)) without
the prior written consent of a majority of the holders of
the PIK Preferred Stock.
3. Dividends. (i) Holders of shares of PIK
Preferred Stock shall be entitled to receive out of funds
legally available for the payment of dividends ("Legally
Available Funds"), cumulative dividends for each share of
PIK Preferred Stock in an amount equal to the annual rate
of 7.5% (or $75 per share per year) accruable quarterly
on June 15, September 15, December 15 and March 15 (or at
such additional times and for such interim periods, if
any, as determined by the Board of Directors) (each of
such dates being a "Dividend Accrual Date"), except that
if such date is a Saturday, Sunday or legal holiday then
such dividend shall be accruable on the next date that is
not a Saturday, Sunday or legal holiday or which banks in
the State of New York are permitted to be closed (a
"Business Day"). Each of such quarterly dividends
accruals shall be fully cumulative and shall accrue
(whether or not declared), on a daily basis from the
first day of the quarterly period in which such dividend
may be accruable as provided herein, provided, however,
that with respect to the first dividend accrual date
following the issuance of shares of PIK Preferred Stock,
such dividend shall accrue from the Issuance Date. All
accrued but unpaid dividends shall be compounded
quarterly at a rate equal to an annual rate of 7.5%. The
Board of Directors shall declare and pay such accrued
dividends at such time and to the extent permitted by law
and the Financing (as hereinafter defined), subject to
the provisions of paragraph 3(iii) below. During the
period commencing on April 1, 1996 (the "Issuance Date")
and ending on the fifth anniversary of the Issuance Date,
or such longer period as shall be necessary to comply
with the terms of the Financing (as defined below),
dividends may, at the Company's option, be paid in shares
of Series A PIK Preferred Stock. No fractional shares of
PIK Preferred Stock shall be issued, so that the number
of shares to be paid as a dividend pursuant to this
paragraph shall be rounded to the nearest whole number of
shares. Such dividends shall be paid to the holders of
record at the close of business on the date specified by
the Board of Directors of the Company at the time such
dividend is declared; provided, however, that such
declaration date shall not be more than 60 days nor less
than 10 days prior to the respective Dividend Payment
Date.
For the purposes of this Certificate of
Designation the "Financing" shall mean (i) the Credit,
Security, Guaranty and Pledge Agreement, dated as of
December 21, 1995 among Skytel Corp., the Company and
certain subsidiaries thereof, certain lenders, Chemical
Bank, Credit Lyonnais New York Branch, and J.P. Morgan
Securities Inc. as amended, and (ii) the Company's 131/2%
Senior Notes due 2002 (the "Senior Notes").
(ii) All dividends paid with respect to
shares of the PIK Preferred Stock pursuant to section
3(i) shall be paid pro rata to the holders entitled
thereto. All dividends paid in additional shares of PIK
Preferred Stock shall be deemed issued on the applicable
Dividend Payment Date, and will thereupon be duly
authorized, validly issued, fully paid and nonassessable
and free and clear of all liens and charges.
(iii) Notwithstanding anything contained
herein to the contrary, no cash dividends on shares of
PIK Preferred Stock shall be declared by the Board of
Directors or paid or set apart for payment by the Company
at such time as the terms and provisions of the Financing
specifically prohibit such declaration, payment or
setting apart for payment or provide that such
declaration, payment or setting apart for payment would
(or, with notice or lapse of time or both, would)
constitute a breach thereof or a default thereunder.
(iv) If at any time the Company shall
have failed to pay all dividends which have accrued on
any outstanding shares of Senior Securities or any Parity
Securities at the times such dividends are payable,
unless otherwise provided in the terms of the Senior
Securities or the Parity Securities, no cash or stock
dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Company on shares of
PIK Preferred Stock unless prior to or concurrently with
such declaration, payment or setting apart for payment,
all accrued and unpaid dividends on all outstanding
shares of such Senior Securities and Parity Securities
shall have been declared, paid or set apart for payment,
without interest; provided, however, that in the event
such failure to pay accrued dividends is with respect
only to the outstanding shares of PIK Preferred Stock and
any outstanding shares of any Parity Securities, cash or
stock dividends may be declared, paid or set apart for
payment, without interest, pro rata on shares of PIK
Preferred Stock and shares of such other series of
Preferred Stock so that the amounts of any dividends
declared, paid or set apart for payment (whether in cash
or additional securities) on shares of PIK Preferred
Stock and shares of such other series of Preferred Stock
shall in all cases bear to each other the same ratio
that, at the time of such declaration, payment or setting
apart for payment, the amounts of all accrued but unpaid
dividends on shares of the PIK Preferred Stock and shares
of Parity Securities bear to each other. Any dividend
not paid pursuant to section 3(i) hereof or this section
3(iv) shall be fully cumulative and shall accrue (whether
or not declared), without interest, as set forth in
section 3(i) hereof, even if such dividend is not paid
pursuant to section 3(iii).
(v) (a) Holders of shares of PIK
Preferred Stock shall be entitled to receive the
dividends provided for in section 3(i) hereof in
preference to and in priority over any dividends upon any
of the Junior Securities.
(b) So long as any shares of PIK
Preferred Stock are outstanding, the Company shall not
declare, pay or set apart for payment any dividend on any
of the Junior Securities or make any payment on account
of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption, retirement or
other acquisition of, or otherwise acquire for value, any
of the Junior Securities or any warrants, rights, calls
or options exercisable for any of the Junior Securities,
or make any distribution in respect thereof, either
directly or indirectly, whether in cash, obligations or
shares of the Company or other property (other than
distributions or dividends payable solely in the same
Junior Securities to the holders of such stock), and
shall not permit any company or other entity directly or
indirectly controlled by the Company to purchase or
redeem any of the Junior Securities or any warrants,
rights, calls or options exercisable for any of the
Junior Securities, unless prior to or concurrently with
such declaration, payment, setting apart for payment,
purchase or distribution, as the case may be, all accrued
and unpaid dividends, if any, on shares of PIK Preferred
Stock not paid on the dates provided for in section 3(i)
hereof (including if not paid pursuant to the terms and
conditions of section 3(iii) or section 3(iv) hereof)
shall have been paid.
(c) Subject to the foregoing
provisions of this section 3, the Board of Directors may
declare and the Company may pay or set apart for payment
dividends and other distributions on any of the Junior
Securities, and may purchase or otherwise redeem any of
the Junior Securities or any warrants, rights or options
exercisable for any of the Junior Securities, and the
holders of the shares of PIK Preferred Stock shall not be
entitled to share therein.
4. Liquidation Preference. (i) In the event
of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, the holders
of shares of PIK Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company
available for distribution to its stockholders an amount
in cash equal to $1,000 for each share outstanding, plus
an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation,
before any payment shall be made or any assets
distributed to the holders of any of the Junior
Securities; provided, however, that the holders of
outstanding shares of PIK Preferred Stock shall not be
entitled to receive such liquidation payment until the
liquidation payments on all outstanding shares of Senior
Securities shall have been paid in full. No full
preferential payment on account of any liquidation,
dissolution or winding up of the Company, whether
voluntary or involuntary, shall be made to the holders of
any class of Parity Securities unless there shall
likewise be paid at the same time to holders of PIK
Preferred Stock the full amounts to which such holders
are entitled with respect to such distribution. If the
assets of the Company are not sufficient to pay in full
the liquidation payments payable to the holders of
outstanding shares of PIK Preferred Stock and outstanding
shares of Parity Securities, then the holders of all such
shares shall share ratably in such distribution of assets
in accordance with the full respective preferential
amounts that would be payable on such shares of PIK
Preferred Stock and such shares of Parity Securities if
all amounts payable thereon were paid in full.
(ii) For the purposes of this section 4,
(x) the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Company or (y) the
consolidation or merger of the Company with one or more
other companies or entities shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary.
5. Redemption.
(a) Mandatory Redemptions. To the extent
permitted by law and the Financing, as mandatory
redemptions for the retirement of the shares of PIK
Preferred Stock, the Company shall redeem, out of Legally
Available Funds (if such shares remain outstanding) on
each of the seventh, eighth and ninth anniversaries of
the Issuance Date (each a "Mandatory Redemption Date"),
twenty-five percent (25%) of the shares of PIK Preferred
Stock initially issued and then outstanding, in each case
at the redemption price of $1,000 for each share
outstanding, plus an amount in cash equal to all accrued
but unpaid dividends to the Mandatory Redemption Date.
Immediately prior to authorizing or making such
redemption with respect to the PIK Preferred Stock, the
Company, by resolution of its Board of Directors shall,
to the extent of any Legally Available Funds, declare a
dividend on the PIK Preferred Stock payable on the
Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the PIK Preferred Stock
as of such date and, if the Company does not have
sufficient Legally Available Funds to declare and pay all
dividends accrued at the time of such redemption, any
remaining accrued and unpaid dividends shall be added to
the redemption price. If the Company shall fail to
discharge its obligation to redeem the aforementioned
outstanding shares of PIK Preferred Stock required to be
redeemed pursuant to this section 5(a) (the "Mandatory
Redemption Obligation"), the Mandatory Redemption
Obligation shall be discharged as soon as the Company is
able to discharge such Mandatory Redemption Obligation.
If and so long as the Mandatory Redemption Obligation
shall not be fully discharged, (i) dividends on such PIK
Preferred Stock shall continue to accrue and be added to
the dividend payable pursuant to the second preceding
sentence and (ii) the Company shall not declare or pay
any dividend or make any distribution on its securities
not otherwise permitted by this certificate. If on any
Mandatory Redemption Date less than 18,750 shares of PIK
Preferred Stock remain outstanding, the Mandatory
Redemption Obligation shall apply only to such lesser
number of shares of PIK Preferred Stock then outstanding,
and such obligation shall be discharged when such lesser
number of shares is redeemed in accordance with this
section 5(a).
(b) Final Mandatory Redemption. (i) To
the extent permitted by law and the Financing, as a final
mandatory redemption for the retirement of the shares of
PIK Preferred Stock, the Company shall redeem, out of
Legally Available Funds (if such shares remain
outstanding) on April 1, 2006 (the "Final Mandatory
Redemption Date"), all remaining shares of PIK Preferred
Stock then outstanding, at the redemption price of $1,000
for each share outstanding, plus an amount in cash equal
to all accrued but unpaid dividends thereon to the Final
Mandatory Redemption Date. Immediately prior to
authorizing or making such redemption with respect to the
PIK Preferred Stock, the Company, by resolution of its
Board of Directors shall, to the extent of any Legally
Available Funds, declare a dividend on the PIK Preferred
Stock payable on the Final Mandatory Redemption Date in
an amount equal to any accrued and unpaid dividends on
the PIK Preferred Stock as of such date and, if the
Company does not have sufficient Legally Available Funds
to declare and pay all dividends accrued at the time of
such redemption, any remaining accrued and unpaid
dividends shall be added to the redemption price. If the
Company shall fail to discharge its obligation to redeem
all of the outstanding shares of PIK Preferred Stock
required to be redeemed pursuant to this section 5(b)
(the "Final Mandatory Redemption Obligation"), the Final
Mandatory Redemption Obligation shall be discharged as
soon as the Company is able to discharge such Final
Mandatory Redemption Obligation. If and so long as the
Final Mandatory Redemption Obligation shall not be fully
discharged, (x) dividends on the PIK Preferred Stock
shall continue to accrue and be added to the dividend
payable pursuant to the second preceding sentence and (y)
the Company shall not declare or pay any dividend or make
any distribution on its securities not otherwise
permitted by this certificate.
(ii) The Company may, at it option, make any
mandatory redemption payment required pursuant to clauses
(a) and (b)(i) of this Section 5 in shares of Common
Stock in lieu of cash. In the event that the Company
elects to make any such payment in Common Stock, on the
Redemption Date, in lieu of cash, each holder shall
receive that number of shares (rounded to the nearest
whole share) of Common Stock determined by dividing (i)
the aggregate amount of cash that such holder would
otherwise have received (including with respect to
accrued and unpaid dividends) pursuant to such redemption
by (ii) the average Closing Price of the Common Stock for
the twenty consecutive Trading Days immediately preceding
the Mandatory Redemption Date or the Final Redemption
Date, as the case may be.
(c) Optional Redemption. To the extent
permitted by law and the Financing, the PIK Preferred
Stock shall be redeemable at any time, or from time to
time, in whole or in part, out of Legally Available
Funds, at the option of the Company, on any date after
(i) the second anniversary of the Issuance Date (a
"Regular Optional Redemption Date") or (ii) the first
anniversary of, but prior to the second anniversary of,
the Issuance Date (an "Accelerated Optional Redemption
Date", and together with a Regular Optional Redemption
Date, an "Optional Redemption Date"); provided, however,
that no redemption shall be made under clause (ii) unless
the average Closing Price (as defined in section 8) of
the Common Stock for any period of twenty consecutive
Trading Days (as defined in section 6), prior to any such
redemption, equals or exceeds 175% of the Conversion
Price (as determined in accordance with section 8).
Optional redemptions shall be made, upon giving notice as
provided in clause (d) below, at the redemption price of
$1,000 for each share outstanding, plus an amount in cash
equal to all accrued but unpaid dividends thereon to the
Optional Redemption Date. Immediately prior to
authorizing or making any such redemption with respect to
the PIK Preferred Stock, and as a condition precedent to
the Company so redeeming at its option, in whole or in
part, shares of the PIK Preferred Stock, the Company, by
resolution of its Board of Directors shall, to the extent
of any Legally Available Funds, declare a dividend on the
PIK Preferred Stock payable on the Optional Redemption
Date in an amount equal to any accrued and unpaid
dividends on the PIK Preferred Stock as of such date and
if the Company does not have sufficient Legally Available
Funds to declare and pay all dividends accrued to the
Optional Redemption Date, any remaining accrued and
unpaid dividends shall be added to the redemption price.
(d) Notice of Redemption. For the
purposes of this section 5(d), a Mandatory Redemption
Date, a Final Mandatory Redemption Date, a Regular
Optional Redemption Date and an Accelerated Optional
Redemption Date are hereinafter collectively referred to
as a "Redemption Date"). In the event the Company shall
redeem shares of PIK Preferred Stock pursuant to any of
clauses (a), (b) or (c) above, a notice of such
redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 60 days
prior to the Redemption Date, to each holder of record of
the shares to be redeemed, at such holder's address as
the same appears on the stock books of the Company's
transfer agent. Each such notice shall state: (i) the
Redemption Date; (ii) the number of shares of PIK
Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (iii) the
redemption price and the form in which such redemption
price will be paid (cash or shares of Common Stock); (iv)
the place or places where certificates for such shares
are to be surrendered for payment of the redemption
price; (v) that payment will be made upon presentation
and surrender of such PIK Preferred Stock; (vi) the then
current Conversion Price; (vii) that dividends on the
shares to be redeemed shall cease to accrue following
such Redemption Date; (viii) that such redemption is at
the option of the Company or that such redemption is a
mandatory redemption or a final redemption; and (ix) that
accrued and unpaid dividends up to and including the
Redemption Date will be paid in accordance with the terms
herein. Notice having been mailed as aforesaid, on and
after the Redemption Date, unless the Company shall be in
default in providing money for the payment of the
redemption price (including an amount equal to any
accrued and unpaid dividends up to and including the
Redemption Date), (x) dividends on the shares of the PIK
Preferred Stock so called for redemption shall cease to
accrue, (y) said shares shall be deemed no longer
outstanding, and (z) all rights of the holders thereof as
stockholders of the Company (except the right to receive
from the Company the monies payable upon redemption,
without interest thereon, upon surrender of the
certificates evidencing such shares) shall cease. The
Company's obligation to provide monies in accordance with
the preceding sentence shall be deemed fulfilled if, on
or before the Redemption Date, the Company shall deposit
with a bank or trust company having an office or agency
in the Borough of Manhattan, City of New York, and having
a capital and surplus of at least $500,000,000, the
principal amount of funds necessary for such redemption,
in trust for the account of the holders of the shares to
be redeemed (and so as to be and continue to be available
therefor), with irrevocable instructions and authority to
such bank or trust company that such funds be applied to
the redemption of the shares of PIK Preferred Stock so
called for redemption. Any interest accrued on such
funds shall be paid to the Company from time to time.
Any funds so deposited and unclaimed at the end of three
years from such Redemption Date shall be released or
repaid to the Company, after which, subject to any
applicable laws relating to escheat or unclaimed
property, the holder or holders of such shares of PIK
Preferred Stock so called for redemption shall look only
to the Company for payment of the redemption price.
Upon surrender in accordance with said
notice of the certificates for any such shares so
redeemed (properly endorsed or assigned for transfer, if
the Board of Directors shall so require and the notice
shall so state), such shares shall be redeemed by the
Company at the applicable redemption price aforesaid. If
fewer than all the outstanding shares of PIK Preferred
Stock are to be redeemed, shares to be redeemed shall be
selected by the Company from outstanding shares of PIK
Preferred Stock not previously called for redemption by
lot or pro rata or by any other equitable method
determined by the Board of Directors in its sole
discretion. If fewer than all the shares represented by
any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to
the holder thereof. In the event that the Company elects
to make any Mandatory Redemption or the Final Redemption
in shares at Common Stock, upon such surrender,
accompanied by written instructions to the Company
specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares rounded to the nearest whole
number issuable upon the redemption thereof as of the
time of such surrender and as promptly as practicable
thereafter will deliver certificates for such shares of
Common Stock. No fractional shares will be issued
pursuant to this Section 5. The Company, to the extent
required, shall authorize, free of preemptive rights,
such number of duly authorized shares of Common Stock as
shall be required to effect the redemption.
Notwithstanding the foregoing, if the Company's
notice of redemption has been given pursuant to this
Section 5 and any holder of shares of PIK Preferred Stock
shall, prior to the close of business on the third
Business Day preceding the Redemption Date, give written
notice to the Company pursuant to this Section 5(d)
hereof of the conversion of any or all of the shares to
be redeemed held by such holder (accompanied by a
certificate or certificates for such shares, duly
endorsed or assigned to the Company), then the conversion
of such shares to be redeemed shall become effective as
provided in Section 8. In the event that such redemption
was pursuant to a Mandatory Redemption, any shares so
converted shall, at the option of the Company, be counted
as shares required to be redeemed pursuant to such
Mandatory Redemption.
(e) The election by the Company to redeem
shares of PIK Preferred Stock pursuant to this Section 5
hereof shall become irrevocable only on the relevant
Optional Redemption Date.
6. Redemption Upon a Change of Control. (a)
Upon the occurrence of a Change of Control (as defined
below), the Company shall make an offer (the "Change of
Control Offer") to each holder of PIK Preferred Stock to
repurchase all or any part of such holder's PIK Preferred
Stock at a purchase price equal to $1,000 per share, plus
an amount equal to accrued and unpaid dividends to the
date of redemption (the "Change of Control Redemption
Date"); provided, however, that no Change of Control
Offer shall be made, pursuant to this section 6, until
such time as an offer to repurchase the Senior Notes upon
a "Change of Control" (as defined therein) on the terms
and conditions set forth in such Senior Notes and in the
indenture pursuant to which they were issued (the
"Indenture") shall have been made to the holders of the
Senior Notes, and such offer shall have been completed
and payment in full to the holders of such Senior Notes
shall have been paid, in accordance with the terms of the
Senior Notes and the Indenture. No additional dividends
shall be accrued or be paid after the Change of Control
Redemption Date on shares of PIK Preferred Stock tendered
and redeemed pursuant to the Change of Control Offer.
Within thirty (30) days following a Change of Control,
the Company shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 6 and that all shares of PIK
Preferred Stock tendered will be accepted for payment;
(2) the purchase price and the Change of Control
Redemption Date, which shall be no earlier than 30 days
nor later than 40 days from the date such notice is
mailed; (3) that any shares of PIK Preferred Stock not
tendered will continue to accrue dividends in accordance
with the terms of Section 3; (4) that, unless the Company
defaults in the payment of the redemption price, all
shares of PIK Preferred Stock redeemed pursuant to the
Change of Control Offer shall cease to accrue dividends
after the Change of Control Redemption Date; (5) that
holders electing to have any shares of PIK Preferred
Stock redeemed pursuant to the Change of Control Offer
will be required to surrender the certificates
representing such shares; (6) that holders will be
entitled to withdraw their election if the Company's
transfer agent receives, not later than the close of
business on the second Business Day preceding the Change
of Control Redemption Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
holder, the number of shares delivered for redemption,
and a statement that such holder is withdrawing his
election to have such shares redeemed; and (7) that
holders whose shares are being redeemed only in part will
be issued new certificates representing shares not
redeemed by the Company.
(b) On the Change of Control Redemption
Date, the Company shall, to the extent lawful, (i) accept
for redemption shares tendered pursuant to the Change of
Control Offer, (ii) deposit with a bank or trust company
having an office or agency in the Borough of Manhattan,
City of New York, and having a capital and surplus of at
least $500,000,000, an amount equal to the purchase price
in respect of all shares so tendered, in trust for the
account of the holders of the shares to be redeemed (and
so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or
trust company that such funds be applied to the
redemption of the shares of PIK Preferred Stock tendered
pursuant to the Change of Control Offer. The Company's
transfer agent shall promptly mail to each holder a
certificate representing shares surrendered but not
tendered and not redeemed in accordance with such
holder's instructions, if any.
(c) The redemption option of the holder
of PIK Preferred Stock upon a Change of Control pursuant
to this Section 6 may constitute an "issuer tender offer"
as defined in Rule 13e-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in such
event such transaction may be subject to the requirements
of Rule 13e-4, including the filing of an Issuer Tender
Offer Statement on Schedule 13E-4 with the Securities and
Exchange Commission and the furnishing of certain
information contained therein to such holder. If such a
Change of Control occurs, (i) the Company will comply
with all appropriate rules and regulations applicable to
"issuer tender offers" at such time and (ii) each holder
of PIK Preferred Stock will be entitled to withdraw the
notice of redemption given hereunder throughout the
"issuer tender offer." Upon the expiration date of the
"issuer tender offer," such notice shall be irrevocable
and shall terminate all conversion rights with respect to
the PIK Preferred Stock to be redeemed under this Section
6. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection
with the redemption of shares in connection with a Change
of Control.
(d) "Change of Control" means the occurrence of any
of the following events:
(i) any Person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the total Voting Stock or Total Common
Equity of the Company; provided, that no Change of
Control will be deemed to occur pursuant to this clause
(a) if (x) the Person is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
Person is a corporation (1) that is not, and does not
have any outstanding debt securities that are, rated by
S&P, Moody's or any other rating agency of national
standing at any time during a period of 90 consecutive
days beginning on the date of such event (which period
will be extended up to an additional 90 days for as long
as any such rating agency has publicly announced that
such corporation or debt thereof will be rated), unless
after such date but during such period debt securities of
such corporation having a maturity at original issuance
of at least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of Common Stock of such Person will
be deemed to equal the Closing Price of such Common Stock
on such later Trading Day, subject to the last sentence
of the definition of "Total Common Equity");
(ii) the Company consolidates with, or
merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all
or substantially all of its assets to any Person, or any
Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into
or exchanged for (1) Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person
or (2) cash, securities and other property in an amount
which could be paid by the Company as a Restricted
Payment (as such term is defined in Section 4.07 of the
Indenture) and (ii) immediately after such transaction no
Person (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), is the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock
or Total Common Equity of the surviving or transferee
Person; provided, that no Change of Control will be
deemed to occur pursuant to this clause (d) if (x) the
surviving or transferee Person or the Person referred to
in clause (d)(ii)(2) is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
surviving or transferee Person or such other Person is a
corporation (1) that is not, and does not have any
outstanding debt securities that are, rated by S&P,
Moody's or any other rating agency of national standing
at any time during a period of 90 consecutive days
beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any
such rating agency has publicly announced that such
corporation or debt thereof will be rated), unless after
such date but during such period debt securities of such
corporation having a maturity at original issuance of at
least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of the Common Stock of such Person
will be deemed to equal the Closing Price of such Common
Stock on such later Trading Day, subject to the last
sentence of the definition of "Total Common Equity"); or
(iii) during any consecutive two-year
period, individuals who at the beginning of such period
constituted the Board of Directors of the Company
(together with any directors who are members of the Board
of Directors on the date hereof and any new directors
whose election by such Board of Directors or whose
nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the
directors then still in office who were either directors
at the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors of the Company then in office.
Any event that would constitute a Change of
Control pursuant to clause (i) or (ii) above but for the
proviso thereto will not be deemed to be a Change of
Control until such time (if any) as the conditions
described in such proviso cease to have been met.
(e) For the purposes of this Section 6 the
following terms are defined as follows:
(i) "Beneficial Owner" means a beneficial
owner as defined in Rules 13d-3 and 13d-5 under the
Exchange Act (or any successor rules), including the
provision of such rules that a Person shall be deemed to
have beneficial ownership of all securities that such
Person has a right to acquire within 60 days of the date
of determination of beneficial ownership of such
security; provided that a Person will not be deemed a
beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and (2) is not also
then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
(ii) "Business Day" means any day other than a
Saturday, a Sunday or a day on which banking institutions
in the City of New York or at a place of payment are
authorized by law, regulation or executive order to
remain closed.
(iii) "Capital Stock" means (i) in the case of
a corporation, corporate stock, (ii) in the case of an
association or other business entity, any and all shares,
interests, participations, rights or other equivalents
(however designated) of corporate stock and (iii) in the
case of a partnership, partnership interests (whether
general or limited) and any other interest or
participation that confers on a Person the right to
receive a share of the profits and losses of, or
distributions of assets of, such partnership.
(iv) "Common Stock" of any Person means
Capital Stock of such Person that does not rank prior, as
to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
(v) "Closing Price" on any Trading Day with
respect to the per share price of any shares of Capital
Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock
Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the
principal national securities exchange on which such
shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq but the
issuer is a Foreign Issuer (as defined in Rule 3b-4(b)
under the Exchange Act) and the principal securities
exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as
defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices
regular way on such principal exchange, or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq and the
issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm that is selected from
time to time by the Company for that purpose, or if no
such bid and asked prices can be obtained from any such
firm, the fair market value of such Capital Stock on such
day as determined in good faith by the Board of
Directors.
(vi) "Disqualified Stock" means any Capital
Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on
or prior to the maturity date of the Senior Notes,
provided, however, that any Capital Stock which would not
constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require the Company
to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the
Final Mandatory Redemption Date shall not constitute
Disqualified Stock if the change in control provisions
applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions
applicable to the Senior Notes and such Capital Stock
specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such
Senior Notes as are required to be repurchased pursuant
to the terms of Section 4.16 of the Indenture.
(vii) "Investment Grade" means a rating of at
least BBB-, in the case of S&P, or Baa3, in the case of
Moody's.
(viii) "Person" means any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any
such entity or substantially all of the assets of any
such entity, subdivision or business).
(ix) "Total Common Equity" of any Person
means, as of any date of determination (and as modified
for purposes of the definition of "Change of Control"),
the product of (i) the aggregate number of outstanding
primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or
securities convertible or exchangeable into, shares of
Common Stock of such Person) and (ii) the average Closing
Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause
(ii) of the preceding sentence shall be determined by the
Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors.
(x) "Trading Day," with respect to a
securities exchange or automated quotation system, means
a day on which such exchange or system is open for a full
day of trading.
(xi) "Voting Stock" of any Person means
Capital Stock of such Person which ordinarily has voting
power for the election of directors (or Persons
performing similar functions) of such Person, whether at
all times or only so long as no senior class of
securities has such voting power by reason of any
contingency.
7. Voting Rights. (a) Except as herein
provided or as otherwise required by law, holders of PIK
Preferred Stock shall have no voting rights. Whenever,
at any time or times, dividends payable on the shares of
Exchangeable Preferred Stock at the time outstanding
shall be cumulatively in arrears for two consecutive
quarterly dividend periods, the holders of all shares of
PIK Preferred Stock and any shares of Parity Securities
upon which like voting rights have been conferred and are
exercisable (the PIK Preferred Stock and any such Parity
Securities, collectively for purposes of this Section 7,
the "Defaulted Preferred Stock"), shall be entitled to
elect one director of the Company at the Company's next
annual meeting of stockholders and at each subsequent
annual meeting of stockholders; and if such dividends on
the Exchangeable Preferred Stock shall continue in
arrears for four consecutive quarterly dividend periods,
such holders of Defaulted Preferred Stock shall be
entitled thereafter to elect one additional director of
the Company at such next annual meeting and at each
subsequent annual meeting; provided, however, the shares
of Defaulted Preferred Stock shall be entitled to
exercise their voting rights at a special meeting of the
holders of shares of Defaulted Preferred Stock as set
forth in paragraphs (b) and (c) of this Section 7. At
elections for such directors, each holder of PIK
Preferred Stock shall be entitled to one vote for each
share held (the holders of shares of any other series of
Defaulted Preferred Stock ranking on such a parity being
entitled to such number of votes, if any, for each share
of stock held as may be granted to them). Upon the
vesting of such right of the holders of Defaulted
Preferred Stock, the maximum authorized number of members
of the Board of Directors shall automatically be
increased by one or two, as the case may be, and the
vacancies so created shall be filled by vote of the
holders of outstanding Defaulted Preferred Stock as
hereinafter set forth. The right of holders of Defaulted
Preferred Stock, voting separately as a class without
regard to series, to elect members of the Board of
Directors as aforesaid shall continue until such time as
all dividends accumulated and unpaid on the Exchangeable
Preferred Stock shall have been paid or declared and
funds set aside for payment in full, at which time such
right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of
each and every subsequent default of the character above
mentioned.
(b) Whenever such voting right shall have
vested, such right may be exercised initially either at a
special meeting of the holders of shares of Defaulted
Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of
electing directors, and thereafter at such meeting or by
the written consent of such holders pursuant to Section
228 of the DGCL.
(c) At any time when such voting right
shall have vested in the holders of shares of Defaulted
Preferred Stock entitled to vote thereon, and if such
right shall not already have been initially exercised, an
officer of the Company shall, upon the written request of
10% of the holders of record of shares of such Defaulted
Preferred Stock then outstanding, addressed to the
Secretary of the Company, call a special meeting of
holders of shares of such Defaulted Preferred Stock.
Such meeting shall be held at the earliest practicable
date upon the notice required for special meetings of
stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place
designated by the Secretary of the Company. If such
meeting shall not be called by the proper officers of the
Company within 30 days after the personal service of such
written request upon the Secretary of the Company, or
within 30 days after mailing the same within the United
States, by registered mail, addressed to the Secretary of
the Company at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal
authorities), then holders of record of 10% of the shares
of Defaulted Preferred Stock then outstanding may
designate in writing any person to call such meeting at
the expense of the Company, and such meeting may be
called by such person so designated upon the notice
required for special meetings of stockholders and shall
be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted
Preferred Stock then outstanding that would be entitled
to vote at such meeting shall have access to the stock
books of the Company's transfer agent for the purpose of
causing a meeting of stockholders to be called pursuant
to the provisions of this paragraph. Notwithstanding the
provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45
days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) Subject to the provisions hereof, the
directors elected pursuant to this section shall serve
until the next annual meeting or until their respective
successors shall be elected and qualified. Any director
elected by the holders of Defaulted Preferred Stock may
be removed by, and shall not be removed otherwise than
by, the vote of the holders of a majority of the
outstanding shares of the Defaulted Preferred Stock who
were entitled to participate in such election of
directors, voting as a separate class, without regard to
series, at a meeting called for such purpose or by
written consent as permitted by law and the Certificate
of Incorporation and by-laws of the Company. If the
office of any director elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, becomes vacant by reason of death,
resignation, retirement, disqualification or removal from
office or otherwise, the remaining director elected by
the holders of Defaulted Preferred Stock, voting as a
class, without regard to series, may choose a successor
who shall hold office for the unexpired term in respect
of which such vacancy occurred. Upon any termination of
the right of the holders of Defaulted Preferred Stock to
vote for directors as herein provided, the term of office
of all directors then in office elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, shall terminate immediately. Whenever
the terms of office of the directors elected by the
holders of Defaulted Preferred Stock, voting as a class,
without regard to series, shall so terminate and the
special voting powers vested in the holders of Defaulted
Preferred Stock shall have expired, the number of
directors shall be such number as may be provided for in
the Company's by-laws irrespective of any increase made
pursuant to the provisions of this Section 7.
8. Conversion Rights. (a) Each share of Series
A PIK Preferred Stock may be converted, at any time and
at the option of the holder, into 55.87 fully paid, non-
assessable shares of Common Stock of the Company on and
subject to the terms and conditions of this Section 8.
(b) The number of shares of Common Stock
issuable upon conversion of each share of the Series A
PIK Preferred Stock shall be determined by the Conversion
Price (as hereinafter defined) in effect on the date of
conversion (calculated as to each conversion to the
nearest 1/100th of a share). The Conversion Price shall
initially equal $17.90; provided, however, that such
Conversion Price shall be adjusted and readjusted from
time to time as provided in this Section 8 and, as so
adjusted and readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by
this Section 8.
(c) Except as may be provided by the
Board of Directors, upon conversion of the PIK Preferred
Stock, the Company is not obligated to make any payment
or adjustment with respect to dividends accrued on the
PIK Preferred Stock through the date of conversion unless
the holder of the shares of PIK Preferred Stock being
converted was the record holder of such shares on the
record date for the payment of such dividends.
(d) Upon surrender to the Company at the
office of the transfer agent or such other place or
places, if any, as the Board of Directors may determine,
of certificates duly endorsed to the Company or in blank
for shares of PIK Preferred Stock to be converted
together with appropriate evidence of the payment of any
transfer or similar tax, if required, and written
instructions to the Company requesting conversion of such
shares and specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares of Common Stock rounded to the
nearest whole number issuable upon conversion thereof as
of the time of such surrender and as promptly as
practicable thereafter will deliver certificates for such
shares of Common Stock. No fractional shares of Common
Stock shall be issued pursuant to this Section 8. Upon
surrender of a certificate representing shares of PIK
Preferred Stock to be converted in part, in addition to
the foregoing, the Company shall also issue to such
holder a new certificate representing any unconverted
shares of PIK Preferred Stock represented by the
certificate surrendered for conversion.
(e) The Company shall pay all
documentary, stamp, or similar issue or transfer tax due
on the issue of shares of Common Stock issuable upon
conversion of the PIK Preferred Stock; provided, however,
that the holder of shares of PIK Preferred Stock so
converted shall pay any such tax which is due because
such shares are to be issued in the name other than that
of such holder.
(f) The Conversion Price in effect at any
time shall be adjusted as follows:
(1) If the Company shall, at any
time or from time to time, effect a subdivision of
the outstanding Common Stock, the Conversion Price
in effect immediately before such subdivision shall
be proportionately decreased and, conversely, if the
Company shall, at any time or from time to time,
effect a combination of the outstanding Common
Stock, the Conversion Price in effect immediately
before such combination shall be proportionately
increased. Any adjustment under this subdivision
shall become effective at the close of business on
the record date fixed for the applicable subdivision
or combination.
(2) In the event the Company shall,
at any time or from time to time, make or issue to
all holders of shares of Common Stock (or fix a
record date for the determination of holders of
Common Stock entitled to receive), a dividend or
other distribution payable in shares of Common
Stock, then the Conversion Price then in effect
shall be decreased as of the time of such issuance
(or, in the event such a record date shall have been
fixed, as of the close of business on such record
date) in accordance with the following formula:
0
C1 = C X -------
0 + N
where:
C1 = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock
outstanding immediately prior to the
applicable issuance (or the close of
business on the record date).
N = the number of additional shares of
Common Stock issued in payment of
such dividend of distribution.
(3) In the event that the Company
shall issue or sell any shares of Common Stock prior
to the second anniversary of the date of issuance of
the PIK Preferred Stock pursuant to a transaction
exempt from the registration requirement of the
Securities Act of 1933, and 120% of the price at
which such shares of Common Stock were issued or
sold (the "Issue Price") is less than the Conversion
Price in effect immediately prior to such issuance
or sale, then the Conversion Price then in effect
shall be reduced to an amount equal to 120% of such
Issue Price.
(4) In the event that the Company
shall issue or sell any rights, warrants or options
prior to the second anniversary of the date of
issuance of the PIK Preferred Stock pursuant to a
transaction exempt from the registration requirement
of the Securities Act of 1933 to subscribe for or to
purchase Common Stock or other securities
convertible into or exercisable or exchangeable for
Common Stock with an exercise or conversion price
(the "Strike Price") which is less than the
Conversion Price in effect immediately prior to such
issuance or sale, then the Conversion Price then in
effect be reduced to the Strike Price.
(g) Anything herein to the contrary
notwithstanding, no adjustment will be made to the
Conversion Price by reason of (A) upon the issuance of
Common Stock, Options or Convertible Securities to
employees or directors of the Company pursuant to
employee benefit plans or otherwise, or the issuance of
Common Stock upon the conversion, exercise or exchange
thereof, (B) the issuance of Common Stock upon the
conversion, exercise or exchange of Options or
Convertible Securities issued and outstanding on the date
a certificate of designations setting forth this
resolution is filed with the Secretary of State of the
State of Delaware, or (C) the issuance of Common Stock
upon the conversion of the PIK Preferred Stock.
(h) No adjustment in the Conversion Price
need be made unless the adjustment pursuant to Section
8(f)(1) and (2) would require an increase or decrease of
at least 1% in the Conversion Price.
(i) No adjustment need be made for a
change in the par value of the Common Stock.
(j) Whenever the Conversion Price is
adjusted, the Company shall promptly mail to holders of
PIK Preferred Stock a notice of adjustment briefly
stating the facts requiring the adjustment and the manner
of computing it.
(k) In case of any consolidation or
merger of the Company with any other entity (other than a
wholly-owned subsidiary of the Company), or in case of
any sale or transfer of all or substantially all of the
assets of the Company, or in the case of any share
exchange pursuant to which all of the outstanding shares
of Common Stock are converted into other securities or
property, the Company shall make appropriate provision or
cause appropriate provision to be made so that holders of
each share of PIK Preferred Stock then outstanding shall
have the right thereafter to convert such share of PIK
Preferred Stock into the kind and amount of shares of
stock and other securities and property receivable upon
such consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common
Stock into which such share of PIK Preferred stock might
have been converted immediately prior to the effective
date of such consolidation, merger, sale, transfer or
share exchange. If in connection with any such
consolidation, merger, sale, transfer or share exchange,
each holder of shares of Common Stock is entitled to
elect to receive either securities, cash or other assets
upon completion of such transaction, the Company shall
provide or cause to be provided to each holder of PIK
Preferred Stock the right to elect to receive the
securities, cash or other assets into which the PIK
Preferred Stock held by such holder shall be convertible
after completion of any such transaction on the same
terms and subject to the same conditions applicable to
holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on
the period in which such election shall be made and the
effect of failing to exercise the election). The Company
shall not effect any such transaction unless the
provisions of this paragraph have been fulfilled. The
above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
(l) The Company shall reserve and at all
times keep available, free from preemptive rights, out of
its authorized but unissued stock, for the purpose of
effecting the conversion of the PIK Preferred Stock, such
number of its duly authorized Common Stock as shall from
time to time be sufficient to effect the conversion of
all outstanding PIK Preferred Stock.
9. Limitation and Rights Upon Insolvency.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock at a time when immediately after
making such payment the Company is or would be rendered
insolvent (as defined by applicable law), provided that
the obligation of the Company to make any such payment
shall not be extinguished in the event the foregoing
limitation applies.
10. Limitations under the Financing.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock if upon, or after, making such
payment the Company would, or with the passage of time,
or the giving of notice, or both, would be in default
under the terms of the Financing, provided that the
obligation of the Company to make any such payment shall
not be extinguished in the event the foregoing limitation
applies.
11. Shares to Be Retired. Any share of PIK
Preferred Stock converted, redeemed or otherwise acquired
by the Company shall be retired and cancelled and shall
upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to
reissuance by the Board of Directors as PIK Preferred
Stock or shares of preferred stock of one or more other
series.
12. Record Holders. The Company and the
Company's transfer agent may deem and treat the record
holder of any shares of PIK Preferred Stock as the true
and lawful owner thereof for all purposes, and neither
the Company nor the Company's transfer agent shall be
affected by any notice to the contrary.
13. Notice. Except as may otherwise be
provided for herein, all notices referred to herein shall
be in writing, and all notices hereunder shall be deemed
to have been given upon, the earlier of receipt of such
notice or three Business Days after the mailing of such
notice if sent by registered mail (unless first-class
mail shall be specifically permitted for such notice
under the terms of this Certificate of Designations) with
postage prepaid, addressed: if to the Company, to its
offices at 200 South Lamar Street, Security Centre, South
Building, Jackson, Mississippi 39201 (Attention:
General Counsel) or to an agent of the Company designated
as permitted by the Certificate of Incorporation or, if
to any holder of the PIK Preferred Stock, to such holder
at the address of such holder of the PIK Preferred Stock
as listed in the stock record books of the Company (which
may include the records of the Company's transfer agent);
or to such other address as the Company or holder, as the
case may be, shall have designated by notice similarly
given.
IN WITNESS WHEREOF, this Corrected Certificate
of Rights and Preferences has been duly executed this 7th
day of May, 1996.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh, III
_________________________
John E. Welsh, III
Vice Chairman and Chief
Financial Officer
CORRECTED
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
THE SERIES B 7.5% CUMULATIVE CONVERTIBLE
ACCRUING PAY-IN-KIND PREFERRED STOCK
OF
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
_____________________________________________
Pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware
_____________________________________________
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
(the "Company"), a company organized and existing under
and by virtue of the provisions of the General
Corporation Law as of the State of Delaware (the "DGCL"),
certifies as follows:
FIRST: On April 17, 1996, the Company filed
with the Secretary of State a Certificate of Rights and
Preferences of Series B 7.5% Cumulative Convertible
Accruing Pay-In-Kind Preferred Stock (the "Certificate of
Designations").
SECOND: A reference to "one or more" (in
place of "a") in the fourth line of the resolution that
appears in paragraph THIRD of the Certificate of
Designations was omitted. A Reference to "the "Series B
PIK Preferred Stock," together with all other series of
the Company's 7.5% Cumulative Convertible Accruing Pay-
In-Kind Preferred Stock," and a reference to "The Series
B PIK Preferred Stock together with all other series of
the PIK Preferred Stock will, in the aggregate," (in
place of "which will") in Section 1 of the Certificate of
Designations were omitted.
THIRD: A reference to "Series B" was omitted
on the first line of Section 2, on the 33rd line of
Section 3(i), on the first line of Section 8(a) and on
the second line of Section 8(b) of the Certificate of
Designations.
FOURTH: A reference to "PIK" was omitted on
the seventh line of the second paragraph of Section 5(d),
the second line of Section 5(e), the 26th, 30th, 34th and
37th lines of Section 6(a) and the sixth line of Section
8(c) of the Certificate of Designations.
FIFTH: A reference to "April 17, 1996" (in
place of "the date of issuance of the PIK Preferred
Stock") was omitted on the 28th line of Section 3(i) of
the Certificate of Designations.
SIXTH: The foregoing corrections were
prepared in accordance with the provisions of Section
103(f) of the General Corporation Law of the State of
Delaware.
SEVENTH: Set forth below is the text of the
Corrected Certificate of Designation:
FIRST: The Company was incorporated in the
State of Delaware on October 21, 1988;
SECOND: The Certificate of Incorporation of
the Company authorizes the issuance of 25,000,000 shares
of Preferred Stock, par value $.01 per share and,
further, authorizes the Board of Directors of the Company
(the "Board of Directors"), by resolution or resolutions,
at any time and from time to time, to divide and
establish any or all of the unissued shares of Preferred
Stock into one or more classes or series, and without
limiting the generality of the foregoing, to fix and
determine the designation of each such class or series,
the number of shares which shall constitute such class or
series and certain relative rights and preferences of the
shares of each class or series so established.
THIRD: The Board of Directors of the Company
pursuant to authority conferred upon the Board of
Directors under the Restated Certificate of Incorporation
(the "Certificate of Incorporation") filed with the
Secretary of State of Delaware on December 27, 1988 and
at a meeting that was duly called on March 27, 1996, at
which a quorum was present and acting throughout, did
duly adopt the following resolutions authorizing the
issuance of one or more series of the Company's Preferred
Stock, par value $.01 per share, and setting forth the
terms and provisions of said Preferred Stock:
RESOLVED, that the Board of Directors, pursuant
to authority vested in it by the provisions of
the Certificate of Incorporation, hereby
authorizes the creation and issuance of one or
more series of the Company's Preferred Stock,
par value $.01 per share, which shall in the
aggregate consist of up to 130,000 shares of
the 25,000,000 shares of Preferred Stock that
the Company now has authority to issue, and
hereby fixes the powers, designation, dividend
rate, redemption provisions, voting powers,
right on liquidation or dissolution, and other
preferences and relative participating,
optional or other rights, and the
qualifications, limitations or restrictions
thereof (in addition to those set forth in said
Certificate of Incorporation) as follows:
1. Designation. The Preferred Stock of the
Company created and authorized for issuance hereby shall
be designated as "Series B 7.5% Cumulative Convertible
Accruing Pay-In-Kind Preferred Stock" (the "Series B PIK
Preferred Stock," together with all other series of the
Company's 7.5% Cumulative Convertible Accruing Pay-In-
Kind Preferred Stock, hereinafter the "PIK Preferred
Stock"). The Series B PIK Preferred Stock together with
all other series of the PIK Preferred Stock will, in the
aggregate, consist of 130,000 shares of such PIK
Preferred Stock.
2. Priority. The Series B PIK Preferred Stock
shall, with respect to dividend rights and rights on
liquidation, winding up or dissolution, whether voluntary
or involuntary, whether now or hereafter issued, rank (i)
on parity with any other series of PIK Preferred Stock
and any other series of Preferred Stock established
hereafter by the Board of Directors, the terms of which
shall specifically provide that such series shall rank on
parity with the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution, (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks on parity are at all
times collectively referred to as "Parity Securities")
(ii) junior to the Company's $2.25 Cumulative Convertible
Exchangeable Preferred Stock (the "Exchangeable Preferred
Stock") and any other series of Preferred Stock
established by the Board of Directors, the terms of which
shall specifically provide that such series shall rank
senior to the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks junior, including the
Exchangeable Preferred Stock, are at times collectively
referred to herein as the "Senior Securities"), and (iii)
senior to the Company's Series C Junior Participating
Preferred Stock, $.01 par value per share (the "Series C
Preferred Stock"), the Company's Common Stock, $.01 par
value per share (the "Common Stock"), and, subject to
clauses (i) and (ii) hereof, any other equity securities
of the Company, with respect to dividend rights and
rights on liquidation, winding up or dissolution (all of
such equity securities of the Company to which the PIK
Preferred Stock ranks senior, including the Series C
Preferred Stock and the Common Stock, are at times
collectively referred to herein as the "Junior
Securities"). Notwithstanding the foregoing, the Company
shall not establish, create, authorize or issue any
shares of Parity Securities (other than additional series
of PIK Preferred Stock) or Senior Securities nor issue
any subordinated debt (other than in connection with any
refinancing, exchange or similar transaction with respect
to the existing Senior Notes (as defined herein)) without
the prior written consent of a majority of the holders of
the PIK Preferred Stock.
3. Dividends. (i) Holders of shares of PIK
Preferred Stock shall be entitled to receive out of funds
legally available for the payment of dividends ("Legally
Available Funds"), cumulative dividends for each share of
PIK Preferred Stock in an amount equal to the annual rate
of 7.5% (or $75 per share per year) accruable quarterly
on June 15, September 15, December 15 and March 15 (or at
such additional times and for such interim periods, if
any, as determined by the Board of Directors) (each of
such dates being a "Dividend Accrual Date"), except that
if such date is a Saturday, Sunday or legal holiday then
such dividend shall be accruable on the next date that is
not a Saturday, Sunday or legal holiday or which banks in
the State of New York are permitted to be closed (a
"Business Day"). Each of such quarterly dividends
accruals shall be fully cumulative and shall accrue
(whether or not declared), on a daily basis from the
first day of the quarterly period in which such dividend
may be accruable as provided herein, provided, however,
that with respect to the first dividend accrual date
following the issuance of shares of PIK Preferred Stock,
such dividend shall accrue from the Issuance Date. All
accrued but unpaid dividends shall be compounded
quarterly at a rate equal to an annual rate of 7.5%. The
Board of Directors shall declare and pay such accrued
dividends at such time and to the extent permitted by law
and the Financing (as hereinafter defined), subject to
the provisions of paragraph 3(iii) below. During the
period commencing on April 17, 1996 (the "Issuance Date")
and ending on the fifth anniversary of the Issuance Date,
or such longer period as shall be necessary to comply
with the terms of the Financing (as defined below),
dividends may, at the Company's option, be paid in shares
of Series B PIK Preferred Stock. No fractional shares of
PIK Preferred Stock shall be issued, so that the number
of shares to be paid as a dividend pursuant to this
paragraph shall be rounded to the nearest whole number of
shares. Such dividends shall be paid to the holders of
record at the close of business on the date specified by
the Board of Directors of the Company at the time such
dividend is declared; provided, however, that such
declaration date shall not be more than 60 days nor less
than 10 days prior to the respective Dividend Payment
Date.
For the purposes of this Certificate of
Designation the "Financing" shall mean (i) the Credit,
Security, Guaranty and Pledge Agreement, dated as of
December 21, 1995 among Skytel Corp., the Company and
certain subsidiaries thereof, certain lenders, Chemical
Bank, Credit Lyonnais New York Branch, and J.P. Morgan
Securities Inc. as amended, and (ii) the Company's 131/2%
Senior Notes due 2002 (the "Senior Notes").
(ii) All dividends paid with respect to
shares of the PIK Preferred Stock pursuant to section
3(i) shall be paid pro rata to the holders entitled
thereto. All dividends paid in additional shares of PIK
Preferred Stock shall be deemed issued on the applicable
Dividend Payment Date, and will thereupon be duly
authorized, validly issued, fully paid and nonassessable
and free and clear of all liens and charges.
(iii) Notwithstanding anything contained
herein to the contrary, no cash dividends on shares of
PIK Preferred Stock shall be declared by the Board of
Directors or paid or set apart for payment by the Company
at such time as the terms and provisions of the Financing
specifically prohibit such declaration, payment or
setting apart for payment or provide that such
declaration, payment or setting apart for payment would
(or, with notice or lapse of time or both, would)
constitute a breach thereof or a default thereunder.
(iv) If at any time the Company shall
have failed to pay all dividends which have accrued on
any outstanding shares of Senior Securities or any Parity
Securities at the times such dividends are payable,
unless otherwise provided in the terms of the Senior
Securities or the Parity Securities, no cash or stock
dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Company on shares of
PIK Preferred Stock unless prior to or concurrently with
such declaration, payment or setting apart for payment,
all accrued and unpaid dividends on all outstanding
shares of such Senior Securities and Parity Securities
shall have been declared, paid or set apart for payment,
without interest; provided, however, that in the event
such failure to pay accrued dividends is with respect
only to the outstanding shares of PIK Preferred Stock and
any outstanding shares of any Parity Securities, cash or
stock dividends may be declared, paid or set apart for
payment, without interest, pro rata on shares of PIK
Preferred Stock and shares of such other series of
Preferred Stock so that the amounts of any dividends
declared, paid or set apart for payment (whether in cash
or additional securities) on shares of PIK Preferred
Stock and shares of such other series of Preferred Stock
shall in all cases bear to each other the same ratio
that, at the time of such declaration, payment or setting
apart for payment, the amounts of all accrued but unpaid
dividends on shares of the PIK Preferred Stock and shares
of Parity Securities bear to each other. Any dividend
not paid pursuant to section 3(i) hereof or this section
3(iv) shall be fully cumulative and shall accrue (whether
or not declared), without interest, as set forth in
section 3(i) hereof, even if such dividend is not paid
pursuant to section 3(iii).
(v) (a) Holders of shares of PIK
Preferred Stock shall be entitled to receive the
dividends provided for in section 3(i) hereof in
preference to and in priority over any dividends upon
any of the Junior Securities.
(b) So long as any shares of PIK
Preferred Stock are outstanding, the Company shall not
declare, pay or set apart for payment any dividend on any
of the Junior Securities or make any payment on account
of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption, retirement or
other acquisition of, or otherwise acquire for value, any
of the Junior Securities or any warrants, rights, calls
or options exercisable for any of the Junior Securities,
or make any distribution in respect thereof, either
directly or indirectly, whether in cash, obligations or
shares of the Company or other property (other than
distributions or dividends payable solely in the same
Junior Securities to the holders of such stock), and
shall not permit any company or other entity directly or
indirectly controlled by the Company to purchase or
redeem any of the Junior Securities or any warrants,
rights, calls or options exercisable for any of the
Junior Securities, unless prior to or concurrently with
such declaration, payment, setting apart for payment,
purchase or distribution, as the case may be, all accrued
and unpaid dividends, if any, on shares of PIK Preferred
Stock not paid on the dates provided for in section 3(i)
hereof (including if not paid pursuant to the terms and
conditions of section 3(iii) or section 3(iv) hereof)
shall have been paid.
(c) Subject to the foregoing
provisions of this section 3, the Board of Directors may
declare and the Company may pay or set apart for payment
dividends and other distributions on any of the Junior
Securities, and may purchase or otherwise redeem any of
the Junior Securities or any warrants, rights or options
exercisable for any of the Junior Securities, and the
holders of the shares of PIK Preferred Stock shall not be
entitled to share therein.
4. Liquidation Preference. (i) In the event
of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, the holders
of shares of PIK Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company
available for distribution to its stockholders an amount
in cash equal to $1,000 for each share outstanding, plus
an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation,
before any payment shall be made or any assets
distributed to the holders of any of the Junior
Securities; provided, however, that the holders of
outstanding shares of PIK Preferred Stock shall not be
entitled to receive such liquidation payment until the
liquidation payments on all outstanding shares of Senior
Securities shall have been paid in full. No full
preferential payment on account of any liquidation,
dissolution or winding up of the Company, whether
voluntary or involuntary, shall be made to the holders of
any class of Parity Securities unless there shall
likewise be paid at the same time to holders of PIK
Preferred Stock the full amounts to which such holders
are entitled with respect to such distribution. If the
assets of the Company are not sufficient to pay in full
the liquidation payments payable to the holders of
outstanding shares of PIK Preferred Stock and outstanding
shares of Parity Securities, then the holders of all such
shares shall share ratably in such distribution of assets
in accordance with the full respective preferential
amounts that would be payable on such shares of PIK
Preferred Stock and such shares of Parity Securities if
all amounts payable thereon were paid in full.
(ii) For the purposes of this section 4,
(x) the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Company or (y) the
consolidation or merger of the Company with one or more
other companies or entities shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary.
5. Redemption.
(a) Mandatory Redemptions. To the extent
permitted by law and the Financing, as mandatory
redemptions for the retirement of the shares of PIK
Preferred Stock, the Company shall redeem, out of Legally
Available Funds (if such shares remain outstanding) on
each of the seventh, eighth and ninth anniversaries of
the Issuance Date (each a "Mandatory Redemption Date"),
twenty-five percent (25%) of the shares of PIK Preferred
Stock initially issued and then outstanding, in each case
at the redemption price of $1,000 for each share
outstanding, plus an amount in cash equal to all accrued
but unpaid dividends to the Mandatory Redemption Date.
Immediately prior to authorizing or making such
redemption with respect to the PIK Preferred Stock, the
Company, by resolution of its Board of Directors shall,
to the extent of any Legally Available Funds, declare a
dividend on the PIK Preferred Stock payable on the
Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the PIK Preferred Stock
as of such date and, if the Company does not have
sufficient Legally Available Funds to declare and pay all
dividends accrued at the time of such redemption, any
remaining accrued and unpaid dividends shall be added to
the redemption price. If the Company shall fail to
discharge its obligation to redeem the aforementioned
outstanding shares of PIK Preferred Stock required to be
redeemed pursuant to this section 5(a) (the "Mandatory
Redemption Obligation"), the Mandatory Redemption
Obligation shall be discharged as soon as the Company is
able to discharge such Mandatory Redemption Obligation.
If and so long as the Mandatory Redemption Obligation
shall not be fully discharged, (i) dividends on such PIK
Preferred Stock shall continue to accrue and be added to
the dividend payable pursuant to the second preceding
sentence and (ii) the Company shall not declare or pay
any dividend or make any distribution on its securities
not otherwise permitted by this certificate. If on any
Mandatory Redemption Date less than 18,750 shares of PIK
Preferred Stock remain outstanding, the Mandatory
Redemption Obligation shall apply only to such lesser
number of shares of PIK Preferred Stock then outstanding,
and such obligation shall be discharged when such lesser
number of shares is redeemed in accordance with this
section 5(a).
(b) Final Mandatory Redemption. (i) To
the extent permitted by law and the Financing, as a final
mandatory redemption for the retirement of the shares of
PIK Preferred Stock, the Company shall redeem, out of
Legally Available Funds (if such shares remain
outstanding) on April 1, 2006 (the "Final Mandatory
Redemption Date"), all remaining shares of PIK Preferred
Stock then outstanding, at the redemption price of $1,000
for each share outstanding, plus an amount in cash equal
to all accrued but unpaid dividends thereon to the Final
Mandatory Redemption Date. Immediately prior to
authorizing or making such redemption with respect to the
PIK Preferred Stock, the Company, by resolution of its
Board of Directors shall, to the extent of any Legally
Available Funds, declare a dividend on the PIK Preferred
Stock payable on the Final Mandatory Redemption Date in
an amount equal to any accrued and unpaid dividends on
the PIK Preferred Stock as of such date and, if the
Company does not have sufficient Legally Available Funds
to declare and pay all dividends accrued at the time of
such redemption, any remaining accrued and unpaid
dividends shall be added to the redemption price. If the
Company shall fail to discharge its obligation to redeem
all of the outstanding shares of PIK Preferred Stock
required to be redeemed pursuant to this section 5(b)
(the "Final Mandatory Redemption Obligation"), the Final
Mandatory Redemption Obligation shall be discharged as
soon as the Company is able to discharge such Final
Mandatory Redemption Obligation. If and so long as the
Final Mandatory Redemption Obligation shall not be fully
discharged, (x) dividends on the PIK Preferred Stock
shall continue to accrue and be added to the dividend
payable pursuant to the second preceding sentence and (y)
the Company shall not declare or pay any dividend or make
any distribution on its securities not otherwise
permitted by this certificate.
(ii) The Company may, at it option, make any
mandatory redemption payment required pursuant to clauses
(a) and (b)(i) of this Section 5 in shares of Common
Stock in lieu of cash. In the event that the Company
elects to make any such payment in Common Stock, on the
Redemption Date, in lieu of cash, each holder shall
receive that number of shares (rounded to the nearest
whole share) of Common Stock determined by dividing (i)
the aggregate amount of cash that such holder would
otherwise have received (including with respect to
accrued and unpaid dividends) pursuant to such redemption
by (ii) the average Closing Price of the Common Stock for
the twenty consecutive Trading Days immediately preceding
the Mandatory Redemption Date or the Final Redemption
Date, as the case may be.
(c) Optional Redemption. To the extent
permitted by law and the Financing, the PIK Preferred
Stock shall be redeemable at any time, or from time to
time, in whole or in part, out of Legally Available
Funds, at the option of the Company, on any date after
(i) the second anniversary of the Issuance Date (a
"Regular Optional Redemption Date") or (ii) the first
anniversary of, but prior to the second anniversary of,
the Issuance Date (an "Accelerated Optional Redemption
Date", and together with a Regular Optional Redemption
Date, an "Optional Redemption Date"); provided, however,
that no redemption shall be made under clause (ii) unless
the average Closing Price (as defined in section 8) of
the Common Stock for any period of twenty consecutive
Trading Days (as defined in section 6), prior to any such
redemption, equals or exceeds 175% of the Conversion
Price (as determined in accordance with section 8).
Optional redemptions shall be made, upon giving notice as
provided in clause (d) below, at the redemption price of
$1,000 for each share outstanding, plus an amount in cash
equal to all accrued but unpaid dividends thereon to the
Optional Redemption Date. Immediately prior to
authorizing or making any such redemption with respect to
the PIK Preferred Stock, and as a condition precedent to
the Company so redeeming at its option, in whole or in
part, shares of the PIK Preferred Stock, the Company, by
resolution of its Board of Directors shall, to the extent
of any Legally Available Funds, declare a dividend on the
PIK Preferred Stock payable on the Optional Redemption
Date in an amount equal to any accrued and unpaid
dividends on the PIK Preferred Stock as of such date and
if the Company does not have sufficient Legally Available
Funds to declare and pay all dividends accrued to the
Optional Redemption Date, any remaining accrued and
unpaid dividends shall be added to the redemption price.
(d) Notice of Redemption. For the
purposes of this section 5(d), a Mandatory Redemption
Date, a Final Mandatory Redemption Date, a Regular
Optional Redemption Date and an Accelerated Optional
Redemption Date are hereinafter collectively referred to
as a "Redemption Date"). In the event the Company shall
redeem shares of PIK Preferred Stock pursuant to any of
clauses (a), (b) or (c) above, a notice of such
redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 60 days
prior to the Redemption Date, to each holder of record of
the shares to be redeemed, at such holder's address as
the same appears on the stock books of the Company's
transfer agent. Each such notice shall state: (i) the
Redemption Date; (ii) the number of shares of PIK
Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (iii) the
redemption price and the form in which such redemption
price will be paid (cash or shares of Common Stock); (iv)
the place or places where certificates for such shares
are to be surrendered for payment of the redemption
price; (v) that payment will be made upon presentation
and surrender of such PIK Preferred Stock; (vi) the then
current Conversion Price; (vii) that dividends on the
shares to be redeemed shall cease to accrue following
such Redemption Date; (viii) that such redemption is at
the option of the Company or that such redemption is a
mandatory redemption or a final redemption; and (ix) that
accrued and unpaid dividends up to and including the
Redemption Date will be paid in accordance with the terms
herein. Notice having been mailed as aforesaid, on and
after the Redemption Date, unless the Company shall be in
default in providing money for the payment of the
redemption price (including an amount equal to any
accrued and unpaid dividends up to and including the
Redemption Date), (x) dividends on the shares of the PIK
Preferred Stock so called for redemption shall cease to
accrue, (y) said shares shall be deemed no longer
outstanding, and (z) all rights of the holders thereof as
stockholders of the Company (except the right to receive
from the Company the monies payable upon redemption,
without interest thereon, upon surrender of the
certificates evidencing such shares) shall cease. The
Company's obligation to provide monies in accordance with
the preceding sentence shall be deemed fulfilled if, on
or before the Redemption Date, the Company shall deposit
with a bank or trust company having an office or agency
in the Borough of Manhattan, City of New York, and having
a capital and surplus of at least $500,000,000, the
principal amount of funds necessary for such redemption,
in trust for the account of the holders of the shares to
be redeemed (and so as to be and continue to be available
therefor), with irrevocable instructions and authority to
such bank or trust company that such funds be applied to
the redemption of the shares of PIK Preferred Stock so
called for redemption. Any interest accrued on such
funds shall be paid to the Company from time to time.
Any funds so deposited and unclaimed at the end of three
years from such Redemption Date shall be released or
repaid to the Company, after which, subject to any
applicable laws relating to escheat or unclaimed
property, the holder or holders of such shares of PIK
Preferred Stock so called for redemption shall look only
to the Company for payment of the redemption price.
Upon surrender in accordance with said
notice of the certificates for any such shares so
redeemed (properly endorsed or assigned for transfer, if
the Board of Directors shall so require and the notice
shall so state), such shares shall be redeemed by the
Company at the applicable redemption price aforesaid. If
fewer than all the outstanding shares of PIK Preferred
Stock are to be redeemed, shares to be redeemed shall be
selected by the Company from outstanding shares of PIK
Preferred Stock not previously called for redemption by
lot or pro rata or by any other equitable method
determined by the Board of Directors in its sole
discretion. If fewer than all the shares represented by
any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to
the holder thereof. In the event that the Company elects
to make any Mandatory Redemption or the Final Redemption
in shares at Common Stock, upon such surrender,
accompanied by written instructions to the Company
specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares rounded to the nearest whole
number issuable upon the redemption thereof as of the
time of such surrender and as promptly as practicable
thereafter will deliver certificates for such shares of
Common Stock. No fractional shares will be issued
pursuant to this Section 5. The Company, to the extent
required, shall authorize, free of preemptive rights,
such number of duly authorized shares of Common Stock as
shall be required to effect the redemption.
Notwithstanding the foregoing, if the Company's
notice of redemption has been given pursuant to this
Section 5 and any holder of shares of PIK Preferred Stock
shall, prior to the close of business on the third
Business Day preceding the Redemption Date, give written
notice to the Company pursuant to this Section 5(d)
hereof of the conversion of any or all of the shares to
be redeemed held by such holder (accompanied by a
certificate or certificates for such shares, duly
endorsed or assigned to the Company), then the conversion
of such shares to be redeemed shall become effective as
provided in Section 8. In the event that such redemption
was pursuant to a Mandatory Redemption, any shares so
converted shall, at the option of the Company, be counted
as shares required to be redeemed pursuant to such
Mandatory Redemption.
(e) The election by the Company to redeem
shares of PIK Preferred Stock pursuant to this Section 5
hereof shall become irrevocable only on the relevant
Optional Redemption Date.
6. Redemption Upon a Change of Control. (a)
Upon the occurrence of a Change of Control (as defined
below), the Company shall make an offer (the "Change of
Control Offer") to each holder of PIK Preferred Stock to
repurchase all or any part of such holder's PIK Preferred
Stock at a purchase price equal to $1,000 per share, plus
an amount equal to accrued and unpaid dividends to the
date of redemption (the "Change of Control Redemption
Date"); provided, however, that no Change of Control
Offer shall be made, pursuant to this section 6, until
such time as an offer to repurchase the Senior Notes upon
a "Change of Control" (as defined therein) on the terms
and conditions set forth in such Senior Notes and in the
indenture pursuant to which they were issued (the
"Indenture") shall have been made to the holders of the
Senior Notes, and such offer shall have been completed
and payment in full to the holders of such Senior Notes
shall have been paid, in accordance with the terms of the
Senior Notes and the Indenture. No additional dividends
shall be accrued or be paid after the Change of Control
Redemption Date on shares of PIK Preferred Stock tendered
and redeemed pursuant to the Change of Control Offer.
Within thirty (30) days following a Change of Control,
the Company shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 6 and that all shares of PIK
Preferred Stock tendered will be accepted for payment;
(2) the purchase price and the Change of Control
Redemption Date, which shall be no earlier than 30 days
nor later than 40 days from the date such notice is
mailed; (3) that any shares of PIK Preferred Stock not
tendered will continue to accrue dividends in accordance
with the terms of Section 3; (4) that, unless the Company
defaults in the payment of the redemption price, all
shares of PIK Preferred Stock redeemed pursuant to the
Change of Control Offer shall cease to accrue dividends
after the Change of Control Redemption Date; (5) that
holders electing to have any shares of PIK Preferred
Stock redeemed pursuant to the Change of Control Offer
will be required to surrender the certificates
representing such shares; (6) that holders will be
entitled to withdraw their election if the Company's
transfer agent receives, not later than the close of
business on the second Business Day preceding the Change
of Control Redemption Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
holder, the number of shares delivered for redemption,
and a statement that such holder is withdrawing his
election to have such shares redeemed; and (7) that
holders whose shares are being redeemed only in part will
be issued new certificates representing shares not
redeemed by the Company.
(b) On the Change of Control Redemption
Date, the Company shall, to the extent lawful, (i) accept
for redemption shares tendered pursuant to the Change of
Control Offer, (ii) deposit with a bank or trust company
having an office or agency in the Borough of Manhattan,
City of New York, and having a capital and surplus of at
least $500,000,000, an amount equal to the purchase price
in respect of all shares so tendered, in trust for the
account of the holders of the shares to be redeemed (and
so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or
trust company that such funds be applied to the
redemption of the shares of PIK Preferred Stock tendered
pursuant to the Change of Control Offer. The Company's
transfer agent shall promptly mail to each holder a
certificate representing shares surrendered but not
tendered and not redeemed in accordance with such
holder's instructions, if any.
(c) The redemption option of the holder
of PIK Preferred Stock upon a Change of Control pursuant
to this Section 6 may constitute an "issuer tender offer"
as defined in Rule 13e-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in such
event such transaction may be subject to the requirements
of Rule 13e-4, including the filing of an Issuer Tender
Offer Statement on Schedule 13E-4 with the Securities and
Exchange Commission and the furnishing of certain
information contained therein to such holder. If such a
Change of Control occurs, (i) the Company will comply
with all appropriate rules and regulations applicable to
"issuer tender offers" at such time and (ii) each holder
of PIK Preferred Stock will be entitled to withdraw the
notice of redemption given hereunder throughout the
"issuer tender offer." Upon the expiration date of the
"issuer tender offer," such notice shall be irrevocable
and shall terminate all conversion rights with respect to
the PIK Preferred Stock to be redeemed under this Section
6. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection
with the redemption of shares in connection with a Change
of Control.
(d) "Change of Control" means the occurrence of any
of the following events:
(i) any Person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the total Voting Stock or Total Common
Equity of the Company; provided, that no Change of
Control will be deemed to occur pursuant to this clause
(a) if (x) the Person is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
Person is a corporation (1) that is not, and does not
have any outstanding debt securities that are, rated by
S&P, Moody's or any other rating agency of national
standing at any time during a period of 90 consecutive
days beginning on the date of such event (which period
will be extended up to an additional 90 days for as long
as any such rating agency has publicly announced that
such corporation or debt thereof will be rated), unless
after such date but during such period debt securities of
such corporation having a maturity at original issuance
of at least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of Common Stock of such Person will
be deemed to equal the Closing Price of such Common Stock
on such later Trading Day, subject to the last sentence
of the definition of "Total Common Equity");
(ii) the Company consolidates with, or
merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all
or substantially all of its assets to any Person, or any
Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into
or exchanged for (1) Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person
or (2) cash, securities and other property in an amount
which could be paid by the Company as a Restricted
Payment (as such term is defined in Section 4.07 of the
Indenture) and (ii) immediately after such transaction no
Person (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), is the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock
or Total Common Equity of the surviving or transferee
Person; provided, that no Change of Control will be
deemed to occur pursuant to this clause (d) if (x) the
surviving or transferee Person or the Person referred to
in clause (d)(ii)(2) is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
surviving or transferee Person or such other Person is a
corporation (1) that is not, and does not have any
outstanding debt securities that are, rated by S&P,
Moody's or any other rating agency of national standing
at any time during a period of 90 consecutive days
beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any
such rating agency has publicly announced that such
corporation or debt thereof will be rated), unless after
such date but during such period debt securities of such
corporation having a maturity at original issuance of at
least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of the Common Stock of such Person
will be deemed to equal the Closing Price of such Common
Stock on such later Trading Day, subject to the last
sentence of the definition of "Total Common Equity"); or
(iii) during any consecutive two-year
period, individuals who at the beginning of such period
constituted the Board of Directors of the Company
(together with any directors who are members of the Board
of Directors on the date hereof and any new directors
whose election by such Board of Directors or whose
nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the
directors then still in office who were either directors
at the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors of the Company then in office.
Any event that would constitute a Change of
Control pursuant to clause (i) or (ii) above but for the
proviso thereto will not be deemed to be a Change of
Control until such time (if any) as the conditions
described in such proviso cease to have been met.
(e) For the purposes of this Section 6 the
following terms are defined as follows:
(i) "Beneficial Owner" means a beneficial
owner as defined in Rules 13d-3 and 13d-5 under the
Exchange Act (or any successor rules), including the
provision of such rules that a Person shall be deemed to
have beneficial ownership of all securities that such
Person has a right to acquire within 60 days of the date
of determination of beneficial ownership of such
security; provided that a Person will not be deemed a
beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and (2) is not also
then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
(ii) "Business Day" means any day other than a
Saturday, a Sunday or a day on which banking institutions
in the City of New York or at a place of payment are
authorized by law, regulation or executive order to
remain closed.
(iii) "Capital Stock" means (i) in the case of
a corporation, corporate stock, (ii) in the case of an
association or other business entity, any and all shares,
interests, participations, rights or other equivalents
(however designated) of corporate stock and (iii) in the
case of a partnership, partnership interests (whether
general or limited) and any other interest or
participation that confers on a Person the right to
receive a share of the profits and losses of, or
distributions of assets of, such partnership.
(iv) "Common Stock" of any Person means
Capital Stock of such Person that does not rank prior, as
to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
(v) "Closing Price" on any Trading Day with
respect to the per share price of any shares of Capital
Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock
Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the
principal national securities exchange on which such
shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq but the
issuer is a Foreign Issuer (as defined in Rule 3b-4(b)
under the Exchange Act) and the principal securities
exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as
defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices
regular way on such principal exchange, or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq and the
issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm that is selected from
time to time by the Company for that purpose, or if no
such bid and asked prices can be obtained from any such
firm, the fair market value of such Capital Stock on such
day as determined in good faith by the Board of
Directors.
(vi) "Disqualified Stock" means any Capital
Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on
or prior to the maturity date of the Senior Notes,
provided, however, that any Capital Stock which would not
constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require the Company
to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the
Final Mandatory Redemption Date shall not constitute
Disqualified Stock if the change in control provisions
applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions
applicable to the Senior Notes and such Capital Stock
specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such
Senior Notes as are required to be repurchased pursuant
to the terms of Section 4.16 of the Indenture.
(vii) "Investment Grade" means a rating of at
least BBB-, in the case of S&P, or Baa3, in the case of
Moody's.
(viii) "Person" means any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any
such entity or substantially all of the assets of any
such entity, subdivision or business).
(ix) "Total Common Equity" of any Person
means, as of any date of determination (and as modified
for purposes of the definition of "Change of Control"),
the product of (i) the aggregate number of outstanding
primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or
securities convertible or exchangeable into, shares of
Common Stock of such Person) and (ii) the average Closing
Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause
(ii) of the preceding sentence shall be determined by the
Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors.
(x) "Trading Day," with respect to a
securities exchange or automated quotation system, means
a day on which such exchange or system is open for a full
day of trading.
(xi) "Voting Stock" of any Person means
Capital Stock of such Person which ordinarily has voting
power for the election of directors (or Persons
performing similar functions) of such Person, whether at
all times or only so long as no senior class of
securities has such voting power by reason of any
contingency.
7. Voting Rights. (a) Except as herein
provided or as otherwise required by law, holders of PIK
Preferred Stock shall have no voting rights. Whenever,
at any time or times, dividends payable on the shares of
Exchangeable Preferred Stock at the time outstanding
shall be cumulatively in arrears for two consecutive
quarterly dividend periods, the holders of all shares of
PIK Preferred Stock and any shares of Parity Securities
upon which like voting rights have been conferred and are
exercisable (the PIK Preferred Stock and any such Parity
Securities, collectively for purposes of this Section 7,
the "Defaulted Preferred Stock"), shall be entitled to
elect one director of the Company at the Company's next
annual meeting of stockholders and at each subsequent
annual meeting of stockholders; and if such dividends on
the Exchangeable Preferred Stock shall continue in
arrears for four consecutive quarterly dividend periods,
such holders of Defaulted Preferred Stock shall be
entitled thereafter to elect one additional director of
the Company at such next annual meeting and at each
subsequent annual meeting; provided, however, the shares
of Defaulted Preferred Stock shall be entitled to
exercise their voting rights at a special meeting of the
holders of shares of Defaulted Preferred Stock as set
forth in paragraphs (b) and (c) of this Section 7. At
elections for such directors, each holder of PIK
Preferred Stock shall be entitled to one vote for each
share held (the holders of shares of any other series of
Defaulted Preferred Stock ranking on such a parity being
entitled to such number of votes, if any, for each share
of stock held as may be granted to them). Upon the
vesting of such right of the holders of Defaulted
Preferred Stock, the maximum authorized number of members
of the Board of Directors shall automatically be
increased by one or two, as the case may be, and the
vacancies so created shall be filled by vote of the
holders of outstanding Defaulted Preferred Stock as
hereinafter set forth. The right of holders of Defaulted
Preferred Stock, voting separately as a class without
regard to series, to elect members of the Board of
Directors as aforesaid shall continue until such time as
all dividends accumulated and unpaid on the Exchangeable
Preferred Stock shall have been paid or declared and
funds set aside for payment in full, at which time such
right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of
each and every subsequent default of the character above
mentioned.
(b) Whenever such voting right shall have
vested, such right may be exercised initially either at a
special meeting of the holders of shares of Defaulted
Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of
electing directors, and thereafter at such meeting or by
the written consent of such holders pursuant to Section
228 of the DGCL.
(c) At any time when such voting right
shall have vested in the holders of shares of Defaulted
Preferred Stock entitled to vote thereon, and if such
right shall not already have been initially exercised, an
officer of the Company shall, upon the written request of
10% of the holders of record of shares of such Defaulted
Preferred Stock then outstanding, addressed to the
Secretary of the Company, call a special meeting of
holders of shares of such Defaulted Preferred Stock.
Such meeting shall be held at the earliest practicable
date upon the notice required for special meetings of
stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place
designated by the Secretary of the Company. If such
meeting shall not be called by the proper officers of the
Company within 30 days after the personal service of such
written request upon the Secretary of the Company, or
within 30 days after mailing the same within the United
States, by registered mail, addressed to the Secretary of
the Company at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal
authorities), then holders of record of 10% of the shares
of Defaulted Preferred Stock then outstanding may
designate in writing any person to call such meeting at
the expense of the Company, and such meeting may be
called by such person so designated upon the notice
required for special meetings of stockholders and shall
be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted
Preferred Stock then outstanding that would be entitled
to vote at such meeting shall have access to the stock
books of the Company's transfer agent for the purpose of
causing a meeting of stockholders to be called pursuant
to the provisions of this paragraph. Notwithstanding the
provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45
days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) Subject to the provisions hereof, the
directors elected pursuant to this section shall serve
until the next annual meeting or until their respective
successors shall be elected and qualified. Any director
elected by the holders of Defaulted Preferred Stock may
be removed by, and shall not be removed otherwise than
by, the vote of the holders of a majority of the
outstanding shares of the Defaulted Preferred Stock who
were entitled to participate in such election of
directors, voting as a separate class, without regard to
series, at a meeting called for such purpose or by
written consent as permitted by law and the Certificate
of Incorporation and by-laws of the Company. If the
office of any director elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, becomes vacant by reason of death,
resignation, retirement, disqualification or removal from
office or otherwise, the remaining director elected by
the holders of Defaulted Preferred Stock, voting as a
class, without regard to series, may choose a successor
who shall hold office for the unexpired term in respect
of which such vacancy occurred. Upon any termination of
the right of the holders of Defaulted Preferred Stock to
vote for directors as herein provided, the term of office
of all directors then in office elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, shall terminate immediately. Whenever
the terms of office of the directors elected by the
holders of Defaulted Preferred Stock, voting as a class,
without regard to series, shall so terminate and the
special voting powers vested in the holders of Defaulted
Preferred Stock shall have expired, the number of
directors shall be such number as may be provided for in
the Company's by-laws irrespective of any increase made
pursuant to the provisions of this Section 7.
8. Conversion Rights. (a) Each share of Series
B PIK Preferred Stock may be converted, at any time and
at the option of the holder, into 52.38 fully paid, non-
assessable shares of Common Stock of the Company on and
subject to the terms and conditions of this Section 8.
(b) The number of shares of Common Stock
issuable upon conversion of each share of the Series B
PIK Preferred Stock shall be determined by the Conversion
Price (as hereinafter defined) in effect on the date of
conversion (calculated as to each conversion to the
nearest 1/100th of a share). The Conversion Price shall
initially equal $19.09; provided, however, that such
Conversion Price shall be adjusted and readjusted from
time to time as provided in this Section 8 and, as so
adjusted and readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by
this Section 8.
(c) Except as may be provided by the
Board of Directors, upon conversion of the PIK Preferred
Stock, the Company is not obligated to make any payment
or adjustment with respect to dividends accrued on the
PIK Preferred Stock through the date of conversion unless
the holder of the shares of PIK Preferred Stock being
converted was the record holder of such shares on the
record date for the payment of such dividends.
(d) Upon surrender to the Company at the
office of the transfer agent or such other place or
places, if any, as the Board of Directors may determine,
of certificates duly endorsed to the Company or in blank
for shares of PIK Preferred Stock to be converted
together with appropriate evidence of the payment of any
transfer or similar tax, if required, and written
instructions to the Company requesting conversion of such
shares and specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares of Common Stock rounded to the
nearest whole number issuable upon conversion thereof as
of the time of such surrender and as promptly as
practicable thereafter will deliver certificates for such
shares of Common Stock. No fractional shares of Common
Stock shall be issued pursuant to this Section 8. Upon
surrender of a certificate representing shares of PIK
Preferred Stock to be converted in part, in addition to
the foregoing, the Company shall also issue to such
holder a new certificate representing any unconverted
shares of PIK Preferred Stock represented by the
certificate surrendered for conversion.
(e) The Company shall pay all
documentary, stamp, or similar issue or transfer tax due
on the issue of shares of Common Stock issuable upon
conversion of the PIK Preferred Stock; provided, however,
that the holder of shares of PIK Preferred Stock so
converted shall pay any such tax which is due because
such shares are to be issued in the name other than that
of such holder.
(f) The Conversion Price in effect at any
time shall be adjusted as follows:
(1) If the Company shall, at any
time or from time to time, effect a subdivision of
the outstanding Common Stock, the Conversion Price
in effect immediately before such subdivision shall
be proportionately decreased and, conversely, if the
Company shall, at any time or from time to time,
effect a combination of the outstanding Common
Stock, the Conversion Price in effect immediately
before such combination shall be proportionately
increased. Any adjustment under this subdivision
shall become effective at the close of business on
the record date fixed for the applicable subdivision
or combination.
(2) In the event the Company shall,
at any time or from time to time, make or issue to
all holders of shares of Common Stock (or fix a
record date for the determination of holders of
Common Stock entitled to receive), a dividend or
other distribution payable in shares of Common
Stock, then the Conversion Price then in effect
shall be decreased as of the time of such issuance
(or, in the event such a record date shall have been
fixed, as of the close of business on such record
date) in accordance with the following formula:
0
C1 = C X -------
0 + N
where: C1 = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock
outstanding immediately prior to the
applicable issuance (or the close of
business on the record date).
N = the number of additional shares of
Common Stock issued in payment of
such dividend of distribution.
(3) In the event that the Company
shall issue or sell any shares of Common Stock prior
to the second anniversary of the date of issuance of
the PIK Preferred Stock pursuant to a transaction
exempt from the registration requirement of the
Securities Act of 1933, and 120% of the price at
which such shares of Common Stock were issued or
sold (the "Issue Price") is less than the Conversion
Price in effect immediately prior to such issuance
or sale, then the Conversion Price then in effect
shall be reduced to an amount equal to 120% of such
Issue Price.
(4) In the event that the Company
shall issue or sell any rights, warrants or options
prior to the second anniversary of the date of
issuance of the PIK Preferred Stock pursuant to a
transaction exempt from the registration requirement
of the Securities Act of 1933 to subscribe for or to
purchase Common Stock or other securities
convertible into or exercisable or exchangeable for
Common Stock with an exercise or conversion price
(the "Strike Price") which is less than the
Conversion Price in effect immediately prior to such
issuance or sale, then the Conversion Price then in
effect be reduced to the Strike Price.
(g) Anything herein to the contrary
notwithstanding, no adjustment will be made to the
Conversion Price by reason of (A) upon the issuance of
Common Stock, Options or Convertible Securities to
employees or directors of the Company pursuant to
employee benefit plans or otherwise, or the issuance of
Common Stock upon the conversion, exercise or exchange
thereof, (B) the issuance of Common Stock upon the
conversion, exercise or exchange of Options or
Convertible Securities issued and outstanding on the date
a certificate of designations setting forth this
resolution is filed with the Secretary of State of the
State of Delaware, or (C) the issuance of Common Stock
upon the conversion of the PIK Preferred Stock.
(h) No adjustment in the Conversion Price
need be made unless the adjustment pursuant to Section
8(f)(1) and (2) would require an increase or decrease of
at least 1% in the Conversion Price.
(i) No adjustment need be made for a
change in the par value of the Common Stock.
(j) Whenever the Conversion Price is
adjusted, the Company shall promptly mail to holders of
PIK Preferred Stock a notice of adjustment briefly
stating the facts requiring the adjustment and the manner
of computing it.
(k) In case of any consolidation or
merger of the Company with any other entity (other than a
wholly-owned subsidiary of the Company), or in case of
any sale or transfer of all or substantially all of the
assets of the Company, or in the case of any share
exchange pursuant to which all of the outstanding shares
of Common Stock are converted into other securities or
property, the Company shall make appropriate provision or
cause appropriate provision to be made so that holders of
each share of PIK Preferred Stock then outstanding shall
have the right thereafter to convert such share of PIK
Preferred Stock into the kind and amount of shares of
stock and other securities and property receivable upon
such consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common
Stock into which such share of PIK Preferred stock might
have been converted immediately prior to the effective
date of such consolidation, merger, sale, transfer or
share exchange. If in connection with any such
consolidation, merger, sale, transfer or share exchange,
each holder of shares of Common Stock is entitled to
elect to receive either securities, cash or other assets
upon completion of such transaction, the Company shall
provide or cause to be provided to each holder of PIK
Preferred Stock the right to elect to receive the
securities, cash or other assets into which the PIK
Preferred Stock held by such holder shall be convertible
after completion of any such transaction on the same
terms and subject to the same conditions applicable to
holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on
the period in which such election shall be made and the
effect of failing to exercise the election). The Company
shall not effect any such transaction unless the
provisions of this paragraph have been fulfilled. The
above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
(l) The Company shall reserve and at all
times keep available, free from preemptive rights, out of
its authorized but unissued stock, for the purpose of
effecting the conversion of the PIK Preferred Stock, such
number of its duly authorized Common Stock as shall from
time to time be sufficient to effect the conversion of
all outstanding PIK Preferred Stock.
9. Limitation and Rights Upon Insolvency.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock at a time when immediately after
making such payment the Company is or would be rendered
insolvent (as defined by applicable law), provided that
the obligation of the Company to make any such payment
shall not be extinguished in the event the foregoing
limitation applies.
10. Limitations under the Financing.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock if upon, or after, making such
payment the Company would, or with the passage of time,
or the giving of notice, or both, would be in default
under the terms of the Financing, provided that the
obligation of the Company to make any such payment shall
not be extinguished in the event the foregoing limitation
applies.
11. Shares to Be Retired. Any share of PIK
Preferred Stock converted, redeemed or otherwise acquired
by the Company shall be retired and cancelled and shall
upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to
reissuance by the Board of Directors as PIK Preferred
Stock or shares of preferred stock of one or more other
series.
12. Record Holders. The Company and the
Company's transfer agent may deem and treat the record
holder of any shares of PIK Preferred Stock as the true
and lawful owner thereof for all purposes, and neither
the Company nor the Company's transfer agent shall be
affected by any notice to the contrary.
13. Notice. Except as may otherwise be
provided for herein, all notices referred to herein shall
be in writing, and all notices hereunder shall be deemed
to have been given upon, the earlier of receipt of such
notice or three Business Days after the mailing of such
notice if sent by registered mail (unless first-class
mail shall be specifically permitted for such notice
under the terms of this Certificate of Designations) with
postage prepaid, addressed: if to the Company, to its
offices at 200 South Lamar Street, Security Centre, South
Building, Jackson, Mississippi 39201 (Attention:
General Counsel) or to an agent of the Company designated
as permitted by the Certificate of Incorporation or, if
to any holder of the PIK Preferred Stock, to such holder
at the address of such holder of the PIK Preferred Stock
as listed in the stock record books of the Company (which
may include the records of the Company's transfer agent);
or to such other address as the Company or holder, as the
case may be, shall have designated by notice similarly
given.
IN WITNESS WHEREOF, this Corrected Certificate
of Rights and Preferences has been duly executed this 7th
day of May, 1996.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh, III
_________________________
John E. Welsh, III
Vice Chairman and Chief
Financial Officer
RIGHTS AND PREFERENCES
OF THE
Series C
7.5% CUMULATIVE CONVERTIBLE
ACCRUING PAY-IN-KIND PREFERRED STOCK
OF
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
___________________________________________
Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware
___________________________________________
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
(the "Company"), a company organized and existing under
and by virtue of the provisions of the General
Corporation Law as of the State of Delaware (the "DGCL"),
certifies as follows:
FIRST: The Company was incorporated in the
State of Delaware on October 21, 1988;
SECOND: The Certificate of Incorporation of
the Company authorizes the issuance of 25,000,000 shares
of Preferred Stock, par value $.01 per share and,
further, authorizes the Board of Directors of the Company
(the "Board of Directors"), by resolution or resolutions,
at any time and from time to time, to divide and
establish any or all of the unissued shares of Preferred
Stock into one or more classes or series, and without
limiting the generality of the foregoing, to fix and
determine the designation of each such class or series,
the number of shares which shall constitute such class or
series and certain relative rights and preferences of the
shares of each class or series so established.
THIRD: The Board of Directors of the Company
pursuant to authority conferred upon the Board of
Directors under the Restated Certificate of Incorporation
(the "Certificate of Incorporation") filed with the
Secretary of State of Delaware on December 27, 1988 and
at a meeting that was duly called on March 27, 1996, at
which a quorum was present and acting throughout, did
duly adopt the following resolutions authorizing the
issuance of one or more series of the Company's Preferred
Stock, par value $.01 per share, and setting forth the
terms and provisions of said Preferred Stock:
RESOLVED, that the Board of Directors, pursuant
to authority vested in it by the provisions of
the Certificate of Incorporation, hereby
authorizes the creation and issuance of one or
more series of the Company's Preferred Stock,
par value $.01 per share, which shall in the
aggregate consist of up to 130,000 shares of
the 25,000,000 shares of Preferred Stock that
the Company now has authority to issue, and
hereby fixes the powers, designation, dividend
rate, redemption provisions, voting powers,
rights on liquidation or dissolution, and other
preferences and relative participating,
optional or other rights, and the
qualifications, limitations or restrictions
thereof (in addition to those set forth in said
Certificate of Incorporation) as follows:
1. Designation. The Preferred Stock of the
Company created and authorized for issuance hereby shall
be designated as "Series C 7.5% Cumulative Convertible
Accruing Pay-In-Kind Preferred Stock" (the "Series C PIK
Preferred Stock," together with all other series of the
Company's 7.5% Cumulative Convertible Accruing Pay-In-
Kind Preferred Stock, hereinafter the "PIK Preferred
Stock"). The Series C PIK Preferred Stock together with
all other series of the PIK Preferred Stock will, in the
aggregate, consist of 130,000 shares of such PIK
Preferred Stock.
2. Priority. The Series C PIK Preferred Stock
shall, with respect to dividend rights and rights on
liquidation, winding up or dissolution, whether voluntary
or involuntary, whether now or hereafter issued, rank (i)
on parity with any other series of PIK Preferred Stock
and any other series of Preferred Stock established
hereafter by the Board of Directors, the terms of which
shall specifically provide that such series shall rank on
parity with the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution, (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks on parity are at all
times collectively referred to as "Parity Securities")
(ii) junior to the Company's $2.25 Cumulative Convertible
Exchangeable Preferred Stock (the "Exchangeable Preferred
Stock") and any other series of Preferred Stock
established by the Board of Directors, the terms of which
shall specifically provide that such series shall rank
senior to the PIK Preferred Stock with respect to
dividend rights and rights on liquidation, winding up or
dissolution (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks junior, including the
Exchangeable Preferred Stock, are at times collectively
referred to herein as the "Senior Securities"), and (iii)
senior to the Company's Series C Junior Participating
Preferred Stock, $.01 par value per share (the "Series C
Preferred Stock"), the Company's Common Stock, $.01 par
value per share (the "Common Stock"), and, subject to
clauses (i) and (ii) hereof, any other equity securities
of the Company, with respect to dividend rights and
rights on liquidation, winding up or dissolution (all of
such equity securities of the Company to which the PIK
Preferred Stock ranks senior, including the Series C
Preferred Stock and the Common Stock, are at times
collectively referred to herein as the "Junior
Securities"). Notwithstanding the foregoing, the Company
shall not establish, create, authorize or issue any
shares of Parity Securities (other than additional series
of PIK Preferred Stock) or Senior Securities nor issue
any subordinated debt (other than in connection with any
refinancing, exchange or similar transaction with respect
to the existing Senior Notes (as defined herein)) without
the prior written consent of a majority of the holders of
the PIK Preferred Stock.
3. Dividends. (i) Holders of shares of PIK
Preferred Stock shall be entitled to receive out of funds
legally available for the payment of dividends ("Legally
Available Funds"), cumulative dividends for each share of
PIK Preferred Stock in an amount equal to the annual rate
of 7.5% (or $75 per share per year) accruable quarterly
on June 15, September 15, December 15 and March 15 (or at
such additional times and for such interim periods, if
any, as determined by the Board of Directors) (each of
such dates being a "Dividend Accrual Date"), except that
if such date is a Saturday, Sunday or legal holiday then
such dividend shall be accruable on the next date that is
not a Saturday, Sunday or legal holiday or which banks in
the State of New York are permitted to be closed (a
"Business Day"). Each of such quarterly dividends
accruals shall be fully cumulative and shall accrue
(whether or not declared), on a daily basis from the
first day of the quarterly period in which such dividend
may be accruable as provided herein, provided, however,
that with respect to the first dividend accrual date
following the issuance of shares of PIK Preferred Stock,
such dividend shall accrue from the Issuance Date. All
accrued but unpaid dividends shall be compounded
quarterly at a rate equal to an annual rate of 7.5%. The
Board of Directors shall declare and pay such accrued
dividends at such time and to the extent permitted by law
and the Financing (as hereinafter defined), subject to
the provisions of paragraph 3(iii) below. During the
period commencing on May 7, 1996 (the "Issuance Date")
and ending on the fifth anniversary of the Issuance Date,
or such longer period as shall be necessary to comply
with the terms of the Financing (as defined below),
dividends may, at the Company's option, be paid in shares
of Series C PIK Preferred Stock. No fractional shares of
PIK Preferred Stock shall be issued, so that the number
of shares to be paid as a dividend pursuant to this
paragraph shall be rounded to the nearest whole number of
shares. Such dividends shall be paid to the holders of
record at the close of business on the date specified by
the Board of Directors of the Company at the time such
dividend is declared; provided, however, that such
declaration date shall not be more than 60 days nor less
than 10 days prior to the respective Dividend Payment
Date.
For the purposes of this Certificate of
Designation the "Financing" shall mean (i) the Credit,
Security, Guaranty and Pledge Agreement, dated as of
December 21, 1995 among Skytel Corp., the Company and
certain subsidiaries thereof, certain lenders, Chemical
Bank, Credit Lyonnais New York Branch, and J.P. Morgan
Securities Inc. as amended, and (ii) the Company's 131/2%
Senior Notes due 2002 (the "Senior Notes").
(ii) All dividends paid with respect to
shares of the PIK Preferred Stock pursuant to section
3(i) shall be paid pro rata to the holders entitled
thereto. All dividends paid in additional shares of PIK
Preferred Stock shall be deemed issued on the applicable
Dividend Payment Date, and will thereupon be duly
authorized, validly issued, fully paid and nonassessable
and free and clear of all liens and charges.
(iii) Notwithstanding anything contained
herein to the contrary, no cash dividends on shares of
PIK Preferred Stock shall be declared by the Board of
Directors or paid or set apart for payment by the Company
at such time as the terms and provisions of the Financing
specifically prohibit such declaration, payment or
setting apart for payment or provide that such
declaration, payment or setting apart for payment would
(or, with notice or lapse of time or both, would)
constitute a breach thereof or a default thereunder.
(iv) If at any time the Company shall
have failed to pay all dividends which have accrued on
any outstanding shares of Senior Securities or any Parity
Securities at the times such dividends are payable,
unless otherwise provided in the terms of the Senior
Securities or the Parity Securities, no cash or stock
dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Company on shares of
PIK Preferred Stock unless prior to or concurrently with
such declaration, payment or setting apart for payment,
all accrued and unpaid dividends on all outstanding
shares of such Senior Securities and Parity Securities
shall have been declared, paid or set apart for payment,
without interest; provided, however, that in the event
such failure to pay accrued dividends is with respect
only to the outstanding shares of PIK Preferred Stock and
any outstanding shares of any Parity Securities, cash or
stock dividends may be declared, paid or set apart for
payment, without interest, pro rata on shares of PIK
Preferred Stock and shares of such other series of
Preferred Stock so that the amounts of any dividends
declared, paid or set apart for payment (whether in cash
or additional securities) on shares of PIK Preferred
Stock and shares of such other series of Preferred Stock
shall in all cases bear to each other the same ratio
that, at the time of such declaration, payment or setting
apart for payment, the amounts of all accrued but unpaid
dividends on shares of the PIK Preferred Stock and shares
of Parity Securities bear to each other. Any dividend
not paid pursuant to section 3(i) hereof or this section
3(iv) shall be fully cumulative and shall accrue (whether
or not declared), without interest, as set forth in
section 3(i) hereof, even if such dividend is not paid
pursuant to section 3(iii).
(v) (a) Holders of shares of PIK
Preferred Stock shall be entitled to receive the
dividends provided for in section 3(i) hereof in
preference to and in priority over any dividends upon any
of the Junior Securities.
(b) So long as any shares of PIK
Preferred Stock are outstanding, the Company shall not
declare, pay or set apart for payment any dividend on any
of the Junior Securities or make any payment on account
of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption, retirement or
other acquisition of, or otherwise acquire for value, any
of the Junior Securities or any warrants, rights, calls
or options exercisable for any of the Junior Securities,
or make any distribution in respect thereof, either
directly or indirectly, whether in cash, obligations or
shares of the Company or other property (other than
distributions or dividends payable solely in the same
Junior Securities to the holders of such stock), and
shall not permit any company or other entity directly or
indirectly controlled by the Company to purchase or
redeem any of the Junior Securities or any warrants,
rights, calls or options exercisable for any of the
Junior Securities, unless prior to or concurrently with
such declaration, payment, setting apart for payment,
purchase or distribution, as the case may be, all accrued
and unpaid dividends, if any, on shares of PIK Preferred
Stock not paid on the dates provided for in section 3(i)
hereof (including if not paid pursuant to the terms and
conditions of section 3(iii) or section 3(iv) hereof)
shall have been paid.
(c) Subject to the foregoing
provisions of this section 3, the Board of Directors may
declare and the Company may pay or set apart for payment
dividends and other distributions on any of the Junior
Securities, and may purchase or otherwise redeem any of
the Junior Securities or any warrants, rights or options
exercisable for any of the Junior Securities, and the
holders of the shares of PIK Preferred Stock shall not be
entitled to share therein.
4. Liquidation Preference. (i) In the event
of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, the holders
of shares of PIK Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company
available for distribution to its stockholders an amount
in cash equal to $1,000 for each share outstanding, plus
an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation,
before any payment shall be made or any assets
distributed to the holders of any of the Junior
Securities; provided, however, that the holders of
outstanding shares of PIK Preferred Stock shall not be
entitled to receive such liquidation payment until the
liquidation payments on all outstanding shares of Senior
Securities shall have been paid in full. No full
preferential payment on account of any liquidation,
dissolution or winding up of the Company, whether
voluntary or involuntary, shall be made to the holders of
any class of Parity Securities unless there shall
likewise be paid at the same time to holders of PIK
Preferred Stock the full amounts to which such holders
are entitled with respect to such distribution. If the
assets of the Company are not sufficient to pay in full
the liquidation payments payable to the holders of
outstanding shares of PIK Preferred Stock and outstanding
shares of Parity Securities, then the holders of all such
shares shall share ratably in such distribution of assets
in accordance with the full respective preferential
amounts that would be payable on such shares of PIK
Preferred Stock and such shares of Parity Securities if
all amounts payable thereon were paid in full.
(ii) For the purposes of this section 4,
(x) the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Company or (y) the
consolidation or merger of the Company with one or more
other companies or entities shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary.
5. Redemption.
(a) Mandatory Redemptions. To the extent
permitted by law and the Financing, as mandatory
redemptions for the retirement of the shares of PIK
Preferred Stock, the Company shall redeem, out of Legally
Available Funds (if such shares remain outstanding) on
each of the seventh, eighth and ninth anniversaries of
the Issuance Date (each a "Mandatory Redemption Date"),
twenty-five percent (25%) of the shares of PIK Preferred
Stock initially issued and then outstanding, in each case
at the redemption price of $1,000 for each share
outstanding, plus an amount in cash equal to all accrued
but unpaid dividends to the Mandatory Redemption Date.
Immediately prior to authorizing or making such
redemption with respect to the PIK Preferred Stock, the
Company, by resolution of its Board of Directors shall,
to the extent of any Legally Available Funds, declare a
dividend on the PIK Preferred Stock payable on the
Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the PIK Preferred Stock
as of such date and, if the Company does not have
sufficient Legally Available Funds to declare and pay all
dividends accrued at the time of such redemption, any
remaining accrued and unpaid dividends shall be added to
the redemption price. If the Company shall fail to
discharge its obligation to redeem the aforementioned
outstanding shares of PIK Preferred Stock required to be
redeemed pursuant to this section 5(a) (the "Mandatory
Redemption Obligation"), the Mandatory Redemption
Obligation shall be discharged as soon as the Company is
able to discharge such Mandatory Redemption Obligation.
If and so long as the Mandatory Redemption Obligation
shall not be fully discharged, (i) dividends on such PIK
Preferred Stock shall continue to accrue and be added to
the dividend payable pursuant to the second preceding
sentence and (ii) the Company shall not declare or pay
any dividend or make any distribution on its securities
not otherwise permitted by this certificate. If on any
Mandatory Redemption Date less than 18,750 shares of PIK
Preferred Stock remain outstanding, the Mandatory
Redemption Obligation shall apply only to such lesser
number of shares of PIK Preferred Stock then outstanding,
and such obligation shall be discharged when such lesser
number of shares is redeemed in accordance with this
section 5(a).
(b) Final Mandatory Redemption. (i) To
the extent permitted by law and the Financing, as a final
mandatory redemption for the retirement of the shares of
PIK Preferred Stock, the Company shall redeem, out of
Legally Available Funds (if such shares remain
outstanding) on April 1, 2006 (the "Final Mandatory
Redemption Date"), all remaining shares of PIK Preferred
Stock then outstanding, at the redemption price of $1,000
for each share outstanding, plus an amount in cash equal
to all accrued but unpaid dividends thereon to the Final
Mandatory Redemption Date. Immediately prior to
authorizing or making such redemption with respect to the
PIK Preferred Stock, the Company, by resolution of its
Board of Directors shall, to the extent of any Legally
Available Funds, declare a dividend on the PIK Preferred
Stock payable on the Final Mandatory Redemption Date in
an amount equal to any accrued and unpaid dividends on
the PIK Preferred Stock as of such date and, if the
Company does not have sufficient Legally Available Funds
to declare and pay all dividends accrued at the time of
such redemption, any remaining accrued and unpaid
dividends shall be added to the redemption price. If the
Company shall fail to discharge its obligation to redeem
all of the outstanding shares of PIK Preferred Stock
required to be redeemed pursuant to this section 5(b)
(the "Final Mandatory Redemption Obligation"), the Final
Mandatory Redemption Obligation shall be discharged as
soon as the Company is able to discharge such Final
Mandatory Redemption Obligation. If and so long as the
Final Mandatory Redemption Obligation shall not be fully
discharged, (x) dividends on the PIK Preferred Stock
shall continue to accrue and be added to the dividend
payable pursuant to the second preceding sentence and (y)
the Company shall not declare or pay any dividend or make
any distribution on its securities not otherwise
permitted by this certificate.
(ii) The Company may, at it option, make any
mandatory redemption payment required pursuant to clauses
(a) and (b)(i) of this Section 5 in shares of Common
Stock in lieu of cash. In the event that the Company
elects to make any such payment in Common Stock, on the
Redemption Date, in lieu of cash, each holder shall
receive that number of shares (rounded to the nearest
whole share) of Common Stock determined by dividing (i)
the aggregate amount of cash that such holder would
otherwise have received (including with respect to
accrued and unpaid dividends) pursuant to such redemption
by (ii) the average Closing Price of the Common Stock for
the twenty consecutive Trading Days immediately preceding
the Mandatory Redemption Date or the Final Redemption
Date, as the case may be.
(c) Optional Redemption. To the extent
permitted by law and the Financing, the PIK Preferred
Stock shall be redeemable at any time, or from time to
time, in whole or in part, out of Legally Available
Funds, at the option of the Company, on any date after
(i) the second anniversary of the Issuance Date (a
"Regular Optional Redemption Date") or (ii) the first
anniversary of, but prior to the second anniversary of,
the Issuance Date (an "Accelerated Optional Redemption
Date", and together with a Regular Optional Redemption
Date, an "Optional Redemption Date"); provided, however,
that no redemption shall be made under clause (ii) unless
the average Closing Price (as defined in section 8) of
the Common Stock for any period of twenty consecutive
Trading Days (as defined in section 6), prior to any such
redemption, equals or exceeds 175% of the Conversion
Price (as determined in accordance with section 8).
Optional redemptions shall be made, upon giving notice as
provided in clause (d) below, at the redemption price of
$1,000 for each share outstanding, plus an amount in cash
equal to all accrued but unpaid dividends thereon to the
Optional Redemption Date. Immediately prior to
authorizing or making any such redemption with respect to
the PIK Preferred Stock, and as a condition precedent to
the Company so redeeming at its option, in whole or in
part, shares of the PIK Preferred Stock, the Company, by
resolution of its Board of Directors shall, to the extent
of any Legally Available Funds, declare a dividend on the
PIK Preferred Stock payable on the Optional Redemption
Date in an amount equal to any accrued and unpaid
dividends on the PIK Preferred Stock as of such date and
if the Company does not have sufficient Legally Available
Funds to declare and pay all dividends accrued to the
Optional Redemption Date, any remaining accrued and
unpaid dividends shall be added to the redemption price.
(d) Notice of Redemption. For the
purposes of this section 5(d), a Mandatory Redemption
Date, a Final Mandatory Redemption Date, a Regular
Optional Redemption Date and an Accelerated Optional
Redemption Date are hereinafter collectively referred to
as a "Redemption Date"). In the event the Company shall
redeem shares of PIK Preferred Stock pursuant to any of
clauses (a), (b) or (c) above, a notice of such
redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 60 days
prior to the Redemption Date, to each holder of record of
the shares to be redeemed, at such holder's address as
the same appears on the stock books of the Company's
transfer agent. Each such notice shall state: (i) the
Redemption Date; (ii) the number of shares of PIK
Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (iii) the
redemption price and the form in which such redemption
price will be paid (cash or shares of Common Stock); (iv)
the place or places where certificates for such shares
are to be surrendered for payment of the redemption
price; (v) that payment will be made upon presentation
and surrender of such PIK Preferred Stock; (vi) the then
current Conversion Price; (vii) that dividends on the
shares to be redeemed shall cease to accrue following
such Redemption Date; (viii) that such redemption is at
the option of the Company or that such redemption is a
mandatory redemption or a final redemption; and (ix) that
accrued and unpaid dividends up to and including the
Redemption Date will be paid in accordance with the terms
herein. Notice having been mailed as aforesaid, on and
after the Redemption Date, unless the Company shall be in
default in providing money for the payment of the
redemption price (including an amount equal to any
accrued and unpaid dividends up to and including the
Redemption Date), (x) dividends on the shares of the PIK
Preferred Stock so called for redemption shall cease to
accrue, (y) said shares shall be deemed no longer
outstanding, and (z) all rights of the holders thereof as
stockholders of the Company (except the right to receive
from the Company the monies payable upon redemption,
without interest thereon, upon surrender of the
certificates evidencing such shares) shall cease. The
Company's obligation to provide monies in accordance with
the preceding sentence shall be deemed fulfilled if, on
or before the Redemption Date, the Company shall deposit
with a bank or trust company having an office or agency
in the Borough of Manhattan, City of New York, and having
a capital and surplus of at least $500,000,000, the
principal amount of funds necessary for such redemption,
in trust for the account of the holders of the shares to
be redeemed (and so as to be and continue to be available
therefor), with irrevocable instructions and authority to
such bank or trust company that such funds be applied to
the redemption of the shares of PIK Preferred Stock so
called for redemption. Any interest accrued on such
funds shall be paid to the Company from time to time.
Any funds so deposited and unclaimed at the end of three
years from such Redemption Date shall be released or
repaid to the Company, after which, subject to any
applicable laws relating to escheat or unclaimed
property, the holder or holders of such shares of PIK
Preferred Stock so called for redemption shall look only
to the Company for payment of the redemption price.
Upon surrender in accordance with said
notice of the certificates for any such shares so
redeemed (properly endorsed or assigned for transfer, if
the Board of Directors shall so require and the notice
shall so state), such shares shall be redeemed by the
Company at the applicable redemption price aforesaid. If
fewer than all the outstanding shares of PIK Preferred
Stock are to be redeemed, shares to be redeemed shall be
selected by the Company from outstanding shares of PIK
Preferred Stock not previously called for redemption by
lot or pro rata or by any other equitable method
determined by the Board of Directors in its sole
discretion. If fewer than all the shares represented by
any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to
the holder thereof. In the event that the Company elects
to make any Mandatory Redemption or the Final Redemption
in shares at Common Stock, upon such surrender,
accompanied by written instructions to the Company
specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares rounded to the nearest whole
number issuable upon the redemption thereof as of the
time of such surrender and as promptly as practicable
thereafter will deliver certificates for such shares of
Common Stock. No fractional shares will be issued
pursuant to this Section 5. The Company, to the extent
required, shall authorize, free of preemptive rights,
such number of duly authorized shares of Common Stock as
shall be required to effect the redemption.
Notwithstanding the foregoing, if the Company's
notice of redemption has been given pursuant to this
Section 5 and any holder of shares of PIK Preferred Stock
shall, prior to the close of business on the third
Business Day preceding the Redemption Date, give written
notice to the Company pursuant to this Section 5(d)
hereof of the conversion of any or all of the shares to
be redeemed held by such holder (accompanied by a
certificate or certificates for such shares, duly
endorsed or assigned to the Company), then the conversion
of such shares to be redeemed shall become effective as
provided in Section 8. In the event that such redemption
was pursuant to a Mandatory Redemption, any shares so
converted shall, at the option of the Company, be counted
as shares required to be redeemed pursuant to such
Mandatory Redemption.
(e) The election by the Company to redeem
shares of PIK Preferred Stock pursuant to this Section 5
hereof shall become irrevocable only on the relevant
Optional Redemption Date.
6. Redemption Upon a Change of Control. (a)
Upon the occurrence of a Change of Control (as defined
below), the Company shall make an offer (the "Change of
Control Offer") to each holder of PIK Preferred Stock to
repurchase all or any part of such holder's PIK Preferred
Stock at a purchase price equal to $1,000 per share, plus
an amount equal to accrued and unpaid dividends to the
date of redemption (the "Change of Control Redemption
Date"); provided, however, that no Change of Control
Offer shall be made, pursuant to this section 6, until
such time as an offer to repurchase the Senior Notes upon
a "Change of Control" (as defined therein) on the terms
and conditions set forth in such Senior Notes and in the
indenture pursuant to which they were issued (the
"Indenture") shall have been made to the holders of the
Senior Notes, and such offer shall have been completed
and payment in full to the holders of such Senior Notes
shall have been paid, in accordance with the terms of the
Senior Notes and the Indenture. No additional dividends
shall be accrued or be paid after the Change of Control
Redemption Date on shares of PIK Preferred Stock tendered
and redeemed pursuant to the Change of Control Offer.
Within thirty (30) days following a Change of Control,
the Company shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 6 and that all shares of PIK
Preferred Stock tendered will be accepted for payment;
(2) the purchase price and the Change of Control
Redemption Date, which shall be no earlier than 30 days
nor later than 40 days from the date such notice is
mailed; (3) that any shares of PIK Preferred Stock not
tendered will continue to accrue dividends in accordance
with the terms of Section 3; (4) that, unless the Company
defaults in the payment of the redemption price, all
shares of PIK Preferred Stock redeemed pursuant to the
Change of Control Offer shall cease to accrue dividends
after the Change of Control Redemption Date; (5) that
holders electing to have any shares of PIK Preferred
Stock redeemed pursuant to the Change of Control Offer
will be required to surrender the certificates
representing such shares; (6) that holders will be
entitled to withdraw their election if the Company's
transfer agent receives, not later than the close of
business on the second Business Day preceding the Change
of Control Redemption Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
holder, the number of shares delivered for redemption,
and a statement that such holder is withdrawing his
election to have such shares redeemed; and (7) that
holders whose shares are being redeemed only in part will
be issued new certificates representing shares not
redeemed by the Company.
(b) On the Change of Control Redemption
Date, the Company shall, to the extent lawful, (i) accept
for redemption shares tendered pursuant to the Change of
Control Offer, (ii) deposit with a bank or trust company
having an office or agency in the Borough of Manhattan,
City of New York, and having a capital and surplus of at
least $500,000,000, an amount equal to the purchase price
in respect of all shares so tendered, in trust for the
account of the holders of the shares to be redeemed (and
so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or
trust company that such funds be applied to the
redemption of the shares of PIK Preferred Stock tendered
pursuant to the Change of Control Offer. The Company's
transfer agent shall promptly mail to each holder a
certificate representing shares surrendered but not
tendered and not redeemed in accordance with such
holder's instructions, if any.
(c) The redemption option of the holder
of PIK Preferred Stock upon a Change of Control pursuant
to this Section 6 may constitute an "issuer tender offer"
as defined in Rule 13e-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in such
event such transaction may be subject to the requirements
of Rule 13e-4, including the filing of an Issuer Tender
Offer Statement on Schedule 13E-4 with the Securities and
Exchange Commission and the furnishing of certain
information contained therein to such holder. If such a
Change of Control occurs, (i) the Company will comply
with all appropriate rules and regulations applicable to
"issuer tender offers" at such time and (ii) each holder
of PIK Preferred Stock will be entitled to withdraw the
notice of redemption given hereunder throughout the
"issuer tender offer." Upon the expiration date of the
"issuer tender offer," such notice shall be irrevocable
and shall terminate all conversion rights with respect to
the PIK Preferred Stock to be redeemed under this Section
6. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection
with the redemption of shares in connection with a Change
of Control.
(d) "Change of Control" means the occurrence of any
of the following events:
(i) any Person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the total Voting Stock or Total Common
Equity of the Company; provided, that no Change of
Control will be deemed to occur pursuant to this clause
(a) if (x) the Person is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
Person is a corporation (1) that is not, and does not
have any outstanding debt securities that are, rated by
S&P, Moody's or any other rating agency of national
standing at any time during a period of 90 consecutive
days beginning on the date of such event (which period
will be extended up to an additional 90 days for as long
as any such rating agency has publicly announced that
such corporation or debt thereof will be rated), unless
after such date but during such period debt securities of
such corporation having a maturity at original issuance
of at least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of Common Stock of such Person will
be deemed to equal the Closing Price of such Common Stock
on such later Trading Day, subject to the last sentence
of the definition of "Total Common Equity");
(ii) the Company consolidates with, or
merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all
or substantially all of its assets to any Person, or any
Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into
or exchanged for (1) Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person
or (2) cash, securities and other property in an amount
which could be paid by the Company as a Restricted
Payment (as such term is defined in Section 4.07 of the
Indenture) and (ii) immediately after such transaction no
Person (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), is the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock
or Total Common Equity of the surviving or transferee
Person; provided, that no Change of Control will be
deemed to occur pursuant to this clause (d) if (x) the
surviving or transferee Person or the Person referred to
in clause (d)(ii)(2) is a corporation with outstanding
debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at
least 90 consecutive days, beginning on the date of such
event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is
under publicly announced consideration for possible
downgrading by the applicable rating agency), or (y) the
surviving or transferee Person or such other Person is a
corporation (1) that is not, and does not have any
outstanding debt securities that are, rated by S&P,
Moody's or any other rating agency of national standing
at any time during a period of 90 consecutive days
beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any
such rating agency has publicly announced that such
corporation or debt thereof will be rated), unless after
such date but during such period debt securities of such
corporation having a maturity at original issuance of at
least one year are rated Investment Grade by S&P or
Moody's and remain so rated for the remainder of the
period referred to in clause (x) above and (2) that, when
determined as of the Trading Day immediately before and
the Trading Day immediately after the date of such event,
has Total Common Equity of at least $5.0 billion
(provided that, solely for the purpose of calculating
Total Common Equity as of such later Trading Day, the
average Closing Price of the Common Stock of such Person
will be deemed to equal the Closing Price of such Common
Stock on such later Trading Day, subject to the last
sentence of the definition of "Total Common Equity"); or
(iii) during any consecutive two-year
period, individuals who at the beginning of such period
constituted the Board of Directors of the Company
(together with any directors who are members of the Board
of Directors on the date hereof and any new directors
whose election by such Board of Directors or whose
nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the
directors then still in office who were either directors
at the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors of the Company then in office.
Any event that would constitute a Change of
Control pursuant to clause (i) or (ii) above but for the
proviso thereto will not be deemed to be a Change of
Control until such time (if any) as the conditions
described in such proviso cease to have been met.
(e) For the purposes of this Section 6 the
following terms are defined as follows:
(i) "Beneficial Owner" means a beneficial
owner as defined in Rules 13d-3 and 13d-5 under the
Exchange Act (or any successor rules), including the
provision of such rules that a Person shall be deemed to
have beneficial ownership of all securities that such
Person has a right to acquire within 60 days of the date
of determination of beneficial ownership of such
security; provided that a Person will not be deemed a
beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and (2) is not also
then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
(ii) "Business Day" means any day other than a
Saturday, a Sunday or a day on which banking institutions
in the City of New York or at a place of payment are
authorized by law, regulation or executive order to
remain closed.
(iii) "Capital Stock" means (i) in the case of
a corporation, corporate stock, (ii) in the case of an
association or other business entity, any and all shares,
interests, participations, rights or other equivalents
(however designated) of corporate stock and (iii) in the
case of a partnership, partnership interests (whether
general or limited) and any other interest or
participation that confers on a Person the right to
receive a share of the profits and losses of, or
distributions of assets of, such partnership.
(iv) "Common Stock" of any Person means
Capital Stock of such Person that does not rank prior, as
to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
(v) "Closing Price" on any Trading Day with
respect to the per share price of any shares of Capital
Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock
Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the
principal national securities exchange on which such
shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq but the
issuer is a Foreign Issuer (as defined in Rule 3b-4(b)
under the Exchange Act) and the principal securities
exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as
defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices
regular way on such principal exchange, or, if such
shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq and the
issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm that is selected from
time to time by the Company for that purpose, or if no
such bid and asked prices can be obtained from any such
firm, the fair market value of such Capital Stock on such
day as determined in good faith by the Board of
Directors.
(vi) "Disqualified Stock" means any Capital
Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on
or prior to the maturity date of the Senior Notes,
provided, however, that any Capital Stock which would not
constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require the Company
to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the
Final Mandatory Redemption Date shall not constitute
Disqualified Stock if the change in control provisions
applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions
applicable to the Senior Notes and such Capital Stock
specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such
Senior Notes as are required to be repurchased pursuant
to the terms of Section 4.16 of the Indenture.
(vii) "Investment Grade" means a rating of at
least BBB-, in the case of S&P, or Baa3, in the case of
Moody's.
(viii) "Person" means any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any
such entity or substantially all of the assets of any
such entity, subdivision or business).
(ix) "Total Common Equity" of any Person
means, as of any date of determination (and as modified
for purposes of the definition of "Change of Control"),
the product of (i) the aggregate number of outstanding
primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or
securities convertible or exchangeable into, shares of
Common Stock of such Person) and (ii) the average Closing
Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause
(ii) of the preceding sentence shall be determined by the
Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors.
(x) "Trading Day," with respect to a
securities exchange or automated quotation system, means
a day on which such exchange or system is open for a full
day of trading.
(xi) "Voting Stock" of any Person means
Capital Stock of such Person which ordinarily has voting
power for the election of directors (or Persons
performing similar functions) of such Person, whether at
all times or only so long as no senior class of
securities has such voting power by reason of any
contingency.
7. Voting Rights. (a) Except as herein
provided or as otherwise required by law, holders of PIK
Preferred Stock shall have no voting rights. Whenever,
at any time or times, dividends payable on the shares of
Exchangeable Preferred Stock at the time outstanding
shall be cumulatively in arrears for two consecutive
quarterly dividend periods, the holders of all shares of
PIK Preferred Stock and any shares of Parity Securities
upon which like voting rights have been conferred and are
exercisable (the PIK Preferred Stock and any such Parity
Securities, collectively for purposes of this Section 7,
the "Defaulted Preferred Stock"), shall be entitled to
elect one director of the Company at the Company's next
annual meeting of stockholders and at each subsequent
annual meeting of stockholders; and if such dividends on
the Exchangeable Preferred Stock shall continue in
arrears for four consecutive quarterly dividend periods,
such holders of Defaulted Preferred Stock shall be
entitled thereafter to elect one additional director of
the Company at such next annual meeting and at each
subsequent annual meeting; provided, however, the shares
of Defaulted Preferred Stock shall be entitled to
exercise their voting rights at a special meeting of the
holders of shares of Defaulted Preferred Stock as set
forth in paragraphs (b) and (c) of this Section 7. At
elections for such directors, each holder of PIK
Preferred Stock shall be entitled to one vote for each
share held (the holders of shares of any other series of
Defaulted Preferred Stock ranking on such a parity being
entitled to such number of votes, if any, for each share
of stock held as may be granted to them). Upon the
vesting of such right of the holders of Defaulted
Preferred Stock, the maximum authorized number of members
of the Board of Directors shall automatically be
increased by one or two, as the case may be, and the
vacancies so created shall be filled by vote of the
holders of outstanding Defaulted Preferred Stock as
hereinafter set forth. The right of holders of Defaulted
Preferred Stock, voting separately as a class without
regard to series, to elect members of the Board of
Directors as aforesaid shall continue until such time as
all dividends accumulated and unpaid on the Exchangeable
Preferred Stock shall have been paid or declared and
funds set aside for payment in full, at which time such
right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of
each and every subsequent default of the character above
mentioned.
(b) Whenever such voting right shall have
vested, such right may be exercised initially either at a
special meeting of the holders of shares of Defaulted
Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of
electing directors, and thereafter at such meeting or by
the written consent of such holders pursuant to Section
228 of the DGCL.
(c) At any time when such voting right
shall have vested in the holders of shares of Defaulted
Preferred Stock entitled to vote thereon, and if such
right shall not already have been initially exercised, an
officer of the Company shall, upon the written request of
10% of the holders of record of shares of such Defaulted
Preferred Stock then outstanding, addressed to the
Secretary of the Company, call a special meeting of
holders of shares of such Defaulted Preferred Stock.
Such meeting shall be held at the earliest practicable
date upon the notice required for special meetings of
stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place
designated by the Secretary of the Company. If such
meeting shall not be called by the proper officers of the
Company within 30 days after the personal service of such
written request upon the Secretary of the Company, or
within 30 days after mailing the same within the United
States, by registered mail, addressed to the Secretary of
the Company at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal
authorities), then holders of record of 10% of the shares
of Defaulted Preferred Stock then outstanding may
designate in writing any person to call such meeting at
the expense of the Company, and such meeting may be
called by such person so designated upon the notice
required for special meetings of stockholders and shall
be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted
Preferred Stock then outstanding that would be entitled
to vote at such meeting shall have access to the stock
books of the Company's transfer agent for the purpose of
causing a meeting of stockholders to be called pursuant
to the provisions of this paragraph. Notwithstanding the
provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45
days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) Subject to the provisions hereof, the
directors elected pursuant to this section shall serve
until the next annual meeting or until their respective
successors shall be elected and qualified. Any director
elected by the holders of Defaulted Preferred Stock may
be removed by, and shall not be removed otherwise than
by, the vote of the holders of a majority of the
outstanding shares of the Defaulted Preferred Stock who
were entitled to participate in such election of
directors, voting as a separate class, without regard to
series, at a meeting called for such purpose or by
written consent as permitted by law and the Certificate
of Incorporation and by-laws of the Company. If the
office of any director elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, becomes vacant by reason of death,
resignation, retirement, disqualification or removal from
office or otherwise, the remaining director elected by
the holders of Defaulted Preferred Stock, voting as a
class, without regard to series, may choose a successor
who shall hold office for the unexpired term in respect
of which such vacancy occurred. Upon any termination of
the right of the holders of Defaulted Preferred Stock to
vote for directors as herein provided, the term of office
of all directors then in office elected by the holders of
Defaulted Preferred Stock, voting as a class, without
regard to series, shall terminate immediately. Whenever
the terms of office of the directors elected by the
holders of Defaulted Preferred Stock, voting as a class,
without regard to series, shall so terminate and the
special voting powers vested in the holders of Defaulted
Preferred Stock shall have expired, the number of
directors shall be such number as may be provided for in
the Company's by-laws irrespective of any increase made
pursuant to the provisions of this Section 7.
8. Conversion Rights. (a) Each share of Series
C PIK Preferred Stock may be converted, at any time and
at the option of the holder, into 54.98 fully paid, non-
assessable shares of Common Stock of the Company on and
subject to the terms and conditions of this Section 8.
(b) The number of shares of Common Stock
issuable upon conversion of each share of the Series C
PIK Preferred Stock shall be determined by the Conversion
Price (as hereinafter defined) in effect on the date of
conversion (calculated as to each conversion to the
nearest 1/100th of a share). The Conversion Price shall
initially equal $18.19; provided, however, that such
Conversion Price shall be adjusted and readjusted from
time to time as provided in this Section 8 and, as so
adjusted and readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by
this Section 8.
(c) Except as may be provided by the
Board of Directors, upon conversion of the PIK Preferred
Stock, the Company is not obligated to make any payment
or adjustment with respect to dividends accrued on the
PIK Preferred Stock through the date of conversion unless
the holder of the shares of PIK Preferred Stock being
converted was the record holder of such shares on the
record date for the payment of such dividends.
(d) Upon surrender to the Company at the
office of the transfer agent or such other place or
places, if any, as the Board of Directors may determine,
of certificates duly endorsed to the Company or in blank
for shares of PIK Preferred Stock to be converted
together with appropriate evidence of the payment of any
transfer or similar tax, if required, and written
instructions to the Company requesting conversion of such
shares and specifying the name and address of the person,
corporation, firm or other entity to whom such shares of
Common Stock are to be issued, the Company shall issue
the number of full shares of Common Stock rounded to the
nearest whole number issuable upon conversion thereof as
of the time of such surrender and as promptly as
practicable thereafter will deliver certificates for such
shares of Common Stock. No fractional shares of Common
Stock shall be issued pursuant to this Section 8. Upon
surrender of a certificate representing shares of PIK
Preferred Stock to be converted in part, in addition to
the foregoing, the Company shall also issue to such
holder a new certificate representing any unconverted
shares of PIK Preferred Stock represented by the
certificate surrendered for conversion.
(e) The Company shall pay all
documentary, stamp, or similar issue or transfer tax due
on the issue of shares of Common Stock issuable upon
conversion of the PIK Preferred Stock; provided, however,
that the holder of shares of PIK Preferred Stock so
converted shall pay any such tax which is due because
such shares are to be issued in the name other than that
of such holder.
(f) The Conversion Price in effect at any
time shall be adjusted as follows:
(1) If the Company shall, at any
time or from time to time, effect a subdivision of
the outstanding Common Stock, the Conversion Price
in effect immediately before such subdivision shall
be proportionately decreased and, conversely, if the
Company shall, at any time or from time to time,
effect a combination of the outstanding Common
Stock, the Conversion Price in effect immediately
before such combination shall be proportionately
increased. Any adjustment under this subdivision
shall become effective at the close of business on
the record date fixed for the applicable subdivision
or combination.
(2) In the event the Company shall,
at any time or from time to time, make or issue to
all holders of shares of Common Stock (or fix a
record date for the determination of holders of
Common Stock entitled to receive), a dividend or
other distribution payable in shares of Common
Stock, then the Conversion Price then in effect
shall be decreased as of the time of such issuance
(or, in the event such a record date shall have been
fixed, as of the close of business on such record
date) in accordance with the following formula:
0
C1 = C X -------
0 + N
where:
C1 = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock
outstanding immediately prior to the
applicable issuance (or the close of
business on the record date).
N = the number of additional shares of
Common Stock issued in payment of
such dividend of distribution.
(3) In the event that the Company
shall issue or sell any shares of Common Stock prior
to the second anniversary of the date of issuance of
the PIK Preferred Stock pursuant to a transaction
exempt from the registration requirement of the
Securities Act of 1933, and 120% of the price at
which such shares of Common Stock were issued or
sold (the "Issue Price") is less than the Conversion
Price in effect immediately prior to such issuance
or sale, then the Conversion Price then in effect
shall be reduced to an amount equal to 120% of such
Issue Price.
(4) In the event that the Company
shall issue or sell any rights, warrants or options
prior to the second anniversary of the date of
issuance of the PIK Preferred Stock pursuant to a
transaction exempt from the registration requirement
of the Securities Act of 1933 to subscribe for or to
purchase Common Stock or other securities
convertible into or exercisable or exchangeable for
Common Stock with an exercise or conversion price
(the "Strike Price") which is less than the
Conversion Price in effect immediately prior to such
issuance or sale, then the Conversion Price then in
effect be reduced to the Strike Price.
(g) Anything herein to the contrary
notwithstanding, no adjustment will be made to the
Conversion Price by reason of (A) upon the issuance of
Common Stock, Options or Convertible Securities to
employees or directors of the Company pursuant to
employee benefit plans or otherwise, or the issuance of
Common Stock upon the conversion, exercise or exchange
thereof, (B) the issuance of Common Stock upon the
conversion, exercise or exchange of Options or
Convertible Securities issued and outstanding on the date
a certificate of designations setting forth this
resolution is filed with the Secretary of State of the
State of Delaware, or (C) the issuance of Common Stock
upon the conversion of the PIK Preferred Stock.
(h) No adjustment in the Conversion Price
need be made unless the adjustment pursuant to Section
8(f)(1) and (2) would require an increase or decrease of
at least 1% in the Conversion Price.
(i) No adjustment need be made for a
change in the par value of the Common Stock.
(j) Whenever the Conversion Price is
adjusted, the Company shall promptly mail to holders of
PIK Preferred Stock a notice of adjustment briefly
stating the facts requiring the adjustment and the manner
of computing it.
(k) In case of any consolidation or
merger of the Company with any other entity (other than a
wholly-owned subsidiary of the Company), or in case of
any sale or transfer of all or substantially all of the
assets of the Company, or in the case of any share
exchange pursuant to which all of the outstanding shares
of Common Stock are converted into other securities or
property, the Company shall make appropriate provision or
cause appropriate provision to be made so that holders of
each share of PIK Preferred Stock then outstanding shall
have the right thereafter to convert such share of PIK
Preferred Stock into the kind and amount of shares of
stock and other securities and property receivable upon
such consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common
Stock into which such share of PIK Preferred stock might
have been converted immediately prior to the effective
date of such consolidation, merger, sale, transfer or
share exchange. If in connection with any such
consolidation, merger, sale, transfer or share exchange,
each holder of shares of Common Stock is entitled to
elect to receive either securities, cash or other assets
upon completion of such transaction, the Company shall
provide or cause to be provided to each holder of PIK
Preferred Stock the right to elect to receive the
securities, cash or other assets into which the PIK
Preferred Stock held by such holder shall be convertible
after completion of any such transaction on the same
terms and subject to the same conditions applicable to
holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on
the period in which such election shall be made and the
effect of failing to exercise the election). The Company
shall not effect any such transaction unless the
provisions of this paragraph have been fulfilled. The
above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
(l) The Company shall reserve and at all
times keep available, free from preemptive rights, out of
its authorized but unissued stock, for the purpose of
effecting the conversion of the PIK Preferred Stock, such
number of its duly authorized Common Stock as shall from
time to time be sufficient to effect the conversion of
all outstanding PIK Preferred Stock.
9. Limitation and Rights Upon Insolvency.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock at a time when immediately after
making such payment the Company is or would be rendered
insolvent (as defined by applicable law), provided that
the obligation of the Company to make any such payment
shall not be extinguished in the event the foregoing
limitation applies.
10. Limitations under the Financing.
Notwithstanding any other provision of this certificate,
the Company shall not be required to pay any dividend on,
or to pay any amount in respect of any redemption of, the
PIK Preferred Stock if upon, or after, making such
payment the Company would, or with the passage of time,
or the giving of notice, or both, would be in default
under the terms of the Financing, provided that the
obligation of the Company to make any such payment shall
not be extinguished in the event the foregoing limitation
applies.
11. Shares to Be Retired. Any share of PIK
Preferred Stock converted, redeemed or otherwise acquired
by the Company shall be retired and cancelled and shall
upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to
reissuance by the Board of Directors as PIK Preferred
Stock or shares of preferred stock of one or more other
series.
12. Record Holders. The Company and the
Company's transfer agent may deem and treat the record
holder of any shares of PIK Preferred Stock as the true
and lawful owner thereof for all purposes, and neither
the Company nor the Company's transfer agent shall be
affected by any notice to the contrary.
13. Notice. Except as may otherwise be
provided for herein, all notices referred to herein shall
be in writing, and all notices hereunder shall be deemed
to have been given upon, the earlier of receipt of such
notice or three Business Days after the mailing of such
notice if sent by registered mail (unless first-class
mail shall be specifically permitted for such notice
under the terms of this Certificate of Designations) with
postage prepaid, addressed: if to the Company, to its
offices at 200 South Lamar Street, Security Centre, South
Building, Jackson, Mississippi 39201 (Attention:
General Counsel) or to an agent of the Company designated
as permitted by the Certificate of Incorporation or, if
to any holder of the PIK Preferred Stock, to such holder
at the address of such holder of the PIK Preferred Stock
as listed in the stock record books of the Company (which
may include the records of the Company's transfer agent);
or to such other address as the Company or holder, as the
case may be, shall have designated by notice similarly
given.
IN WITNESS WHEREOF, this Certificate of Rights
and Preferences has been duly executed this 7th day of
May, 1996.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh, III
__________________________
John E. Welsh, III
Vice Chairman and Chief
Financial Officer
FORM OF
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agree-
ment"), dated as of ________, 1996, by and between Mobile
Telecommunication Technologies Corp., a Delaware corpora-
tion (the "Company"), and ______________________________
(the "Purchaser").
ARTICLE I.
Purchase and Sale of Preferred Stock
1.1 Agreement to Purchase and Sell. Upon the
basis of the representations and warranties, for the
consideration, and subject to the terms and conditions
set forth in this Agreement, the Company agrees to sell
to the Purchaser, and the Purchaser agrees to purchase
from the Company, the number of shares set forth next to
the Purchaser's name on Schedule 1.1 hereto, of a series
of preferred stock, $.01 par value per share, of the
Company (the "Preferred Stock") designated as the Series
A 7.5% Cumulative Convertible Accruing Pay-In-Kind
Preferred Stock and having the preferences and rights set
forth in the form of Certificate of Designation attached
as Exhibit A hereto, in each case free and clear of all
claims, liens, charges and encumbrances of any nature
whatsoever, at the Closing referred to in Section 1.2
hereof, and, in consideration of the sale of the shares
of Preferred Stock by the Company to the Purchaser, the
Purchaser agrees to pay in the aggregate to the Company
$1,000 per Preferred Share (the "Purchase Price") in the
amount set forth next to the Purchaser's name on Schedule
1.1 hereto.
1.2 Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Meagher & Flom at
11:00 a.m., Eastern Standard Time, on __________, 1996, or
at such other place or time as the Purchaser and the
Company shall mutually agree in writing. The date on
which the Closing occurs is hereinafter referred to as
the "Closing Date."
1.3 Delivery and Payment. At the Closing, (a)
the Company shall deliver or cause to be delivered to the
Purchaser (i) a stock certificate evidencing the shares
of Preferred Stock issued in the name of the Purchaser,
and (ii) all other documents, instruments and writings
required to be delivered by the Company to the Purchaser
pursuant to this Agreement or otherwise required in
connection herewith, and (b) the Purchaser shall deliver
or cause to be delivered to the Company (i) the Purchase
Price, by wire transfer of immediately available funds to
the account of the Company to be designated by the Compa-
ny in writing not later than one business day prior to
the Closing Date, and (ii) all other documents, instru-
ments and writings required to be delivered by the Pur-
chaser to the Company pursuant to this Agreement or
otherwise required in connection herewith.
ARTICLE II.
Representations and Warranties of the Company
The Company hereby represents and warrants to
the Purchaser as follows:
2.1 Incorporation and Organization. The
Company is a corporation duly formed, validly existing
and in good standing under the laws of the State of
Delaware and has full corporate power and authority to
own and operate its assets and properties and carry on
its businesses as presently conducted and is duly quali-
fied to do business and is in good standing in all juris-
dictions in which the ownership or occupancy of its
properties or its activities presently makes such quali-
fication necessary, except where the failure to so quali-
fy or be in good standing would not have a material
adverse effect upon the businesses, properties or assets
of the Company or any of its Material Subsidiaries.
2.2 Authority. The Company has all requisite
corporate power and authority to enter into this Agree-
ment and each other agreement, instrument and document
required to be executed by the Company in connection
herewith, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by the
Company of this Agreement, the Stockholder Agreement in
the form of Exhibit B-1 hereto (the "Stockholder Agree-
ment"), the Registration Rights Agreement in the form of
Exhibit C hereto (the "Registration Rights Agreement"),
and such other agreements, instruments and documents, and
the consummation by the Company of the transactions
contemplated hereby and thereby, have been duly autho-
rized by all necessary corporate action of the Company.
The Board of Directors of the Company has approved the
issuance and sale of the shares of Preferred Stock (in-
cluding, without limitation, the conversion of the shares
of Preferred Stock) and the other transactions contem-
plated by this Agreement. This Agreement has been duly
and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its
terms, except as enforcement may be limited by bankrupt-
cy, insolvency or other similar laws affecting the en-
forcement of creditors' rights generally and except that
the availability of equitable remedies, including specif-
ic performance, is subject to the discretion of the court
before which any proceeding therefor may be brought.
2.3 Capital Structure. The authorized capital
stock of the Company consists of 75,000,000 shares of
common stock and 25,000,000 shares of preferred stock.
At the close of business on March 27, 1996, 54,138,156
shares of Common Stock and 3,750,000 shares of $2.25
Cumulative Convertible Exchangeable Preferred Stock were
issued and outstanding. At the close of business on
March 27, 1996, a total of 7,648,406 shares of common
stock were reserved for issuance upon the exercise of (i)
the conversion rights of the $2.25 Cumulative Convertible
Exchangeable Preferred Stock, (ii) the options, stock
appreciation rights and other rights granted under the
Company's 1988 Executive Incentive Plan, (iii) the op-
tions, stock appreciation rights and other rights granted
under the Company's 1990 Executive Incentive Plan, (iv)
the awards and options granted under the Company's Long-
Term Incentive Plan, (v) the options granted under the
Company's 1993 Employee Stock Purchase Plan and (vi) the
nonqualified options granted to directors of the Company
who are not officers. When issued and delivered at the
Closing against payment therefor as provided herein, the
shares of Preferred Stock will be duly and validly autho-
rized and issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth in
this Section 2.3, Schedule 2.3 hereto or as contemplated
by this Agreement, there are no options, warrants, calls,
rights, commitments or agreements of any character to
which the Company or any subsidiary of the Company is a
party or by which it is bound obligating the Company or
any subsidiary of the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or obligating the
Company to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
2.4 Consents and Approvals. Assuming the
accuracy of the representation of the Purchaser set forth
in Section 3.5 hereof and except as may be required
pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), all authorizations, approv-
als and consents, if any, required to be obtained from,
and all registrations, declarations and filings, if any,
required to be made with all governmental authorities and
regulatory bodies to permit the Company to execute and
deliver, and to perform its obligations under, this
Agreement have been obtained or made, as the case may be,
and all such authorizations, approvals, consents, regis-
trations, declarations and filings (collectively, "con-
sents and filings") are in full force and effect, except
where failure to obtain and/or maintain in full force and
effect such consents and filings would not have a materi-
al adverse effect upon the execution and delivery of, and
upon the performance of the Company's obligations under,
this Agreement.
2.5 No Violations. Neither the execution or
delivery by the Company, nor the consummation by the
Company of the transactions herein contemplated, nor the
fulfillment by the Company of the terms and provisions
hereof (i) will conflict with, violate or result in a
breach of, any of the terms, conditions or provisions of
any law, regulation, order, writ, injunction, decree,
determination or award of any court, governmental depart-
ment, board, agency or instrumentality or any arbitrator,
applicable to the Company including, without limitation,
the Communications Act of 1934, as amended, and the rules
and regulations promulgated thereunder, (ii) will con-
flict with, violate or result in a breach of, or consti-
tute a default under, any of the terms, conditions or
provisions of the Company's certificate of incorporation,
certificates of designations and by-laws, (iii) will
conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions
or provisions of any loan agreement, indenture, trust,
deed or other agreement or instrument to which the Compa-
ny is a party or by which it is bound or (iv) result in
the creation or imposition of any lien, charge, security
interest or encumbrance of any nature whatsoever (collec-
tively, a "lien") upon any of the Company's property or
assets (including, without limitation, the shares of
Preferred Stock to be acquired by the Purchaser pursuant
to this Agreement). Except with respect to the Credit,
Security, Guaranty and Pledge Agreement dated as of
December 21, 1995 among Skytel Corp., the Company and
certain subsidiaries thereof, certain lenders, Chemical
Bank, Credit Lyonnais New York Branch, and J.P. Morgan
Securities Inc. (the "Credit Agreement") which default
shall be cured upon closing of this transaction, the
Company is not in default under any agreement to which it
is a party which default could impair its ability to
perform its obligation under this Agreement, except where
such default would not have a material adverse effect on
Mtel's ability to perform its obligation under this
Agreement.
2.6 Public Documents. The Company has fur-
nished or made available to the Purchaser true and com-
plete copies of each report, schedule, registration
statement and definitive proxy statement filed by the
Company with the Securities and Exchange Commission (the
"Commission") since January 1, 1995 (including the 10-K
to be filed for the year ended December 31, 1995) (the
"SEC Documents"), which are all the documents (other than
preliminary proxy materials) that the Company was re-
quired to file with the Commission since such date. As
of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Secu-
rities Act of 1933, as amended (the "Securities Act"),
the Exchange Act and the rules and regulations of the
Commission thereunder applicable to such SEC Documents
and none of the SEC Documents contained any untrue state-
ment of a material fact or omitted to state a material
fact required to be stated therein or necessary in order
to make the statements therein not misleading. Except to
the extent information contained in any SEC Document has
been revised or superseded by a later-filed SEC Document,
none of the SEC Documents currently contains any untrue
statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order
to make the statements therein, in light of the circum-
stances under which they are made, not misleading. The
financial statements of the Company included in the SEC
Documents comply as to form in all material respects with
applicable accounting requirements and the published
rules and regulations of the Commission with respect
thereto, have been prepared in all material respects in
accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved
(except as may be permitted by the rules of the Commis-
sion) and fairly present in all material respects (sub-
ject, in the case of the unaudited statements, to normal,
recurring audit adjustments) the consolidated financial
position of the Company and its consolidated subsidiaries
as at the dates thereof and the consolidated results of
their operations and changes in financial position for
the periods then ended.
2.7 Absence of Certain Changes or Events.
Except (x) as disclosed in (i) Schedule 2.7 hereto, (ii)
the SEC Documents filed prior to the date of this Agree-
ment or (y) as contemplated by, permitted by or disclosed
in this Agreement, since the date of the most recent
audited financial statements included in the SEC Docu-
ments, the Company and its subsidiaries have conducted
their respective businesses in the ordinary course, and
there has not been any material adverse change in the
financial condition, results of operations, business,
properties, assets or liabilities of the Company or any
of its Material Subsidiaries (as defined below)(the
Purchaser acknowledges that for purposes of this Agree-
ment any fluctuations in the market value of the
Company's common stock shall not constitute a material
adverse change). "Material Subsidiaries" shall mean
Skytel Corp., Destineer, Inc. and Mtel International,
Inc.
2.8 Exemption from Securities Act. Assuming
that the representations, warranties and acknowledgments
of the Purchaser provided for in Article III of this
Agreement or otherwise herein are true and correct, the
sale of the shares of Preferred Stock pursuant to this
Agreement will be exempt from the registration provisions
of the Securities Act, and the registration provisions of
any blue sky or other state securities law or regulation
(hereinafter collectively referred to as "blue sky laws")
of any applicable jurisdiction.
ARTICLE III.
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to
the Company as follows:
3.1 Incorporation and Organization. The Pur-
chaser is a corporation duly formed, validly existing and
in good standing under the laws of the State of
and has full corporate power and authority to own and
operate its assets and properties and carry on its busi-
nesses as presently conducted.
3.2 Authority. The Purchaser has all requisite
power and authority (corporate, or otherwise) to enter
into this Agreement and each other agreement, instrument
and document required to be executed by the Purchaser in
connection herewith, and to consummate the transactions
contemplated hereby and thereby. The execution and
delivery by the Purchaser of this Agreement, the Stock-
holder Agreement, the Registration Rights Agreement, and
such other agreements, instruments and documents, and the
consummation by the Purchaser of the transactions contem-
plated hereby and thereby, have been duly authorized by
all necessary action of the Purchaser. This Agreement
has been duly and validly executed and delivered by the
Purchaser and constitutes a valid and binding obligation
of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally
and except that the availability of equitable remedies,
including specific performance, is subject to the discre-
tion of the court before which any proceeding therefor
may be brought.
3.3 Consents and Approvals. Assuming the
accuracy of the representation of the Company set forth
in Section 2.5 hereof and except as may be required
pursuant to the Exchange Act, all authorizations, approv-
als and consents, if any, required to be obtained from,
and all registrations, declarations and filings, if any,
required to be made with, all governmental authorities
and regulatory bodies to permit the Purchaser to execute
and deliver, and to perform its obligations under, this
Agreement have been obtained or made, as the case may be,
and all such authorizations, approvals, consents, regis-
trations, declarations and filings (collectively, "con-
sents and filings") are in full force and effect, except
where failure to obtain and/or maintain in full force and
effect the consents and filings would not have a material
adverse effect upon the execution and delivery of, and
upon the performance of the Purchaser's obligations
under, this Agreement.
3.4 No Violations. Neither the execution or
delivery by the Purchaser of this Agreement, nor the
consummation by the Purchaser of the transactions herein
contemplated, nor the fulfillment by the Purchaser of the
terms and provisions hereof (i) will conflict with,
violate or result in a breach of, any of the terms,
conditions or provisions of any law, regulation, order,
writ, injunction, decree, determination or award of any
court, governmental department, board, agency or instru-
mentality or any arbitrator, applicable to the Purchaser
including, without limitation, the Communications Act of
1934, as amended, and the rules and regulations promul-
gated thereunder, (ii) will conflict with, violate or
result in a breach of, or constitute a default under, any
of the terms, conditions or provisions of the Purchaser's
certificate of incorporation (or other organizational
documents) and by-laws, if any, or (iii) will conflict
with, violate or result in a breach of, or constitute a
default under, any of the terms, conditions or provisions
of any loan agreement, indenture, trust, deed or other
agreement or instrument to which the Purchaser is a party
or by which it or he is bound, except where such con-
flict, violation or breach will not have a material
adverse effect on the Purchaser's execution, delivery,
consummation or fulfillment of this Agreement. The
Purchaser is not in default under any agreement to which
it is a party which default could materially adversely
impair its ability to perform its obligations under this
Agreement.
3.5 Investment Representation. The Purchaser
is acquiring the shares of Preferred Stock (including any
shares of Common Stock to be acquired by the Purchaser
upon conversion of the shares of Preferred Stock) (col-
lectively, the "Company Securities") for its own account
for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof
within the meaning of the Securities Act. The Purchaser
understands that the Company Securities have not been
and, subject to the terms of the Registration Rights
Agreement, will not be registered under the Securities
Act or any blue sky laws in reliance, in part, upon the
representations, warranties and covenants contained
herein. Subject to the provisions, if applicable, set
forth in the Stockholder Agreement, the Purchaser also
understands that it cannot offer for sale, sell or trans-
fer the Company Securities except as provided below. The
Purchaser agrees that the following restrictive legend
will be placed on certificates representing any or all of
the Company Securities and that transfer of any or all of
the Company Securities may be refused by the Company's
transfer agent unless the Company Securities for which
transfer is sought are registered under the Securities
Act and all other applicable federal securities or blue
sky laws or unless the Purchaser provides information
satisfactory to the Company that such registration is not
required:
"THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENE-
FIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD OR TRANSFERRED AND MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (1)
TO THE COMPANY, (2) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, (3) PURSUANT TO ANY
OTHER APPLICABLE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES.
Subject to the provisions, if applicable, set
forth in the Stockholder Agreement, the Company Securi-
ties being delivered pursuant to this Agreement shall not
be transferable by such Purchaser except (i) pursuant to
an effective registration statement under the Securities
Act, (ii) pursuant to Rule 144, or any successor rule,
under the Securities Act, or (iii) upon receipt by the
Company of a written opinion of counsel to such Purchaser
reasonably satisfactory to the Company that is knowledge-
able in securities laws matters, to the effect that the
proposed transfer is exempt from the registration re-
quirements of the Securities Act and the relevant blue
sky laws.
The Purchaser and the Purchaser's advisors have
such knowledge and experience in financial and business
matters that they are capable of evaluating the merits
and risks of an investment in the Company Securities;
have all information deemed by them to be necessary or
appropriate to evaluate the risks and merits of an in-
vestment in the Company Securities; have received all
information requested from the Company; have had the
opportunity to ask questions of and receive answers from
representatives of the Company concerning the Company.
ARTICLE IV.
Conditions to Closing
4.1 Conditions to Obligations of the Purchaser.
The obligations of the Purchaser to consummate the trans-
actions contemplated hereby are subject to the fulfill-
ment of each of the following conditions:
(a) the representations and warranties of the
Company contained in this Agreement shall be true and
correct in all material respects at and as of the Closing
with the same effect as though such representations and
warranties had been made as of the Closing;
(b) the Company shall have performed and com-
plied in all material respects with all other terms
required by this Agreement to be performed or complied
with by the Company at or prior to the Closing;
(c) the Purchaser shall have received a certif-
icate, dated as of the Closing Date, signed by an execu-
tive officer of the Company and stating that the condi-
tions set forth in clauses (a) and (b) above have been
satisfied;
(d) no action or proceeding shall have been
instituted or threatened for the purpose or with the
probable or reasonably likely effect of enjoining or
preventing the consummation of this Agreement or seeking
damages on account thereof;
(e) the Company shall have delivered to the
Purchaser a copy of the Stockholder Agreement, duly
executed by the Company;
(f) the Company shall have delivered to the
Purchaser a copy of the Registration Rights Agreement,
duly executed by the Company; and
(g) the Company shall have delivered to the
Purchaser a certified copy of the resolutions of the
Board of Directors of the Company authorizing the trans-
actions contemplated hereby.
4.2 Conditions to Obligations of the Company.
The obligations of the Company to consummate the transac-
tions contemplated hereby are subject to the fulfillment
of the following conditions:
(a) the representations and warranties of the
Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Closing
with the same effect as though such representations and
warranties had been made as of the Closing;
(b) the Purchaser shall have performed and
complied in all material respects with all other terms
required by this Agreement to be performed or complied
with by the Purchaser at or prior to the Closing;
(c) the Company shall have received a certifi-
cate from the Purchaser, dated as of the Closing Date,
one of which shall have been signed by a duly authorized
officer of the Purchaser, stating that the conditions set
forth in clauses (a) and (b) above have been satisfied;
(d) no action or proceeding shall have been
instituted or threatened for the purpose or with the
probable or reasonably likely effect of enjoining or
preventing the consummation of this Agreement or seeking
damages on account thereof;
(e) the Purchaser shall have delivered to the
Purchaser a copy of the Stockholder Agreement, duly
executed by the Purchaser; and
(f) the Purchaser shall have delivered to the
Company a copy of the Registration Rights Agreement, duly
executed by the Purchaser.
ARTICLE V.
Termination
5.1 Termination. This Agreement may be termi-
nated prior to the Closing by (a) the mutual consent of
the Purchaser and the Company, (b) the Company (i) upon
the failure of the Purchaser to perform or comply in all
material respects with any of its covenants or agreements
contained herein prior to the Closing, (ii) if any repre-
sentation or warranty of the Purchaser hereunder shall
not have been true and correct in all material respects
as of the time at which it was made, or (iii) pursuant to
Section 5.3 hereof, (c) the Purchaser (i) upon the fail-
ure of the Company to perform or comply in all material
respects with any of its covenants or agreements con-
tained herein prior to the Closing, or (ii) if any repre-
sentation or warranty of the Company hereunder shall not
have been true and correct in all material respects as of
the time at which such was made; provided, however, that
no party may terminate this Agreement pursuant to clauses
(b)(i) or (ii) or (c)(i) or (ii) above if such party is,
at the time of any such attempted termination, in breach
of any term hereof. The termination by any party pursu-
ant to this Section 5.1 shall not be deemed a waiver of
any claim such party may have against the other party or
parties hereunder.
ARTICLE VI.
Miscellaneous
6.1 Collateral Agreements, Amendments and
Waivers. This Agreement (together with the documents
delivered pursuant hereto) supersedes all prior docu-
ments, understandings and agreements, oral or written,
relating to this transaction and, except for any confi-
dentiality agreement currently existing between the
parties, constitutes the entire understanding between the
parties with respect to the subject matter hereof. Any
modification or amendment to, or waiver of, any provision
of this Agreement may be made only by an instrument in
writing executed by the party against whom enforcement
thereof is sought.
6.2 Successors and Assigns. Neither the
Purchaser's nor the Company's rights or obligations under
this Agreement may be assigned. Any assignment in viola-
tion of the foregoing shall be null and void. Subject to
the preceding sentences of this Section 6.2, the provi-
sions of this Agreement (and, unless otherwise expressly
provided therein, of any document delivered pursuant to
this Agreement) shall be binding upon and inure to the
benefit of the parties hereto and their respective suc-
cessors and assigns.
6.3 Survival of Representations, Warranties and
Agreements. None of the representations, warranties and
covenants of the parties contained in this Agreement
shall survive the Closing.
6.4 Expenses. Each party shall pay all costs
and expenses incurred by it in connection with the nego-
tiation, execution and delivery of this Agreement and the
transactions contemplated hereby.
6.5 Invalid Provisions. If any provision of
this Agreement is held to be illegal, invalid or unen-
forceable under present or future laws, then, if possi-
ble, such illegal, invalid or unenforceable provision
will be modified to such extent as is necessary to comply
with such present or future laws and such modification
shall not affect any other provision hereof, provided
that if such provision may not be so modified such ille-
gality, invalidity or unenforceability will not affect
any other provision, but this Agreement will be reformed,
construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein.
6.6 Notices. In any case where any notice or
other communication is required or permitted to be given
hereunder (including, without limitation, any change in
the information set forth in this Section 6.6) such
notice or communication shall be in writing and (a)
personally delivered, (b) sent by registered United
States mail,, postage prepaid, return receipt requested,
(c) transmitted by telecopy or (d) sent by way of a
recognized overnight courier service, postage prepaid,
return receipt requested with instructions to deliver on
the next business day, in each case as follows:
If to the Company, to:
Mobile Telecommunication Technologies Corp.
110 East 59th Street
36th Floor
New York, New York 10022
Attention: John E. Welsh, III
Telecopy: (212) 735-0808
with a copy to:
Mobile Telecommunication
Technologies Corp.
200 South Lamar Street
Security Centre, South Building
Jackson, Mississippi 39201
Attention: Leonard G. Kriss, Esq.
Telecopy: (601) 944-7291
If to the Purchaser, to:
6.7 Public Announcement. Until the termination
of this Agreement, neither the Company nor the Purchaser
shall issue or cause the publication of any press release
or other public announcement with respect to the transac-
tions contemplated by this Agreement without the consent
of the other parties, which consent shall not be unrea-
sonably withheld, provided that each party may issue such
press releases or public announcements as shall be re-
quired by law in which event such party shall give the
other parties a reasonable opportunity to review and
comment thereon.
6.8 Reports to Holders of Shares of Preferred
Stock. As long as the Purchaser owns any shares of
Preferred Stock, within 15 business days after the Compa-
ny files with the Commission copies of its annual re-
ports, quarterly reports and other current reports (or
copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that
it is required to file with the Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act, the Company
shall furnish a copy of the same to the Purchaser.
6.9 No Third-Party Beneficiaries. No person or
entity not a party to this Agreement shall be deemed to
be a third-party beneficiary hereunder or entitled to any
rights hereunder.
6.10 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OR CHOICE OF LAW. THE PARTIES HERETO AGREE
THAT THE VENUE WITH RESPECT TO ANY ACTION OR SUIT COM-
MENCED BY EITHER OF THEM IN CONNECTION WITH THE TRANSAC-
TIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE IN A FEDER-
AL OR STATE COURT OF COMPETENT JURISDICTION IN THE UNITED
STATES.
6.11 Counterparts. This Agreement may be exe-
cuted in two or more counterparts, each of which may be
executed by one or more of the parties hereto, but all of
which, when taken together, shall constitute but one
agreement binding upon all of the parties hereto.
6.12 Additional Series of PIK Preferred
Stock; Registration Rights Agreement. Subsequent to the
date hereof, the Company may issue and sell additional
shares of the Series A Cumulative Convertible Pay-In-Kind
Preferred Stock and additional series of pay-in-kind
preferred stock on substantially the same terms set forth
in the Certificate of Designation (except with regard to
the conversion price); provided, however, that the amount
of all shares of pay-in-kind preferred stock issued
pursuant to this provision and pursuant to this Agreement
shall not in the aggregate exceed $75,000,000. In the
event of such additional issuances, the parties agree to
enter into an amended Registration Rights Agreement which
shall add as parties any purchasers of such additional
shares of pay-in-kind preferred stock, but shall other-
wise be identical to the Registration Rights Agreement.
STOCKHOLDER AGREEMENT
Dated as of March 29, 1996
by and between
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
and
MICROSOFT CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
1.1 "Affiliate" . . . . . . . . . . . . . . . . 1
1.2 "Agreement" . . . . . . . . . . . . . . . . 2
1.3 "Charitable Institution . . . . . . . . . . 2
1.4 "Code" . . . . . . . . . . . . . . . . . . 2
1.5 "Communications Act" . . . . . . . . . . . 2
1.6 "Exchange Act" . . . . . . . . . . . . . . 2
1.7 "Group" . . . . . . . . . . . . . . . . . . 2
1.8 "Microsoft" . . . . . . . . . . . . . . . 2
1.9 "Mtel" . . . . . . . . . . . . . . . . . . 2
1.10 "Mtel Preferred Stock" . . . . . . . . . . 2
1.11 "Mtel Voting Securities" . . . . . . . . . 2
1.12 "Non-Rule 144 Exempt Transaction" . . . . . 2
1.13 "Option Period" . . . . . . . . . . . . . . 2
1.14 "Permitted Transfer" . . . . . . . . . . . 2
1.15 "Period" . . . . . . . . . . . . . . . . . 3
1.16 "Person" . . . . . . . . . . . . . . . . . 3
1.17 "Restricted Securities" . . . . . . . . . . 3
1.18 "SEC" . . . . . . . . . . . . . . . . . . . 3
1.19 "Securities Act" . . . . . . . . . . . . . 3
1.20 "Transfer" . . . . . . . . . . . . . . . . 3
1.21 "Transfer Notice" . . . . . . . . . . . . . 3
ARTICLE II
COVENANTS
2.1 Microsoft Covenants . . . . . . . . . . . . 3
(a) Microsoft Investment in Mtel . . . . . 3
(b) Standstill Provisions . . . . . . . . 4
(c) Restriction on Transfer . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MTEL
3.1 Capitalization . . . . . . . . . . . . . . 6
3.2 Authority . . . . . . . . . . . . . . . . . 6
3.3 Organization . . . . . . . . . . . . . . . 7
3.4 Consents and Approvals . . . . . . . . . . 7
3.5 No Violations . . . . . . . . . . . . . . . 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
4.1 Authority . . . . . . . . . . . . . . . . . 8
4.2 Organization . . . . . . . . . . . . . . . 8
4.3 Consents and Approvals . . . . . . . . . . 8
4.4 No Violations . . . . . . . . . . . . . . . 9
ARTICLE V
MISCELLANEOUS
5.1 Termination . . . . . . . . . . . . . . . . 9
5.2 Assignability . . . . . . . . . . . . . . . 9
5.3 Notices . . . . . . . . . . . . . . . . . . 10
5.4 Waivers . . . . . . . . . . . . . . . . . . 10
5.5 Third Party Rights . . . . . . . . . . . . 11
5.6 Choice of Law . . . . . . . . . . . . . . . 11
5.7 Severability . . . . . . . . . . . . . . . 11
5.8 Enforcement of Agreement . . . . . . . . . 11
5.9 References to Agreement . . . . . . . . . . 11
5.10 Headings, etc. . . . . . . . . . . . . . . 12
5.11 Counterparts. . . . . . . . . . . . . . . . 12
5.12 Survival. . . . . . . . . . . . . . . . . . 12
5.13 Amendments . . . . . . . . . . . . . . . . 12
5.14 Entire Agreement . . . . . . . . . . . . . 12
STOCKHOLDER AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDER AGREEMENT
dated as of March 29, 1996 (this "Agreement") by and
between Mobile Telecommunication Technologies Corp., a
Delaware corporation ("Mtel"), and Microsoft Corporation,
a Washington corporation ("Microsoft").
W I T N E S S E T H:
WHEREAS, Mtel and Microsoft have entered into a
Stock Purchase Agreement dated as of March 29, 1996 (the
"Stock Purchase Agreement") pursuant to which Microsoft
will acquire shares of Series A 7.5% Cumulative
Convertible Accruable Pay-In-Kind Preferred Stock, par
value $.01, of Mtel ("Mtel Preferred Stock"), in
accordance with the terms and conditions set forth in the
Stock Purchase Agreement.
WHEREAS, Microsoft entered into a stockholders
agreement (the "Original Stockholders Agreement"), dated
September 15, 1995, with Mtel in connection with an
exchange of stock whereby Microsoft acquired shares of
common stock of Mtel.
WHEREAS, Mtel and Microsoft desire to enter
into certain additional agreements concerning their
continuing relationship as set forth herein.
AND WHEREAS, Mtel and Microsoft desire this
Agreement to supersede the Original Stockholders
Agreement as it relates to the parties hereto and the
matters covered hereby and thereby.
NOW, THEREFORE, in consideration of the
premises and the representations, warranties, covenants
and agreements contained herein and in the Stock Purchase
Agreement, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have
the respective meanings assigned to them in the Stock
Purchase Agreement. Unless the context otherwise
requires, the following terms shall have the following
meanings:
1.1 "Affiliate" shall mean, with respect to
any Person, (a) in the case of an individual, any
relative of such Person; (b) any officer, director,
trustee, partner, member, manager, employee or holder of
ten percent (10%) or more of any class of the voting
securities of or equity interest in such Person; (c) any,
corporation, partnership, limited liability company,
trust or other entity controlling, controlled by or under
common control with such Person; or (d) any officer,
director, trustee, partner, manager, employee or holder
of ten percent (10%) or more of the outstanding voting
securities of any corporation, partnership, limited
liability company, trust or other entity controlling,
controlled by, or under common control with such Person.
1.2 "Agreement" shall mean this Stockholder
Agreement, as the same may be modified, amended or
superseded, from time to time, in accordance with the
terms hereof.
1.3 "Charitable Institution" shall mean an
organization qualified under Section 501(c)(3) of the
Code.
1.4 "Code" shall mean the Internal Revenue
Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
1.5 "Communications Act" shall mean the
Communications Act of 1934, as amended.
1.6 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.7 "Group" shall mean two or more persons
acting in concert as a partnership, limited partnership,
syndicate or other entity for the purpose of acquiring,
holding, taking action with respect to or disposing of
voting securities of Mtel.
1.8 "Microsoft" shall mean Microsoft
Corporation, a Washington corporation.
1.9 "Mtel" shall mean Mobile Telecommunication
Technologies Corp., a Delaware corporation.
1.10 "Mtel Preferred Stock" shall have the
meaning set forth in the recitals to this Agreement.
1.11 "Mtel Voting Securities" shall have the
meaning ascribed to such term in Section 2.1(a).
1.12 "Non-Rule 144 Exempt Transaction" shall
have the meaning ascribed to such term in Section 2.1(c).
1.13 "Option Period" shall have the meaning
ascribed to such term in Section 2.1(e) hereof.
1.14 "Permitted Transfer" shall mean:
(a) any Transfer in which the only person
or persons who become the "beneficial owner"
(as determined pursuant to Rule 13d-3 under the
Exchange Act) of Restricted Securities is an
Affiliate or member of the "immediate family"
(as such term is defined in Rule 16a-l(e) under
the Exchange Act) of the transferring party;
and
(b) any gift to a bona fide Charitable
Institution.
1.15 "Period" shall have the meaning ascribed
to such term in Section 2.1(a).
1.16 "Person" shall mean an individual, firm,
trust, association, corporation, partnership, limited
partnership, government (whether federal, state, local or
other political subdivision, or any agency or bureau of
any of them) or other entity.
1.17 "Restricted Securities" shall have the
meaning set forth in Section 2.1(c) of this Agreement.
1.18 "SEC" shall mean the United States
Securities and Exchange Commission, or any successor
agency.
1.19 "Securities Act" shall mean the Securities
Act of 1933, as amended.
1.20 "Transfer" shall mean any offer, transfer
sale, exchange, assignment, pledge, hypothecation, gift,
grant of security interest in or lien on, placement in a
trust (voting or otherwise) or any other disposition or
encumbrance.
1.21 "Transfer Notice" shall have the meaning
ascribed to such term in Section 2.1(d).
ARTICLE II
COVENANTS
2.1 Microsoft Covenants. Microsoft covenants
with Mtel as follows:
(a) Microsoft Investment in Mtel. During the
period commencing on the date hereof and ending on the
fifth anniversary of the date of this Agreement (the
"Period"), Microsoft shall not and shall cause each of
its Affiliates not to, without the prior written consent
of Mtel, duly authorized by the Board of Directors of
Mtel, directly or indirectly, through one or more
intermediaries or otherwise, acting singly or as part of
a Group, purchase, acquire or own (of record or
beneficially) or offer (or propose to offer in any
manner) or agree to purchase, acquire or own (of record
or beneficially), any securities of Mtel entitled to vote
generally in the election of directors of Mtel (or
convertible into or exchangeable for securities of Mtel
entitled to vote generally in the election of directors
of Mtel) ("Mtel Voting Securities") if, after giving
effect to such purchase or acquisition, Microsoft and its
Affiliates would own (of record or beneficially) more
than ten percent (10%) of the total of all outstanding
Mtel Voting Securities.
(b) Standstill Provisions. During the Period,
without the prior written consent of Mtel, duly
authorized by Mtel's Board of Directors, Microsoft,
directly or indirectly, through one or more
intermediaries or otherwise, acting singly or as part of
a Group, shall not, and shall cause each of its
Affiliates not to:
(1) (i) Make, or in any way participate
in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are defined or used in
Regulation 14A promulgated pursuant to the Exchange
Act) or consents to vote or become a "participant"
or "participant in a solicitation" (as such terms
are defined or used in Rule 14a-11 promulgated
pursuant to the Exchange Act) with respect to Mtel,
(ii) seek to advise or influence any third person
(within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to the voting of any Mtel
Voting securities, (iii) call or seek to call,
directly or indirectly, any special meeting of
stockholders of Mtel for any reason whatsoever, (iv)
seek, request, or take any action to obtain or
retain, directly or indirectly, any list of holders
of any Mtel Voting Securities, or (v) assist or
encourage any attempt by any other person to do or
seek any of the foregoing;
(2) Initiate, propose or otherwise
participate in a solicitation of holders of Mtel
Voting Securities for the approval of one or more
stockholder proposals with respect to Mtel as
described in Rule 14a-8 promulgated pursuant to the
Exchange Act;
(3) Directly or indirectly participate in
or encourage the formation of any Group which
beneficially owns or seeks to acquire beneficial
ownership of Mtel Voting securities;
(4) Deposit any Mtel Voting Securities in
a voting trust or subject them to any voting
agreement or arrangement, and Microsoft represents
and warrants to Mtel that other than this Agreement
there are no such voting trusts, voting agreements
or arrangements with respect to it which would
include the Mtel Voting Securities to be received
pursuant to the Stock Purchase Agreement;
(5) (i) Make any public announcement
with respect to, or submit a proposal for, or seek
to effect any form of merger, consolidation,
business combination, tender offer, exchange offer
or other acquisition or other business transaction
with Mtel or any Affiliate of Mtel or any
restructuring, recapitalization or similar
transaction with respect to Mtel or any Affiliate of
Mtel, (ii) otherwise act, directly or indirectly,
alone or in concert with others, to seek to control
or influence in any manner, other than as may be
permitted by the terms of this Agreement, the
management, Board of Directors, policies or affairs
of Mtel or any Affiliate of Mtel, or (iii), in the
case of either (i) or (ii) above, instigate or
encourage any third party to do any of the
foregoing;
(6) Make any public or private
communication with any holder of Mtel Voting
Securities or other person regarding the management,
Board of Directors, control, policies or affairs of
Mtel; or
(7) Propose, or publicly disclose an
intent to propose, any of the foregoing, unless and
until in any such case such offer or proposal shall
have been specifically invited in writing by Mtel or
by an authorized representative
(c) Restriction on Transfer. During the
period commencing on the date hereof and ending on
November 15, 1996, Microsoft shall not make or cause to
be made any Transfer of Mtel Preferred Stock or any stock
into which such Mtel Preferred Stock is convertible or
any other capital stock of Mtel now owned or hereafter
acquired (the "Restricted Securities") except for
Permitted Transfers. Thereafter Microsoft shall be
permitted to Transfer Restricted Securities (i) pursuant
to the provisions of Rule 144 under the Securities Act,
and (ii) in a transaction or series of transactions
exempt from registration under the Securities Act other
than under Rule 144 (a "Non-Rule 144 Exempt
Transaction"); provided, however, that no transaction
pursuant to Rule 144 or Non-Rule 144 Exempt Transaction
shall be made during a period of ninety (90) days after
the declaration of effectiveness of any registration
statement relating to the public offering of Mtel Voting
Securities or any securities that may be convertible into
or exchangeable or exercisable for Mtel Voting
Securities, provided, further, that under no
circumstances shall Microsoft sell more than one percent
(1%) of the total number of issued and outstanding shares
of common stock of Mtel (on a fully diluted basis) to any
other person or entity operating in the
telecommunications industry. In the event of any
Transfer of Restricted Securities (including a Permitted
Transfer) by Microsoft, such Transfer shall be
accompanied by an opinion of counsel, in form and
substance reasonably satisfactory to Mtel, to the effect
that the proposed Transfer complies with the applicable
provision of the Securities Act and the rules and
regulations thereunder, and any applicable state
securities laws; provided, however, that such opinion of
counsel shall not be required if such Transfer of
Restricted Securities is made pursuant to the provisions
of Rule 144.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MTEL
Mtel hereby represents and warrants to
Microsoft as follows;
3.1 Capitalization. The authorized capital
stock of Mtel consists of 75,000,000 shares of common
stock and 25,000,000 shares of preferred stock. At the
close of business on March 27, 1996, 54,138,156 shares of
common stock and 3,750,000 shares of $2.25 Cumulative
Convertible Preferred Stock Exchangeable Preferred Stock
were issued and outstanding. At the close of business on
March 27, 1996, a total of 7,648,406 shares of common
stock were reserved for issuance upon the exercise of (i)
the conversion rights of the $2.25 Cumulative Convertible
Exchangeable Preferred Stock, (ii) the options, stock
appreciation rights and other rights granted under Mtel's
1988 Executive Incentive Plan, (iii) the options, stock
appreciation rights and other rights granted under Mtel's
1990 Executive Incentive Plan, (iv) the awards and
options granted under Mtel's Long-Term Incentive Plan,
(v) options granted under Mtel's 1993 Employee Stock
Purchase Plan and (vi) the nonqualified options granted
to directors of Mtel who are not officers. Except as set
forth in this Section 3.1, Schedule 3.1 hereto or as
contemplated by this Agreement, there are not any
options, warrants, calls, rights, commitments or
agreements of any character to which Mtel or any
subsidiary of Mtel is a party or by which it is bound
obligating Mtel or any subsidiary of Mtel to issue,
deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Mtel or
obligating Mtel to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
3.2 Authority. Mtel has all requisite
corporate power and authority to enter into this
Agreement and each other agreement, instrument and
document required to be executed by Mtel in connection
herewith, and to consummate the transactions contemplated
hereby. The execution and delivery by Mtel of this
Agreement and the consummation by Mtel of the
transactions contemplated hereby, have been duly
authorized by all necessary corporate action of Mtel.
This Agreement has been duly and validly executed and
delivered by Mtel and constitutes a valid and binding
obligation of Mtel enforceable against Mtel in accordance
with its terms except that the enforceability hereof may
be limited by applicable bankruptcy or other laws
affecting the enforcement of creditors' rights generally
and the availability of equitable remedies, including
specific performance, is subject to the discretion of the
court before which any proceeding therefor may be
brought.
3.3 Organization. Mtel is a corporation duly
formed, validly existing and in good standing under the
laws of the State of Delaware and has full corporate
power and authority to own and operate its assets and
properties and carry on its businesses as presently
conducted and is duly qualified to do business and is in
good standing in all jurisdictions in which the ownership
or occupancy of its properties or its activities
presently makes such qualification necessary, except
where the failure to so qualify or be in good standing
would not have a material adverse effect upon the
businesses, properties or assets of Mtel and its
subsidiaries, taken as a whole.
3.4 Consents and Approvals. All
authorizations, approvals and consents, if any, required
to be obtained from, and all registrations, declarations
and filings, if any, required to be made with all
governmental authorities and regulatory bodies to permit
Mtel to execute and deliver, and to perform its
obligations under, this Agreement have been obtained or
made, as the case may be, and all such authorizations,
approvals, consents, registrations, declarations and
filings (collectively, "consents and filings") are in
full force and effect, except where failure to obtain
and/or maintain in full force and effect such consents
and filings would not have a material adverse effect upon
the execution and delivery of, and upon the performance
of Mtel's obligations under, this Agreement.
3.5 No Violations. Neither the execution or
delivery by Mtel, nor the consummation by Mtel of the
transactions herein contemplated, nor the fulfillment by
Mtel of the terms and provisions hereof (i) will conflict
with, violate or result in a breach of, any of the terms,
conditions or provisions of any law, regulation, order,
writ, injunction, decree, determination or award of any
court, governmental department, board, agency or
instrumentality or any arbitrator, applicable to Mtel
including, without limitation, the Communications Act and
the rules and regulations promulgated thereunder, (ii)
will conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions
or provisions of Mtel's certificate of incorporation,
certificates of designation and by-laws, (iii) will
conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions
or provisions of any loan agreement, indenture, trust,
deed or other agreement or instrument to which Mtel is a
party or by which it is bound or (iv) result in the
creation or imposition of any lien, charge, security
interest or encumbrance of any nature whatsoever
(collectively, a "lien") upon any of Mtel's property or
assets. Except with respect to the Credit Agreement (as
defined in the Stock Purchase Agreement) which default
shall be cured upon the closing under the Stock Purchase
Agreement, Mtel is not in default under any agreement to
which it is a party which default could impair its
ability to perform its obligation under this Agreement,
except where such default would not have a material
adverse affect on Mtel's ability to perform its
obligations under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
Microsoft hereby represents and warrants to
Mtel as follows:
4.1 Authority. Microsoft has all requisite
corporate power and authority to enter into this
Agreement and each other agreement, instrument and
document required to be executed by Microsoft in
connection herewith, and to consummate the transactions
contemplated hereby. The execution and delivery by
Microsoft of this Agreement and the consummation by
Microsoft of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action of
Microsoft. This Agreement has been duly and validly
executed and delivered by Microsoft and constitutes a
valid and binding obligation of Microsoft enforceable
against Microsoft in accordance with its terms except
that the enforceability hereof may be limited by
applicable bankruptcy or other laws affecting the
enforcement of creditors' rights generally and the
availability of equitable remedies, including specific
performance, is subject to the discretion of the court
before which any proceeding therefor may be brought.
4.2 Organization. Microsoft is a corporation
duly formed, validly existing and in good standing under
the laws of the State of Washington and has full
corporate power and authority to own and operate its
assets and properties and carry on its businesses as
presently conducted and is duly qualified to do business
and is in good standing in all jurisdictions in which the
ownership or occupancy of their properties or their
activities presently makes such qualification necessary,
except where the failure to so qualify or be in good
standing would not have a material adverse effect upon
the businesses, properties or assets of Microsoft and its
subsidiaries, taken as a whole.
4.3 Consents and Approvals. All
authorizations, approvals and consents, if any, required
to be obtained from, and all registrations, declarations
and filings, if any, required to be made with, all
governmental authorities and regulatory bodies to permit
Microsoft to execute and deliver, and to perform its
obligations under, this Agreement have been obtained or
made, as the case may be, and all such authorizations,
approvals, consents, registrations, declarations and
filings (collectively, "consents and filings") are in
full force and effect, except where failure to obtain
and/or maintain in full force and effect such consents
and filings would not have a material adverse effect upon
the execution and delivery of, and upon the performance
of Microsoft's obligation under, this Agreement.
4.4 No Violations. Neither the execution or
delivery by Microsoft of this Agreement, nor the
consummation by Microsoft of the transactions herein
contemplated, nor the fulfillment by Microsoft of the
terms and provisions hereof (i) will conflict with,
violate or result in a breach of, any of the terms,
conditions or provisions of any law, regulation, order,
writ, injunction, decree, determination or award of any
court, governmental department, board, agency or
instrumentality or any arbitrator, applicable to
Microsoft including, without limitation, the
Communications Act, and the rules and regulations
promulgated thereunder, (ii) will conflict with, violate
or result in a breach of, or constitute a default under,
any of the terms, conditions or provisions of Microsoft's
certificate of incorporation and by-laws or (iii) will
conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions
or provisions of any loan agreement, indenture, trust,
deed or other agreement or instrument to which Microsoft
is a party or by which it is bound, except where such
conflict, violation or breach will not have a material
adverse effect on Microsoft's execution, delivery,
consummation or fulfillment of this Agreement. Microsoft
is not in default under any agreement to which it is a
party which default could impair its ability to perform
its obligations under this Agreement, except where such
default would not have a material adverse effect on
Microsoft's ability to perform its obligations under this
Agreement.
ARTICLE V
MISCELLANEOUS
5.1 Termination. This Agreement, and all
rights and obligations of the parties hereunder, shall
terminate upon the mutual agreement of the parties
hereto.
5.2 Assignability. This Agreement shall be
binding upon and inure to the benefit of the successors
and assigns of each party hereto. Neither this Agreement
nor any right or obligation hereunder may be assigned or
delegated in whole or in part to any other person without
the prior written consent of each other party hereto.
5.3 Notices. In any case where any notice or
other communication is required or permitted to be given
hereunder (including, without limitation, any change in
the information set forth in this Section 5.3) such
notice or communication shall be in writing and (a)
personally delivered, (b) sent by registered United
States mail, postage prepaid, return receipt requested,
(c) transmitted by telecopy or (d) sent by way of a
recognized overnight courier service, Postage prepaid,
return receipt requested with instructions to deliver on
the next business day, in each case as follows:
(i) If to Mtel, to:
Mobile Telecommunication Technologies
Corp.
110 East 59th St.
36th Floor
New York, New York 10022
Attention: John E. Welsh, III
Telecopy: (212) 735-0808
with a copy to:
Mobile Telecommunication Technologies
Corp.
200 South Lamar Street
Security Centre, South Building
Jackson, Mississippi 39201
Attention: Leonard G. Kriss, Esq.
Telecopy: (601) 944-7194
(ii) If to Microsoft, to:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Attention: Treasurer
Telecopy: (206) 936-2625
with a copy to:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Attention: Robert A. Eschelman
Telecopy: (206) 869-1327
5.4 Waivers. The failure at any time of any
party hereto to require performance by any other party
hereto of any responsibility or obligation required by
this Agreement shall in no way affect a party's right to
require such performance at any time thereafter, nor
shall the waiver by the party of a breach of any
provision of this Agreement by any other party constitute
a waiver of any other breach of the same or any other
provision of this Agreement nor constitute a waiver of
the responsibility or obligation itself.
5.5 Third Party Rights. Nothing in this
Agreement, whether express or implied, is intended or
shall be construed to confer, directly or indirectly,
upon or give to any other person than Mtel, Microsoft and
their respective Affiliates, any legal or equitable
right, remedy or claim under or in respect of this
Agreement or any covenant, condition or other provision
contained herein.
5.6 Choice of Law. This Agreement shall be
construed and enforced in accordance with and governed by
the laws of the State of Delaware without giving effect
to the principles of conflict of laws thereof.
5.7 Severability. Should any provision of
this Agreement be deemed in contradiction with the laws
of any jurisdiction in which it is to be performed or
unenforceable for any reason, such provision shall be
deemed null and void, but this Agreement shall remain in
force in all other respects. Should any provision of
this Agreement be or become ineffective because of
changes in applicable laws or interpretations thereof or
should this Agreement fail to include a provision that is
required as matter of law, the validity of the other
provisions of this Agreement shall not be affected
thereby. If such circumstances arise, the parties hereto
shall negotiate in good faith appropriate modifications
to this Agreement to reflect those changes that are
required by law.
5.8 Enforcement of Agreement. Any action or
proceeding brought by any party to this Agreement on its
own behalf, or on behalf of Mtel, in connection with or
relating to this Agreement or any provision hereof shall
be brought only in a federal or state court of competent
jurisdiction in the United States. Each of the parties
hereto, solely in connection with any such action or
proceeding, does hereby (a) submit to the jurisdiction of
any such court, (b) waive any defense of or relating to
lack of jurisdiction with respect to any such action or
proceeding in any such court and (c) waive any defense of
or relating to service of process in a such action or
proceeding in any such court.
5.9 References to Agreement. Any reference
herein to this Agreement shall be deemed to be a
reference to such Agreement as the same may be modified,
varied, amended or supplemented from time to time by the
parties hereto in accordance with the provisions hereof.
Unless the context otherwise expressly requires, the
words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other
subdivision or Appendix.
5.10 Headings, etc. The Article and Section
headings in this Agreement, and the table of contents
included herein, are inserted for convenience of
reference only and shall not affect the interpretation of
this Agreement. Whenever the context shall require, each
term stated in either the singular or plural shall
include the singular and the plural. References herein
to masculine, feminine or neuter pronouns shall be
construed to refer to another gender when the context may
require.
5.11 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute
one and the same instrument.
5.12 Survival. The provisions of all
representations and warranties made herein shall survive
the execution and delivery of this Agreement until the
expiration of a period of two years following the
effective date of any termination of this Agreement.
5.13 Amendments. This Agreement may be amended
or modified only by a written instrument executed by each
of the parties hereto or by their respective successors
and assigns.
5.14 Entire Agreement. This Agreement and the
other agreements and documents contemplated herein and
therein, constitute the entire agreement between the
parties hereto and supersede any prior agreement or
understanding between the parties. This Agreement
supersedes the Original Stockholders Agreement as it
relates to the parties hereto and the matters covered
hereby and thereby.
IN WITNESS WHEREOF, Mtel and Microsoft have
caused this Agreement to be duly executed and delivered
on the day and year first above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh, III
___________________________
Name: John E. Welsh, III
Title: Vice Chairman and Chief
Financial Officer
MICROSOFT CORPORATION
By: /s/ Greg Maffei
___________________________
Name: Greg Maffei
Title: Treasurer
____________________________________________
FORM OF REGISTRATION RIGHTS AGREEMENT
____________________________________________
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated this ____ day of _____, 1996, by and
among Mobile Telecommunication Technologies Corp., a
Delaware corporation (the "Corporation"), and _________
___________, a Washington corporation (the
"Stockholder").
W I T N E S S E T H :
WHEREAS, pursuant to the terms of a stock
purchase agreement (the "Stock Purchase Agreement"), the
Corporation has sold to the Stockholder shares of the
Corporation's Series A 7.5% Cumulative Convertible Accruing
Pay-In-Kind Preferred Stock, par value $0.01 (the "PIK
Preferred Stock"); and
WHEREAS, by its terms as provided in the
Certificate of Designation of the Rights and Preferences
of the Series A 7.5% Cumulative Convertible Accruing
Pay-In-Kind Preferred Stock, the PIK Preferred Stock is
convertible into shares of common stock, par value $0.01,
of the Corporation (the "Common Stock");
WHEREAS, in connection with, and contingent
upon the consummation of, the closing of the transaction
contemplated by the Stock Purchase Agreement, the
Corporation and the Stockholder desire to provide for
certain registration rights with respect to the
Registrable Stock as set forth herein;
NOW, THEREFORE, in consideration of the
foregoing and for other good and valuable consideration,
the receipt and sufficiency of which hereby are
acknowledged, the parties hereto, subject to the terms
and conditions set forth below, hereby agree as follows:
ARTICLE I.
DEFINITIONS
Unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have
the respective meanings assigned to them in the Stock
Purchase Agreement. Unless the context otherwise
requires, the following terms shall have the following
meanings:
1.1 "HOLDER": A holder of Registrable Stock
provided that anyone who acquires any Registrable Stock
in a distribution pursuant to a registration statement
filed by the Corporation under the Securities Act shall
not thereby be deemed to be a "Holder."
1.2 "REGISTER," "REGISTERED" AND
"REGISTRATION": Each refer to a registration of
Registrable Stock effected by filing with the SEC a
registration statement in compliance with the Securities
Act and the declaration or ordering by the SEC of
effectiveness of such registration statement.
1.3 "REGISTRABLE STOCK": All shares of
either (i) PIK Preferred Stock (or any additional series
of payment-in-kind preferred stock that may be issued as
contemplated by the Stock Purchase Agreement) or (ii)
following conversion of any such preferred stock, the
Common Stock into which such preferred stock was
converted.
1.4 "SHELF REGISTRATION": means a
registration effected pursuant to Section 2 hereof.
1.5 "SHELF REGISTRATION STATEMENT": means a
shelf registration statement of the Corporation pursuant
to the provisions of Section 2 hereof filed with the
Securities and Exchange Commission (the "SEC") which
covers some or all of the Registrable Securities, as
applicable, and, at the option of the Corporation, such
shares of capital stock (or other securities of the
Corporation) as the Corporation shall designate therein
(the "Corporation Shelf Securities") on an appropriate
form under Rule 415 under the Securities Act of 1933 (the
"Act"), or any similar rule that may be adopted by the
SEC, amendments and supplements to such registration
statement, including post-effective amendments, in each
case including the prospectus contained therein, all
exhibits thereto and all material incorporated by
reference therein.
ARTICLE II.
REGISTRATION RIGHTS
2.1 SHELF REGISTRATION.
(a) The Corporation shall (i) file by November
15, 1996 with the SEC a Shelf Registration Statement
relating to the offer and sale of the Registrable
Securities by the Holders and the Corporation Shelf
Securities by the Corporation from time to time in
accordance with the methods of distribution elected
by such Holders, or the Corporation, as the case may
be, and set forth in such Shelf Registration
Statement and, thereafter, and (ii) use its
reasonable best efforts to cause such Shelf
Registration Statement to be declared effective
under the Act; provided, however, that no Holder
shall be entitled to have the Registrable Securities
held by it covered by such Shelf Registration unless
such Holder is in compliance with Section 2.5
hereof.
(b) The Corporation shall use its reasonable
best efforts (i) to keep the Shelf Registration
Statement continuously effective in order to permit
the prospectus forming part thereof to be usable by
the Holders until April 1, 1998 or such shorter
period that will terminate when all the Registerable
Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf
Registration Statement, and (ii) after the
effectiveness of the Shelf Registration Statement,
promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of
any Registrable Securities of such Holder and to
identify such Holder as a selling securityholder.
2.2 REGISTRATION PROCEDURES. In connection
with any Shelf Registration Statement, the Corporation
shall:
(a) prepare and file with the SEC a Shelf
Registration Statement, on an appropriate form
pursuant to Rule 415 of the Act and which the
Corporation is eligible to use, with respect to such
shares and use its best efforts to cause such Shelf
Registration statement to become and remain
effective as provided herein;
(b) prepare and file with the SEC such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and current and to
comply with the provisions of the Act with respect
to the disposition of all shares covered by such
registration statement, including such amendments
and supplements as may be necessary to reflect the
intended method of disposition from time to time of
the prospective seller or sellers of such
Registrable Stock;
(c) furnish to each seller such number of
copies of a prospectus in conformity with the
requirements of the Act, and such other documents,
as such seller may reasonably request in order to
facilitate the public sale or other disposition of
the Registrable Stock owned by such seller;
(d) use its best efforts to register or
qualify the shares of Registrable Stock covered by
such registration statement under such other
securities or blue sky or other applicable laws of
such jurisdiction within the United States as each
prospective seller shall reasonably request, to
enable such seller to consummate the public sale or
other disposition in such jurisdictions of the
shares of Registrable Stock owned by such seller;
provided, however, that in no event shall the
Corporation be obligated to qualify to do business
in any jurisdiction where it is not at the time so
qualified or to take any action that would subject
it to service of process in suits other than those
arising out of the offer or sale of the Registrable
Stock covered by such registration statement in any
jurisdiction where it is not at the time so subject;
and
(e) furnish to each prospective seller a
signed counterpart, addressed to the prospective
sellers, of (i) an opinion of counsel for the
Corporation, dated the effective date of the
registration statement, and (ii) a "comfort" letter
(or, in the case of any such Person which does not
satisfy the conditions for receipt of a "comfort"
letter specified in Statement on Auditing Standards
No. 72, an "agreed upon procedures" letter) signed
by the independent public accountants who have
certified the Corporation's financial statements
included in the registration statement, covering
substantially the same matters with respect to the
registration statement (and the prospectus included
therein) and (in the case of the "comfort" or
"agreed upon procedures" letter) with respect to
events subsequent to the date of the financial
statements, as are customarily covered (at the time
of such registration) in opinions of issuer's
counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of
securities (with, in the case of an "agreed upon
procedures" letter, such modifications or deletions
as may be required under Statement on Auditing
Standards No. 35).
2.3 LIMITATIONS ON OFFERINGS BY THE HOLDERS.
(a) Notwithstanding the provisions of Section
2.1, if at any time the Corporation desires to
effect a registered offering of securities (pursuant
to Shelf Registration Statement or otherwise) and
simultaneously therewith any Holder desires to
effect an offering pursuant to a Shelf Registration
Statement and if the underwriter, if any, determines
that (i) marketing factors require a limitation of
the total number of shares to be underwritten, or
(ii) the offering price per share would be reduced
by the inclusion of the securities of the Holders,
then the number of shares to be included in the
underwriting shall first be allocated to the
Corporation, then the remainder, if any, among all
Holders who indicated to the Corporation their
decision to distribute any of their Registrable
Stock through such underwriting, in proportion, as
nearly as practicable, to the respective numbers of
shares of Registrable Stock which such Holders
initially indicated to be included in the
underwriting.
(b) If at any time the Corporation is engaged,
or proposes to engage in a registered public
offering within 30 days of the time of a proposed
offering by a Holder pursuant to the Shelf
Registration Statement, or is engaged in any other
activity that, in the good faith determination of
the Board of Directors of the Corporation (the
"Board"), would be adversely affected by the
proposed offering by a Holder or the required
disclosure in connection therewith to the material
detriment of the Corporation or any affiliate
thereof, then the Corporation may at its option
direct that such offering by a Holder be delayed,
suspended or postponed for a period not in excess of
45 days from the effective date of such offering, or
the date of commencement of such other material
activity, as the case may be.
(c) Anything in this Agreement to the contrary
notwithstanding, the Holders shall not offer any
Registrable Securities pursuant to the Shelf
Registration Statement if such offering would
require the Corporation (i) to furnish any financial
statements other than as of the end of a fiscal
quarter or (ii) to furnish any audited financial
statements other than as of the end of a fiscal year
unless the Holder(s) requesting such registration
agree to bear the expenses of furnishing such
financial statements. In addition to the foregoing,
in the event of a proposed offering by a Holder
pursuant to the Shelf Registration Statement, at
such time as any registration statement would be
required to include audited financial statement as
of a fiscal year end, the Corporation may delay the
dissemination of the required notice and the taking
of any action to effect a supplement to the Shelf
Registration Statement until such time as such
audited financial statements are available in the
ordinary course of business.
(d) No Holder shall offer any Registrable
Securities pursuant to the Shelf Registration
Statement within 45 days after the effectiveness of
any other registration of the Corporation's capital
stock.
(e) No take-down under the Shelf Registration
Statement shall be effected unless the value of the
Registrable Securities proposed to be offered under
such take-down exceeds $5 million.
2.4 DESIGNATION OF UNDERWRITER.
(a) In the case of any registration effected
pursuant to Section 2.1, a majority in interest of
the Holders shall have the right to designate the
managing underwriter in any underwritten offering,
which underwriter shall be reasonably acceptable to
the Corporation.
(b) In the case of any registration initiated
by the Corporation, the Corporation shall have the
right to designate the managing underwriter in any
underwritten offering.
2.5 COOPERATION BY PROSPECTIVE SELLERS.
(a) Each prospective seller of Registrable
Stock, and each underwriter designated by each such
seller, will furnish to the Corporation such
information as the Corporation may reasonably
require from such seller or underwriter in
connection with the Shelf Registration Statement
(and the prospectus included therein). No Holder
may participate in any offering unless such Holder
(i) agrees to sell its Registrable Stock to be sold
on the basis provided in any agreement governing the
offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements
and other documents required in connection with the
offering.
(b) Failure of a prospective seller of
Registrable Stock to furnish the information and
agreements described in this Agreement shall not
affect the obligations of the Corporation under this
Agreement to remaining sellers to furnish such
information and agreements unless, in the reasonable
opinion of counsel to the Corporation or the
underwriters, such failure impairs or may impair the
viability of the offering or the legality of the
registration or the underlying offering.
(c) The Holders holding shares included in the
registration will not (until further notice by the
Corporation) effect sales thereof (or deliver a
prospectus to any purchaser) after receipt of
telegraphic or written notice from the Corporation
to suspend sales to permit the Corporation to
correct or update a registration statement or
prospectus. At the end of the period during which
the Corporation is obligated to keep the
registration statement current and effective as
described in Section 2.1(b)(i), the Holders holding
shares of Registrable Stock included in the
registration shall discontinue sales of shares
pursuant to such registration statement upon receipt
of notice from the Corporation of its intention to
remove from registration the shares of Registrable
Stock covered by such registration statement that
remain unsold, and such Holders shall notify the
Corporation of the number of such shares registered
that remain unsold immediately upon receipt of such
notice from the Corporation.
In connection with any offering, each Holder
who is a prospective seller, will not use any
offering document, offering circular or other
offering materials with respect to the offer or sale
of Registrable Stock, other than the prospectuses
provided by the Corporation and any documents
incorporated by reference therein.
2.6 EXPENSES OF REGISTRATION. All expenses
incurred in effecting any registration pursuant to this
Agreement, including, without limitation, all
registration and filing fees, printing expenses, expenses
of compliance with blue sky laws, fees and disbursements
of counsel for the Corporation and expenses of any audits
incidental to or required by any such registration, shall
be borne by the Corporation, except (a) that all
additional expenses, fees and disbursements of any
counsel retained by the Holders, and all underwriting
discounts, fees and commissions shall be borne by the
Holders holding the securities registered pursuant to
such registration, according to the quantity of their
securities so registered; and (b) the Corporation shall
not be required to pay for any expenses of any take-down
pursuant to a Shelf Registration proceeding begun
pursuant to Section 2.1 if the registration request is
subsequently withdrawn at the request of the Holders of a
majority of the Registrable Stock to be registered (in
which case all participating Holders shall bear such
expenses); provided, however, that if immediately prior
to the time of such withdrawal, the Holders have learned
of a materially adverse change in the condition, business
or prospects of the Corporation from that known to the
Holders at the time of their request, then the Holders
shall not be required to pay any of such expenses and
shall retain their rights pursuant to Section 2.1.
2.7 INDEMNIFICATION.
(a) To the extent permitted by law, the
Corporation will indemnify each Holder requesting or
joining in a registration, each agent, officer and
director of such Holders, each person controlling
such Holder and each underwriter and selling broker
of the securities so registered (collectively,
"Indemnitees") against all claims, losses, damages
and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact
contained in any prospectus, offering circular or
other document incident to any registration,
qualification or compliance (or in any related
registration statement, notification or the like) or
any omission (or alleged omission) to state therein
a material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances in
which they were made, or any violation by the
Corporation of any rule or resolution promulgated
under the Securities Act applicable to the
Corporation and relating to an action or inaction
required of the Corporation in connection with any
such registration, qualification or compliance, and
will reimburse each such Indemnitee for any legal
and any other expenses reasonably incurred in
connection with investigating or defending any such
claim, loss, damage, liability or action, provided,
however, that the Corporation will not be liable in
any such case to the extent that any such claim,
loss, damage or liability is caused by any untrue
statement or omission so made in strict conformity
with written information furnished to the
Corporation by an instrument duly executed by such
Indemnitees and stated to be specifically for use
therein and except that the foregoing indemnity
agreement is subject to the condition that, insofar
as it relates to any such untrue statement (or
alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on
file with the SEC at the time the registration
statement becomes effective or in the amended
prospectus filed with the SEC pursuant to Rule
424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any
underwriter, or any Indemnitee if there is no
underwriter, if a copy of the Final Prospectus was
not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the
time such furnishing is required by the Securities
Act; provided, further, that this indemnity shall
not be deemed to relieve any underwriter of any of
its due diligence obligations; provided, further,
that the indemnity agreement contained in this
Section 2.7(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage,
liability or action if such settlement is effected
without the consent of the Corporation, which
consent shall not be unreasonably withheld.
(b) To the extent permitted by law, each
Holder requesting or joining in a registration and
each underwriter of the securities so registered
will indemnify the Corporation and its officers and
directors and each other Holder and each person, if
any, who controls any of them within the meaning of
Section 15 of the Securities Act and their
respective successors against all claims, losses,
damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering
circular or other document incident to any
registration, qualification or compliance (or in any
related registration statement, notification or the
like) or any omission (or alleged omission) to state
therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading in the light of the circumstances in
which they were made and will reimburse the
Corporation and each other person indemnified
pursuant to this paragraph (b) for any legal and any
other expenses reasonably incurred in connection
with investigating or defending any such claim,
loss, damage, liability or action, provided,
however, that this paragraph (b) shall apply only if
(and only to the extent that) such statement or
omission was made in reliance upon and in strict
conformity with written information (including,
without limitation, written negative responses to
inquiries) furnished to the Corporation by an
instrument duly executed by such Holder or
underwriter and stated to be specifically for use in
such prospectus, offering circular or other document
(or related registration statement, notification or
the like) or any amendment or supplement thereto and
except that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates
to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in
the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the
SEC at the time the registration statement becomes
effective or in the Final Prospectus, such indemnity
agreement shall not inure to the benefit of (i) the
Corporation and (ii) any underwriter or any Holder,
if there is no underwriter, if a copy of the Final
Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or
prior to the time such furnishing is required by the
Securities Act; provided, further, that this
indemnity shall not be deemed to relieve any
underwriter of any of its due diligence obligations;
provided, further, that the indemnity agreement
contained in this Section 2.7(b) shall not apply to
amounts paid in settlement of any such claim, loss,
damage, liability or action if such settlement is
effected without the consent of the Holder or
underwriter, as the case may be, which consent shall
not be unreasonably withheld; and provided, further,
that the obligations of such Holders shall be
limited to an amount equal to the proceeds to each
such Holder of Registrable Stock sold as
contemplated herein, unless such claim, loss,
damage, liability or action resulted from such
Holder's fraudulent misconduct.
(c) Each party entitled to indemnification
hereunder (the "Indemnified Party") shall give
notice to the party required to provide
indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party (at its expense)
to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be satisfactory to
the Indemnified Party, and the Indemnified Party may
participate in such defense at such party's expense,
and provided, further, that the omission by any
Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its
obligations under this Section 2.7 except to the
extent that the omission results in a failure of
actual notice to the Indemnifying Party and such
Indemnifying Party is damaged solely as a result of
the failure to give notice. No Indemnifying Party,
in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter
into any settlement that either (i) does not include
as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim
or litigation or (ii) contains any finding of a
violation of law by an Indemnified Party.
(d) The reimbursement required by this Section
2.7 shall be made by periodic payments during the
course of the investigation or defense, as and when
bills are received or expenses are incurred.
(e) If the indemnification provided for in
this Section 2.7 is unavailable to an Indemnified
Party in respect of any losses, claims, damages or
liabilities referred to therein, then each
Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a
result of such losses, claims, damages or
liabilities in such proportion as is appropriate to
reflect the relative fault of the Corporation on the
one hand, and of the sellers of Registrable Stock
and any other sellers participating in the
registration statement on the other hand, in
connection with the statements or omissions that
resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations including the relative benefits
received by the Corporation, on the one hand, and by
the sellers of Registrable Stock and any other
sellers participating in the registration statement
on the other hand. The relative benefits received
by the Corporation on the one hand, and the sellers
of Registrable Stock and any other sellers
participating in the registration statement on the
other hand, shall be deemed to be in the same
proportion as the total net proceeds from the
offering (before deducting expenses) to the
Corporation bear to the total net proceeds from the
offering (before deducting expenses) to the sellers
of Registrable Stock and any other sellers
participating in the registration statement. The
relative fault of the Corporation on the one hand,
and of the sellers of Registrable Stock and any
other sellers participating in the registration
statement on the other hand, shall be determined by
reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or
the omission or alleged omission to state a material
fact relates to information supplied by the
Corporation or by the sellers of Registrable Stock
or other sellers participating in the registration
statement and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(f) The Corporation and the sellers of
Registrable Stock agree that it would not be just
and equitable if contribution pursuant to this
Section 2.7 were determined by pro rata allocation
(even if the sellers of Registrable Stock were
treated as one entity for such purpose) or by any
other method of allocation that does not take
account of the equitable considerations referred to
in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result
of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph
shall be deemed to include, subject to the
limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified
party in connection with investigating or defending
any such action or claim. Notwithstanding the
provisions of this Section 2.9, no seller of
Registrable Stock shall be required to contribute
any amount in excess of the proceeds received by
such seller from the sale of Registrable Stock
covered by any registration statement filed pursuant
hereto. No person guilty of fraudulent
misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of
such fraudulent misrepresentation.
(g) The obligations under this Section 2.7
shall survive the completion of any offering of
Registrable Stock in a registration statement under
this Agreement or otherwise.
2.8 RIGHTS THAT MAY BE GRANTED TO SUBSEQUENT INVESTORS.
(a) Within the limitations prescribed by this
paragraph (a), but not otherwise, the Corporation
may grant to subsequent investors in the Corporation
rights of registration upon request and rights of
incidental registration, including on any Shelf
Registration Statement; provided, however, if an
underwriter, if any, determines that (i) marketing
factors require a limitation on the total number of
shares to be underwritten, or (ii) the offering
price per share would be reduced by the inclusion of
securities of a third party, then the number of
shares to be included in the underwriting shall be
allocated first to the Holders and then the
remainder, if any, to such other third parties.
2.9 DELAY OF REGISTRATION. The Stockholder
shall have no right to take any action to restrain,
enjoin, or otherwise delay any registration as the result
of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
The parties hereby represent and warrant with
respect to themselves as follows:
3.1 ORGANIZATION. The Corporation and the
Stockholder are corporations duly formed, validly
existing and in good standing under the laws of their
respective states of incorporation and have full power
(corporate or otherwise) and authority to own and operate
their assets and properties and carry on their businesses
as presently conducted and are duly qualified to do
business and are in good standing in all jurisdictions in
which the ownership or occupancy of their properties or
their activities presently makes such qualification
necessary, except where the failure to so qualify would
not have a material adverse effect upon their, and their
subsidiaries', businesses, properties or assets. With
respect to the Corporation, subsidiaries shall mean
Skytel Corp., Destineer, Inc. and Mtel International, Inc.
3.2 AUTHORITY. The Corporation has all
requisite corporate power and authority to enter into
this Agreement and to consummate the transactions
contemplated hereby. The Stockholder has all requisite
power and authority to enter into and to consummate the
transactions contemplated hereby. The execution and
delivery by the Corporation and the Stockholder of this
Agreement and the consummation by the Corporation and the
Stockholder of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action of
the Corporation and the Stockholder. This Agreement
constitutes a valid and binding obligation of the parties
hereto, enforceable against them in accordance with its
terms, except as the enforceability thereof may be
limited by bankruptcy or other laws affecting the
enforcement of creditors' rights generally and the
availability of equitable remedies, including specific
performance, is subject to the discretion of the court
before which any proceeding therefor may be brought.
3.3 CONSENTS AND APPROVALS. All
authorizations, approvals and consents, if any, required
to be obtained from, and all registrations, declarations
and filings, if any, required to be made with, all
governmental authorities and regulatory bodies to permit
the Corporation and the Stockholder to execute and
deliver, and to perform its obligations under, this
Agreement have been obtained or made, as the case may be,
and all such authorizations, approvals, consents,
registrations, declarations and filings (collectively
"consents and fillings") are in full force and effect,
except where failure to obtain and/or maintain in full
force and effect such consents and filings would not have
a material adverse effect upon the execution and delivery
of, and upon the performance of the parties' obligations
under, this Agreement.
3.4 NO VIOLATIONS. Neither the execution or
delivery of this Agreement by the parties hereto, nor the
consummation by the parties hereto of the transactions
herein contemplated, nor the fulfillment by the
Stockholder and the Corporation of the terms and
provisions hereof (i) will conflict with, violate or
result in a breach of, any of the terms, conditions or
provisions of any law, regulation, order, writ,
injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality
or any arbitrator, applicable to the Stockholder or the
Corporation including, without limitation, the
Communications Act of 1934, as amended (the
"Communications Act"), and the rules and regulations
promulgated thereunder, (ii) will conflict with, violate
or result in a breach of, or constitute a default under,
any of the terms, conditions or provisions of the
articles of incorporation or by-laws of the Corporation
or the Stockholder, (iii) will conflict with, violate or
result in a breach of, or constitute a default under, any
of the terms, conditions or provisions of any loan
agreement, indenture, trust, deed or other agreement or
instrument to which the Stockholder is a party or by
which it is bound or (iv) result in the creation or
imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever (collectively, a
"lien") upon any of the Stockholder's or the
Corporation's property or assets. Except with respect to
the Credit Agreement (as defined in the stock Purchase
Agreement) which default shall be cured upon the Closing
under the Stock Purchase Agreement, the Stockholder and
the Corporation is not in default under any agreement to
which it is a party which default could impair its
ability to perform its obligations under this Agreement,
except where such default would not have a material
adverse affect on the parties' ability to perform its
obligations under this Agreement.
ARTICLE IV.
MISCELLANEOUS
4.1 TERMINATION. The registration rights
granted and obligations created hereunder shall terminate
April 1, 1998.
4.2 ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the successors
and assigns of each party hereto. Except as provided in
Section 2.12 hereof, neither this Agreement nor any right
or obligation hereunder may be assigned or delegated in
whole or in part to any other person without the prior
written consent of each other party hereto.
4.3 NOTICES. In any case where any notice or
other communication is required or permitted to be given
hereunder (including, without limitation, any change in
the information set forth in this Section 4.3) such
notice or communication shall be in writing and (a)
personally delivered, (b) sent by registered United
States mail, postage prepaid, return receipt requested,
(c) transmitted by telecopy or (d) sent by way of a
recognized overnight courier service, postage prepaid,
return receipt requested with instructions to deliver on
the next business day, in each case as follows:
(a) If to the Corporation, to:
Mobile Telecommunication Technologies Corp.
110 East 59th Street
36th Floor
New York, New York 10022
Attention: John E. Welsh, III
Telecopy: (212) 735-0808
with a copy to:
Mobile Telecommunication Technologies Corp.
200 South Lamar Street
Security Centre, South Building
Jackson, Mississippi 39201
Attention: Leonard G. Kriss, Esq.
Telecopy: (601) 944-7194
(b) If to the Stockholder, to:
All such notices or other communications shall
be deemed to have been given or received (i) upon receipt
if personally delivered, (ii) on the fifth day following
posting if by registered United States mail, (iii) when
sent by confirmed telecopy or (iv) on the next business
day following deposit with an overnight courier.
4.4 THIRD PARTY RIGHTS. Nothing in this
Agreement, whether express or implied, is intended or
shall be construed to confer, directly or indirectly,
upon or give to any other than the Corporation, the
Stockholder and their respective affiliates, any legal or
equitable right, remedy or claim under or in respect of
this Agreement or any covenant, condition or
other provision contained herein.
4.5 CHOICE OF LAW. This Agreement shall be
construed and enforced in accordance with and governed by
the laws of the State of Delaware without giving effect
to the principles of conflict of laws thereof.
4.6 SEVERABILITY. Should any provision of
this Agreement be deemed in contradiction with the laws
of any jurisdiction in which it is to be performed or
unenforceable for any reason, such provision shall be
deemed null and void, but this Agreement shall remain in
force in all other respects. Should any provision of
this Agreement be or become ineffective because of
changes in applicable laws or interpretations thereof or
should this Agreement fail to include a provision that is
required as a matter of law, the validity of the other
provisions of this Agreement shall not be affected
thereby. If such circumstances arise, the parties hereto
shall negotiate in good faith appropriate modifications
to this Agreement to reflect those changes that are
required by law.
4.7 ENFORCEMENT OF AGREEMENT. Any action or
proceeding brought by any party to this Agreement on its
own behalf, or on behalf of the Corporation, in
connection with or relating to this Agreement or any
provision hereof shall be brought only in a federal or
state court of competent jurisdiction in the United
States. Each of the parties hereto, solely in connection
with any such action or proceeding, does hereby (a)
submit to the jurisdiction of any such court, (b) waive
any defense of or relating to lack of jurisdiction with
respect to any such action or proceeding in any such
court, (c) waive any defense of or relating to service of
process in any such action or proceeding in any such
court and (d) irrevocably appoints the Corporation as its
agent to accept service of process in such action,
provided that if the Corporation is the party commencing
such action or proceeding, it shall give reasonably
prompt notice thereof to the other party named in such
action or proceeding.
4.8 TRANSFERS. Any dispositions made pursuant
to this Agreement shall comply in all respects with the
Communications Act and the rules and regulations
promulgated thereunder including, without limitation, the
limitations on ownership or control of FCC licenses or
FCC businesses contained in Section 310 of the
Communications Act.
4.9 REFERENCES TO AGREEMENT. Any reference
herein to this Agreement shall be deemed to be a
reference to such Agreement as the same may be modified,
varied, amended or supplemented from time to time by the
Stockholder in accordance with the provisions hereof.
Unless the context otherwise expressly requires, the
words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other
subdivision.
4.10 ENTIRE AGREEMENT. This Agreement, the
Stockholder Agreement and the other agreements and
documents contemplated herein and therein, constitute the
entire agreement between the parties hereto and supersede
any prior agreement or understanding between the parties
hereto whether oral or written, with respect
to the matters contemplated hereby and thereby.
4.11 HEADINGS, ETC. The Article and Section
headings in this Agreement are inserted for convenience
of reference only and shall not affect the interpretation
of this Agreement. Whenever the context shall require,
each term stated in either the singular or plural shall
include the singular and the plural. References herein
to masculine, feminine or neuter pronouns shall be
construed to refer to another gender when the context may
require.
4.12 COUNTERPARTS. This Agreement maybe
executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute
one and the same instrument.
4.13 SURVIVAL. All representations and
warranties made herein shall survive the execution and
delivery of this Agreement and any termination of this
Agreement.
4.14 AMENDMENTS. This Agreement may be amended
or modified only by a written instrument executed by each
of the parties hereto or by their respective successors
and assigns.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP. CONSOLIDATED BALANCE SHEET AS OF MARCH 31,
1996 AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE QUARTER ENDED MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,064,832
<SECURITIES> 0
<RECEIVABLES> 66,999,939
<ALLOWANCES> 10,016,131
<INVENTORY> 0
<CURRENT-ASSETS> 114,356,484
<PP&E> 407,211,997
<DEPRECIATION> 94,628,555
<TOTAL-ASSETS> 911,988,047
<CURRENT-LIABILITIES> 126,361,852
<BONDS> 363,104,781
0
37,800
<COMMON> 541,607
<OTHER-SE> 421,893,747
<TOTAL-LIABILITY-AND-EQUITY> 911,988,047
<SALES> 80,584,096
<TOTAL-REVENUES> 80,584,096
<CGS> 0
<TOTAL-COSTS> 106,720,343
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,989,762
<INCOME-PRETAX> (27,952,935)
<INCOME-TAX> 620,823
<INCOME-CONTINUING> (28,573,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,573,758)
<EPS-PRIMARY> (0.57)
<EPS-DILUTED> (0.57)
</TABLE>
