<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 September 30, 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 of (I.R.S. Employer
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.
54,402,688 shares of Common Stock,
par value $.01 per share, as of
October 31, 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 -- September 30, 1996 and December 31,
1995.
Consolidated Statements of Operations -- Nine Months Ended September
30, 1996 and 1995, and Three Months Ended September 30, 1996 and 1995.
Consolidated Statements of Cash Flows -- Nine Months Ended September
30, 1996 and 1995, and Three Months Ended September 30, 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>
September 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $29,877,306 $9,612,734
Accounts receivable, net 67,542,489 46,313,031
Other receivables 7,207,377 5,488,392
Other current assets 13,804,602 3,700,019
--------------- ---------------
TOTAL CURRENT ASSETS 118,431,774 65,114,176
--------------- ---------------
MESSAGING NETWORKS
Property and equipment, net 320,352,774 294,626,442
Certificates of authority and license cost 166,474,706 159,101,539
Network construction and development costs 87,636,929 88,145,489
--------------- ---------------
TOTAL MESSAGING NETWORKS 574,464,409 541,873,470
--------------- ---------------
GOODWILL 85,714,066 88,144,574
INVESTMENT IN UNCONSOLIDATED INTERNATIONAL
VENTURES 47,008,087 68,043,591
OTHER ASSETS
Securities restricted for debt service 40,633,667 64,101,245
Other 25,360,466 24,136,475
--------------- ---------------
TOTAL OTHER ASSETS 65,994,133 88,237,720
--------------- ---------------
$891,612,469 $851,413,531
=============== ===============
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES
Current maturities of long-term debt $794,524 $1,278,426
Accounts payable and accrued liabilities 86,020,170 93,281,635
--------------- ---------------
TOTAL CURRENT LIABILITIES 86,814,694 94,560,061
--------------- ---------------
LONG-TERM DEBT 397,509,972 333,258,720
MINORITY INTEREST 21,713,503 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;
57,500 shares of 7.5% Cumulative
Convertible Accruing PIK Preferred
Stock outstanding in 1996 38,075 37,500
Common Stock, par value $.01 per share;
100,000,000 shares authorized;
shares issued: 54,364,377 in 1996
and 54,134,711 in 1995 543,644 541,347
Additional paid-in-capital 617,949,271 557,837,759
Accumulated deficit (231,514,019) (133,383,935)
Cumulative translation adjustment (1,442,671) (1,492,422)
--------------- ---------------
TOTAL STOCKHOLDERS' INVESTMENT 385,574,300 423,540,249
--------------- ---------------
$891,612,469 $851,413,531
=============== ===============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- -----------------------------
1996 1995 1996 1995
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues $260,801,420 $171,915,365 $92,005,625 $64,422,756
Expenses:
Operating 83,953,470 43,549,763 28,106,120 17,817,252
Selling, general and administrative 171,561,335 120,481,461 58,636,542 43,985,214
Depreciation and amortization 67,759,636 24,462,692 23,088,142 9,953,060
-------------- -------------- -------------- -------------
323,274,441 188,493,916 109,830,804 71,755,526
-------------- -------------- -------------- -------------
Operating income (loss) (62,473,021) (16,578,551) (17,825,179) (7,332,770)
Interest income 4,457,804 10,373,802 1,575,081 2,595,839
Interest expense (32,309,993) (7,380,126) (11,906,619) (2,231,191)
Gain (loss) on sale of assets 2,411,103 72,492 (3,777,526) 31,825
Other income 51,778 1,314,523 17,906 406,607
-------------- -------------- -------------- -------------
Income (loss) before income taxes
and equity income (loss) (87,862,329) (12,197,860) (31,916,337) (6,529,690)
Provision for income taxes 1,460,822 504,864 131,536 190,093
Equity in income (losses) of investments (451,124) 1,061,105 (255,780) 80,021
-------------- -------------- -------------- -------------
Net income (loss) ($89,774,275) ($11,641,619) ($32,303,653) ($6,639,762)
Preferred dividend requirement 8,355,824 6,328,125 3,218,205 2,109,375
-------------- -------------- -------------- -------------
Net income (loss) available to common
stockholders ($98,130,099) ($17,969,744) ($35,521,858) ($8,749,137)
============== ============== ============== =============
Net income (loss) per common share ($1.81) ($0.36) ($0.65) ($0.17)
============== ============== ============== =============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------- ------------------------------
1996 1995 1996 1995
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($89,774,275) ($11,641,619) ($32,303,653) ($6,639,762)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 67,759,636 24,462,692 23,088,142 9,953,060
Provision for losses on accounts receivable
and inventory 14,667,847 4,387,347 5,579,339 1,548,808
Amortization of debt issuance costs 1,457,034 (451,397) 456,467 139,949
Foreign currency transaction (gain) loss (14,445) (234) 5,731 869
(Gain) loss on sale of assets (2,411,103) (72,492) 3,777,526 (31,825)
Losses attributable to minority interests (37,333) - (23,637) -
Equity in (income) losses from investments 451,124 (1,061,105) 255,780 (80,021)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (25,780,844) (22,090,941) 8,919,274 (7,787,446)
(Increase) in other receivables (1,718,985) - (926,150) -
(Increase) decrease in other current assets (10,104,583) 8,224,726 (10,736,214) (5,856,135)
Increase (decrease) in accounts payable and
accrued liabilities (17,884,112) 31,441,693 (15,225,746) 24,103,667
--------------- -------------- -------------- --------------
Net Cash Provided By (Used In) Operating Activities (63,390,039) 33,198,670 (17,133,141) 15,351,164
--------------- -------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of assets 66,801,059 3,840,250 53,037,015 -
Capital expenditures, net (104,742,913) (194,476,817) (35,558,898) (80,802,478)
(Increase) in investment in unconsolidated
international ventures (10,260,714) (6,685,167) (3,465,553) (4,065,290)
(Increase) decrease in other assets 16,224,449 (1,909,508) 4,480,072 (217,291)
Decrease in short term investments - 38,817,846 - 42,116,524
--------------- -------------- -------------- --------------
Net Cash Provided By (Used In) Investing Activities (31,978,119) (160,413,396) 18,492,636 (42,968,535)
--------------- -------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 65,000,000 1,657,881 20,000,000 1,616,593
Principal payments on long-term debt (1,218,205) (5,759,642) (593,220) (72,067)
Payment of dividends on preferred stock (6,328,125) (6,328,125) (2,109,375) (2,109,375)
Sale of stock and exercise of options 58,179,060 6,319,010 28,696 225,128
--------------- -------------- -------------- --------------
Net Cash Provided By (Used In) Financing Activities 115,632,730 (4,110,876) 17,326,101 (339,721)
--------------- -------------- -------------- --------------
Net increase (decrease) in cash and cash
equivalents 20,264,572 (131,325,602) 18,685,596 (27,957,092)
Cash and cash equivalents-beginning of
period 9,612,734 145,620,779 11,191,710 42,252,269
--------------- -------------- -------------- --------------
Cash and cash equivalents-end of period $29,877,306 $14,295,177 $29,877,306 $14,295,177
=============== ============== ============== ==============
</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.
In September 1995, the Company launched commercial operation of the first
nationwide wireless messaging network in the United States that utilizes
frequency licensed by the FCC for narrowband personal communication services
("PCS"). This network enables subscribers to send and receive 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, and utilizes a proprietary
system architecture designed and developed by Mtel. Mtel's 100%-owned
subsidiary, Destineer Corp., holds the FCC license utilized by this 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 in Latin America and the Asia
Pacific region. Mtel also provides its subscribers with access to an
international messaging network that utilizes Mtel's proprietary technology and
interconnects the systems operated by Mtel and its joint ventures with systems
in
6
<PAGE>
Canada, Singapore and other countries. See Note 9 of Notes to Consolidated
Financial Statements.
Mtel is also engaged in 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, narrowband PCS messaging and international messaging operations. For
the third quarter of 1996, SkyTel one-way messaging, the Company's principal
operating segment, reported revenues of $82.1 million, operating income of $18.7
million and net income of $17.8 million. Narrowband PCS messaging operations,
which commenced commercial operation in September 1995 and are currently in a
start-up phase, reported revenues of $2.7 million, an operating loss of $28.6
million and a net loss of $38.8 million for the third quarter of 1996. Mtel's
international operations reported revenues of $5.2 million, an operating loss of
$6.4 million and a net loss of $11.6 million from its majority-owned ventures
for the quarter ended September 30, 1996. For purposes of reporting operating
income (loss) for the Company's business segments, certain indirect operating
and selling, general and administrative expenses are allocated among the
business segments based on the percentage of time spent by personnel on each
segment's activities, and certain expenses that are incurred for the benefit
of the parent company are not allocated to the business segments.
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 and the impact of
certain events and transactions on the availability of 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.
7
<PAGE>
The Company's consolidated financial statements for the three and nine
month periods ending September 30, 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 these
periods are not necessarily indicative of the results for the year ending
December 31, 1996.
3. EARNINGS (LOSS) PER SHARE
Loss per share for the three and nine month periods ending September 30,
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 third quarter of 1996 and
the first nine months of 1996 was 54,364,009 and 54,272,058, respectively. The
weighted average number of shares of common stock outstanding in the third
quarter of 1995 and the first nine months of 1995 was 50,623,748 and 49,710,560,
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.
8
<PAGE>
5. AMENDMENT OF INDENTURE RELATING TO SENIOR NOTES
In July 1996, the Company completed a consent solicitation pursuant to
which the holders of the Company's 13.5% Senior Notes due 2002 (the "Senior
Notes") approved certain amendments to the indenture relating to the Senior
Notes. Under the amended terms of the indenture, the Company has the ability to
incur additional senior debt, subject to the terms of its existing bank credit
facility, to meet the Company's anticipated financial needs. The amount of
senior debt that may be incurred under the covenants in the indenture is based,
in part, on the number of messaging units placed in service since September 30,
1994. In addition, the amendments to the indenture permit the Company to
designate its Latin American and Asian holding companies, or any other foreign
subsidiary, as "unrestricted" subsidiaries for purposes of the indenture,
thereby taking them outside the scope of the indenture covenants, to facilitate
the sale of equity securities in these holding companies. The Company paid
consenting holders of the Senior Notes $15.00 per $1,000 principal amount of
Senior Notes, or an aggregate of approximately $3.9 million, and agreed to
extend the period during which the Company is prohibited from effecting an
optional redemption of the Senior Notes by one year to December 15, 1999. The
consideration paid to the consenting holders of the Senior Notes will be
amortized over the remaining term of the Senior Notes.
6. 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.
In March 1996, the lending banks waived certain 1995 and first quarter
1996 covenant violations and agreed to certain amendments to the bank loan
agreement to provide additional operational flexibility.
9
<PAGE>
The amendments, among other things, required the Company to complete the
following transactions on or before the dates indicated: (i) on or before May
15, 1996, complete the sale of such number of shares of PIK Preferred Stock (as
defined in Note 7) as would result in the Company receiving gross proceeds of at
least $50.0 million; (ii) on or before June 30, 1996, complete the previously
planned sale of the Company's 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 the
Company's investments in operations in Latin America for certain minimum
proceeds; and (iii) on or before December 31, 1996, complete the 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. In June 1996, the lending banks granted the Company a 30-day
extension, until July 31, 1996, to complete the sale of its interest in MPL, and
a 90-day extension, until September 30, 1996, to complete the sale of equity
securities of the subsidiary formed for the purpose of holding the Company's
investments in its Latin American operations. The Company completed the sale of
PIK Preferred Stock in the second quarter of 1996 (see Note 7), completed the
sale of its 29% equity interest in MPL in July 1996 (see Note 8), and completed
the sale of equity securities of its Latin American holding company in September
1996 (see Note 9). The Company is engaged in discussions concerning the sale of
equity securities in its Asian holding company, although it has no agreements
or understandings regarding such a sale at the present time. The Company would
be required to seek an amendment of the covenant in the bank loan agreement
which requires the sale of equity securities in its Asian holding company if
such sale is not completed on or before December 31, 1996 and, based upon
preliminary discussions with the banks, expects that such an amendment would be
agreed to if requested by the Company.
In August 1996, the lending banks and SkyTel agreed to further amend the
terms of the secured revolving credit facility. In this second amendment, the
banks consented to the amendments of the indenture relating to the Senior Notes
approved by the holders of the Senior Notes in July 1996. See Note 5 of Notes to
Consolidated Financial Statements. In addition, the second amendment limits the
aggregate borrowings that may be incurred by the Company under the credit
facility to an amount not to exceed $160 million in the third quarter of 1996
and to an amount not to exceed $175 million pending the approval by the lending
banks of the 1997 business plan, and a further amendment to the bank loan
agreement appropriately modifying certain financial covenants which the Company
expects to complete on or before December 31, 1996.
10
<PAGE>
7. PIK PREFERRED STOCK
In April and May of 1996, the Company completed the sale of 57,500 shares
of its 7.5% Cumulative Convertible Accruing PIK Preferred Stock (the "PIK
Preferred Stock") for an aggregate purchase price of $57.5 million. See Note 6.
The proceeds from the sale of the PIK Preferred Stock have been used by the
Company for general corporate purposes including the continued development and
optimization of the narrowband PCS network.
8. SALE OF MERCURY PAGING LTD.
On July 15, 1996, the Company completed the sale of its 29% equity
interest in MPL, which operates in the United Kingdom, and received net pre-tax
proceeds of approximately $26.4 million. MPL was considered a non-strategic
asset because it did not operate on the 931 MHz frequency in the United Kingdom.
In the third quarter of 1996, the Company recorded a net after-tax loss on the
sale of its equity interest in MPL of approximately $3.6 million.
9. SALE OF 20% INTEREST IN LATIN AMERICAN OPERATIONS
In September 1996, the Company completed the sale of a 20% equity
interest in Mtel Latin America, Inc. ("Mtel Latam"), the subsidiary formed for
the purpose of holding the Company's
11
<PAGE>
investments in its Latin American operations, for an aggregate purchase price of
$35 million. Mtel Latam received $27 million of the proceeds at closing and the
remaining $8 million is to be received on or before March 31, 1997. No gain or
loss was recorded in connection with this transaction. The transaction is
reflected as minority interest on Mtel's balance sheet. Mtel received
approximately $10.2 million of the proceeds as reimbursement for amounts
invested in the Latin American operations during 1996. The remainder of the
proceeds from the sale will be used to fund capital expenditures, working
capital requirements and additional development efforts in the Latin American
region. In order to complete the sale of the equity interest in Mtel Latam, Mtel
was required to designate Mtel Latam as an "unrestricted" subsidiary for
purposes of the bank credit facility and the indenture relating to the Senior
Notes. As a result of this designation, any additional financing required to
fund Mtel Latam's operations and development efforts must be obtained by Mtel
Latam independent of Mtel.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid by Mtel was $27.0 million and $15.2 million during the nine
months ended September 30, 1996 and 1995, respectively, and was $6.4 million and
$0.02 million during the three months ended September 30, 1996 and 1995,
respectively. No federal income taxes were paid during these periods.
12
<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 three and nine month periods ended
September 30, 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 and the
impact of certain events and transactions 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 52% in the nine months ended
September 30, 1996 as compared to the nine months ended September 30, 1995,
primarily due to the 47% increase in SkyTel one-way messaging revenues in the
first nine months of 1996 as compared to the first nine months of 1995.
Revenues on a consolidated basis increased 43% in the third quarter of 1996 as
13
<PAGE>
compared to the third quarter of 1995, primarily due to the 38% increase in
SkyTel one-way messaging revenue in the third quarter of 1996 as compared to the
third quarter of 1995. As of September 30, 1996, SkyTel had 1,056,400 one-way
messaging units in service in the United States, an increase of 30% over the
813,300 one-way messaging units in service as of September 30, 1995. In the
third quarter of 1996, SkyTel reported one-way net unit sales of 18,900 as
compared to 50,100 net unit additions in the second quarter of 1996. The lower
rate of net unit sales in the third quarter of 1996, as compared to the second
quarter of 1996, resulted from continuing higher than anticipated disconnect
rates in the reseller distribution channel, including MCI Telecommunications
Corp. ("MCI"), and in the agent distribution channel. In the fourth quarter of
1996, the Company expects to experience a decline in these disconnect rates,
which would result in greater net unit additions in the fourth quarter of 1996
as compared to the third quarter of 1996. Average revenue per unit from one-way
operations was $26.24 in the third quarter of 1996 as compared to $26.43 in the
second quarter of 1996.
In September 1996, the reseller distribution arrangement with MCI was
restructured. MCI will continue to purchase SkyTel services at wholesale rates
to fulfill the regional and national paging requirements of its business
customers, but has agreed to purchase the pagers required by its customers.
Under the revised structure, SkyTel provides certain customer support services
to MCI and is reimbursed for the costs of such services.
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 nine months of 1996, revenues
recorded by the Company's consolidated international operations accounted for
approximately 5% of Mtel's revenues as compared to 4% in the first nine months
of 1995.
14
<PAGE>
During the first nine months of 1996, SkyTel one-way messaging provided
approximately 89% of Mtel's revenues as compared to 92% in the first nine months
of 1995. Narrowband PCS messaging provided approximately 3% of consolidated
revenues during the first nine months of 1996. Other Mtel operations provided
approximately 3% of revenues in the first nine months of 1996 as compared to 4%
in the first nine months of 1995.
Mtel is finalizing a family of narrowband PCS offerings including three
primary products: interactive 2-way messaging; cost-effective fixed location
services; and a new generation of improved nationwide alphanumeric messaging
services. By mid-December 1996, Mtel will begin to more actively market
interactive 2-way messaging to corporate accounts in selected major markets, and
by the end of April 1997, Mtel plans to be actively marketing all three
narrowband PCS products.
EXPENSES
Expenses include operating, selling, general and administrative, and
depreciation and amortization. The Company capitalized certain costs related to
the narrowband PCS network until commencement of commercial operation in
September 1995.
Operating expenses primarily consist of salaries, telephone costs and
transmitter and receiver site rentals associated with the Company's one-way and
narrowband PCS 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 93% in the first nine months of 1996 as compared to the first
nine months of 1995 and increased 58% in the third quarter of 1996 as compared
to the third quarter of 1995. This increase primarily reflects operating
expenses attributable to the narrowband PCS network, which because of system
design and functionality has significantly higher fixed operating expenses than
the
15
<PAGE>
Company's one-way operations, and increased telephone and system costs
associated with the increasing one-way messaging subscriber base. As a
percentage of consolidated revenues, operating expenses increased to 32% in the
first nine months of 1996 as compared to 25% in the first nine months of 1995
and increased to 31% in the third quarter of 1996 as compared to 28% in the
third quarter of 1995. Mtel expects to continue to incur increased operating
expenses during the remainder of 1996 and 1997 as a result of operating expenses
related to the narrowband PCS network and as a result of the continuing
expansion of its one-way messaging subscriber base.
Selling, general and administrative expenses include marketing and
advertising costs related to domestic and international messaging operations,
personnel costs associated with SkyTel's direct sales and marketing staff and
customer support operations and corporate overhead costs, primarily salaries and
administrative expenses. These expenses on a consolidated basis increased 42%
in the first nine months of 1996 as compared to the first nine months of 1995
and increased 33% in the third quarter of 1996 as compared to the third quarter
of 1995. This increase primarily reflects selling, general and administrative
expenses related to the narrowband PCS 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. As a percentage of consolidated
revenues, selling, general and administrative expenses decreased to 66% in the
first nine months of 1996 as compared to 70% in the first nine months of 1995
and decreased to 64% in the third quarter of 1996 as compared to 68% in the
third quarter of 1995. On a consolidated basis, selling, general and
administrative expenses are expected to continue to increase during the
remainder of 1996 and 1997 primarily as a result of expenses related to the
narrowband PCS network.
16
<PAGE>
Depreciation and amortization increased 177% in the first nine months of
1996 as compared to the first nine months of 1995 and increased 132% in the
third quarter of 1996 as compared to the third quarter of 1995, primarily
reflecting depreciation and amortization of the network infrastructure, spectrum
costs and other capitalized costs related to the narrowband PCS network and
depreciation of one-way messaging units in service. As a percentage of
consolidated revenues, depreciation and amortization expenses increased to 26%
in the first nine months of 1996 as compared to 14% in the first nine months of
1995 and increased to 25% in the third quarter of 1996 as compared to 15% in the
third quarter of 1995. The Company expects depreciation and amortization
expenses to continue to increase during the remainder of 1996 and 1997 as a
result of depreciation and amortization of network infrastructure, spectrum
costs and other capitalized costs related to the narrowband PCS network.
OPERATING INCOME (LOSS)
Mtel reported a consolidated operating loss of approximately $62.5
million for the first nine months of 1996 as compared to an operating loss of
approximately $16.6 million for the first nine months of 1995 and a consolidated
loss of $17.8 million for the third quarter of 1996 as compared to an operating
loss of $7.3 million for the third quarter of 1995. For the three-month period
ended September 30, 1996, one-way messaging operations recorded operating income
of $18.7 million, which was offset by an operating loss of $28.6 million from
narrowband PCS operations and an operating loss of $6.4 million from
international operations.
The Company expects to report operating losses on a consolidated basis
during the remainder of 1996 and 1997 as a result of continuing start-up losses
related to narrowband PCS operations and continuing losses from international
messaging operations. However, the Company
17
<PAGE>
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 338% in the first nine months of 1996 as
compared to the first nine months of 1995 and increased 434% in the third
quarter of 1996 as compared to the third quarter of 1995. This increase
primarily reflects interest accrued on borrowings under the Company's secured
bank credit facility established in December 1995. As of September 30, 1996,
the Company had $130.5 million principal amount outstanding under the bank
credit facility. In addition, the Company generally ceased capitalizing
interest related to the development and construction of the narrowband PCS
network upon commencement of commercial operation in September 1995.
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 $19.8 million and $5.7 million in interest
costs in the first nine months of 1995 and 1996, respectively, and capitalized
approximately $6.9 million and $1.7 million in interest costs in the third
quarter of 1995 and 1996, respectively. Capitalized interest decreased in the
third quarter and first nine months of 1996 as compared to the same periods in
1995 since the capitalization of interest related to the development and
construction of the narrowband PCS network generally ceased upon commencement of
commercial operation in September 1995.
18
<PAGE>
Interest income totaled $4.5 million in the first nine months of 1996 as
compared to $10.4 million in the first nine months of 1995 and totaled $1.6
million in the third quarter of 1996 as compared to $2.6 million in the third
quarter 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 $1.5 million and $0.5
million in the first nine months of 1996 and 1995, respectively, and $0.1
million and $0.2 million in the third quarter of 1996 and 1995, respectively,
relating to state and local income taxes. The Company reported a net loss for
federal income tax purposes during the three and nine month periods ended
September 30, 1996 and 1995 and, accordingly, no provision for federal income
taxes has been made for such periods.
PREFERRED STOCK DIVIDENDS
The Company accrued approximately $2.1 million in each of the quarters
ended September 30, 1996 and 1995 related to dividends on the Company's $2.25
Cumulative Convertible Exchangeable Preferred Stock (the "$2.25 Preferred
Stock"). In addition, the Company accrued approximately $1.1 million in the
third quarter of 1996 related to stock dividends accrued on the Company's PIK
Preferred Stock issued in April and May of 1996. Although dividends on the
$2.25 Preferred Stock and the PIK 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 7 of Notes
to Consolidated Financial Statements.
19
<PAGE>
NET INCOME (LOSS)
Mtel recorded a net loss of approximately $89.8 million in the nine month
period ended September 30, 1996 which, combined with the effect of the preferred
stock dividends, resulted in a net loss per common share of $1.81 for such
period. This compares to a net loss of approximately $11.6 million, or $0.36
per common share, in the first nine months of 1995. The Company recorded a net
loss of $32.3 million, or $0.65 per common share, in the third quarter of 1996
as compared to a net loss of $6.6 million, or $0.17 per common share, in the
third quarter of 1995. The net loss in the three and nine month periods ended
September 30, 1996 includes a net loss of approximately $3.6 million recorded on
the sale of the Company's 29% equity interest in MPL completed in July 1996.
The net loss reported for the nine months ended September 30, 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. in the first quarter of 1996. The
Company expects to incur net losses during the remainder of 1996 and 1997 as a
result of continuing start-up losses from the narrowband PCS network and
continuing losses from its international operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company invested $58.5 million in the first nine months of 1996,
including $19.6 million in the third quarter of 1996, to procure messaging units
to support SkyTel's increasing one-way messaging subscriber base and, to a
lesser extent, in connection with the optimization and expansion of the SkyTel
one-way messaging system. In addition, Mtel incurred capital expenditures for
equipment, development costs and construction costs related to the narrowband
PCS network of $39.4 million in the first nine months of 1996, including $13.8
million in the third quarter of 1996, which related to the Company's efforts to
expand the coverage of the narrowband PCS network in certain major
20
<PAGE>
metropolitan areas, continued efforts to optimize and improve the performance
and reliability of the narrowband PCS network and the purchase of two-way
personal messaging units. Capital expenditures in the third quarter of 1996 were
funded with cash generated from SkyTel's one-way messaging operations,
borrowings under SkyTel's bank credit facility and the proceeds from the sale of
the Company's 29% equity interest in MPL.
In July 1996, the Company completed a consent solicitation pursuant to
which the holders of the Senior Notes approved certain amendments to the
indenture relating to the Senior Notes. Under the amended terms of the
indenture, the Company has the ability to incur additional senior debt, subject
to the terms of its existing bank credit facility, to meet the Company's
anticipated financial needs. The amount of senior debt that may be incurred
under the covenants in the indenture is based, in part, on the number of
messaging units placed in service since September 30, 1994. In addition, the
amendments to the indenture permit the Company to designate its Latin American
and Asian holding companies as "unrestricted" subsidiaries for purposes of the
indenture, thereby taking them outside the scope of the indenture covenants, to
facilitate the sale of equity securities in these holding companies. The Company
paid consenting holders of the Senior Notes $15.00 per $1,000 principal amount
of Senior Notes, or an aggregate of approximately $3.9 million, and agreed to
extend the period during which the Company is prohibited from effecting an
optional redemption of the Senior Notes by one year to December 15, 1999.
As previously reported in the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, in March 1996 the lending banks waived certain
1995 and first quarter 1996 covenant violations and agreed to certain amendments
to the bank loan agreement to provide additional operational flexibility. The
amendments, among other things, required the Company to complete the
21
<PAGE>
following transactions on or before the dates indicated: (i) on or before May
15, 1996, complete the sale of such number of shares of PIK Preferred Stock as
would result in the Company receiving gross proceeds of at least $50.0 million;
(ii) on or before June 30, 1996, complete the previously planned sale of the
Company's 29% equity interest in MPL, which operates in the United Kingdom, and
the 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, complete the
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. In June 1996, the lending banks granted the Company a
30-day extension, until July 31, 1996, to complete the sale of its interest in
MPL, and a 90-day extension, until September 30, 1996, to complete the sale of
equity securities of the subsidiary formed for the purpose of holding the
Company's investments in its Latin American operations. The Company completed
the sale of PIK Preferred Stock in the second quarter of 1996, completed the
sale of its 29% equity interest in MPL in July 1996 and completed the sale of
equity securities of its Latin American holding company in September 1996. The
Company is engaged in discussions concerning the sale of equity securities in
its Asian holding company, although it has no agreements or understandings
regarding such a sale at the present time. The Company would be required to seek
an amendment of the covenant in the bank loan agreement which requires the sale
of equity securities in its Asian holding company if such sale is not completed
on or before December 31, 1996 and, based upon preliminary discussions with the
banks, expects that such an amendment would be agreed to if requested by the
Company.
In August 1996, the lending banks and SkyTel agreed to further amend the
terms of the secured revolving credit facility. In this second amendment, the
banks consented to the amendments of the indenture relating to the Senior Notes
approved by the holders of the Senior Notes in July 1996. In addition, the
second amendment limits the aggregate borrowings that may be incurred by the
Company
22
<PAGE>
under the credit facility to an amount not to exceed $160 million in the third
quarter of 1996 and to an amount not to exceed $175 million pending the approval
by the banks of the 1997 business plan and a further amendment to the bank loan
agreement appropriately modifying certain financial covenants, which the Company
expects to complete on or before December 31, 1996.
As of September 30, 1996, SkyTel had $130.5 million in borrowings
outstanding under the bank credit facility, including borrowings of $20.0
million in the third quarter of 1996. Letters of credit in the amount of $2.2
million have been issued under the credit facility as of September 30, 1996, and
the credit available under the facility has been reduced by a corresponding
amount. As of September 30, 1996, the Company had additional borrowing
availability under the bank credit facility of approximately $27.3 million,
which increased to $42.3 million as of October 1, 1996. The Company is involved
in discussions with the banks with respect to an additional amendment to the
terms of the credit facility which, among other things, would increase the
borrowing availability under this facility.
On July 15, 1996, the Company completed the sale of its 29% equity
interest in MPL, which operates in the United Kingdom, and received net pre-tax
proceeds of approximately $26.4 million. In the third quarter of 1996, the
Company reported a net after-tax loss on the sale of its equity interest in MPL
of approximately $3.6 million.
In September 1996, the Company completed the sale of a 20% equity
interest in Mtel Latam, the subsidiary formed for the purpose of holding the
Company's investments in its Latin American operations, for an aggregate
purchase price of $35 million. Mtel Latam received $27 million of the proceeds
at closing and the remaining $8 million is to be received on or before March 31,
1997. Mtel received approximately $10.2 million of the proceeds as reimbursement
for amounts invested in the Latin American operations during 1996. The remainder
of the proceeds from the sale will be used to fund capital expenditures, working
capital requirements and additional development efforts in the Latin American
region. In order to complete the sale of the equity interest in Mtel Latam, Mtel
was required to designate Mtel Latam as an "unrestricted" subsidiary for
purposes of the bank credit facility and the indenture relating to the Senior
Notes. As a result of this designation, any additional financing required to
fund Mtel Latam's operations and development efforts must be obtained by Mtel
Latam independent of Mtel.
23
<PAGE>
Although the Company believes that its bank credit facility, cash flows
from one-way messaging operations and the other 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 and the completion of the sale of equity securities in its
Asian holding company.
In October 1996, the U.S. Supreme Court declined to hear Mtel's challenge
to the legal authority of the FCC to impose a $33 million payment obligation for
the narrowband PCS license issued to Mtel in July 1994 pursuant to the Pioneer's
Preference grant. The case has been remanded to the FCC by the U.S. Court of
Appeals for the District of Columbia Circuit to determine whether the fee was
properly imposed on Mtel. Mtel is under no obligation to pay the license fee
until any new FCC order that may be issued on remand is no longer subject to
administrative reconsideration or judicial review. Mtel does not currently
utilize this license for its narrowband PCS operations.
24
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
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:
Exhibit No. Description
4.1 Amendment No. 2 dated as of August 23, 1996 to the
Credit, Security, Guaranty and Pledge Agreement dated
as of December 21, 1995, as amended, by and among the
Company, the lenders referred to therein, Chase
Manhattan Bank, Credit Lyonnais New York Branch and
J.P. Morgan Securities, Inc.
10.1 Purchase Agreement dated as of September 19, 1996, by
and between Mtel Latin America, Inc. and Newbridge
Latin America, L.P.
10.2 Contribution, Registration Rights and Standstill
Agreement dated as of September 19, 1996 by and among
the Company, Newbridge Latin America, L.P. and TPG
Partners, L.P.
25
<PAGE>
10.3 Stockholders and Exchange Rights Agreement dated as of
September 19, 1996 by and among Mtel Latin America,
Inc., Mtel International, Inc. and Newbridge Latin
America, L.P.
10.4 Subscription Agreement dated as of September 19, 1996
by and between Newbridge Latin America, L.P. and Mtel
Puerto Rico, Inc.
10.5 Stockholders and Exchange Rights Agreement dated as of
September 19, 1996 by and among Mtel Puerto Rico, Inc.,
Mtel Latin America, Inc. and Newbridge Latin America,
L.P.
10.6 Employment Agreement dated as of August 1, 1996 by and
between the Company and John T. Stupka.
10.7 Employment Agreement dated as of August 15, 1996 by and
between the Company and Robert Kaiser.
10.8 Form of Restricted Stock Agreement under the 1990
Executive Incentive Plan.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
26
<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: November 13, 1996 By /s/ John T. Stupka
--------------------
John T. Stupka
President and Chief
Executive Officer
Dated: November 13, 1996 By /s/ Robert Kaiser
-------------------
Robert Kaiser
Senior Vice President - Finance
and Chief Financial Officer
27
<PAGE>
EXHIBIT 10.1
PURCHASE AGREEMENT
dated as of September 19, 1996
by and between
NEWBRIDGE LATIN AMERICA, L.P.
and
MTEL LATIN AMERICA, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purchase and Sale of the Shares............................... 2
1.1 Agreement to Purchase and Sell......................... 2
1.2 Closing................................................ 3
1.3 Delivery and Payment................................... 3
1.4 Common Shares Purchase Price........................... 3
2. Representations and Warranties of Mtel LATAM.................. 4
2.1 Incorporation and Organization......................... 4
2.2 Subsidiaries........................................... 5
2.3 Capitalization......................................... 6
2.4 Authorization; Valid and Binding
Agreements............................................. 8
2.5 Financial Statements................................... 9
2.6 Undisclosed Liabilities................................ 10
2.7 No Conflicts, Violation, Etc........................... 10
2.8 Consents............................................... 11
2.9 Exemption from Securities Act.......................... 11
2.10 Litigation............................................. 11
2.11 No Material Adverse Change............................. 12
2.12 Compliance with Laws................................... 12
2.13 Certificates, Authorizations, Permits
and Licenses........................................... 12
2.14 Intellectual Property.................................. 13
2.15 Expenditures........................................... 13
2.16 Affiliate Transactions................................. 14
2.17 Foreign Corrupt Practices Act.......................... 14
2.18 Brokers................................................ 14
2.19 Waiver and Consent..................................... 14
2.20 Employee Benefit Plans................................. 14
2.21 Contracts.............................................. 15
3. Representations and Warranties of
the Purchaser................................................. 15
3.1 Organization........................................... 15
3.2 Authority.............................................. 15
3.3 Consents............................................... 16
3.4 No Conflicts, Violation, Etc........................... 16
3.5 Purchase for Investment................................ 17
3.6 Additional Purchaser Representation.................... 20
4. Counterparts.................................................. 20
5. Successors and Assigns........................................ 20
6. Collateral Agreements, Amendments and Waivers................. 21
7. Expenses...................................................... 21
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8. Invalid Provisions............................................ 21
9. Consolidation................................................. 21
10. Survival of Representations and Warranties.................... 22
11. Notices....................................................... 22
12. No Third-Party Beneficiaries.................................. 23
13. Law Governing................................................. 23
14. Further Assurances............................................ 23
15. Headings...................................................... 24
16. No Recourse Against Others.................................... 24
17. Mtel LATAM's Knowledge........................................ 24
18. Exclusion from Plan Assets under ERISA........................ 24
</TABLE>
ii
<PAGE>
PURCHASE AGREEMENT
------------------
This PURCHASE AGREEMENT (this "Agreement"), dated as of September 19,
1996, by and between MTEL LATIN AMERICA, INC., a Delaware corporation ("Mtel
LATAM"), and Newbridge Latin America, L.P., a Cayman Islands limited partnership
(the "Purchaser").
WHEREAS, Mtel LATAM desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from Mtel LATAM, 2,000 shares (the "Common
Shares") of common stock, par value $.01 per share, of Mtel LATAM (the "Common
Stock") and 18,500 shares (the "Preferred Shares" and together with the Common
Shares, the "Shares") of Cumulative Redeemable Variable Rate Preferred Stock,
par value $0.01 per share, of Mtel LATAM (the "Preferred Stock" and together
with the Common Stock, the "Securities");
WHEREAS, Mtel LATAM, Mtel Puerto Rico, Inc. ("Mtel Puerto Rico"), a
Delaware corporation and a wholly-owned subsidiary of Mtel LATAM, and the
Purchaser have previously entered into a Purchase Agreement and a Stockholders
and Exchange Rights Agreement (collectively, the "Puerto Rico Documents"),
pursuant to which, among other things, Mtel Puerto Rico has agreed to issue to
the Purchaser and the Purchaser has agreed to acquire from Mtel Puerto Rico,
3,500 shares (the "Puerto Rico Shares") of 12% Cumulative Redeemable Preferred
Stock, par value $.01 per share, of Mtel Puerto Rico; and
WHEREAS, concurrently with the execution and the consummation of the
transactions contemplated by this Agreement, (A) the Purchaser, Mtel LATAM and
Mtel International are entering into a Stockholders and Exchange Rights
Agreement, dated as of the date hereof and attached hereto as Exhibit A (the
"Stockholders Agreement"), pursuant to which (i) the Purchaser shall have the
right under certain circumstances to cause Mtel International to exchange (a
"Purchaser Exchange") the Shares for shares of common stock, par value $.01 per
share, of Mobile Telecommunication Technologies Corp., a Delaware corporation
("Mtel") (the "Mtel Shares"), (ii) Mtel International shall have the right,
commencing after six years from the date of issuance of the Shares and subject
to certain conditions, to require the Purchaser to exchange (an "Mtel
International Exchange") the Shares for Mtel Shares and (iii) certain
arrangements regarding the governance of Mtel LATAM and the relationship between
the shareholders of Mtel LATAM are speci-
<PAGE>
fied, and (B) the Purchaser and Mtel are entering into a Contribution,
Standstill and Registration Rights Agreement, dated as of the date hereof,
attached hereto as Exhibit B (the "Contribution, Standstill and Registration
Rights Agreement" and, collectively with this Agreement, the Stockholders
Agreement, and the Puerto Rico Documents and the other agreements and documents
concerning the transactions contemplated hereby and thereby, the "Transaction
Documents") pursuant to which (i) the Purchaser will have certain registration
rights with respect to the Mtel Shares it will receive in the event of a
Purchaser Exchange or an Mtel International Exchange, (ii) the Purchaser will be
subject to certain "standstill" provisions with respect to Mtel and (iii) Mtel
will be obligated to contribute to Mtel International a number of Mtel Shares
sufficient to effect a Purchaser Exchange or an Mtel International Exchange, as
the case may be.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
1. Purchase and Sale of the Shares.
-------------------------------
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, at the Closing referred to in
Section 1.2 hereof and taking place simultaneously herewith, Mtel LATAM agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
Mtel LATAM, the Common Shares and the Preferred Shares, the terms of which are
set forth in the form of Amended and Restated Certificate of Incorporation of
Mtel LATAM , attached hereto as Exhibit C, in each case, free and clear of all
claims, liens, charges and encumbrances of any nature whatsoever (collectively,
"Liens"). In consideration of the issuance and sale of such Shares by Mtel
LATAM to the Purchaser, the Purchaser agrees to pay in the aggregate to Mtel
LATAM $31,500,000, consisting of:
(a) $18,500,000 in respect of the Preferred Shares payable at
Closing (the "Preferred Shares Purchase Price") and
2
<PAGE>
(b) $13,000,000 in respect of the Common Shares, $5,000,000 of
which shall be payable at Closing and the remainder of which shall be payable
from time to time in accordance with the capital requirements of Mtel LATAM,
subject to the provisions of Section 1.4 hereof (the "Common Shares Purchase
Price" and together with the Preferred Shares Purchase Price, the "Purchase
Price").
1.2 Closing. The closing of the transactions contemplated hereby
-------
(the "Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher
& Flom, 919 Third Avenue, New York, New York 10022 at 9:00 a.m., Eastern
Daylight Time, on September 20, 1996. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.3 Delivery and Payment. At the Closing, (a) Mtel LATAM will
--------------------
deliver or cause the delivery of (if not previously delivered) to the Purchaser
(i) one or more stock certificates evidencing the Common Shares issued in the
name of the Purchaser, (ii) one or more stock certificates evidencing the
Preferred Shares issued in the name of the Purchaser, (iii) an executed copy of
the Stockholders Agreement and (iv) all other documents, instruments and
writings required by it to be delivered by Mtel LATAM to the Purchaser pursuant
to this Agreement and the other Transaction Documents to which it is a party or
otherwise required in connection herewith or therewith, and (b) the Purchaser
will deliver or cause the delivery of to Mtel LATAM (i) $23,500,000 by wire
transfer of immediately available funds to the account of Mtel LATAM to be
designated by Mtel LATAM in writing not later than two business days prior to
the Closing Date, (ii) an executed copy of the Stockholders Agreement and (iii)
all other documents, instruments and writings required to be delivered by the
Purchaser to Mtel LATAM pursuant to this Agreement and the other Transaction
Documents or otherwise required in connection herewith or therewith.
1.4 Common Shares Purchase Price. (a) Upon the written request (a
----------------------------
"Request Notice") of Mtel LATAM, which request shall be at least 15 business
days in advance of the requested payment date, the Purchaser shall pay to Mtel
LATAM, by wire transfer of immediately available funds to an account designated
by Mtel LATAM in its Request Notice, the portion of the Common Shares
3
<PAGE>
Purchase Price not paid at Closing as specified in the Request Notice (each, a
"Subsequent Payment"). Any such request by Mtel LATAM shall be in the sole
discretion of a majority of the Board of Directors of Mtel LATAM and any dispute
as to the necessity of a payment shall be determined solely by the
representatives on such Board appointed by Mtel International. The date on
which a Subsequent Payment occurs is hereinafter referred to as a "Subsequent
Payment Date." Request Notices shall be made by Mtel LATAM (i) from time-to-
time in accordance with Mtel LATAM's capital requirements and (ii) to the extent
that there then remains any unpaid portion of the Common Shares Purchase Price
fifteen business days prior to the consummation by Mtel LATAM of an offering
(whether registered under the Securities Act of 1933, as amended (the
"Securities Act"), or in a transaction exempt therefrom) of debt securities in
excess of $15,000,000. Notwithstanding the foregoing and without delivery of a
Request Notice, any remaining unpaid portion of the Common Shares Purchase Price
shall be paid in full no later than March 31, 1997 by the Purchaser. Each such
request shall be in an amount of at least $1,000,000, except that a Request
Notice pursuant to clause (ii) above shall request payment of the entire
remaining unpaid portion of the Common Shares Purchase Price.
(b) Mtel LATAM shall include in each Request Notice (i)
instructions for payment by wire transfer; (ii) the amount of the payment; and
(iii) in the event of a Request Notice pursuant to clause (i) of the preceding
paragraph, a description, in reasonable detail, of the use of the funds
previously provided by Newbridge to Mtel LATAM in response to the immediately
preceding Request Notice, if any, and the planned use of the funds to be
provided by the Purchaser to Mtel LATAM in response to the current Request
Notice.
2. Representations and Warranties of Mtel LATAM. Mtel LATAM
--------------------------------------------
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Date (except as otherwise stated herein) as follows:
2.1 Incorporation and Organization. Each of Mtel, Mtel International
------------------------------
and Mtel LATAM is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of the State of Delaware and each
Material Subsidiary (as defined herein), and to Mtel
4
<PAGE>
LATAM's Knowledge (as defined herein), each of the other Subsidiaries (as
defined in Section 2.2 below) is an entity duly incorporated or formed, as the
case may be, and organized, validly existing and in good standing, if
applicable, under the laws of its jurisdiction of incorporation or organization.
Mtel LATAM, each of the Material Subsidiaries, and to Mtel LATAM's Knowledge,
each of the other Subsidiaries (i) has all requisite corporate power and
authority to transact its business as now or heretofore transacted or as
proposed to be transacted and (ii) is duly qualified, licensed, or admitted to
do business as a foreign corporation or other entity, as the case may be, and is
(if applicable) in good standing in each jurisdiction in which the character of
its assets, properties and revenues (collectively, the "Assets") or the nature
of its business requires such qualification, licensing, or admission, except for
such jurisdictions where the failure to be so qualified, licensed, or admitted
or to be in good standing would not have a material adverse effect on the
business, operations or financial condition of Mtel LATAM and its Subsidiaries,
taken as a whole (a "Material Adverse Effect").
2.2 Subsidiaries. (a) Schedule 2.2 to this Agreement (i) sets forth
------------
a true and complete list as of the date hereof of all of the entities in which
Mtel LATAM directly or indirectly owns or holds an interest (the
"Subsidiaries"), (ii) specifically identifies each Subsidiary that is a Material
Subsidiary, and (iii) sets forth with respect to each Subsidiary (A) the correct
name of such Subsidiary, (B) the jurisdiction of its incorporation, (C) the
percentage of the outstanding shares of each class of its capital stock owned,
directly or indirectly, by Mtel LATAM and (D) the names of any other holders of
each class of the capital stock of such Subsidiary and the percentage of each
such class owned by each such other holder. Mtel LATAM has prior to the
execution and delivery of this Agreement made available to the Purchaser true
and complete copies of the organizational documents of each of the Material
Subsidiaries as in effect on the date hereof. Except as set forth on Schedule
2.2, all of the outstanding shares of each of the Subsidiaries owned, directly
or indirectly, by Mtel LATAM, have been duly authorized and issued and are free
and clear of any Lien except for the shares of capital stock of Mtel Puerto Rico
owned by Mtel LATAM which have been pledged pursuant to the Mtel Loan Agreement
which
5
<PAGE>
pledge shall be released immediately upon consummation of the transactions
contemplated by this Agreement. A "Material Subsidiary" shall mean any
operating Subsidiary of Mtel LATAM in Argentina, Brazil (other than Teletrim or
Vicom Servicos de Radiochamada Ltda. (collectively the "Designated
Subsidiary")), Colombia, Mexico, Venezuela or Puerto Rico, and any other
operating Subsidiary of Mtel LATAM whose revenues (calculated on a proportionate
basis) represent 7.5% or more of the consolidated revenues of Mtel LATAM, as
calculated by reference to such Subsidiary's and Mtel LATAM's most recent annual
Financial Statements.
(b) Except as set forth on Schedule 2.3, there are no outstanding
securities convertible into or exchangeable or exercisable for any shares of the
capital stock of any Material Subsidiary, or to Mtel LATAM's Knowledge, any
Subsidiary, nor are there outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, any shares of the capital stock of any Material
Subsidiary, or to Mtel LATAM's Knowledge, any other Subsidiary, or any
securities convertible into or exchangeable or exercisable for any shares of any
such capital stock.
2.3 Capitalization. (a) As of the Closing, after giving effect to
--------------
the provisions of Section 8.4 of the Stockholders Agreement but prior to the
issuance of the shares to the Purchaser, (i) the authorized capital stock of
Mtel LATAM consists solely of 1,000,000 shares of Common Stock, 8,000, of which
are issued and outstanding, and 200,000 shares of Preferred Stock, of which
88,000 are issued and outstanding and (ii) all of such issued and outstanding
shares of Common Stock and Preferred Stock are owned by Mtel International. All
of the capital stock of Mtel LATAM that is or will be issued and outstanding as
of the Closing is or will be at such time duly authorized, validly issued, fully
paid (other than the Common Shares) and non-assessable, and free and clear of
any Liens, except for the shares of capital stock of Mtel LATAM owned by Mtel
------
International which have been pledged pursuant to the Credit, Security, Guaranty
and Pledge Agreement (the "Mtel Loan Agreement"), dated as of December 21, 1995,
as amended, among Skytel Corp., Mtel, the Subsidiaries of Mtel referred to
therein, the lenders
6
<PAGE>
referred to therein, The Chase Manhattan Bank (formerly known as Chemical Bank),
as administrative agent for the lenders, Credit Lyonnais New York Branch, as
documentation agent, and J.P. Morgan Securities Inc., as co-syndication agent.
Except (i) for shares of Common Stock reserved (x) for issuance upon the
conversion of the Preferred Stock and (y) in connection with the Stock Option
Plan (as defined in the Stockholders Agreement), (ii) for the shares of capital
stock of Mtel LATAM owned by Mtel International which have been pledged to
lenders pursuant to the Mtel Loan Agreement, (iii) as otherwise contemplated by
this Agreement, the Stockholders Agreement (including the shares to be
distributed to Mtel International as provided in Section 8.4 of the Stockholders
Agreement), the Contribution Agreement, Standstill and Registration Rights and
the Puerto Rico Documents and (iv) as set forth on Schedule 2.3, (1) there are
no restrictions on the transfer of shares of capital stock of Mtel LATAM other
than those imposed by relevant state and federal securities laws, (2) there are
no agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge, purchase and sale, or other transfer
of the capital stock of Mtel LATAM or any Material Subsidiary, or to Mtel
LATAM's Knowledge, the Designated Subsidiary to which Mtel LATAM or Mtel
International is a party or, to Mtel LATAM's Knowledge, to which any other
person is a party, and (3) no holder of any security of Mtel LATAM or, to Mtel
LATAM's Knowledge, any Material Subsidiary or the Designated Subsidiary is
entitled to preemptive, first refusal or similar statutory or contractual
rights, arising pursuant to any agreement or instrument to which Mtel LATAM or a
Material Subsidiary or to Mtel LATAM's Knowledge, the Designated Subsidiary is a
party, or which are otherwise binding upon Mtel LATAM or a Material Subsidiary,
or, to Mtel LATAM's Knowledge, the Designated Subsidiary or to which any other
person is a party. Except (1) as provided for in their respective
organizational documents, (2) as provided for in any of the Transaction
Documents and (3) as set forth on Schedule 2.3, neither Mtel LATAM nor, to Mtel
LATAM's Knowledge, any Material Subsidiary or the Designated Subsidiary has any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend or
make any other distribution in respect thereof, and no person has demand or
other rights to cause Mtel LATAM or any
7
<PAGE>
Material Subsidiary to file any registration statement under the Securities Act
relating to any securities of Mtel LATAM or any Material Subsidiary, or any
right to participate in any such registration.
(b) Except for (i) the Preferred Shares, the Puerto Rico Shares,
and the options and shares in connection with the Stock Option Plan, or (ii) as
otherwise contemplated by this Agreement and the Stockholders Agreement, there
are no outstanding securities convertible into or exchangeable or exercisable
for any shares of the capital stock of Mtel LATAM, nor are there outstanding any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, any shares of the
capital stock of Mtel LATAM or any securities convertible into or exchangeable
or exercisable for any shares of such capital stock.
2.4 Authorization; Valid and Binding Agreements. Each of Mtel, Mtel
-------------------------------------------
International and Mtel LATAM has all requisite corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform all of its obligations and undertakings hereunder
and thereunder and to carry out the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other Transaction
Documents to which it is a party, the performance by Mtel, Mtel International
and Mtel LATAM of their obligations hereunder and thereunder, and the issuance
and sale of the Shares have been duly authorized by all necessary corporate
action including Board of Directors approval on the part of Mtel, Mtel
International and Mtel LATAM. This Agreement and the other Transaction
Documents to which Mtel, Mtel International or Mtel LATAM, as the case may be,
is a party have been duly and validly executed and delivered by Mtel, Mtel
International or Mtel LATAM, as the case may be. Assuming due authorization,
execution and delivery by the Purchaser, this Agreement and the other
Transaction Documents to which Mtel, Mtel International or Mtel LATAM, as the
case may be, is a party constitute legal, valid and binding obligations of Mtel,
Mtel International or Mtel LATAM, as the case may be, enforceable against Mtel,
Mtel International or Mtel LATAM, as the case may be, in accordance with their
terms, except as enforcement
8
<PAGE>
thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).
2.5 Financial Statements. (a) Mtel LATAM has delivered to the
--------------------
Purchaser copies of the following financial statements: (i) audited
consolidated Financial Statements (as defined below) of Mtel LATAM and its
Subsidiaries as of and for the fiscal years ended December 31, 1993, 1994 and
1995, together with reports on such audited consolidated Financial Statements of
Arthur Anderson LLP, Mtel LATAM's independent public accountants, (ii) the
unaudited consolidated Financial Statements of Mtel LATAM and its Subsidiaries
as of and for the six month period ended June 30, 1996, (iii) the audited
Financial Statements of each Material Subsidiary as of and for the fiscal years
ended December 31, 1993, 1994 and 1995, together with reports thereon of such
Material Subsidiary's independent public accountants and (iv) the unaudited
trial account balances of each Material Subsidiary as of and for the six month
period ended June 30, 1996; provided that in the case of each of clauses (iii)
and (iv) above, only to the extent such Subsidiary was in existence and
operating on the relevant date of such Financial Statement as to which the
representation is made. "Financial Statements" shall mean the balance sheet as
of the date(s) indicated and the related statements of operations, cash flows
and changes in shareholders' equity (including all related notes and schedules
thereto) for the period(s) indicated. The Financial Statements referred to in
clauses (i), (ii), (iii) and (iv) above are collectively referred to herein as
the "Mtel LATAM Statements."
(b) All of the audited Mtel LATAM Statements have been prepared
in accordance with United States generally accepted accounting principles
("GAAP"), except as set forth in the notes thereto, and all of the Mtel LATAM
Statements accurately set forth and fairly present in all material respects the
consolidated financial position and results of operations of Mtel LATAM and its
Material Subsidiaries as of the respective dates thereof and for the respective
periods covered thereby. Schedule 2.5 sets forth the method of accounting
treatment used in
9
<PAGE>
the Financial Statement of Mtel LATAM for each of the Material Subsidiaries for
each of the respective periods.
2.6 Undisclosed Liabilities. As of the date hereof, except for
-----------------------
liabilities (i) reflected on or reserved against on the balance sheets as of
December 31, 1995 or June 30, 1996 of Mtel LATAM or the Material Subsidiaries or
disclosed in any note thereto provided to the Purchaser, (ii) set forth on
Schedule 2.6 hereto, (iii) incurred in the ordinary course of Mtel LATAM's or
any of the Material Subsidiaries' business or (iv) contemplated by this
Agreement, neither Mtel LATAM nor any of the Material Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) which would be required
by GAAP to be reflected on or reserved against on the balance sheet of Mtel
LATAM or any of the Material Subsidiaries.
2.7 No Conflicts, Violation, Etc. The execution and delivery by
----------------------------
Mtel, Mtel International or Mtel LATAM, as the case may be, of this Agreement
and the other Transaction Documents to which such person is a party does not,
and the performance by Mtel, Mtel International or Mtel LATAM, as the case may
be, of its obligations under this Agreement and the other Transaction Documents
to which such person is a party and the consummation of the transactions
contemplated hereby and thereby, will not (a) conflict with or result in
violation or breach of any provision of the charter or by-laws or similar
organizational documents of Mtel, Mtel International or Mtel LATAM or any
Material Subsidiary, or to Mtel LATAM's Knowledge, any other Subsidiary; (b)
conflict with or result in a violation or breach of any law, regulation, rule,
judgment, decree, order, of any court or governmental authority to which Mtel,
Mtel International or Mtel LATAM or any Material Subsidiary or to Mtel LATAM's
Knowledge, the Designated Subsidiary, may be subject; (c) cause or give the
right to cause the acceleration of the maturity of any debt or obligation of
Mtel, Mtel International, Mtel LATAM or any Material Subsidiary or to Mtel
LATAM's Knowledge, the Designated Subsidiary; or (d) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or result in
the creation of any Lien upon any property of Mtel, Mtel International, Mtel
LATAM or any Material Subsidiary or to Mtel LATAM's Knowledge, the Designated
Subsidiary, under, any agreement to which Mtel LATAM or
10
<PAGE>
any Material Subsidiary or to Mtel LATAM's Knowledge, the Designated Subsidiary,
is a party or by which Mtel LATAM or any Material Subsidiary or to Mtel LATAM's
Knowledge, the Designated Subsidiary, is bound, except in the case of clauses
(b), (c) and (d) above, for such violations, conflicts or defaults which would
not have a Material Adverse Effect or in the case of Mtel or Mtel International,
a material adverse effect on the business or financial condition of Mtel or Mtel
International, and each of their Subsidiaries, taken as a whole, or those as to
which requisite waivers or consents have been obtained.
2.8 Consents. Assuming the accuracy of the representation of the
--------
Purchaser set forth in Section 3.5 hereof, except as set forth on Schedule 2.8
hereof, no consents, approvals, actions or authorizations of, or registrations,
declarations or filings with or notices to, any administrative, governmental or
other public authority are required to be obtained or made by Mtel, Mtel
International or Mtel LATAM or any Material Subsidiary or to Mtel LATAM's
Knowledge, the Designated Subsidiary, in connection with (i) the execution,
delivery or performance of this Agreement and the other Transaction Documents to
which it is a party, (ii) the consummation of the transactions contemplated
hereby and thereby, or (iii) the issuance of the Securities, except where the
failure to obtain such consent, approval, action or authorization or make such
registration, declaration or filing would not have a Material Adverse Effect.
Mtel has taken all action necessary to designate Mtel LATAM an "Unrestricted
Subsidiary" pursuant to the Mtel Loan Agreement and the Indenture (as
hereinafter defined).
2.9 Exemption from Securities Act. Assuming that the
-----------------------------
representations, warranties and acknowledgments of the Purchasers provided for
in Section 3.5 of this Agreement or otherwise contained herein are true and
correct, the sale of the Shares pursuant to this Agreement will be exempt from
the registration provisions of the Securities Act of 1933, as amended (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.
2.10 Litigation. There are no actions, suits, proceedings pending or,
----------
to Mtel LATAM's Knowledge,
11
<PAGE>
threatened, against Mtel, Mtel International or Mtel LATAM or any of its
Material Subsidiaries in any court or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
seeks to restrain, enjoin, prevent the consummation of or otherwise challenge
this Agreement, any Transaction Document or the issuance of the Securities, or
which, if adversely determined, would have a Material Adverse Effect.
2.11 No Material Adverse Change. Except as set forth on Schedule 2.11
--------------------------
hereof, or in the June 30, 1996 Mtel LATAM Financial Statements, or as
contemplated by this Agreement, since December 31, 1995, there has not been a
Material Adverse Effect.
2.12 Compliance with Laws. Except as set forth in Schedule 2.12
--------------------
hereto, neither Mtel LATAM nor any of the Material Subsidiaries is in violation
of any statutes, laws, ordinances, governmental rules or regulations or any
judgment, order or decree (federal, state, local or foreign) to which any of
them is subject, or has failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership or operation of
their respective properties or the conduct of their respective businesses,
except for such violations or failures to obtain as would not have a Material
Adverse Effect.
2.13 Certificates, Authorizations, Permits and Licenses. (a) Except
--------------------------------------------------
as set forth on Schedule 2.13(a) hereto, Mtel LATAM and each of the Material
Subsidiaries and, to Mtel LATAM's Knowledge, the Designated Subsidiary, possess
such certificates, authorizations and permits issued by the appropriate federal,
state and foreign regulatory agencies or bodies as are necessary to conduct the
business as now operated by them except where the failure to possess the same
would not have a Material Adverse Effect.
(b) All paging and messaging licenses, permits, and similar
regulatory documents which are material to the Business or operations of Mtel
LATAM and its Material Subsidiaries and, to Mtel LATAM's Knowledge, the
Designated Subsidiary, (the "Licenses") are in full force and effect and free
and clear of all Liens which have been imposed by an action of Mtel LATAM or the
12
<PAGE>
Material Subsidiary and, to Mtel LATAM's Knowledge, the Designated Subsidiary,
as the case may be, and such validity and effectiveness, to Mtel LATAM's
Knowledge, have not been impaired by the passage of any law, statute, or
regulation by any governmental authority in an applicable jurisdiction since the
granting or assignment of the License. Mtel LATAM and its Material Subsidiaries
and, to Mtel LATAM's Knowledge, the Designated Subsidiary, are not, and have not
received any notice that Mtel LATAM or a Material Subsidiary or, to Mtel LATAM's
Knowledge, the Designated Subsidiary, is, in default (or with the giving of
notice or lapse of time or both, would be in default) under, or has violated,
any such License. Each Material Subsidiary and, to Mtel LATAM's Knowledge, the
Designated Subsidiary holds or has a right to use, and following the Closing
will hold or have a right to use, the necessary licenses to operate its paging
and messaging services on the 931.9375 MHz frequency and except as set forth on
Schedule 2.13 hereof, none of such licenses expires in accordance with its terms
prior to December 31, 1997.
2.14 Intellectual Property. Each of Mtel LATAM and each Material
---------------------
Subsidiary has all of its respective right, title and interest in, or to, or a
valid and binding license to use certain intellectual property consisting of
trademarks, software and paging technology which is set forth on Schedule 2.14
hereto (the "Intellectual Property"). All of such licenses are in full force
and effect, except where the failure to be in full force and effect would not
have a Material Adverse Effect. To Mtel LATAM's Knowledge, each of Mtel LATAM
and each Material Subsidiary has all trademarks, tradenames, licenses (other
than paging licenses) and similar intellectual property necessary for the
operation of its business as presently conducted, except where the failure to
have such intellectual property would not have a Material Adverse Effect.
2.15 Expenditures. Schedule 2.15 hereto sets forth a summary as of
------------
the date hereof of the capital expenditures, working capital requirements, and
business development costs incurred by Mtel LATAM or the Subsidiaries from
January 1, 1996 through June 30, 1996 that have been financed through loans made
by Mtel or Mtel International.
13
<PAGE>
2.16 Affiliate Transactions. Schedule 2.16 lists (i) all material
----------------------
contracts, arrangements or transactions between, on the one hand, Mtel LATAM or
any Subsidiary, and on the other hand, any of Mtel LATAM's affiliates including,
without limitation, Mtel and Mtel International and (ii) any agreements to enter
into any such contracts, arrangements or transactions.
2.17 Foreign Corrupt Practices Act. To Mtel LATAM's Knowledge,
-----------------------------
neither Mtel LATAM, Mtel International, Mtel, nor any of the Material
Subsidiaries, or any of their respective officers, employees or directors acting
at the direction of Mtel LATAM has taken any action in violation of the Foreign
Corrupt Practices Act of the United States, as amended (the "FCPA").
2.18 Brokers. In connection with the issuance and sale of the
-------
Shares, Mtel has agreed to cause Mtel LATAM to pay the fees and expenses of
Dillon, Read & Co. Inc. ("Dillon Read") pursuant to that certain Agreement dated
October 17, 1995 between Mtel LATAM and Dillon Read. Mtel LATAM has dealt with
no broker, finder, commission agent or other person in connection with the sale
of the Shares and the transactions contemplated by this Agreement, and Mtel
LATAM is under no obligation to pay any broker's fee or commission in connection
with such transactions, other than fees payable to Dillon Read as placement
agent in connection with the issuance and sale of the Shares by Mtel LATAM and
for services rendered in connection with related transactions, which fees are
the obligation solely of Mtel LATAM.
2.19 Waiver and Consent. Mtel LATAM has provided the Purchaser with
------------------
true and correct copies of (i) that certain Amendment No. 2, dated August 23,
1996, to the Mtel Loan Agreement and (ii) the Supplemental Indenture, dated July
17, 1996, by and between Mtel and Texas Commerce Bank National Association, as
trustee (the "Trustee") supplementing the Indenture (as amended, the
"Indenture"), dated as of December 29, 1994, between Mtel and the Trustee,
relating to the 13-1/2% Senior Notes due 2002.
2.20 Employee Benefit Plans. Neither Mtel LATAM nor any of its
----------------------
Material Subsidiaries maintains, sponsors, or contributes (or during the last
five (5) years has been obligated to maintain, sponsor or contrib-
14
<PAGE>
ute or maintained, sponsored or contributed) to any program or arrangement that
is an "employee pension benefit plan," an "employee welfare benefit plan," a
"multiple employer welfare arrangement," or a "multiemployer plan", as those
terms are defined in Sections 3(1), 3(2), 3(4) or 3(37) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
2.21 Contracts. Schedule 2.21 sets forth a list of all contracts to
---------
which Mtel LATAM, any Material Subsidiary, or to Mtel LATAM's Knowledge, any
Subsidiary (except Teletrim) is a party which have an obligation or commitment
of greater than $2 million per year (the "Material Contracts"). No default or
defaults (without regard to notice or lapse of time or both) exist by Mtel LATAM
or, to Mtel LATAM's Knowledge, any of its Subsidiaries in the due performance by
it, or, to Mtel LATAM's Knowledge, by the other party or parties thereto, of any
term, covenant or condition of any Material Contract and all of such Material
Contracts are in full force and effect as of the date hereof, except for such
defaults or failures to be in full force and effect which would not have a
Material Adverse Effect.
3. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to Mtel LATAM as of the date hereof and as of the
Closing Date (except as otherwise stated herein) as follows :
3.1 Organization. The Purchaser is a limited partnership duly
------------
formed, validly existing and in good standing under the laws of the Cayman
Islands. Purchaser has full partnership power and authority to own and operate
its assets and properties and carry on its businesses as presently conducted.
3.2 Authority. The Purchaser has all requisite power and authority
---------
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to perform all of its obligations and undertakings
hereunder and thereunder and to carry out the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which the Purchaser is a party and the performance by
the Purchaser of its obligations hereunder and thereunder have been duly
authorized by all
15
<PAGE>
necessary action on the part of the Purchaser. This Agreement and the other
Transaction Documents to which the Purchaser is a party have been duly and
validly executed and delivered by the Purchaser. Assuming due authorization,
execution and delivery by Mtel, Mtel LATAM and Mtel International, this
Agreement and the other Transaction Documents to which the Purchaser is a party
constitute legal, valid and binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their terms, except as enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).
3.3 Consents. No consents, approvals, actions or authorizations of,
--------
or registrations, declarations or filings with or notices to, any
administrative, governmental or other public authority, are required to be
obtained or made by the Purchaser in connection with (i) the execution, delivery
or performance of this Agreement and the other Transaction Documents to which it
is a party or (ii) the consummation of the transactions contemplated hereby and
thereby except for as required by reasons pertaining specifically to Mtel LATAM
or any Subsidiary or except where the failure to obtain such consents,
approvals, actions or authorizations or make such registration, declaration, or
filing would not have a Material Adverse Effect and would not have a material
adverse effect on the transactions contemplated hereby.
3.4 No Conflicts, Violation, Etc. The execution and delivery by
----------------------------
Purchaser of this Agreement and the other Transaction Documents to which it is a
party does not, and the performance by Purchaser of its obligations under this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not (a) conflict with or
result in a violation or breach of any provision of the charter or by-laws or
similar organizational documents of Purchaser; (b) conflict with or result in a
violation or breach of any law, regulation, rule, judgment, decree, order, of
any court or governmental authority to which Purchaser may be subject; or (c)
violate, or be in con-
16
<PAGE>
flict with, or constitute a default under, or permit the termination of, or
result in the creation of any Lien upon the Shares under, any agreement to which
Purchaser is a party or by which Purchaser is bound except in the case of
clauses (b) and (c) above, for such violations, conflicts, or defaults which
would not have a Material Adverse Effect and would not have a material adverse
effect on the transactions contemplated hereby.
3.5 Purchase for Investment. The Purchaser represents that (i) it is
-----------------------
acquiring the Shares for its own account, for investment purposes only and not
with a view to the resale or distribution thereof or with any present intention
of distributing or selling any of the Shares, it being understood that the right
to dispose of such Shares shall be entirely within the discretion of the
Purchaser; (ii) it has authority to make the representations contained in this
Article 3; (iii) it has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Shares and is capable of bearing the economic risk of such
investment, including a complete loss of the investment in the Shares; (iv) it
is an "accredited investor" within the meaning of Rule 501 of Regulation D of
the Securities Act or a similar institutional investor; (v) it is acquiring all
the Shares to be acquired by it hereunder with no view or intention to offer for
sale any of the Shares in a manner which would violate federal or state
securities laws; subject, however, to any requirement of law that the
disposition of its property shall at all times be and remain within its control;
(vi) that it is aware that the Shares, and that any shares issuable upon the
exchange or conversion of the Shares, have not been and, subject to the terms of
the Stockholders Agreement and the Contribution and Registration Rights
Agreement, as the case may be, will not be registered under the Securities Act
and may not be offered or sold within the United States to, or for the account
or benefit of, U.S. persons, except as provided below; and (vii) it has received
the information it has requested in connection with its execution of this
Agreement and its purchase of the Shares, and has been given the opportunity and
right to meet, and to ask questions and receive answers from, the
representatives of Mtel LATAM and to investigate and inquire into all aspects of
Mtel LATAM and the terms and conditions of the purchase of the Shares.
17
<PAGE>
The Purchaser agrees that the following restrictive legends will be
placed on certificates representing any or all of the Shares and that transfer
of any or all of the Shares may be refused by Mtel LATAM's transfer agent unless
the Shares 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 Mtel LATAM that such registration
is not required:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND CERTAIN OTHER CONDITIONS, AS SPECIFIED IN A STOCKHOLDERS
AGREEMENT, DATED AS OF SEPTEMBER 19, 1996 (THE "STOCKHOLDERS AGREEMENT"),
COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF MTEL LATIN AMERICA, INC.
("MTEL LATAM") AND WHICH WILL BE FURNISHED WITHOUT CHARGE TO A STOCKHOLDER
UPON WRITTEN REQUEST THEREFOR FROM SUCH STOCKHOLDER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL
OF THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
PURSUANT TO THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND, EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS (SUCH FEDERAL AND STATE LAWS, THE "SECURITIES LAWS") OR (B)
IF MTEL LATAM HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER,
WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO MTEL LATAM,
TO THE EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF THE SECURITIES LAWS."
In addition, the following legend shall be added to the Purchaser's certificates
representing the Common Stock:
18
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO MANDATORY
EXCHANGE RIGHTS, PURSUANT TO WHICH THESE SECURITIES WILL BE EXCHANGED FOR
COMMON STOCK OF MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. IN ACCORDANCE
WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT. TRANSFEREES ACQUIRING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MUST AS A CONDITION TO SUCH
TRANSFER ENTER INTO AN AGREEMENT WITH THE ISSUER AND ITS PARENT PURSUANT TO
WHICH IT AGREES TO BE BOUND BY THE FOREGOING EXCHANGE RIGHTS. ANY
PURPORTED TRANSFER NOT COMPLYING WITH THE FOREGOING SENTENCE SHALL BE NULL
AND VOID."
In addition, the following legend shall be added to the Purchaser's certificates
representing the Common Stock:
"THE TOTAL AMOUNT OF CONSIDERATION TO BE PAID FOR THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS $13,000,000 AND THE AMOUNT PAID FOR SUCH
SECURITIES WAS $5,000,000."
In addition, the following legend shall be added to the certificates
representing the Preferred Stock:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO MANDATORY
OBLIGATIONS TO EXCHANGE THESE SECURITIES IN EXCHANGE FOR COMMON STOCK OF
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. ("MTEL") IN ACCORDANCE WITH THE
TERMS OF THE STOCKHOLDERS AGREEMENT (INCLUDING THE MANDATORY OBLIGATION TO
EXCHANGE THESE SECURITIES IN EXCHANGE FOR COMMON STOCK OF MTEL IN THE EVENT
THAT SHARES OF COMMON STOCK OF MTEL LATIN AMERICA, INC. ARE EXCHANGED FOR
MTEL COMMON STOCK). TRANSFEREES ACQUIRING THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MUST AS A CONDITION TO SUCH TRANSFER ENTER INTO AN
AGREEMENT WITH THE ISSUER AND ITS PARENT PURSUANT TO WHICH IT AGREES TO BE
BOUND BY THE FOREGOING EXCHANGE RIGHTS. ANY PURPORTED TRANSFER NOT
COMPLYING WITH THE FOREGOING SENTENCE SHALL BE NULL AND VOID."
The Shares being delivered pursuant to this Agreement shall not be
transferable by the Purchaser
19
<PAGE>
except (A) (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 Mtel LATAM of a written opinion of
counsel reasonably satisfactory to Mtel LATAM to the effect that the proposed
transfer is exempt from the registration requirements of the Securities Act and
relevant state securities laws and (B) following notice to the transferee of any
restrictions on the transfer of such Shares.
Upon complete satisfaction of the Purchaser's obligation pursuant to
Section 1.4 hereof, the Purchaser may deliver the certificates representing the
Common Stock to the secretary of Mtel LATAM who will replace such certificates
with certificates bearing the legends set forth above with the final legend
specific to the Purchaser's Common Stock deleted.
3.6 Additional Purchaser Representation. The Purchaser acknowledges
-----------------------------------
that it is aware that Francisco J. Amaro, the President and Chief Operating
Officer of Mtel LATAM, is the son-in-law of John N. Palmer, the Chairman of the
Board of Directors of Mtel and Chairman of the Board and Chief Executive Officer
of Mtel LATAM.
4. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
5. Successors and Assigns. Neither the Purchaser's nor Mtel LATAM's
----------------------
rights or obligations under this Agreement shall be assigned, except for an
assignment by the Purchaser of its Shares and its rights and obligations under
this Agreement to an affiliate of the Purchaser that is controlled by the
general partner of the Purchaser; provided, however, that (i) such affiliate is
-------- -------
financially able to meet the obligations of the Purchaser contemplated hereby
and by the Transaction Documents; (ii) all of the Purchaser's rights and
obligations under the Puerto Rico Documents are simultaneously assigned to such
affiliate; and (iii) that such affiliate's assets are not "Plan Assets" as such
term is defined in Title 1 of ERISA. Any assignment in violation of the
foregoing shall be null and void. Subject to the preceding sentences of this
Section 5, the provisions of this
20
<PAGE>
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
6. Collateral Agreements, Amendments and Waivers. This Agreement
------------------------------------- -------
(together with the documents delivered pursuant hereto) supersedes all prior
documents, understandings and agreements, oral or written, relating to this
transaction and, except for any confidentiality 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 all of the parties to this Agreement.
7. Expenses. Each party shall pay all costs and expenses incurred
--------
by it in connection with the negotiation, execution and delivery of this
Agreement and the transactions contemplated hereby. On the Closing Date, Mtel
LATAM shall reimburse the Purchaser for its reasonable out-of-pocket expenses
(supported by reasonable documentation) incurred in connection with the
transactions contemplated hereby, in a amount not to exceed in the aggregate
$325,000, which amount shall be deducted from the portion of the Purchase Price
to be paid by the Purchaser at the Closing pursuant to Section 1.1 hereof.
8. Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under present or future laws, then, if
possible, 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 illegality, 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.
9. Consolidation. For as long as the Purchaser shall hold more than
-------------
20% of the seats on the Board of Directors of Mtel LATAM, neither Mtel, Mtel
International nor Mtel LATAM shall take any position on any tax return providing
for the consolidation of Mtel LATAM with Mtel or Mtel International for tax
purposes, without the
21
<PAGE>
Exhibit 10.2
---------------------------------------------
CONTRIBUTION, REGISTRATION RIGHTS AND STANDSTILL
AGREEMENT
dated as of September 19, 1996
by and among
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.,
NEWBRIDGE LATIN AMERICA, L.P.,
AND
TPG PARTNERS, L.P.
---------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Page
----
TABLE OF CONTENTS
-----------------
<S> <C> <C>
ARTICLE I DEFINITIONS.................................................. 2
1.1 Definitions.................................................. 2
ARTICLE II CONTRIBUTION AND EXCHANGE AGREEMENTS
RELATED...................................................... 2
2.1 Contribution of Mtel Common Stock............................ 2
2.2 Additional Mtel Obligations.................................. 3
ARTICLE III REGISTRATION RIGHTS.......................................... 4
3.1 Shelf Registration........................................... 4
3.2 Registration Procedures...................................... 5
3.3 Limitations on Offerings by the Pur-
chasers...................................................... 6
3.4 Designation of Underwriter................................... 8
3.5 Cooperation by Prospective
Sellers...................................................... 8
3.6 Expenses of Registration..................................... 9
3.7 Indemnification.............................................. 9
3.8 Rights That May Be Granted to Subse-
quent Investors; Rights Granted to Pri-
or Investors................................................. 14
3.9 Delay of Registration........................................ 14
3.10 Rule 144 and Rule 144A....................................... 14
3.11 Specific Performance......................................... 15
ARTICLE IV STANDSTILL AGREEMENT......................................... 15
4.1 Standstill Provisions........................................ 15
ARTICLE V REPRESENTATIONS AND
WARRANTIES................................................... 16
5.1 Organization................................................. 16
5.2 Authority.................................................... 17
5.3 Consents and Approvals....................................... 17
5.4 No Violations................................................ 18
5.5 Additional Mtel Representations.............................. 18
ARTICLE VI MISCELLANEOUS................................................ 19
6.1 Termination.................................................. 19
6.2 Assignability................................................ 19
6.3 Notices...................................................... 19
6.4 Third Party Rights........................................... 21
6.5 Choice of Law................................................ 21
6.6 Severability................................................. 21
6.7 Enforcement of Agreement..................................... 21
6.8 References to Agreement...................................... 21
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.9 Entire Agreement.......................................... 22
6.10 Headings, etc............................................. 22
6.11 Counterparts.............................................. 22
6.12 Amendments................................................ 22
6.13 Non-Competition........................................... 22
</TABLE>
2
<PAGE>
CONTRIBUTION, REGISTRATION RIGHTS AND STANDSTILL
AGREEMENT
THIS CONTRIBUTION, REGISTRATION RIGHTS AND STANDSTILL AGREEMENT (the
"Agreement"), dated as of September 19, 1996, by and among Mobile
- ----------
Telecommunication Technologies Corp., a Delaware corporation ("Mtel"), Newbridge
----
Latin America, L.P., a Cayman Islands limited partnership (the "Purchaser"), and
---------
TPG Partners, L.P., a Delaware limited partnership ("TPG"), is entered into in
---
connection with the Purchaser's investment in Mtel Latin America, Inc., a
Delaware corporation and a wholly-owned subsidiary of Mtel ("Mtel LATAM"),
----------
pursuant to a Purchase Agreement, dated as of September 19, 1996, by and among
the Purchaser Mtel International, Inc., a Delaware corporation and a wholly-
owned subsidiary of Mtel ("Mtel International"), and Mtel LATAM (the "Purchase
------------------ --------
Agreement") and a Stockholders and Exchange Rights Agreement, dated as of the
- ---------
date hereof (the "Stockholders Agreement"), by and among Mtel LATAM, Mtel
----------------------
International and the Purchaser, and certain other agreements and documents
(together with this Agreement, the Purchase Agreement and the Stockholders
Agreement, the "Transaction Documents").
---------------------
WHEREAS, in order to effectuate the Exchange Rights provisions set
forth in Article VII of the Stockholders Agreement, upon the occurrence of
certain Exchange Events or the Mtel Mandatory Exchange and on or prior to the
Exchange Date, Mtel has agreed to provide, contribute to or otherwise cause Mtel
International to make available, sufficient shares of Mtel Common Stock as may
be required to effect such exchanges;
WHEREAS, pursuant to the Stockholders Agreement, upon the exercise of
any of the Purchaser's Exchange Rights or the Mtel Mandatory Exchange shares of
Mtel Common Stock shall be issued to the Purchaser, and in connection therewith,
Mtel and the Purchaser desire to grant certain registration rights with respect
to such Registrable Securities as set forth herein; and
WHEREAS, in connection with, and contingent upon, the consummation of
the transactions contemplated by the Transaction Documents, the Purchaser and
TPG agree to refrain from undertaking certain activities set forth in this
Agreement as they relate to Mtel.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Stockholders Agreement.
Unless the context otherwise requires, the following terms shall have the
meanings ascribed to them below:
"Mtel Shelf Securities" shall mean those securities of Mtel as Mtel
---------------------
shall designate to be included in a Shelf Registration Agreement.
"Shelf Registration" shall means a registration effected pursuant to
------------------
Section 3 hereof.
"Shelf Registration Statement" shall mean a shelf registration
----------------------------
statement of Mtel pursuant to the provisions of Section 3 hereof filed with the
SEC which covers some or all of the Registrable Securities, as applicable, and,
at the option of Mtel, such Mtel Shelf Securities on an appropriate form under
Rule 415 under 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
CONTRIBUTION AND EXCHANGE RELATED AGREEMENTS
--------------------------------------------
2.1 Contribution of Mtel Common Stock. If, at any time
---------------------------------
following the Closing Date, upon the occurrence of (x) an Exchange Event and the
subsequent exercise by the Purchaser of its option under Section 7.1 of the
Stockholders Agreement to exchange any or all of its shares of the Securities
into an amount of shares of Mtel Common Stock as determined by the applicable
Ex-
2
<PAGE>
change Formula and Mtel's receipt of the written Exchange Notice of the exchange
specifying the number of shares to be exchanged and any such other information
as may be required by the Stockholders Agreement for an exchange, or (y) the
satisfaction of the conditions specified in Section 7.3 of the Stockholders
Agreement and the subsequent exercise by Mtel International of its option to
require the Purchaser to exchange all of its Common Shares into shares of Mtel
Common Stock, Mtel shall thereupon contribute to Mtel International, or
otherwise cause Mtel International to have available, sufficient shares of Mtel
Common Stock to effect such exchange transaction (and the additional exchanges
pursuant to Section 7.2 of the Stockholders Agreement and, if applicable,
pursuant to an agreement(s) with a Purchaser Transferee).
2.2 Additional Mtel Obligations. (a) If required in order to
---------------------------
satisfy the Prospectus Condition, Mtel, upon such request from Mtel
International, shall use its reasonable best efforts to deliver to the Purchaser
or its designee, together with the certificate for such shares of Mtel Common
Stock and cash in lieu of any fractional shares, a current prospectus (meeting
the requirements of Section 10 of the Securities Act) relating to the Mtel
Common Stock; provided, however, that in the event Mtel is unable during any
-------- -------
period to deliver a current prospectus, no exchange shall be effected (and no
Exchange Date shall occur) during such period and any exchange that could
otherwise have been effected during such period shall be deemed to have been
effected immediately prior to the close of business (and the Exchange Date shall
be deemed to have occurred) on the first Business Day that Mtel is able to
deliver a current prospectus relating to the Mtel Common Stock. The inability
of Mtel to deliver a current prospectus at any time shall not be deemed a
default under this Agreement or the Stockholders Agreement. Mtel agrees to use
its reasonable best efforts to ensure that it will be able to deliver a current
prospectus, if required, during any period that the holders of the Securities
are entitled to exchange such shares for shares of Mtel Common Stock.
(b) Except as provided in Section 7.4 of the Stockholders Agreement,
upon any exchange of Securities pursuant to Section 7.4 of the Stockholders
Agreement, Mtel shall make no payment or allowance for previ-
3
<PAGE>
ously declared dividends or distributions on the shares of Mtel Common Stock
issued upon such exchange (or on any other property issued upon such exchange
pursuant to Section 7.4 of the Stockholders Agreement).
(c) If the Securities represented by a certificate surrendered for
exchange are exchanged in part only, Mtel shall cause to be issued and delivered
to the registered holder, without charge therefor, a new certificate or
certificates representing in the aggregate the number of unexchanged shares.
ARTICLE III
REGISTRATION RIGHTS
-------------------
3.1 Shelf Registration. (a) The Purchaser shall have the
------------------
right, which right may be exercised only once, to require Mtel to Register the
Purchaser's Registrable Securities pursuant to a Shelf Registration Statement.
In the event Purchaser elects to exercise such right, the Purchaser, following
or in contemplation of an Exchange Event, shall send a written notice to Mtel
informing Mtel that the Purchaser shall exercise or has exercised its Exchange
Right and requesting (the date of such notice being hereinafter referred to as,
the "Request Date") that Mtel Register the Purchaser's Registrable Securities.
------------
Upon receipt of such notice Mtel shall (i) prepare and file with the SEC a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the Purchaser and, if applicable, Mtel Shelf Securities from time
to time in accordance with the methods of distribution elected by such
Purchaser, or Mtel, as the case may be, and set forth in such Shelf Registration
Statement and thereafter, (ii) use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective under the Securities Act;
provided, however, that the Purchaser shall not be entitled to have the
- -------- -------
Registrable Securities held by it covered by such Shelf Registration unless such
Purchaser is in compliance with Section 3.5 hereof.
(b) Subject to Section 3.3 hereof, Mtel 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
4
<PAGE>
usable by the Purchaser for a period of three (3) years immediately following
the Request Date 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 or otherwise, and (ii) after
the effectiveness of the Shelf Registration Statement, promptly upon the request
of the Purchaser to take any action reasonably necessary to Register the sale of
any Registrable Stock of the Purchaser and to identify the Purchaser as a
selling security holder.
(c) The Purchaser has agreed that Mtel shall not under any
circumstances prepare and file with the SEC any more than one (1) Shelf
Registration Statement in connection with any of the provisions of any of the
Transaction Documents. The Purchaser also agrees that it shall have no right
to, and shall not request from Mtel, any more than one (1) registration
statement.
3.2 Registration Procedures. In connection with any Shelf
-----------------------
Registration Statement, Mtel shall:
(a) prepare and file with the SEC a Shelf Registration Statement with
respect to Registrable Securities of the Purchaser and, if applicable, Mtel
Shelf Securities and use its reasonable best efforts to cause such Shelf
Registration statement to be declared and remain effective as provided herein;
(b) prepare and file with the SEC such amendments and supplements to
the Shelf Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Shelf Registration Statement effective and
current and to comply with the provisions of the Securities Act with respect to
the disposition of all shares covered by such Shelf 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 Securities;
(c) furnish to the Purchaser such number of copies of a prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the Purchaser may reasonably request in order to
5
<PAGE>
facilitate the public sale or other disposition of the Registrable Securities
owned by the Purchaser;
(d) use its reasonable best efforts to register or qualify the shares
of Registrable Securities covered by such Shelf Registration Statement under
such other securities or blue sky or other applicable laws of such jurisdiction
within the United States as the Purchaser shall reasonably request, to enable
the Purchaser to consummate the public sale or other disposition in such
jurisdictions of the shares of Registrable Securities owned by the Purchaser;
provided, however, that in no event shall Mtel 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 Securities covered by such
Registration Statement in any jurisdiction where it is not at the time so
subject; and
(e) furnish to the Purchaser a signed counterpart, addressed to the
Purchaser, of (i) an opinion of counsel for Mtel, dated the effective date of
the Shelf Registration Statement, and (ii) a comfort letter (or, if the
Purchaser 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 auditors who have certified the financial
statements of Mtel that are included in the Shelf Registration Statement,
covering substantially the same matters with respect to the Shelf 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).
3.3 Limitations on Offerings by the Purchasers. (a) Notwithstanding
------------------------------------------
the provisions of Section 3.1, if (i) at any time Mtel desires to effect a
registered offering of securities (pursuant to a Shelf
6
<PAGE>
Registration Statement, a registration right held by a Prior Investor (as
defined below) or otherwise) and simultaneously therewith the Purchaser desires
to effect an offering pursuant to a Shelf Registration Statement and (ii) the
underwriter, if any, determines that (x) marketing factors require a limitation
of the total number of shares to be underwritten, or (y) the offering price per
share would be reduced by the inclusion of the Registrable Securities of the
Purchaser, then the number of shares to be included in the underwriting shall
first be allocated to Mtel or the Prior Investor, as the case may be, then the
remainder, if any, to the Purchaser.
(b) If at any time Mtel is engaged, or proposes to engage, in a
registered public offering within 30 days of the time of a proposed offering by
the Purchaser pursuant to a Shelf Registration Statement, or is engaged in any
other activity that, in the good faith determination of the Board of Directors
of Mtel (the "Board"), would be adversely affected by the proposed offering by
-----
the Purchaser or the required disclosure in connection therewith would be to the
material detriment of Mtel (or any affiliate of Mtel) and its stockholders, then
Mtel may at its option direct that such offering and the use of the Shelf
Registration Statement by the Purchaser be delayed, suspended or postponed (a
"suspension") for a period not in excess of 45 days from the effective date of
such registered public offering by Mtel, 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
Purchaser shall not offer any Registrable Securities pursuant to the Shelf
Registration Statement if such offering would require Mtel (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 Purchaser agrees to bear the expenses of furnishing such
financial statements. In addition to the foregoing, in the event of a proposed
offering by the Purchaser pursuant to a Shelf Registration Statement at such
time as any registration statement would be required to include audited
financial statements as of a fiscal year end, then Mtel shall have the right to
delay the dissemination of the required notice and the taking of any action to
effect a supplement to the Shelf
7
<PAGE>
Registration Statement until such time as such audited financial statements are
available in the ordinary course of business.
(d) The Purchaser shall not offer any Registrable Securities pursuant
to the Shelf Registration Statement within 45 days after the effectiveness of
any other registration of Mtel's capital stock.
(e) The Purchaser shall not effect any take-down under a Shelf
Registration Statement unless the value of the Registrable Securities proposed
to be offered under such take-down exceeds $5 million.
3.4 Designation of Underwriter. (a) In the case of any
--------------------------
Registration effected pursuant to Section 3.1, the Purchaser shall have the
right to designate the managing underwriter in any underwritten offering, which
underwriter shall be reasonably acceptable to Mtel.
(b) In the case of any registration initiated by Mtel or any other
investor, Mtel or such other investor, as the case may be, shall have the right
to designate the managing underwriter in any underwritten offering.
3.5 Cooperation by Prospective Sellers. (a) The Purchaser,
----------------------------------
and each underwriter designated by the Purchaser, will furnish to Mtel such
information as Mtel may reasonably require from the Purchaser or underwriter in
connection with the Shelf Registration Statement (and the prospectus included
therein). The Purchaser may not participate in any offering unless the
Purchaser (i) agrees to sell its Registrable Securities 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) The Purchaser will not (until further notice by Mtel) effect sales
thereof (or deliver a prospectus to any purchaser) after receipt of telegraphic
or written notice from Mtel to suspend sales to permit Mtel to correct or update
the Shelf Registration Statement or prospectus. At the end of the period during
which Mtel is obligated to keep the Shelf Registration Statement current and
effective as provided in Section 3.1(b)(i),
8
<PAGE>
the Purchaser shall discontinue sales of shares pursuant to such registration
statement upon receipt of notice from Mtel of its intention to remove from
registration the shares of Registrable Securities covered by the Shelf
Registration Statement that remain unsold, and the Purchaser shall notify Mtel
of the number of such shares registered that remain unsold immediately upon
receipt of such notice from Mtel.
(c) In connection with any offering, the Purchaser 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
Mtel and any documents incorporated by reference therein.
3.6 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 Mtel and
expenses of any audits incidental to or required by any such registration, shall
be borne by Mtel, except (a) that all additional expenses, fees and
disbursements of any counsel retained by the Purchaser, and all underwriting
discounts, fees and commissions shall be borne by the Purchaser, and (b) Mtel
shall not be required to pay for any expenses of any take-down pursuant to a
Shelf Registration Statement begun pursuant to Section 3.1 if the registration
request is subsequently withdrawn at the request of the Purchaser; provided,
--------
however, that if immediately prior to the time of such withdrawal, a materially
- -------
adverse change in the business, operations or financial condition of Mtel has
occurred from the time of the Purchaser's request, then the Purchaser shall not
be required to pay any of such expenses and shall retain its rights pursuant to
Section 3.1.
3.7 Indemnification. (a) To the extent permitted by law,
---------------
Mtel will indemnify the Purchaser upon requesting or joining in a Registration,
each agent, officer and director of such Purchaser, each person controlling such
Purchaser 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
9
<PAGE>
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
Mtel of any rule or resolution promulgated under the Securities Act applicable
to Mtel and relating to an action or inaction required of Mtel 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 Mtel 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 conformity with written information
relating to such Indemnitees furnished to Mtel by such Indemnitees 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 Shelf
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 3.7(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 Mtel, which consent shall not be
unreasonably withheld.
(b) To the extent permitted by law, the Purchaser upon requesting or
joining in a registration and each underwriter of the securities so registered
will
10
<PAGE>
indemnify Mtel and its officers and directors and Affiliates 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 Mtel 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 the indemnification pursuant to this Section 3.7(b)
- -------- -------
shall apply only if (and only to the extent that) such statement or omission was
made in reliance upon and in conformity with written information relating to the
Purchaser (including, without limitation, written negative responses to
inquiries) furnished to Mtel by the Purchaser 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 Mtel and any 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 3.7(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
Purchaser or underwriter, as the case may be, which consent shall not be
unreasonably withheld; and provided, further, that the obligations of the
Purchaser shall be limited to an amount equal to the proceeds to the Purchaser
received by the Purchaser from the sale of its Registrable Securities
11
<PAGE>
in such Registration, unless such claim, loss, damage, liability or action
resulted from the Purchaser's fraudulent misconduct.
(c) Each party entitled to indemnification hereunder (the "Indemnified
-----------
Party") shall give notice to the party required to provide indemnification
- -----
(each, an "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 3.7 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 3.7 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 3.7 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 Mtel on the one
12
<PAGE>
hand, and of the Purchaser 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 Mtel, on the one hand, and by the Purchaser on the other
hand. The relative benefits received by Mtel on the one hand, and the Purchaser
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 Mtel bear to the total
net proceeds from the offering (before deducting expenses) to the Purchaser.
The relative fault of Mtel on the one hand, and of the Purchaser 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 Mtel or by
the Purchaser and the parties, relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(f) Mtel and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 3.7 were determined by pro
---
rata allocation 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 3.7, the Purchaser shall not be
required to contribute any amount in excess of the proceeds received by the
Purchaser from the sale of Registrable Securities 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 3.7 shall survive the
completion of any offering of
13
<PAGE>
Registrable Securities in the Shelf Registration Statement under this Agreement
or otherwise.
3.8 Rights That May Be Granted to Subsequent Investors; Rights
---------------------------------------- -----------------
Granted to Prior Investors. Within the limitations prescribed by this Section
- --------------------------
3.8, but not otherwise, Mtel may grant to subsequent investors in Mtel 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
Purchaser and then the remainder, if any, to such other third parties.
Notwithstanding anything else contained in this Agreement, the Purchaser
acknowledges that Mtel has granted prior investors ("Prior Investors") rights of
---------------
registration under the agreements set forth on Schedule 3.8 hereto upon request
and rights of incidental registrations, including on any Shelf Registration
Statement, and the Purchaser acknowledges and agrees that such rights (as they
exist on the date hereof) may take precedence over and have priority with
respect to the rights granted pursuant hereto. In the event that, it is
impractical for Mtel, or adverse to Mtel or the Prior Investors, to have the
rights contemplated hereby afforded to the Purchaser realized at such time, Mtel
shall have no obligation to the Purchaser until such time as its obligations to
the Prior Investors have been satisfied.
3.9 Delay of Registration. The Purchaser 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.
3.10 Rule 144 and Rule 144A. (a) Mtel will file the reports required
----------------------
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder and will take such further action
as the Purchaser may reasonably request, all to the extent required from time to
time to enable the Purchaser to sell Registrable Securities without registration
under the Securities Act within the
14
<PAGE>
limitation of the exemptions provided by (i) Rule 144, (ii) Rule 144A or (iii)
any similar rule or regulation hereafter adopted by the SEC.
(b) If at any time Mtel is not required to file reports in compliance
with either Section 13 or Section 15(d) of the Exchange Act, Mtel at its expense
will, forthwith upon the request of the Purchaser, (i) make available adequate
current public information with respect to Mtel within the meaning of paragraph
(c)(2) of Rule 144 and (ii) deliver the information required by Section (d) of
Rule 144A (such information to be "reasonably current" within the meaning of
Section (d)(4)(ii) of Rule 144A).
3.11 Specific Performance. Without limiting the remedies available
--------------------
to the parties hereto, Mtel and the Purchaser each acknowledge that any failure
by it to comply with its respective obligations under this Article III and
Article IV may result in material irreparable injury to Mtel or the Purchaser,
as the case may be, for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the
event of any such failure, Mtel or the Purchaser, as the case may be, may obtain
such relief as may be required to specifically enforce such party's obligations
under this Article III and Article IV.
ARTICLE IV
STANDSTILL AGREEMENT
--------------------
4.1 Standstill Provisions. Each of the Purchaser and TPG
---------------------
agrees that it shall not, and it shall use its best efforts to cause the
Purchaser Affiliates or any Person controlling the Purchaser or TPG not to, for
a period of five years following the Closing Date, directly or indirectly, alone
or in concert with others, unless specifically consented to in writing by the
Board: (i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of Mtel or any Subsidiary
thereof (other than (A) securities issued in connection with the exercise of an
Exchange Right or (B) indirectly through
15
<PAGE>
the ownership of shares or interests in any publicly traded mutual fund not
Controlled by a Purchaser Affiliate registered with the SEC under the Investment
Company Act of 1940, as amended) or (other than in the ordinary course of
business) any assets of Mtel or any Subsidiary of Mtel; (ii) make, or in any way
participate in, any "solicitation" of "proxies" (as such terms are used in the
rules of the SEC) or consent to vote, or seek to advise or influence any person
or entity with respect to the voting of, any voting securities of Mtel; (iii)
make any announcement with respect to, or submit a proposal for, or offer for
(with or without conditions) any acquisition, merger, consolidation, business
combination, tender or exchange offer, restructuring, recapitalization or other
extraordinary transaction of or involving Mtel or any of its Subsidiaries or
their voting securities or assets; (iv) form, join or in any way participate in
a "group" (as defined in Section 13(d)(3) of the Exchange Act) in connection
with any voting securities of Mtel; (v) otherwise act to seek to control or
influence the management, Board or policies of Mtel; (vi) have any discussions
or enter into any arrangements, understandings or agreements (whether written or
oral) with, or advise, assist or encourage, any other persons in connection with
any of the foregoing; or (vii) make any proposal, statement or inquiry, or
disclose any intention, plan or arrangement, whether written or oral,
inconsistent with the foregoing, or request Mtel, directly or indirectly, to
amend, waive or terminate any provision of this paragraph. Each of the parties
subject to the provisions of this Section 4.1 will promptly advise Mtel of any
inquiry or proposal made to such party with respect to any of the foregoing,
including the details thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The parties hereby represent and warrant with respect to themselves
as follows:
5.1 Organization. Mtel, the Purchaser and TPG are
------------
corporations or limited partnerships, as the case may be, duly formed, validly
existing and in good standing under the laws of their respective jurisdictions
16
<PAGE>
of incorporation or formation, as the case may be, and have full power
(corporate, partnership or otherwise) and authority to own and operate their
assets and properties, and, if applicable, carry on their businesses as
presently conducted and, if applicable, 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.
5.2 Authority. Mtel, the Purchaser and TPG have all requisite power
---------
and authority (corporate, partnership or otherwise) to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Mtel, the Purchaser and TPG of this Agreement and the
consummation by Mtel, the Purchaser and TPG of the transactions contemplated
hereby, have been duly authorized by all necessary action of Mtel, the Purchaser
or TPG, as the case may be. Each of Mtel, the Purchaser and TPG have reviewed
the terms of this Agreement, understand the intention of the parties in entering
into this Agreement and the scope and nature of their obligations hereunder and
have had the opportunity to review the terms of this Agreement and any other
Transaction Documents and instruments to be executed and delivered in connection
herewith and therewith. 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 creditor's 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.
5.3 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 Mtel, the Purchaser and TPG to
execute and deliver and to perform its respective 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")
--------------------
17
<PAGE>
are in full force and effect, except where failure to obtain and/or maintain in
full force and effect such consents and flings would not have a material adverse
effect upon the execution and delivery of, and upon the performance of the
parties' obligations under, this Agreement.
5.4 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 Purchaser, TPG
and 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 the Purchaser, TPG or Mtel, (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
Mtel or other organizational documents of Mtel, the Purchaser or TPG, as the
case may be, (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, the Purchaser or TPG is a party or by which it is bound or (iv) result in
the creation or imposition of any Lien, upon any of TPG'S, the Purchaser's, or
Mtel's property or assets. Each of TPG, the Purchaser and Mtel 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 the parties' ability to
perform its obligations under this Agreement.
5.5 Additional Mtel Representations. In addition to the
-------------------------------
foregoing, Mtel represents and warrants to the Purchaser that it is the
beneficial and record owner of 100% of the issued and outstanding shares of
capital stock of Mtel International on a fully diluted basis.
18
<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Termination. The registration rights and obligations
-----------
created hereunder shall terminate upon the earlier to occur of the third
anniversary of the Request Date or the date on which the Purchaser ceases to own
any Registrable Securities.
6.2 Assignability. This Agreement or any right or obligation
-------------
hereunder shall not be assigned or delegated in whole or in part to any other
Person; provided, however, that the Purchaser's rights to participate in the
-------- -------
Shelf Registration (but not any other rights) under Article III may be assigned
to any Purchaser Transferee of the Purchaser's shares of Mtel LATAM Securities;
provided, that, (i) prior to any such transfer, the Purchaser Transferee agrees
- -------- ----
in writing to be bound by the provisions of Section 3.3, Sections 3.5 through
3.9, Section 3.11, Article IV and Article VI of this Agreement, (ii) the
Purchaser Transferee designates the Purchaser as its agent for all actions,
notices or the like required pursuant to this Agreement or in connection with
the Shelf Registration and (iii) the Purchaser agrees to indemnify Mtel (and its
officers, directors, agents and affiliates) for any and all liabilities arising
from or related to the transfer of such rights or such shares to any such
Purchaser Affiliate or any action or omission by such Purchaser Affiliate in
connection with the matters contemplated by this Agreement and the Shelf
Registration.
6.3 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 6.3) 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:
19
<PAGE>
(a) If to Mtel, 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
(b) If to the Purchaser, to:
Newbridge Latin America, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: Richard Schifter/
James J. O'Brien
Telecopy: (817) 871-4010
(c) If to TPG, to:
TPG Partners, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: Richard Schifter/
James J. O'Brien
Telecopy: (817) 871-4010
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.
20
<PAGE>
6.4 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 Mtel, the Purchaser 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.
6.5 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.
6.6 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.
6.7 Enforcement of Agreement. Any action or proceeding brought by
------------------------
any party to this Agreement in connection with or relating to this Agreement
shall be brought exclusively in a federal or state court sitting in Delaware or
in the City of New York, State of New York. Each of the parties hereto, solely
in connection with any such action or proceeding, does hereby submit to the
jurisdiction of any such court and waive any defense of or relating to lack of
personal jurisdiction with respect to any such action or proceeding in any such
court.
6.8 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.
21
<PAGE>
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.
6.9 Entire Agreement. This Agreement, the Stockholders Agreement
----------------
and the Transaction Documents 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.
6.10 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.
6.11 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.
6.12 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.
6.13 Non-Competition. Each of Mtel and TPG hereby agrees that it
---------------
will comply with Section 9.1 of the Stockholders Agreement, the terms of which
are incorporated herein by reference in its entirety.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first written above.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh III
-------------------------
Name: John E. Welsh III
Title: Vice Chairman
NEWBRIDGE LATIN AMERICA, L.P.
By: LATAM GP, L.P.
By: LAF Advisors, L.L.C.
By: /s/ Richard P. Schifter
-------------------------
Name: Richard P. Schifter
Title:
TPG PARTNERS, L.P.
By: TPG GenPar, L.P.
By: TPG Advisors, Inc.
By: /s/ Richard P. Schifter
-------------------------
Name: Richard P. Schifter
Title:
23
<PAGE>
Exhibit 10.3
================================================================================
STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT
dated as of September 19, 1996
by and among
MTEL LATIN AMERICA, INC.,
MTEL INTERNATIONAL, INC.
and
NEWBRIDGE LATIN AMERICA, L.P.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I DEFINITIONS.................................................... 2
1.1 Definitions 2
ARTICLE II CORPORATE GOVERNANCE........................................... 13
2.1 Supermajority Voting Rights in the Charter; Voting
Matters Related to Charter Documents 13
2.2 Designation of Directors....................................... 18
2.3 Agreements between Mtel LATAM, Mtel and Other Mtel Affiliates.. 20
2.4 Stock Option Plan.............................................. 20
2.5 Payment of Dividends........................................... 21
ARTICLE III TAG-ALONG RIGHTS............................................... 21
3.1 Tag-Along Rights Generally..................................... 22
3.2 Allocation of Shares of Tag-Along Stock........................ 22
3.3 Transfer Mechanics............................................. 22
3.4 Transfers to Third Parties after Stockholders Decline
Tag-Along Rights............................................... 23
ARTICLE IV PREFERRED STOCK CONVERSION AND REDEMPTION RIGHTS............... 24
4.1 Conversion..................................................... 24
(a) Optional Conversion of the Purchaser...................... 24
(b) Mandatory Conversion of Mtel International................ 24
(c) Mechanics of Conversion................................... 25
(d) Reserved Shares........................................... 25
4.2 Redemption Rights and Obligations.............................. 25
ARTICLE V PREEMPTIVE RIGHTS.............................................. 26
5.1 Preemptive Rights.............................................. 26
ARTICLE VI REGISTRATION RIGHTS AND PROCEDURES............................. 27
6.1 Piggyback Registration Rights.................................. 27
6.2 Limitations on Shares Included In Piggyback Registrations...... 29
6.3 Expenses....................................................... 30
6.4 Restrictions on Public Sale by Stockholders and Mtel LATAM..... 30
6.5 Indemnification................................................ 30
6.6 Cooperation by Prospective Sellers............................. 36
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VII EXCHANGE RIGHTS................................................ 37
7.1 Optional Exchange of Common Stock.............................. 37
7.2 Mandatory Exchange of Preferred Stock Upon Exchange of
Common Stock................................................... 38
7.3 Mandatory Exchange of Purchaser Securities Initiated by Mtel
International.................................................. 39
7.4 Mechanics of Exchange.......................................... 40
(a) General................................................... 40
(b) Surrender of Certificates; Notice of Exchange............. 40
(c) Issuance of New Certificates; Delivery of Prospectus...... 41
(d) Satisfaction of Prospectus Condition...................... 42
(e) Effective Date of Exchange................................ 42
(f) Issuance of New Mtel LATAM Certificates for Partial
Exchanges................................................. 42
ARTICLE VIII MTEL LATAM COVENANTS........................................... 43
8.1 Financial Reports.............................................. 43
8.2 Rule 144 and Rule 144A......................................... 43
8.3 Access to Information.......................................... 43
8.4 Mtel LATAM Capitalization...................................... 44
8.5 Payment of the Loan Amount..................................... 44
ARTICLE IX ADDITIONAL COVENANTS........................................... 44
9.1 Non-Competition................................................ 44
9.2 Aggregate Ownership Limitation................................. 46
ARTICLE X STOCK LEGENDS.................................................. 47
10.1 Stock Certificate Legend....................................... 47
ARTICLE XI MISCELLANEOUS.................................................. 49
11.1 Headings; No Third Party Beneficiaries......................... 49
11.2 Entire Agreement............................................... 49
11.3 Notices........................................................ 49
11.4 Applicable Law................................................. 51
11.5 Severability................................................... 51
11.6 Successors; Assigns; Transferees; Amendments; Waivers.......... 51
11.7 Defaults; No Circumvention of Agreement........................ 52
11.8 Further Assurances............................................. 53
11.9 Counterparts................................................... 53
</TABLE>
ii
<PAGE>
STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT
This STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT, dated as of September
19, 1996 (the "Agreement"), by and among Mtel Latin America, Inc., a Delaware
---------
corporation ("Mtel LATAM"), Mtel International, Inc., a Delaware corporation
----------
("Mtel International") and Newbridge Latin America, L.P., a Cayman Islands
- --------------------
limited partnership (the "Purchaser"), and such other persons or entities who or
---------
which become parties to this Agreement pursuant to the terms and conditions of
this Agreement.
WHEREAS, Mtel LATAM and the Purchaser have executed and delivered a
Purchase Agreement, dated as of September 19, 1996 (the "Purchase Agreement"),
------------------
pursuant to which, among other things, Mtel LATAM has agreed to issue to the
Purchaser, and the Purchaser has agreed to acquire from Mtel LATAM, (a) 2,000
shares (the "Common Shares") of Common Stock, par value $0.01 per share, of Mtel
-------------
LATAM (the "Common Stock"), representing in the aggregate 20% of the shares of
------------
the Common Stock (excluding any shares to be issued under the Stock Option Plan
(as defined herein)) and (b) 18,500 shares (such shares, along with 88,000
shares of Preferred Stock being issued to Mtel International pursuant to Section
8.4 herein (collectively referred to as the "Preferred Shares") of Cumulative
----------------
Redeemable Variable Rate Preferred Stock, par value $0.01 per share, of Mtel
LATAM (the "Preferred Stock"), representing in the aggregate 17.37% of the
---------------
Preferred Stock;
WHEREAS, Mtel Puerto Rico, Inc. ("Mtel Puerto Rico"), a Delaware
----------------
corporation and a wholly-owned subsidiary of Mtel LATAM, and the Purchaser have
previously entered into a Purchase Agreement (the "Puerto Rico Purchase
--------------------
Agreement") and a Stockholders and Exchange Rights Agreement, each dated as of
- ---------
September 19, 1996, (collectively, the "Puerto Rico Transaction Documents"),
---------------------------------
pursuant to which, among other things, Mtel Puerto Rico has agreed to issue to
the Purchaser, and the Purchaser has agreed to acquire from Mtel Puerto Rico,
3,500 shares (the "Puerto Rico Preferred Shares") of 12% Redeemable Preferred
----------------------------
Stock, par value $0.01 per share, of Mtel Puerto Rico, representing in the
aggregate 100% of the preferred stock of Mtel Puerto Rico;
<PAGE>
WHEREAS, in connection with the foregoing, Mobile Telecommunications
Technologies Corp. a Delaware corporation ("Mtel"), Mtel LATAM, Mtel
----
International and the Purchaser have entered in certain related agreements (the
"Ancillary Agreements" and together with the Purchase Agreement and the Puerto
--------------------
Rico Transaction Documents, the "Transaction Documents"); and
---------------------
WHEREAS, the Stockholders (as defined herein) believe it to be in
their best interests and in the best interests of Mtel LATAM that they enter
into this Agreement providing for certain rights and restrictions with respect
to the shares of Common Stock owned by them.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings ascribed to them below (such terms to be equally
applicable to both singular and plural forms of the terms defined or referred
to):
"Actual Loan Amount" shall mean an amount equal to the sum of (i)
------------------
$10,150,825, in respect of capital expenditures, working capital requirements
and business development costs incurred by Mtel LATAM from the period from
January 1 to June 30, 1996, and (ii) $1,052,921, in respect of any amounts
accrued from January 1, 1996 to June 30, 1996 in respect of the Management Fee
(as defined in the Management Services Agreement entered into simultaneously on
the date hereof between Mtel LATAM and Mtel).
"Additional Loan Amount" shall mean an amount equal to the sum of (i)
----------------------
the capital expenditures, working capital requirements and business development
costs incurred by Mtel LATAM from the period from July 1, 1996 to September 19,
1996 and (ii) any amounts accrued from July 1, 1996 to September 19, 1996 in
respect of the Management Fee.
2
<PAGE>
"Affiliate" or "affiliate" shall mean, with respect to any specified
--------- ---------
Person, any Person directly or indirectly controlling, controlled by, or under
common control with, such specified Person, at any time during the period for
which the determination of affiliation is being made; provided that in the case
--------
of a Person who is an individual, such terms shall also include members of such
specified Person's immediate family (as defined in Instruction 2 of Item 404(a)
of Regulation S-K under the Securities Act).
"Beneficial Owner" shall mean, as to any securities of Mtel or Mtel
----------------
LATAM, as applicable, a Person who meets any of the following characteristics
(such Person shall be deemed to "beneficially own" and have "beneficial
ownership" of, any securities):
(i) which such Person or any of such Person's Affiliates or
associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise;
(ii) which such Person or any of such Person's Affiliates or
associates, directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding (whether or
not in writing); or
(iii) of which any other Person is the Beneficial Owner and such
Person or any of such Person's Affiliates or associates has any agreement,
arrangement or understanding (whether or not in writing) with such other Person
(or any of such other Person's Affiliates or associates) with respect to
acquiring, holding, voting or disposing thereof; provided, however, that a
--------
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any
such securities if such Person has the right to vote such securities pursuant to
an agreement, arrangement or understanding (whether or not in writing) which (1)
arises solely from a revocable proxy given to such Person in response to a
public proxy or consent solicita-
3
<PAGE>
tion made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report).
"Business" shall mean the business of telecommunications as it
--------
pertains to paging or messaging.
"Business Day" shall mean any calendar day which is not a Saturday,
------------
Sunday or legal holiday or a day on which banking institutions in the State of
New York are permitted to be closed.
"Closing Date" shall have the meaning ascribed to such term in the
------------
Purchase Agreement.
"Common Stock" shall mean the capital stock named as "Common Stock" in
------------
the first Recital to this Agreement.
"Company Stock" shall mean the Common Stock and any other capital
-------------
stock of any class or series of Mtel LATAM, and any securities of Mtel LATAM
convertible into, or exercisable or exchangeable for, any such Common Stock or
other capital stock of Mtel LATAM (including, without limitation, (i) shares of
Common Stock issued pursuant to the Purchase Agreement, (ii) shares of Common
Stock issued upon the exercise of any preemptive rights, (iii) shares of Common
Stock issued and outstanding prior to the date hereof and (iv) shares of
Preferred Stock issued pursuant to the Purchase Agreement and (v) shares of
Common Stock issued upon conversion of the Preferred Stock. The term "Company
-------
Stock" shall exclude any options or capital stock granted pursuant to the Stock
- -----
Option Plan or any other employee stock option plan or employee benefit or other
incentive plan which may be adopted by Mtel LATAM after the date hereof and the
actual shares issuable upon exercise of any stock options.
"Control" when used with respect to any person, means the power to
-------
direct the management and policies of such person, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
4
<PAGE>
"Current Market Price", with respect to any of the Second, Third or
--------------------
Fourth Exchange Events and when used with respect to the price of a share of
Mtel Common Stock, shall be equal to the average of the reported closing sales
prices for Mtel Common Stock on the Nasdaq National Market or such other U.S.
national securities exchange on which Mtel Common Stock may then be listed, for
the 30 consecutive trading days immediately preceding the date on which the
Exchange Notice relating to such Exchange Event is delivered to Mtel
International pursuant to Section 7.4(b) herein.
"Duly Endorsed" shall mean, as to any stock certificate, a stock
-------------
certificate that is either (i) duly endorsed to a specified person; or (ii) duly
endorsed in blank by the Person or Persons in whose name such certificate or
certificate is registered or (iii) accompanied by a duly executed instrument of
transfer separate from such certificate, provided that such instrument of
transfer shall be in form and substance satisfactory to Mtel International.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder.
"Exchange Date" shall have the meaning ascribed to such term in
-------------
Section 7.4(b) herein.
"Exchange Event" shall have the meaning ascribed to such term in
--------------
Section 7.1(a) herein.
"Exchange Notice" shall have the meaning ascribed to such term in
---------------
Section 7.4(b) herein.
"Fair Market Value" shall mean the value per share of the Common
-----------------
Stock, as determined by a nationally recognized investment bank or appraisal
firm in the United States selected by the Purchaser and Mtel International,
based on the assumption that the Common Stock is publicly traded in the United
States on a fully distributed and registered basis with no consideration being
given to any lack of control by the holders of the Common Stock; provided,
--------
however, that if the parties cannot
- -------
5
<PAGE>
agree on an investment bank or appraisal firm with twenty (20) Business Days,
each party shall select a nationally recognized investment bank or appraisal
firm and the two Persons shall designate a third nationally recognized
investment bank or appraisal firm, whose appraisal shall be determinative of
such value.
"Final Outstanding Date" shall have the meaning ascribed to such term
----------------------
in Section 7.4(a) herein.
"First Exchange Event" shall have the meaning ascribed to such term in
--------------------
Section 7.1(a) herein.
"First Exchange Formula" shall have the meaning ascribed to such term
----------------------
in Section 7.1(b) herein.
"Fourth Exchange Event" shall have the meaning ascribed to such term
---------------------
in Section 7.1(a) herein.
"Fully-Diluted Basis" shall mean, with respect to any calculation of
-------------------
the outstanding amount of Common Stock of Mtel LATAM, an amount equal to the
total outstanding number of shares of Common Stock of Mtel LATAM, calculated
without duplication and assuming the conversion of all outstanding shares of
convertible Preferred Stock of Mtel LATAM, the exchange of the Puerto Rico
Preferred Shares and the exercise of any and all warrants, options and other
rights (including, without limitation, stock options or grants to purchase
shares of Common Stock granted pursuant to the Stock Option Plan or any other
employee stock option plan or employee benefit or other incentive plan).
"Guarantee" shall mean any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obliga-
6
<PAGE>
tion of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term "Guarantee"
-------- ------- ---------
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
---------
"Indebtedness" shall mean, with respect to any Person at any date of
------------
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of facilities or agreements providing for letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto), (iv) all obligations of such Person as lessee under capitalized
leases, (v) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services which purchase price is due more than six
months after the date of placing such property in service or taking delivery and
title thereto or the completion of such services; provided, however, that this
-------- -------
provision (v) hereof shall not include obligations which are included in any
capital or operating budget approved in accordance with Section 2.1(xv) hereof,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided,
--------
however, that the amount of such Indebtedness shall be the lesser of (A) the
- -------
fair market value of such asset at such date of determination and (B) the amount
of such Indebtedness, and (vi) all Indebtedness of other Persons Guaranteed by
such Person to the extent such Indebtedness is Guaranteed by such Person. The
amount of Indebtedness of any Person at any date shall be (without duplication)
the outstanding balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation
(unless the underlying contingency has not occurred and the occurrence of the
underlying contingency is entirely within the control of such Person).
"Initial Current Market Price" when used with respect to the price of
----------------------------
a share of Mtel Common Stock shall be equal to the average of the reported
closing sales prices for Mtel Common Stock on the Nasdaq National
7
<PAGE>
Market or such other U.S. national securities exchange upon which such Mtel
Common Stock may then be listed, for the 30 consecutive trading days immediately
preceding the date of an announcement of an agreement or commencement (or other
public announcement) with respect to the First Exchange Event (as defined in
Section 7.1 herein); provided, however, that if such announcement shall be made
-------- -------
after the closing of trading of Mtel Common Stock on any date, such announcement
shall be deemed to be made on the next succeeding trading day.
"IPO" shall mean an initial firm commitment public offering of Common
---
Stock involving the Registration and sale of thirty-five percent (35%) or more
of the total issued and outstanding Common Stock (calculated on a Fully-Diluted
Basis) as of the date immediately preceding such offering, whether involving a
primary offering or a combined primary and secondary offering, and pursuant to
which Mtel LATAM becomes listed on a U.S. national securities exchange, the
Nasdaq Stock Market or the Nasdaq National Market.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including, without limitation any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"Market Capitalization," as of any date of determination, shall mean
---------------------
the product of (i) the sum of (x) the total number of Registered shares of Mtel
Common Stock and (y) the lesser of the number of restricted shares of Mtel
Common Stock that are subject to a registration rights agreement providing for
the registration of such shares under the Securities Act upon the demand of the
holder thereof and the number of such restricted shares that equal twenty-five
percent (25%) of the number determined under clause (x), times (ii) the closing
sales price for Mtel Common Stock on the Nasdaq National Market or such other
U.S. national securities exchange upon which the Mtel Common Stock may then be
listed; provided, that for purposes of the foregoing calculation, Registered
--------
shares of Mtel Common Stock shall include those shares issued pursuant to the
Share Exchange Agreement, dated as of July 19, 1995, by and among Mtel,
Microsoft
8
<PAGE>
Corporation, Kleiner Perkins, Caufield, Byers VI L.P., KPCB VI Founders Fund,
L.P., William H. Gates, Paul G. Allen, Integral Capital Partners, L.P., Integral
Capital Partners L.P. and International CP.
"Material Modification" shall mean an expenditure that exceeds by $1
---------------------
million and varies by 10% or more from the amount set forth in the applicable
line item in the applicable budget of Mtel LATAM as approved by the Mtel LATAM
Board of Directors in accordance with Section 2.1(xv) herein.
"Material Subsidiary" shall mean, any operating Subsidiary of Mtel
-------------------
LATAM in Argentina, Brazil, Colombia, Mexico, Venezuela or Puerto Rico and any
other operating Subsidiary of Mtel LATAM whose revenues (calculated on a
proportionate basis) represent 7.5% or more of the consolidated revenues of Mtel
LATAM, as calculated by reference to such Subsidiary's and Mtel LATAM's most
recent annual financial statements.
"Mtel Change of Control" shall mean the occurrence, pursuant to any
----------------------
transaction or series of transactions, of any of the following events:
(1) 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 50% or more of the total issued and outstanding shares of Common Stock,
calculated on a fully diluted basis;
(2) Mtel 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, or all or substantially all of the assets in
the United States of its one-way paging business, to any Person; or
(3) individuals who on the Closing Date constitute the Mtel Board of
Directors (together with any new directors whose election by the Mtel Board of
Directors or whose nomination for election by Mtel's stockholders was approved
by a vote of at least a majority of the members of the Mtel Board of Directors
then in office who either were members of the Mtel Board of Directors on the
Closing Date or whose election or nomination for election was previously so
approved) cease for any reason
9
<PAGE>
to constitute a majority of the members of the Mtel Board of Directors then in
office.
"Mtel Common Stock" shall mean shares of common stock, par value $0.01
-----------------
per share, of Mtel.
"Mtel Mandatory Exchange" shall have the meaning ascribed to such term
-----------------------
in Section 7.3 herein.
"Mtel Indemnitee" shall have the meaning ascribed to such term in
---------------
Section 6.5(b) herein.
"Mtel International Nominee" shall have the meaning ascribed to such
--------------------------
term in Section 2.2 herein.
"Permitted Transferee" shall mean Mtel or Mtel LATAM or any Affiliate
--------------------
of Mtel or Mtel LATAM (including any employee of Mtel LATAM and its
Subsidiaries).
"Person" shall mean an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint venture, or
other entity of whatever nature.
"Piggyback Securities" shall mean those Registrable Securities which
--------------------
are requested to be sold by any Stockholder pursuant to Article VI hereof.
"Preemptive Rights Offer" shall have the meaning ascribed to such term
-----------------------
in Section 5.1 herein.
"Preferred Exchange Formula" shall have the meaning ascribed to such
--------------------------
term in Section 7.2 herein.
"Preferred Stock" shall mean the capital stock named as "Preferred
---------------
Stock" in the first Recital to this Agreement.
"Prospectus Condition" shall mean, with respect to any exchange
--------------------
requested by a holder of Securities pursuant to Section 7.4 herein, that a
current prospectus (meeting the requirements of Section 10 of the Securities
Act) relating to the Mtel Common Stock shall have been delivered to such holder
or its designee; provided, however, that the Prospectus Condition shall be
-------- -------
deemed satisfied if Mtel receives (i) an opinion of counsel (which may be the
general counsel of, or regular outside
10
<PAGE>
counsel to, Mtel) to the effect that neither Mtel nor Mtel International is
required, under the Securities Act or the rules and regulations of the SEC
promulgated thereunder, to deliver a current prospectus in connection with any
exchange of Securities for shares of Mtel Common Stock or (ii) a letter from the
Division of Corporation Finance (or other appropriate division of the SEC) to
the effect that such Division will not raise objection or recommend any
enforcement action to the SEC if neither Mtel nor Mtel International delivers a
current prospectus in connection with an exchange of Securities for shares of
Mtel Common Stock.
"Purchaser Affiliate" shall mean any Affiliate of the Purchaser or of
-------------------
TPG Partners, L.P., a Delaware limited partnership, but excluding any limited
partners of the Purchaser or TPG Partners, L.P. and the limited partners of any
Affiliate of the Purchaser or TPG Partners, L.P.
"Purchaser Nominee" shall have the meaning ascribed to such term in
-----------------
Section 2.2 herein.
"Purchaser Transferee" shall have the meaning ascribed to such term in
--------------------
Section 11.6 herein.
"Record Date" shall have the meaning ascribed to such term in the Mtel
-----------
LATAM Charter.
"Register," "Registered" and "Registration" as used herein shall refer
-------- ---------- ------------
to a registration of Registrable Stock effected by filing with the SEC a
registration statement in compliance with the Securities Act or the Exchange Act
and, in the case of a Securities Act registration statement, the declaration or
ordering by the SEC of effectiveness of such registration statement.
"Registrable Securities" shall mean shares of Common Stock (including,
----------------------
without limitation, shares of Common Stock issued pursuant to the Purchase
Agreement, shares of Common Stock issued pursuant to the Stock Option Plan or
any other stock option plan or employee benefit or other incentive plan which
may be adopted by Mtel LATAM in accordance with Section 2.1(xxi) herein after
the date hereof, shares of Common Stock issued upon the exercise of any options
or upon the exercise of any preemptive rights granted by Mtel LATAM, shares of
Common
11
<PAGE>
Stock issued upon the exercise of any exchange, conversion or similar right or
any security contemplated by the Transaction Documents and shares of Common
Stock issued and outstanding prior to the date hereof) and any other equity
securities of Mtel LATAM or any successor corporation issued in exchange for or
in respect of such shares of Common Stock. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (i)
such securities shall have been registered under the Securities Act, the
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of pursuant to such effective registration statement, (ii) such
securities shall have been distributed pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, (iii) such securities shall
have been otherwise transferred, if new certificates or other evidence of
ownership for them not bearing a legend restricting further transfer and not
subject to any stop transfer order or other restrictions on transfer shall have
been delivered by Mtel LATAM and subsequent disposition of such securities shall
not require Registration or qualification of such securities under the
Securities Act or any state securities laws then in force, or (iv) such
securities shall cease to be outstanding.
"Representative" shall mean, with respect to a particular Person, any
--------------
director, officer, general partner, limited partner, co-owner, member, nominee,
managing director or controlling Person of such Person.
"SEC" shall mean the United States Securities and Exchange Commission.
---
"Second Exchange Event" shall have the meaning ascribed in such term
---------------------
in Section 7.1(a) herein.
"Second Exchange Formula" shall have the meaning ascribed to such term
-----------------------
in Section 7.1 herein.
"Securities" shall mean the Common Stock and the Preferred Stock.
----------
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
12
<PAGE>
"Stockholders" shall mean the Purchaser and Mtel International.
------------
"Stock Option Plan" shall have the meaning ascribed to such term in
-----------------
Section 2.4 herein.
"Subsidiary" shall mean any Person in which Mtel LATAM, directly or
----------
indirectly, now or hereafter owns, acquires or holds an equity interest.
"Transfer" or "transfer" shall mean any direct or indirect sale,
-------- --------
assignment, mortgage, transfer, pledge, gift, hypothecation or other disposition
of or transfer of capital stock (other than any bona fide pledge or
hypothecation of capital stock to a financial institution(s) in connection with
any loan from such financial institution(s)). The term "Transfer" used as a
--------
verb has a corresponding meaning.
"Third Exchange Event" shall have the meaning ascribed to such term in
--------------------
Section 7.1(a) herein.
"Third Party" shall mean any Person other than Mtel LATAM or any
-----------
Affiliate of Mtel LATAM.
"Voting Interest" shall mean, as to any Person, the ratio, expressed
---------------
as a percentage, of (i) the aggregate number of shares of Common Stock then held
by such Person to (ii) the aggregate number of shares of Common Stock then
outstanding, in each case calculated on a Fully-Diluted Basis, but excluding for
such purposes the Preferred Stock, any options granted pursuant to the Stock
Option Plan or any other employee stock option plan or employee benefit or other
incentive plan and any shares of Common Stock issuable upon the exercise of the
Stock Option Plan or any such other plan.
ARTICLE II
CORPORATE GOVERNANCE
--------------------
2.1 Supermajority Voting Rights in the Charter; Voting Matters
----------------------------------------------------------
Related to Charter Documents. (a) Subject to Section 2.1(d) below, the parties
- ----------------------------
hereto acknowledge and agree that Mtel LATAM's Amended and Restated Certificate
of Incorporation (the "Mtel LATAM Char-
----------------
13
<PAGE>
ter") shall be amended on the date hereof to provide that the approval of seven
- ---
of the eight members of the Mtel LATAM Board of Directors will be required to
approve the following transactions (each, a "Supermajority Event"):
-------------------
(i) a sale or merger of Mtel LATAM or Material Subsidiary, or a sale
of all or substantially all of the assets or capital stock of any Material
Subsidiary, or a sale of greater than 30% of the assets of Mtel LATAM, in each
case in any transaction or series of transactions;
(ii) a liquidation, recapitalization or dissolution of Mtel LATAM or
any Material Subsidiary;
(iii) any loan or loan commitment by Mtel LATAM or any Subsidiary of
Mtel LATAM, as lender, to any affiliate of Mtel (other than Mtel LATAM or any
Subsidiary of Mtel LATAM) or to any other unaffiliated Person;
(iv) any capital contribution in excess of $250,000 per annum to any
Subsidiary (or joint venture or similar entity involving a profit sharing
arrangement) that has its principal place of operations in a country in which
Mtel LATAM (or any Subsidiary of Mtel LATAM) had operations as of the Closing
Date or in a country as to which the Mtel LATAM Board of Directors has
subsequent to the Closing Date approved an investment with respect thereto (in
accordance with the provisions of this Section 2.1(v));
(v) any investment in a country where Mtel LATAM (or a Subsidiary of
Mtel LATAM) did not have operations as of the Closing Date; provided, that, this
--------
Section 2.1 (v) shall not be applicable to the extent the Mtel LATAM Board of
Directors has approved (in accordance with the provisions of this Section
2.1(v)) at any time subsequent to the Closing Date an investment in any such
country, in which case any subsequent investment in any such country shall be
subject to limitations set forth in clause (iv) of this Section 2.1;
(vi) the filing of a bankruptcy petition by Mtel LATAM or any
Material Subsidiary;
(vii) a material change in the nature of Mtel LATAM's business such
that Mtel LATAM is no longer primarily engaged in the Business;
14
<PAGE>
(viii) a material change to the Management Services Agreement, dated
as of the date hereof, by and between Mtel and Mtel LATAM (the "Management
----------
Services Agreement");
- ------------------
(ix) the entering into or amending (A) any transaction or series of
related transactions outside of the ordinary course of business between Mtel
LATAM or any Subsidiary of Mtel LATAM, on the one hand, and Mtel or any
Affiliate of Mtel (other than Mtel LATAM or any Subsidiary of Mtel LATAM), on
the other hand, involving an amount or amounts in excess of $1.0 million or (B)
any transaction or series of related transactions outside of the ordinary course
of business between Mtel LATAM or any Subsidiary of Mtel LATAM and any other
Person, involving an amount or amounts in excess of $2.0 million; provided, that
--------
this Section 2.1(ix) shall not be applicable to the payment contemplated by
Section 8.4 hereof;
(x) (1) the incurrence of any Indebtedness by Mtel LATAM or any
Material Subsidiary, in any transaction or series of transactions, with a
principal amount in excess of $15 million and (2) the amendment of any material
term of any such Indebtedness of Mtel LATAM or any Material Subsidiary in a
manner adverse or unfavorable to Mtel LATAM or any Material Subsidiary;
(xi) the appointment and removal of (I) the chief executive officer,
chief financial officer or chief operating officer of Mtel LATAM and (II) the
chief operating officer or general manager of each Material Subsidiary, and
designation of or any increase in (other than pursuant to applicable local law
or such person's employment agreement) the compensation levels therefor;
(xii) the creation, assumption or incurrence of any Lien on the
assets of Mtel LATAM or any Material Subsidiary, individually or in the
aggregate, in excess of $15 million at any time outstanding;
(xiii) any acquisition of an amount in any transaction or series of
related transactions in excess of $5 million thereof by Mtel LATAM or a Material
Subsidiary;
(xiv) the authorization, redemption, repurchase or issuance of
capital stock (including options,
15
<PAGE>
warrants or other rights to acquire any such capital stock, but excluding the
redemption of the Preferred Shares, the issuance, if any, of payment-in-kind
dividends on the Preferred Shares, the conversion of the Preferred Shares into
Common Stock, the redemption or repurchase of any shares issued under the Stock
Option Plan, or the exchange or redemption of any of the Preferred Stock of Mtel
Puerto Rico, in each case as contemplated by the Transaction Documents);
provided, that no such approval shall be required for the authorization or
- -------- ----
issuance in any transaction or series of transactions in any year of ten percent
(10%) or less of the amount of any class of such capital stock issued and
outstanding as of the beginning of such year; provided, however, that such
-------- -------
issuances in the aggregate shall not exceed 30% of the total number of shares of
capital stock issued and outstanding immediately following the Closing Date,
excluding any shares issued pursuant to options granted under the Stock Option
Plan; provided, further, that, no such issuances shall involve the issuance of a
-------- ------- ----
class or series of preferred stock which ranks senior to the Preferred Stock;
(xv) the approval of an annual business plan and budget, including
the capital expenditures budget, of Mtel LATAM and its Material Subsidiaries or
any Material Modification thereto;
(xvi) any amendment to the Mtel LATAM Charter, the Amended and
Restated By-laws of Mtel LATAM (the "Mtel LATAM By-laws") or other charter
------------------
documents of Mtel LATAM or any of its Material Subsidiaries which would
adversely affect any rights of the Purchaser (including any change in the size
of the Mtel LATAM Board of Directors) except under circumstances described in
the first proviso of Section 2.1(a)(xiv) and Section 2.1(d) hereof;
(xvii) the authorization or incurrence of any single capital
expenditure, in any transaction or series of transactions in excess of $5
million in any year to the extent that such capital expenditure was not included
in any budget approved in accordance with Section 2.1(xv) hereof;
(xviii) the creation of, or the delegation of any power to, any
committee of the Mtel LATAM Board of Directors;
16
<PAGE>
(xix) the appointment of or any change in the independent public
auditors of Mtel LATAM or any of its Material Subsidiaries;
(xx) any change in the accounting policies of Mtel LATAM or any of
its Material Subsidiaries, including any change in fiscal year, except as
required by applicable generally accepted accounting practices; or
(xxi) subject to Section 2.4 hereof, the establishment of the Stock
Option Plan or any other employee stock option or employee benefit or other
incentive plan, and any material modifications to or amendments of the Stock
Option Plan or any such other plans.
(b) From and after the Closing Date, each Stockholder shall vote its
shares of Company Stock (to the extent entitled to vote), at each regular or
special meeting of stockholders of Mtel LATAM or in any written consent executed
in lieu of such a meeting of stockholders, and shall take all actions reasonably
necessary to ensure that the Mtel LATAM Charter and Mtel LATAM By-laws (x) are
consistent with the provisions of Section 2.1(a) hereof and (y) do not, at any
time, conflict with the provisions of this Agreement. From and after the
Closing Date, each Stockholder shall use its reasonable best efforts to cause
its respective Nominees (as defined in Section 2.2 hereof), if any, to act in a
manner consistent with the provisions of this Agreement (including the
provisions of Section 2.1(a) hereof).
(c) In connection with the provisions of Section 2.1(a) hereof
relating to any Subsidiary, except as may be required by any applicable law Mtel
LATAM shall cause its representative(s), if any, on the board of directors or
other governing body of any such Subsidiary, including the shareholders'
assembly of any such Subsidiary, to vote as directed by the Mtel LATAM Board of
Directors with respect to any proposed action; provided, however, it is
-------- -------
understood by the parties hereto that Mtel LATAM may not either currently or in
the future possess the requisite voting or other power at any such Subsidiary to
veto or mandate any proposed action from being approved or disapproved by the
board of directors or other governing body of any such Subsidiary, and in such
circumstance no liability of any kind shall accrue to Mtel LATAM or Mtel
International or any of their respec-
17
<PAGE>
tive officers, directors, shareholders or Affiliates if such proposed action is
approved or disapproved by the Board of Directors or other governing body at any
such Subsidiary notwithstanding the fact that the Mtel LATAM representatives
shall have voted as directed by the Mtel LATAM Board of Directors.
(d) In the event that the Purchaser shall for any reason lose its
right to elect one of its two members to the Mtel LATAM Board of Directors (in
accordance with the provisions of Section 2.2 hereof), the supermajority voting
rights contemplated by paragraphs (a),(b) and (c) of this Section 2.1 shall
terminate and each of the parties shall take any and all actions required so as
to amend the applicable provisions of the Mtel LATAM Charter to eliminate such
supermajority voting provisions and otherwise reflect the foregoing.
2.2 Designation of Directors. (a) Subject to the provisions of
------------------------
Section 2.2(b) hereof, from and after the Closing Date, each of the Stockholders
shall vote its shares of Company Stock (to the extent entitled to vote), at each
regular or special meeting of the stockholders of Mtel LATAM called for the
purpose of filling positions on the Board of Directors of Mtel LATAM, or in any
written consent executed in lieu of such a meeting of stockholders, and shall
take all actions reasonably necessary, to ensure the election to the Mtel LATAM
Board of Directors (the "Mtel LATAM Board") of (i) two individuals selected by
----------------
the Purchaser (the "Purchaser Nominees") and (ii) six individuals selected by
------------------
Mtel International (the "Mtel International Nominees", and together with the
---------------------------
Purchaser Nominees, the "Nominees"); provided however, that if, upon the earlier
-------- -------- -------
to occur of, (x) the Purchaser disposes of any shares of Common Stock such that
after such disposition the Purchaser shall hold (i) an amount of Common Stock
that is less than 90% of the amount of Common Stock initially held by the
Purchaser pursuant to the transactions contemplated by the Purchase Agreement,
the Purchaser shall be entitled to elect only one member to the Mtel LATAM
Board, and Mtel International's obligation to vote its shares pursuant to this
Section 2.2 with respect to the Purchaser Nominees shall be limited to one
director and (ii) an amount of Common Stock that is less than 50% of the amount
of Common Stock initially held by the Purchaser pursuant to the transactions
contemplated by the Purchase Agreement, the Purchaser's right to elect
18
<PAGE>
any members of the Mtel LATAM Board shall terminate and Mtel International's
obligation to vote its shares pursuant to this Section 2.2 with respect to the
Purchaser Nominees shall terminate, or (y) the Purchaser's aggregate Voting
Interest (i) is less than 12%, then the Purchaser shall then be entitled to
elect only one member to the Mtel LATAM Board, and Mtel International's
obligation to vote its shares pursuant to this Section 2.2 with respect to the
Purchaser Nominee shall be limited to one director, or (ii) is less than 5%,
then the Purchaser's right to elect any members to Mtel LATAM's Board shall
terminate and Mtel International's obligation to vote its shares pursuant to
this Section 2.2 with respect to the Purchaser Nominee shall terminate;
provided, further, that, if Mtel's Voting Interest, directly or indirectly,
- -------- ------- ----
shall be less than 50%, the obligation of the Purchaser to vote (or consent) to
the election of all of the Mtel International Nominees shall terminate and
thereafter the Purchaser shall be obligated to vote for (or consent to) the
election of that number of Mtel International Nominees such that Mtel
International shall hold that number of seats on the Mtel LATAM Board which is
equal to the product (rounded upward to the nearest whole number) obtained by
multiplying (x) the total number of directors on the Mtel LATAM Board and (y)
Mtel's, direct or indirect, Voting Interest.
(b) In the event that on March 31, 1997, (or on such earlier date as
to which Mtel LATAM shall have transmitted to the Purchaser a Request Notice (or
Request Notices, as defined in the Purchase Agreement) which in the aggregate
have requested payment of the outstanding and unpaid Common Shares Purchase
Price (as defined in the Purchase Agreement)) the Purchaser shall have failed to
pay any amount set forth in any such Request Notice within 15 business days of
the receipt thereof, and, as a result of such failure, the Purchaser shall not
have paid in the aggregate (a) 90% of the Common Shares Purchase Price, the
Purchaser shall be entitled thereafter to elect only one member to the Mtel
LATAM Board, and the other member shall immediately resign, and Mtel
International's obligation to vote its shares pursuant to this Section 2.2 with
respect to the Purchaser Nominees shall be limited to one director or (b) 50% of
the Common Shares Purchase Price, then the Purchaser's right to elect any
members of the Mtel LATAM Board shall terminate, both such members shall resign
and Mtel
19
<PAGE>
International's obligation to vote its shares pursuant to this Section 2.2 with
respect to the Purchaser Nominees shall terminate.
2.3 Agreements between Mtel LATAM, Mtel and Other Mtel Affiliates.
--------------------------------------- ---------------------
Mtel LATAM shall in writing promptly notify the Purchaser in the event that
Mtel LATAM or a Material Subsidiary enters into, modifies or amends any
agreement with Mtel, any Affiliate of Mtel (other than Mtel LATAM or a Material
Subsidiary), or any shareholder, director or officer of Mtel or any such
Affiliate of Mtel. The terms of any such agreement entered into, modified or
amended between such parties as described in this Section 2.3 shall be no less
favorable than would be obtained in an arms-length transaction between
unaffiliated parties.
2.4 Stock Option Plan. Mtel LATAM shall be entitled to adopt an
-----------------
equity based stock option plan (the "Stock Option Plan") pursuant to which Mtel
-----------------
LATAM may grant stock options and "phantom equity rights" (or other similar
incentives) in an aggregate amount of up to 10% of the outstanding Common Stock
of Mtel LATAM on a Fully-Diluted Basis as of the date hereof, of which 5% shall
be granted at or promptly following the Closing without any supermajority
approval pursuant to Section 2.1 herein and the remaining 5% will be granted by
the Compensation Committee (as defined below) of the Mtel LATAM Board at their
discretion, subject to agreement by the Purchaser's representative on such
Compensation Committee, if any) on such terms and conditions as Mtel LATAM Board
of Directors deems appropriate. If, at the time such Stock Option Plan is
adopted, the Purchaser, pursuant to the provisions of Section 2.2 herein (and
the applicable provisions of the Mtel LATAM Charter), is entitled to appoint one
or more Purchaser Nominees, then, upon the establishment of the Stock Option
Plan, the Board of Directors of Mtel LATAM shall form a three person
Compensation Committee (the "Compensation Committee") of the Mtel LATAM Board,
----------------------
with the Purchaser having the right to appoint one member of such Compensation
Committee and Mtel International have the right to appoint the remaining two
members of the Compensation Committee; provided, however, that if at any time
-------- -------
thereafter, the Purchaser's right to elect directors to the Mtel LATAM Board
shall terminate pursuant to Section 2.2 herein (and the applicable provision of
the Mtel LATAM Charter), the
20
<PAGE>
Purchaser's right under this Section 2.4 to appoint one member of the
Compensation Committee shall simultaneously terminate.
2.5 Payment of Dividends. The parties hereby acknowledge that Mtel
--------------------
LATAM currently intends to retain any future earnings for use in the business
and does not anticipate paying any cash dividends.
ARTICLE III
TAG-ALONG RIGHTS
----------------
3.1 Tag-Along Rights Generally. (a) In the event that Mtel
--------------------------
International or any Permitted Transferee proposes to Transfer any of its shares
of Common Stock or Preferred Stock, other than pursuant to an IPO in which
shares have been allocated pursuant to Section 6.2 hereof, to any Third Party,
subject to the exceptions set forth below, the Purchaser or any Purchaser
Transferee shall have the right in the case of a proposed Transfer by Mtel
International or any Permitted Transferee, to sell collectively such number of
shares of Common Stock and/or Preferred Stock, as the case may be, to be sold
(collectively, "Tag-Along Stock") to the proposed Third Party in accordance with
---------------
the terms of this Article III.
(b) In the event of a Transfer subject to Section 3.1(a) above
pursuant to a bona fide offer, Mtel International and/or such Permitted
Transferee shall provide written notice of such offer (the "Tag-Along Notice")
----------------
to the Purchaser or any Purchaser Transferee in the manner set forth in Section
11.4 hereof. The Tag-Along Notice must contain an offer to purchase or
otherwise acquire shares of Tag-Along Stock from the Purchaser or any Purchaser
Transferee according to the terms and conditions of this Article III upon the
same terms and conditions as the terms and conditions of the Third Party's
offer to Mtel International or any Permitted Transferee.
(c) At any time within 10 Business Days after its receipt of the Tag-
Along Notice, the Purchaser or any Purchaser Transferee may irrevocably accept
the Third Party offer included in the Tag-Along Notice for up to such number of
shares of Tag-Along Stock as is determined
21
<PAGE>
in accordance with the provisions of this Article III by furnishing written
notice of such acceptance to Mtel International and such Third Party; such
written notice of acceptance must be accompanied by the certificate or
certificates representing the shares of Tag-Along Stock (which shall be free and
clear of all Liens), Duly Endorsed, to be sold or otherwise disposed of pursuant
to such Tag-Along Notice by the Purchaser or any Purchaser Transferee, together
with a limited power-of-attorney authorizing Mtel International or any Permitted
Transferee to sell or otherwise dispose of such shares pursuant to the terms and
conditions of such Third Party's offer and the terms and conditions of this
Article III.
3.2 Allocation of Shares of Tag-Along Stock. The Purchaser and/or
---------------------------------------
any Purchaser Transferee shall have the right to sell pursuant to the Third
Party's offer a number of shares of Tag-Along Stock up to the product of (x) the
total number of shares to be acquired by the Third Party as set forth in the
Tag-Along Notice (or such higher number of shares as such Third Party may agree
to), times (y) a fraction, (1) the numerator of which shall be the number of
shares of Common Stock and/or Preferred Stock, as the case may be, Beneficially
Owned by the Purchaser and any Purchaser Transferee as of the date of the Tag-
Along Notice and (2) the denominator of which shall be the aggregate number of
shares of Common Stock and/or Preferred Stock, as the case may be, Beneficially
Owned or deemed to be held on such date by the Stockholders, any Permitted
Transferee and any Purchaser Transferee; provided that any share amounts so
--------
determined shall be rounded to avoid fractional shares.
3.3 Transfer Mechanics. The purchase from the Purchaser or any
------------------
Purchaser Transferee pursuant to this Article III shall be on the same terms and
conditions, including the per share price (which, in the event of cash
consideration, shall be paid by bank, cashier's or certified check or by wire
transfer of immediately available funds, unless otherwise specified in the Tag-
Along Notice provided to the Purchaser and any Purchaser Transferee by Mtel
International) and the same date of sale or other disposition, as are received
by Mtel International and stated in the Tag-Along Notice provided to the
Purchaser by Mtel International or any Permitted Transferee. As promptly as
practicable (but in no event later than 5 days) after the consummation of the
sale or other
22
<PAGE>
disposition of any Common Stock and/or Preferred Stock by Mtel International or
any Permitted Transferee and of the Tag-Along Stock of the Purchaser or any
Purchaser Transferee to the Third Party pursuant to the Third Party's offer,
Mtel International shall notify the Purchaser thereof, shall remit to the
Purchaser and any Purchaser Transferee who accepted the Third Party's offer in
accordance with the provisions of this Article III the total sales price of the
shares of Tag-Along Stock of the Purchaser and any Purchaser Transferee sold or
otherwise disposed of pursuant thereto (together with any excess shares of Tag-
Along Stock of the Purchaser and any Purchaser Transferee which are not sold or
otherwise disposed of pursuant thereto).
3.4 Transfers to Third Parties after Stockholders Decline Tag-Along
---------------------------------------------------------------
Rights. If within 15 Business Days after the receipt of the Tag-Along Notice,
- ------
the Purchaser and any Purchaser Transferee has not accepted the offer contained
in the Tag-Along Notice, the Purchaser and any Purchaser Transferee will be
deemed to have waived any and all rights with respect to the sale or other
disposition of Tag-Along Stock described in the Tag-Along Notice, and Mtel
International or any Permitted Transferee shall have the lesser of (i) the
amount of time set forth in the Third Party's bona fide offer or (ii) 60 days,
in which to sell or otherwise dispose of the shares of Common Stock and/or
Preferred Stock, as the case may be described in the Third Party's offer, on
terms and conditions not more favorable to Mtel International or any Permitted
Transferee than were set forth in the Tag-Along Notice. If, at the end of such
period, Mtel International or any Permitted Transferee shall not have completed
the sale or other disposition of Common Stock and/or Preferred Stock in
accordance with the terms and conditions of the Third Party's offer, any sale or
disposition of any such Common Stock and/or Preferred Stock of Mtel
International or any Permitted Transferee shall again be subject to this Article
III and Mtel International shall return to the Purchaser all certificates
representing shares of Tag Along Stock which such Purchaser delivered for sale
or other disposition pursuant to this Article III, without further liability to
Mtel International; provided, that, the foregoing shall in no way limit the
-------- ----
Purchaser's right to exercise its tag-along rights in any subsequent proposed
Transfer by
23
<PAGE>
Mtel International or any Permitted Transferee which would give rise to such
rights under this Article III.
ARTICLE IV
PREFERRED STOCK CONVERSION AND REDEMPTION RIGHTS
------------------------------------------------
4.1 Conversion.
----------
(a) Optional Conversion of the Purchaser. Subject to the
------------------------------------
requirements of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, if applicable, the Purchaser may at its option convert any or all of
its Preferred Shares (which for the purposes hereof shall include any shares of
Preferred Stock received as a dividend on the Preferred Shares) into shares of
Common Stock; provided, however, that, the Purchaser agrees that it will not
-------- -------
exercise its optional conversion rights with respect to any or all of its
Preferred Shares unless and to the extent the aggregate principal amount of
shares subject to such conversion equals or exceeds $5 million in any single
conversion. The number of shares of Common Stock issuable upon conversion of the
Preferred Shares shall be determined by dividing (i) the face value of the
Preferred Shares (plus all cumulative, accrued, undeclared and unpaid dividends
on the Preferred Shares) by (ii) $6,500 (the purchase price per share of Common
Stock paid by the Purchaser pursuant to the Purchase Agreement). In the event
that the Purchaser exercises the foregoing conversion right, the Purchaser may,
at its option, waive and release its right to any cumulative, accrued,
undeclared and unpaid dividends on the Preferred Shares to be converted.
(b) Mandatory Conversion of Mtel International. In the event that
------------------------------------------
the Purchaser exercises its conversion right with respect to any or all of its
Preferred Shares, simultaneously therewith Mtel International shall convert that
number of its Preferred Shares (which for the purposes hereof shall include any
shares of Preferred Stock received as a dividend on the Preferred Shares) into
Common Stock that equals the product of (i) the number of Preferred Shares
converted by the Purchaser and (ii) four, upon the same terms and conditions and
in the same amount (i.e., at the same conversion ratio as provided for in
- -
Section 4.1(a) hereof) as the Purchaser. To
24
<PAGE>
the extent that the Purchaser exercises its right to waive any dividends on the
Preferred Shares converted pursuant to this Section 4.1, Mtel International
shall waive and release its right to the cumulative, accrued, undeclared and
unpaid dividends on the Preferred Shares to be converted by it.
(c) Mechanics of Conversion. Upon surrender to Mtel LATAM at the
-----------------------
office of the transfer agent or such other place or places, if any, as the Mtel
LATAM Board may determine, of certificates Duly Endorsed to Mtel LATAM or in
blank for the Preferred Shares to be converted together with appropriate
evidence of the payment of any transfer or similar tax, if required, and written
instructions to Mtel LATAM requesting conversion of such Preferred Shares and
specifying the name and address of the person, corporation, firm or other entity
to whom the shares of Common Stock are to be issued, Mtel LATAM shall issue the
number of shares of Common Stock (including fractional shares) 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. Upon surrender of a certificate representing shares of Preferred Stock
to be converted in part, in addition to the foregoing, Mtel LATAM shall also
issue to such holder a new certificate representing any unconverted shares of
Preferred Stock represented by the certificate surrendered for conversion.
(d) Reserved Shares. Mtel LATAM 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 Preferred Shares, such
number of its duly authorized Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Preferred Shares.
4.2 Redemption Rights and Obligations. Mtel LATAM may at its option
---------------------------------
at any time, or from time to time, redeem any or all of the Preferred Stock at
a redemption price per share equal to the face value of the shares of such
Preferred Stock ($1,000 per share) plus the value of all cumulative, accrued,
undeclared and unpaid dividends with respect to the shares of Preferred Stock
being redeemed. In the event that Mtel LATAM exercises its redemption right
with respect to any or all of the shares of Preferred Stock, Mtel LATAM shall
redeem
25
<PAGE>
an equal number of shares of Preferred Stock held by the Purchaser and Mtel
International, or upon the agreement of the Purchaser and Mtel International, on
any other basis. Upon the redemption of any or all of the Purchaser's shares
of Preferred Stock, the dividend rate payable on the remaining outstanding
shares of Preferred Stock owned by Mtel International, any Permitted Transferee
and any Third Party in excess of that number of shares subject to an increased
dividend rate as provided for in Section 4 of the Mtel LATAM Charter shall,
simultaneously with such redemption of the Purchaser's stock, be reduced to a
rate of 12% per annum for the period between the second and third anniversaries
of the Closing Date, 11% per annum for the period between the third and fourth
anniversaries of the Closing Date, and 10% thereafter. For purposes of any
calculation pursuant to this Section 4.2, the Purchaser's shares of Preferred
Stock shall be deemed to include any shares of Preferred Stock Beneficially
Owned by any Purchaser Transferee.
ARTICLE V
PREEMPTIVE RIGHTS
-----------------
5.1 Preemptive Rights. (a) Subject to the provisions of paragraph
-----------------
(b) of this Section 5.1, Mtel LATAM shall not issue, sell, or enter into any
agreement(s) or commitment(s) pursuant to which it becomes obligated to issue,
any shares of its capital stock, or any warrants, options or other securities
convertible or exchangeable into such shares, unless Mtel LATAM shall first
offer (the "Preemptive Rights Offer") in writing to sell to each of the
-----------------------
Stockholders, at the same price, and on the same terms and conditions, an amount
of such securities proposed to be offered by Mtel LATAM, pro rata to the
Stockholder's proportionate Voting Interest. Such Preemptive Rights Offer shall
remain outstanding for at least 30 Business Days from the date of such notice
and shall be exercised by each Stockholder by serving written notice on Mtel
LATAM within such 30 Business Day period.
(b) The Preemptive Rights Offer shall not apply to: (i) any issuances
or grants of equity securities by Mtel LATAM to the officers, directors or
employees of Mtel LATAM or any of its subsidiaries pursuant to the Stock Option
Plan or any other employee stock option
26
<PAGE>
plan or employee benefit or other incentive plan adopted by the Mtel Board
pursuant to Section 2.1(xxi) herein, (ii) the exercise of any options issued
pursuant to or in connection with the Stock Option Plan or any other employee
stock option plan or employee benefit or other incentive plan adopted by Mtel
LATAM or any Material Subsidiary in accordance with Section 2.1(xxi) herein,
(iii) the issuance of any securities by Mtel LATAM upon the exercise of any
exchange, conversion or similar feature contemplated by any security issued
pursuant to the Transaction Documents, (iv) the issuance of any securities by
Mtel LATAM upon the exchange of any shares of Preferred Stock of Mtel Puerto
Rico, (v) the issuance of any equity securities as a payment-in-kind dividend on
any class of Company Stock, (vi) the issuance of equity securities, either
directly or indirectly, in connection with the acquisition by Mtel LATAM of a
controlling interest in any party which is not an Affiliate of either Mtel
LATAM or any of the Stockholders (whether by merger, consolidation, sale of
assets or securities, or otherwise) which issuance has been approved by the Mtel
LATAM Board pursuant to the provisions set forth in Section 2.1 hereof, (vii)
the issuance of securities (including any convertible securities or options and
the conversion or exercise thereof) to any third party which is at such time a
creditor of Mtel LATAM, in connection with the refinancing or restructuring of
the indebtedness owed to such third party, (viii) any issuance of securities by
Mtel LATAM in connection with an IPO, (ix) the distribution by Mtel LATAM of its
securities to all of its stockholders on a pro rata basis or (x) any issuance of
--- ----
securities by Mtel LATAM pursuant to any of the Transaction Documents.
ARTICLE VI
REGISTRATION RIGHTS AND PROCEDURES
----------------------------------
6.1 Piggyback Registration Rights. If at any time Mtel LATAM
-----------------------------
proposes to Register any of its Common Stock in connection with an IPO or, if at
any time prior to the third anniversary of the closing of such IPO, Mtel LATAM
proposes to effect a subsequent primary offering, whether or not for sale for
its own account, in a manner which would permit the Registration of Registrable
Securities for sale to the public under the Securities Act,
27
<PAGE>
Mtel LATAM will each time, subject to Section 6.1(c) hereof, give written notice
to the Purchaser and Mtel International of its intention to do so and of the
Purchaser's and Mtel International's rights under this Article VI prior to the
anticipated filing date of the registration statement relating to such
Registration. Such notice shall offer the Purchaser and Mtel International the
opportunity to include in such registration statement such number of Registrable
Securities as the Purchaser and Mtel International may request. Upon the
written request of each of the Purchaser or Mtel International, as the case may
be, made within 20 Business Days after the receipt of Mtel LATAM's notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by the Purchaser or Mtel International, as the case may be), Mtel
LATAM will use its reasonable best efforts to effect the Registration (and
qualification under any applicable state securities or Blue Sky laws) of all
Registrable Securities which Purchaser or Mtel International, as the case may
be, shall have requested Registration thereof, to the extent required to permit
the disposition (in accordance with such intended methods thereof) of the
Registrable Securities so requested to be Registered; provided that:
--------
(a) if such Registration involves an underwritten offering, the
Purchaser or Mtel International, as the case may be, must sell its Registrable
Securities to the underwriters selected by Mtel LATAM on the same terms and
conditions as apply to Mtel LATAM or any other selling securityholder (or on
equivalent terms and conditions, in the event that the Purchaser or Mtel
International, as the case may be, holds different securities from those being
sold by Mtel LATAM or such other selling securityholder), including, without
limitation, executing and delivering such underwriting agreements or other
related agreements to which Mtel LATAM or any such other selling securityholder
has agreed to execute and deliver;
(b) if, at any time after giving written notice of its intention to
Register any securities pursuant to this Section 6.1 and prior to the effective
date of the Registration statement filed in connection with such Registration,
Mtel LATAM shall determine for any reason not to Register such securities, Mtel
LATAM shall give written notice to the Purchaser and Mtel International and,
thereupon, shall be relieved of its obliga-
28
<PAGE>
tion to Register any Registrable Securities in connection with such
Registration;
(c) if a Registration pursuant to this Section 6.1 involves an
underwritten offering, the Purchaser or Mtel International, as the case may be,
or parties requesting to be included in such Registration may elect, in writing
at least 10 days prior to the effective date of the Registration statement filed
in connection with such Registration, not to Register such securities in
connection with such Registration; and
(d) Mtel LATAM shall not be required to effect any Registration of
Common Stock under this Section 6.1 incidental to the Registration of any of its
securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans, the Stock Option Plan or other
executive or employee benefit or compensation plans (including, without
limitation, any registration of securities on a Form S-4 or S-8 registration
statement or any successor or similar forms).
6.2 Limitations on Shares Included In Piggyback Registrations. If
---------------------------------------------------------
the Registration of which Mtel LATAM gives notice pursuant to Section 6.1 herein
is for an underwritten offering, only securities that are to be included in the
underwriting may be included in the Registration. Notwithstanding any
provision of Section 6.1 herein, if the underwriter determines that marketing
factors require a limitation on the number of shares of Registrable Securities
to be underwritten, the underwriter may exclude or otherwise limit the number of
shares of Registrable Securities to be included in the registration and
underwriting. Mtel LATAM shall so advise the Purchaser and Mtel International,
and the number of shares of Registrable Securities that may be included in the
Registration and underwriting shall be allocated among the Stockholders in
proportion, as nearly as practicable, to the respective numbers of shares of
Registrable Securities which such Stockholders initially requested to be
included in the Registration. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such Registration. If the Purchaser or Mtel International
disapproves of any such underwriting, such person may elect to withdraw
therefrom by written notice
29
<PAGE>
to Mtel LATAM and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall be withdrawn from such
Registration.
6.3 Expenses. Mtel LATAM will pay all Registration expenses in
--------
connection with each Registration of Registrable Securities pursuant to this
Article VI, except that each Stockholder having shares of Mtel LATAM's capital
stock Registered pursuant to this Article VI shall pay all fees and expenses of
such Stockholder's counsel and the underwriting discounts, commissions and
similar fees, and transfer taxes applicable to the securities of such
Stockholder included in such Registration.
6.4 Restrictions on Public Sale by Stockholders and Mtel LATAM. In
----------------------------------------------------------
connection with any offering of any securities of Mtel LATAM, including, without
limitation, any offering contemplated by this Article VI, each Stockholder
agrees that, whether or not such Stockholder's Registrable Securities are
included in such Registration, it will consent and agree to comply with any
"hold back" restriction, relating to Common Stock or any other securities of
Mtel LATAM then owned by such holder, that may be reasonably requested by the
underwriter(s) or placement or other selling agent(s) of such offering. Without
limitation to the foregoing, each Stockholder shall, upon request by such
underwriter(s) or agent(s), agree not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, and not to effect any such public sales or distribution
of any other equity securities of Mtel LATAM or of any security convertible into
or exchangeable or exercisable for any equity security of Mtel LATAM (in each
case, other than as part of such underwritten public offering) during the 30
days prior to, and the 180 day period beginning on, the effective date of such
registration statement (or such lesser period as such underwriter(s) or
placement or other selling agent(s) may permit) (except as part of such
Registration).
6.5 Indemnification. (a) To the extent permitted by law, Mtel LATAM
---------------
will indemnify the Purchaser or Mtel International, as the case may be, upon
requesting or joining in a Registration, each agent, officer and director of the
Purchaser or Mtel International, as the
30
<PAGE>
case may be, each person controlling the Purchaser or Mtel International, as the
case may be, 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 Mtel LATAM of any rule or regulation
promulgated under the Securities Act applicable to Mtel LATAM and relating to an
action or inaction required of Mtel LATAM 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 Mtel LATAM 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 conformity with written
information relating to any such Indemnitees furnished to Mtel LATAM by such
Indemnitees 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 Indemnitee, if a
copy of the Final Prospectus was not furnished to the Person 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 6.5(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
31
<PAGE>
of Mtel LATAM, which consent shall not be unreasonably withheld.
(b) To the extent permitted by law, the Purchaser upon requesting or
joining in a Registration and each underwriter of the securities so Registered
will indemnify Mtel LATAM, Mtel International and their respective officers,
directors and Affiliates and their respective successors (collectively, the
"Mtel 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 and will
reimburse the Mtel Indemnitees 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 indemnification
-------- -------
pursuant to this Section 6.5(b) shall apply only if (and only to the extent
that) such statement or omission was made in reliance upon and in conformity
with written information relating to the Purchaser (including, without
limitation, written negative responses to inquiries) furnished to Mtel LATAM by
the Purchaser or underwriter 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 any Mtel Indemnitees if a copy of the Final Prospectus was not
furnished to the Person 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 6.5(b) shall not apply to amounts paid in
settlement of any such claim,
32
<PAGE>
loss, damage, liability or action if such settlement is effected without the
consent of the Purchaser, which consent shall not be unreasonably withheld; and
provided, further, that the obligations of the Purchaser shall be limited to an
- -------- -------
amount equal to the proceeds to the Purchaser received by the Purchaser from the
sale of its Registrable Securities in such Registration, unless such claim,
loss, damage, liability or action resulted from the Purchaser's fraudulent
misconduct.
(c) To the extent permitted by law, Mtel International upon
requesting or joining in a Registration will indemnify the Purchaser and Mtel
LATAM and their respective officers, directors and Affiliates and their
respective successors (collectively, the "Purchaser 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 and will reimburse the Purchaser
Indemnitees 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 indemnification pursuant to
-------- -------
this Section 6.5(c) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon and in conformity with written
information relating to Mtel International (including, without limitation,
written negative responses to inquiries) furnished to Mtel LATAM by Mtel
International 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
any Purchaser Indemnities if a copy of the Final Prospectus was not furnished to
the Person asserting the loss, liability, claim or damage at or prior to
33
<PAGE>
the time such furnishing is required by the Securities Act; provided, further,
-------- -------
that the indemnity agreement contained in this Section 6.5(c) 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 Mtel International,
which consent shall not be unreasonably withheld; and provided, further, that
-------- -------
the obligations of Mtel International shall be limited to an amount equal to the
proceeds to Mtel International received by Mtel International from the sale of
its Registrable Securities in such Registration, unless such claim, loss,
damage, liability or action resulted from Mtel International's fraudulent
misconduct.
(d) 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 6.5
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.
(e) The reimbursement required by this Section 6.5 shall be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses are incurred.
34
<PAGE>
(f) If the indemnification provided for in this Section 6.5 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 Mtel LATAM, Mtel International and the Purchaser 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 Mtel LATAM, Mtel International and the
Purchaser. The relative benefits received by Mtel LATAM on the one hand, and
the Purchaser and Mtel International, as the case may be, 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 Mtel LATAM bear to the total net
proceeds from the offering (before deducting expenses) to the Purchaser or Mtel
International, as the case may be. The relative fault of Mtel LATAM, Mtel
International and the Purchaser 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 Mtel LATAM, Mtel International or the Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(g) Mtel LATAM, Mtel International and the Purchaser agree that it
would not be just and equitable if contribution pursuant to this Section 6.5
were determined by pro rata allocation 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 6.5, neither
the Purchaser nor Mtel International, as the case may be, shall be required to
contribute any
35
<PAGE>
amount in excess of the proceeds received by Mtel International or the
Purchaser, as the case may be, 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.
(h) The obligations under this Section 6.5 shall survive the
completion of any offering of Registrable Securities in a registration statement
under this Agreement or otherwise.
6.6 Cooperation by Prospective Sellers. (a) The Purchaser and Mtel
----------------------------------
International will furnish to Mtel LATAM such information as Mtel LATAM may
reasonably require from the Purchaser or Mtel International in connection with
the registration statement (and the prospectus included therein). The
Purchaser and Mtel International may not participate in any offering unless the
Purchaser and Mtel International (i) agree to sell their Registrable Securities
to be sold on the basis provided in any agreement governing the offering and
(ii) complete and execute all questionnaires, indemnities, underwriting
agreements and other documents required in connection with the offering.
(b) The Purchaser and Mtel International will not (until further
notice by Mtel LATAM) effect sales thereof (or deliver a prospectus to any
purchaser) after receipt of telegraphic or written notice from Mtel LATAM to
suspend sales to permit Mtel LATAM to correct or update a registration
statement or prospectus. In connection with any offering, the Purchaser and
Mtel International will not use any offering document, offering circular or
other offering materials with respect to the offer or sale of Registrable
Securities, other than the prospectuses provided by Mtel LATAM and any documents
incorporated by reference therein.
36
<PAGE>
ARTICLE VII
EXCHANGE RIGHTS
---------------
7.1 Optional Exchange of Common Stock. (a) Subject to the provisions
---------------------------------
of Section 7.4 hereof, at the Purchaser's option, the Purchaser shall have the
right (an "Exchange Right") to exchange any or all of its shares of Common Stock
--------------
into shares of Mtel Common Stock upon the occurrence of any of the following
events (each an "Exchange Event") in accordance with the formulas set forth in
--------------
paragraph (b) of this Section 7.1:
(i) If at any time following the Closing Date there shall have
occurred an Mtel Change of Control (such event being the "First
-----
Exchange Event");
--------------
(ii) If at any time following the Closing Date either (x) prior to
Mtel LATAM having undertaken an IPO, Mtel, directly or
indirectly, ceases to own at least 40% of the outstanding Common
Stock (calculated on a Fully-Diluted Basis) or (y) in the event
that Mtel LATAM has consummated an IPO and Mtel, directly or
indirectly, ceases to own at least 30% of the outstanding Common
Stock (calculated on a Fully-Diluted Basis) (either event being
the "Second Exchange Event");
---------------------
(iii) If at any time following the fourth anniversary of the Closing
Date, if the Mtel LATAM Board, acting by majority vote and
notwithstanding the provisions of Section 2.1 of this Agreement,
denies a request by the Purchaser that Mtel LATAM undertake an
IPO and the Mtel LATAM Board has not undertaken to arrange a
sale or other disposition of the Purchaser's Securities at Fair
Market Value (any such event being the "Third Exchange Event");
--------------------
or
(iv) If, at any time following the fifth anniversary of the Closing
Date, (A) Mtel,
37
<PAGE>
directly or indirectly, shall not have sold all of its voting
securities in Mtel LATAM, (B) Mtel LATAM shall not have sold
all or substantially all of its assets, (C) Mtel LATAM shall
not have merged with another entity whereby, as a result of the
merger, Mtel LATAM was not the surviving entity, or (D) Mtel
LATAM shall not have completed an IPO (any such event being the
"Fourth Exchange Event" and together with the First, Second and
---------------------
Third Exchange Events, the "Exchange Events").
---------------
(b) In the event of an occurrence of an Exchange Event, at the
Purchaser's option, any or all of the Purchaser's shares of Common Stock shall
be exchanged into that number of shares of Mtel Common Stock equal to the
quotient of (x) the product obtained by multiplying (i) the Fair Market Value
per share of the Common Stock and (ii) the number of shares of Common Stock
being exchanged, and (y) the Initial Current Market Price of Mtel Common Stock,
in the case of the First Exchange Event (the "First Exchange Formula"), or the
----------------------
Current Market Price of Mtel Common Stock, in the case of the Second, Third and
Fourth Exchange Events (the "Second Exchange Formula").
-----------------------
(c) Notwithstanding anything to the contrary herein, in the event
that, following the occurrence of an Exchange Event, the Purchaser elects to
exercise any of its Exchange Rights with respect to less than all of the Common
Stock Beneficially Owned by the Purchaser at the time, (i) any such partial
exchange subject to the provisions of Section 7.4 herein shall be for no less
than twenty percent (20%) of the total number of shares of Common Stock acquired
by the Purchaser on the Closing Date pursuant to the transactions contemplated
by this Agreement and the Transaction Documents (except in the case in which the
Purchaser has elected to exchange all of its remaining Common Stock), and (ii)
the Purchaser shall be entitled to exercise its Exchange Rights under this
Article VII no more than four (4) times.
7.2 Mandatory Exchange of Preferred Stock Upon Exchange of Common
-------------------------------------------------------------
Stock. Subject to the provisions or Section 7.4 herein, in the event that the
- -----
Purchaser
38
<PAGE>
exercises its option to exchange any or all of its shares of Common Stock into
Mtel Common Stock pursuant to Section 7.1 herein, the same percentage of the
total number of shares of Preferred Stock (including Preferred Shares issued or
issuable upon the exchange of the Mtel Puerto Rico Preferred Stock) acquired by
the Purchaser on the Closing Date pursuant to the transactions contemplated by
this Agreement and the Transaction Documents (plus all cumulative, accrued,
undeclared and unpaid dividends on such shares of Preferred Stock) shall,
concurrently with the exchange of the Purchaser's Common Stock, be exchanged
into shares of Mtel Common Stock. In accordance with the foregoing exchange,
the Purchaser shall receive in exchange for its Preferred Stock to be exchanged
in any such exchange that number of shares of Mtel Common Stock equal to the
quotient of (x) the aggregate face value of the shares of Preferred Stock to be
exchanged (plus all cumulative, accrued, undeclared and unpaid dividends on such
shares of Preferred Stock) and (y) either (i) in the case that the mandatory
exchange results from the First Exchange Event, the Initial Current Market Price
of Mtel Common Stock or (ii) in the case that the mandatory exchange results
from the Second, Third and Fourth Exchange Events, the Current Market Price of
Mtel Common Stock (the formula with respect to the Second, Third and Fourth
Exchange Events shall be referred to herein as the "Preferred Exchange
------------------
Formula").
- -------
7.3 Mandatory Exchange of Purchaser Securities Initiated by Mtel
------------------------------------------ -----------------
International. Subject to the provisions of Section 7.4 herein, if, (x) at any
- -------------
time following the date on which the Purchaser is no longer entitled to elect
any members to the Mtel LATAM Board pursuant to the provisions of Section 2.2
hereof, Mtel LATAM may, at its option, require the Purchaser to exchange all of
its Shares of Preferred Stock into that number of shares of Mtel Common Stock in
accordance with the Preferred Exchange Formula and (y) (i) at any time following
the sixth anniversary of the Closing Date, provided that between the fifth
anniversary of the Closing Date and the sixth anniversary of such date the
Purchaser did not by written notice request of Mtel LATAM that Mtel LATAM
undertake an IPO, or, (ii) notwithstanding the foregoing, at any time following
the seventh anniversary of the Closing Date, Mtel's direct or indirect Voting
Interest in Mtel LATAM exceeds or equals 40% and (A) Mtel LATAM shall not have
sold all or substantially all of its
39
<PAGE>
assets, (B) Mtel LATAM shall not have merged with another entity whereby, as a
result of the merger, Mtel LATAM was not the surviving entity, and (C) Mtel
LATAM shall not have completed an IPO (collectively, the "Mtel Mandatory
--------------
Exchange"), then Mtel International may, at its option, at any time thereafter,
- --------
require the Purchaser to (A) exchange all of its shares of Common Stock into
that number of shares of Mtel Common Stock calculated in accordance with the
Second Exchange Formula, and (B) exchange all of its shares of Preferred Stock
into that number of shares of Mtel Common Stock in accordance with the Preferred
Exchange Formula; provided, however, that at the time of such mandatory
-------- -------
exchange, Mtel Common Stock is listed on the Nasdaq National Market, the New
York Stock Exchange or the American Stock Exchange or other major United States
national securities exchange and has a minimum Market Capitalization as of such
date of no less than $500 million.
7.4 Mechanics of Exchange.
---------------------
(a) General. Subject to the provisions of this Section 7.4, the
-------
Securities are exchangeable, at the option of the holders thereof, or at the
option of Mtel International, upon the occurrence of any Exchange Event or the
Mtel Mandatory Exchange, as the case may be, at any time from and after the
issue date and prior to the close of business on the date on which any of and
all of such securities cease to be outstanding (the "Final Outstanding Date"),
----------------------
unless previously exchanged in accordance with the applicable provisions of
Sections 7.1, 7.2 or 7.3, or redeemed by Mtel LATAM. The right to exchange the
Securities called for redemption shall terminate immediately prior to the close
of business on the applicable redemption date for such securities.
(b) Surrender of Certificates; Notice of Exchange. In order to
---------------------------------------------
exchange Securities, the holder thereof shall surrender the certificates
evidencing the Securities to be exchanged at the office or agency to be
maintained by Mtel International for that purpose, Duly Endorsed to Mtel
International, together with written notice of exchange specifying the number of
shares of Common Stock to be exchanged (and the number of shares of Preferred
Stock plus the amount of cumulative, accrued, undeclared and unpaid dividends
thereon) and specifying the name or names (with addresses) in which the certifi-
40
<PAGE>
cate or certificates representing the Mtel Common Stock deliverable on such
exchange are to be registered, and otherwise in accordance with exchange
procedures established by Mtel International (each, an "Exchange Notice"). Each
---------------
Exchange Notice shall be irrevocable, and each exchange shall be deemed to have
been effected immediately prior to the close of business on the date (the
"Exchange Date") on which (i) all of the requirements for such exchange shall
- --------------
have been satisfied and (ii) the Prospectus Condition has, in the reasonable
judgment of Mtel, been satisfied. If any transfer is involved in the issuance
or delivery of any certificate or certificates for shares of Mtel Common Stock
in a name other than that of the registered holder of the shares of the
Securities surrendered for exchange, such holder shall also deliver to Mtel
International a sum sufficient to pay all taxes, if any, payable in respect of
such transfer or evidence satisfactory to Mtel International that such taxes
have been paid. Except as provided in the immediately preceding sentence, Mtel
International shall pay any issue, stamp or other similar tax in respect of such
issuance or delivery.
(c) Issuance of New Certificates; Delivery of Prospectus. As
----------------------------------------------------
promptly as practicable after the Exchange Date, unless the Exchange Notice
satisfies the requirements of Section 7.4(d) herein, Mtel International, in
accordance with the provisions of and subject to the conditions of this Section
7.4, shall issue and deliver at said office or agency to the holder of the
Securities so surrendered for exchange, or on his or her written order, a
certificate or certificates for the number of full shares of Mtel Common Stock
rounded upward to the nearest whole number issuable upon exchange of such shares
in accordance with the provisions of this Section 7.4. If required in order to
satisfy the Prospectus Condition, Mtel International shall, or shall cause Mtel
to, deliver to such holder or its designee, together with the certificate for
such shares of Mtel Common Stock, a current prospectus (meeting the requirements
of Section 10 of the Securities Act) relating to the Mtel Common Stock;
provided, however, that in the event Mtel is unable during any period to
- -------- -------
deliver a current prospectus, no exchange shall be effected (and no Exchange
Date shall occur) during such period and any exchange that could otherwise have
been effected during such period shall be deemed to have been effected immedi-
41
<PAGE>
ately prior to the close of business (and the Exchange Date shall be deemed to
have occurred) on the first Business Day that Mtel is able to deliver a current
prospectus relating to the Mtel Common Stock. The inability of Mtel
International or Mtel to deliver a current prospectus at any time shall not be
deemed a default under this Agreement or the Contribution, Standstill and
Registration Rights Agreement. Mtel has separately agreed, upon request from
Mtel International, to use its reasonable best efforts to ensure that it will be
able to deliver a current prospectus, if required, during any period that the
holders of the Securities are entitled to exchange such shares for shares of
Mtel Common Stock.
(d) Satisfaction of Prospectus Condition. In the event that the
------------------------------------
Purchaser intends to seek to satisfy the Prospectus Condition pursuant to the
provisions set forth in the definition thereof, the Purchaser shall provide the
appropriate opinion or letter from the SEC, as the case may be, in its Exchange
Notice and shall represent therein that such opinion or letter is currently
applicable to the proposed exchange and will be applicable on the Exchange Date.
(e) Effective Date of Exchange. The Person in whose name the
--------------------------
certificate for shares of Mtel Common Stock is issued upon such exchange shall
be treated for all purposes as the stockholder of record of such shares of Mtel
Common Stock as of the close of business on the Exchange Date; provided,
--------
however, that no surrender of the Securities on any date when the stock transfer
- -------
books of Mtel are closed for any purpose shall be effective to constitute the
Person or Persons entitled to receive the shares of Mtel Common Stock
deliverable upon such exchange as the record holder(s) of such shares of Mtel
Common Stock on such date, but such surrender shall be effective (assuming all
other requirements for the valid exchange of such shares have been satisfied) to
constitute such Person or Persons as the record holder(s) of such shares of Mtel
Common Stock for all purposes as of the opening of business on the next
succeeding day on which such stock transfer books are open. Upon exchange of
the Securities, the rights of the holder of such shares, as a holder thereof,
shall cease.
(f) Issuance of New Mtel LATAM Certificates for Partial Exchanges.
-------------------------------------------------------------
If the Securities represented by
42
<PAGE>
a certificate surrendered for exchange are exchanged in part only, Mtel LATAM
shall cause to be issued and delivered to the registered holder, without charge
therefor, a new certificate or certificates representing in the aggregate the
number of unexchanged shares.
ARTICLE VIII
MTEL LATAM COVENANTS
--------------------
8.1 Financial Reports. Mtel LATAM shall deliver to each of the
-----------------
Stockholders (i) unaudited annual financial statements of Mtel LATAM within 90
days of the end of each fiscal year of Mtel LATAM and audited annual financial
statements within 120 days of the end of each fiscal year of Mtel LATAM and (ii)
unaudited quarterly financial statements of Mtel LATAM within 60 days of the end
of the first, second and third accounting quarters of each fiscal year of Mtel
LATAM. In connection with the delivery of its unaudited annual financial
statements, Mtel LATAM shall deliver a list of all Material Subsidiaries as of
the end of the fiscal year relating to such financial statements.
8.2 Rule 144 and Rule 144A. (a) Mtel LATAM will take such action as
----------------------
the Purchaser may reasonably request to the extent required from time to time
to enable the Purchaser to sell its Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule
144, (ii) Rule 144A or (iii) any similar rule or regulation hereafter adopted
by the SEC.
(b) If at any time Mtel LATAM is not required to file reports in
compliance with either Section 13 or Section 15(d) of the Exchange Act, Mtel
LATAM at its expense will, forthwith upon the request of the Purchaser, (i) make
available adequate current public information with respect to Mtel LATAM within
the meaning of paragraph (c)(2) of Rule 144 and (ii) deliver the information
required by Section (d) of Rule 144A (such information to be "reasonably
current" within the meaning of Section (d)(4)(ii) of Rule 144A).
8.3 Access to Information. Mtel LATAM shall provide to any
---------------------
Stockholder information such as is reason-
43
<PAGE>
ably requested by a Stockholder, following the receipt of a written notice from
such Stockholder requesting such information.
8.4 Mtel LATAM Capitalization. Prior to the consummation of the
-------------------------
transactions contemplated by the Purchase Agreement, Mtel LATAM will take all
appropriate actions (including, without limitation, a recapitalization, dividend
or otherwise) to modify Mtel LATAM's capital structure, whereby as a result of
such actions, the capital structure of Mtel LATAM, prior to the issuance of
securities to the Purchaser as contemplated by the Purchase Agreement, will
consist of 1,000,000 shares of authorized Common Stock, 8,000 of which will be
issued to Mtel International and 200,000 shares of authorized Preferred Stock,
88,000 of which will be issued to Mtel International. As of the Closing Date,
following the action contemplated by the foregoing sentence but prior to the
issuance of the Shares to the Purchaser, Mtel International shall own all of the
issued and outstanding Shares of Mtel LATAM.
8.5 Payment of the Loan Amount. The parties hereby agree that (a)
--------------------------
simultaneously with the consummation of the transactions contemplated by the
Purchase Agreement, Mtel LATAM will make a payment to Mtel in an amount equal to
the Actual Loan Amount and (b) within sixty days of the Closing Date, Mtel LATAM
will make a payment to Mtel in an amount equal to the Additional Loan Amount.
The Purchaser and Mtel International will each cause the Purchaser Nominees and
the Mtel International Nominees, as the case may be, to vote in favor of such
payments being declared by the Mtel LATAM Board of Directors at the meeting of
such board at which such action is considered for approval.
ARTICLE IX
ADDITIONAL COVENANTS
--------------------
9.1 Non-Competition. The Purchaser, Mtel International and Mtel
---------------
covenant and agree that, unless prior written consent is obtained from Mtel (in
the case of the Purchaser so long as the Second Exchange Event shall not have
occurred, or in the event that the Second Exchange Event shall have occurred,
then from Mtel Inter-
44
<PAGE>
national) or the Purchaser (in the case of Mtel or Mtel International), as the
case may be, for so long as the Purchaser shall own any securities of Mtel
LATAM, Mtel or any of its Subsidiaries, the Purchaser, Mtel International and
Mtel shall not, and shall cause each of the Purchaser Affiliates and Mtel's or
Mtel International's Affiliates, as the case may be, not to directly or
indirectly, whether acting individually or through or in partnership, jointly or
in conjunction with any Person, acquire, invest in, lend money to, or otherwise
take any interest in or acquire any options in or otherwise support any Person
(as officer, director, agent, principal, stockholder or other security holder,
creditor, consultant or otherwise) that operates or intends to operate a
business, similar to or competitive with the Business as the same is conducted
by Mtel LATAM on the Closing Date anywhere within North America (excluding the
United States of America and Canada, but including Puerto Rico) and South
America ("Latin America"); provided, however, that with respect to two-way
------------- -------- -------
paging services anywhere within Latin America (i) Mtel International shall have
the obligation first to offer to Mtel LATAM the right to provide such services,
and (ii) in the event that the Mtel LATAM Board shall fail to approve, by virtue
of the vote of any of the Purchaser Nominees on the Mtel LATAM Board, any of the
capital expenditures, business plan or plans or the terms of any agreement or
transaction required in connection with the introduction, development or
operation of such services in such geographic region, then the Purchaser and
Mtel International shall enter into good faith negotiations for a period of up
to 180 days in an effort to agree upon a mutually acceptable plan for the
introduction of two-way paging services within Latin America through Mtel LATAM.
If no such agreement is reached within such 180 day period, then Mtel
International shall have the right to provide such services through any Person
or Persons, including subsidiaries or Affiliates, other then Mtel LATAM, without
Mtel International being subject to the provisions of this Section 9.1;
provided, that, the provision of such services shall be on a substantially
- -------- ----
similar basis, economic and otherwise, to the plan proposed by Mtel
International pursuant to clause (i) above. Notwithstanding the foregoing, (a)
Richard C. Blum & Associates ("Blum Asso.") shall not be prohibited from
acquiring a capital interest of no greater than 6% of the outstanding capital of
any publicly traded company similar or competitive with the
45
<PAGE>
Business provided that Blum Asso. holds such shares only for investment purposes
and not for the purposes of "changing or influencing control" of such company
(as such terms are used in Regulation 13D-G under the Exchange Act) and takes no
part in the management or operation of the business, including with respect to
directly or indirectly designating a nominee for membership on the Board of
Directors or similar governing body of such company and (b) Richard Shifter,
William Franke, Richard Blum, David Bonderman, James Coulter and William Price,
each acting in their individual capacity and not as part of a "group" (as such
term is used in Rule 13d-5 of the Exchange Act) with any of the other
individuals specified in this clause, shall not be prohibited from acquiring a
capital interest of no greater than one percent of the outstanding capital of
any publicly traded company similar or competitive with the Business provided
that such individuals hold shares only for investment purposes and not for the
purposes of "changing or influencing the control" of such company (as such terms
are used in Regulation 13D-G under the Exchange Act) and take no part in the
management or operation of the business, including with respect to directly or
indirectly designating a nominee for membership on the Board of Directors or
similar governing body of such company.
9.2 Aggregate Ownership Limitation. Notwithstanding anything to the
------------------------------
contrary contained herein, the Purchaser covenants and agrees that under no
circumstances shall the Purchaser at any time own in the aggregate securities of
an amount in excess of 25% of the outstanding shares of any class of equity
securities of Mtel LATAM unless and until such time as counsel to the Purchaser
shall have delivered (or confirmed at such time as the Purchaser's interest
shall exceed 25% of any such class) to Mtel International an opinion,
satisfactory to and accepted in writing by Mtel International, that opines that
the Purchaser's investment in Mtel LATAM will not cause the assets of Mtel LATAM
to be deemed to constitute assets of any plan subject to ERISA.
46
<PAGE>
ARTICLE X
STOCK LEGENDS
-------------
10.1 Stock Certificate Legend. A copy of this Agreement shall be
------------------------
filed with the Secretary of Mtel LATAM and kept with the records of Mtel LATAM.
Each of the Stockholders agrees that the following legends shall be placed on
the certificates representing any shares of Company Stock owned by them:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND CERTAIN OTHER CONDITIONS, AS SPECIFIED IN A STOCKHOLDERS
AND EXCHANGE RIGHTS AGREEMENT, DATED AS OF SEPTEMBER 19, 1996 (THE
"STOCKHOLDERS AGREEMENT"), COPIES OF WHICH ARE ON FILE WITH THE SECRETARY
OF MTEL LATIN AMERICA, INC. ("MTEL LATAM") AND WHICH WILL BE FURNISHED
WITHOUT CHARGE TO A STOCKHOLDER UPON WRITTEN REQUEST THEREFOR FROM SUCH
STOCKHOLDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDERS AGREEMENT.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
PURSUANT TO THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND, EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS (SUCH FEDERAL AND STATE LAWS, THE "SECURITIES LAWS") OR (B)
IF MTEL LATAM HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER,
WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO MTEL LATAM,
TO THE EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF THE SECURITIES LAWS."
In addition, the following legend shall be added to the certificates
representing Common Stock:
47
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO MANDATORY
EXCHANGE RIGHTS, PURSUANT TO WHICH THESE SECURITIES WILL BE EXCHANGED FOR
COMMON STOCK OF MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. IN ACCORDANCE
WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT. TRANSFEREES ACQUIRING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MUST AS A CONDITION TO SUCH
TRANSFER ENTER INTO AN AGREEMENT WITH THE ISSUER AND ITS PARENT PURSUANT TO
WHICH IT AGREES TO BE BOUND BY THE FOREGOING EXCHANGE RIGHTS. ANY
PURPORTED TRANSFER NOT COMPLYING WITH THE FOREGOING SENTENCE SHALL BE NULL
AND VOID."
In addition, the following legend shall be added to the Purchaser's certificates
representing Common Stock:
"THE TOTAL AMOUNT OF CONSIDERATION TO BE PAID FOR THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS $13,000,000 AND THE AMOUNT PAID FOR SUCH
SECURITIES WAS $5,000,000."
In addition, the following legend shall be added to the certificates
representing Preferred Stock:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO MANDATORY
OBLIGATIONS TO EXCHANGE THESE SECURITIES IN EXCHANGE FOR COMMON STOCK OF
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. ("MTEL") IN ACCORDANCE WITH THE
TERMS OF THE STOCKHOLDERS AGREEMENT (INCLUDING THE MANDATORY OBLIGATION TO
EXCHANGE THESE SECURITIES IN CERTAIN CIRCUMSTANCES IN EXCHANGE FOR COMMON
STOCK OF MTEL IN THE EVENT THAT SHARES OF COMMON STOCK OF MTEL LATIN
AMERICA, INC. ARE EXCHANGED FOR MTEL COMMON STOCK). TRANSFEREES ACQUIRING
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MUST AS A CONDITION TO SUCH
TRANSFER ENTER INTO AN AGREEMENT WITH THE ISSUER AND ITS PARENT PURSUANT TO
WHICH IT AGREES TO BE BOUND BY THE FOREGOING EXCHANGE RIGHTS. ANY
PURPORTED TRANSFER NOT COMPLYING WITH THE FOREGOING SENTENCE SHALL BE NULL
AND VOID."
All Stockholders shall be bound by the requirements of such legends to
the extent that such legends are
48
<PAGE>
applicable. Upon a registration of any shares of Company Stock, the certificate
representing such shares shall be replaced, at the expense of Mtel LATAM, with
certificates bearing only the first of the two legends referred to above. In
addition, upon complete satisfaction of the Purchaser's obligation pursuant to
Section 1.4 of the Purchase Agreement, the Purchaser may deliver the
certificates representing the Common Stock to the Secretary of Mtel LATAM who
will replace such certificates with certificates bearing the applicable legends
set forth above with the legend specific to the Purchaser's Common Stock
deleted.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Headings; No Third Party Beneficiaries. The headings and
--------------------------------------
captions contained herein are for convenience of reference only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Except as otherwise expressly provided herein, the covenants, agreements and
other provisions contained in this Agreement are for the sole benefit of the
parties hereto and their permitted successors and assigns, and they shall not be
construed as conferring, and are not intended to confer, any rights, remedies or
other benefits hereunder on any other Persons. Neither this Agreement nor any
purchase or sale of Company Stock shall create, or be construed or deemed to
create, any right to employment in favor of the Purchaser or any other person by
Mtel LATAM or any subsidiary of Mtel LATAM.
11.2 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
11.3 Notices. All notices, requests, instructions or and other
-------
communications to be given hereunder
49
<PAGE>
by any party hereto to another party hereto shall be in writing and, unless
otherwise provided herein, shall be deemed duly given if delivered personally,
telecopied (which is confirmed) or sent by registered or certified mail (postage
prepaid, return receipt requested) or by reputable overnight courier service (i)
to Mtel LATAM or the Purchaser at the addresses set forth below, (ii) in the
case of a Permitted Transferee, to the address set forth in the written
agreement executed pursuant to Article X hereof, (iii) in the case of any member
of management or other employee of Mtel LATAM or any of its subsidiaries who
becomes a holder of Company Stock or options to acquire Company Stock after the
date hereof, to the address set forth in the written agreement executed pursuant
to Article X hereof:
If to Mtel LATAM, to it at:
Mobile Telecommunication Technologies Corp.
Mtel Centre, South Building
200 South Lamar Street
Jackson, MS 39201
Attention: Leonard G. Kriss
Telecopier: (601) 944-7291
If to Mtel International, to it at:
Mtel International, Inc.
1350 I Street N.W., Suite 1100
Washington, D.C. 20005-3305
Attention: Calvin C. LaRoche
Telecopier: (202) 336-5332
If to Mtel LATAM and/or Mtel International,
with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Martha E. McGarry
Telecopier: (212)735-2001
If to the Purchaser, to:
Newbridge Latin America, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
50
<PAGE>
Attention: Richard P. Schifter/James J. O'Brien
Telecopier: (817)871-0410;
provided that in the event any of the parties referred to above desires to
- --------
designate another address to which such notices should be sent to such party,
such party may designate such other address by giving notice to the other
parties hereto in writing as set forth in this Section 11.4 (provided that any
change of address shall be effective only upon receipt thereof).
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 sent by registered United States mail, (iii) when sent
if confirmed by telecopy or (iv) on the next business day following deposit with
an overnight courier.
11.4 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
--------------
OF THE PARTIES HEREUNDER AND THE PARTIES SUBJECT HERETO SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
11.5 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
11.6 Successors; Assigns; Transferees; Amendments; Waivers.
-----------------------------------------------------
(a) Neither the Purchaser, Mtel International nor Mtel LATAM shall assign any of
the rights or obligations under this Agreement, except in the case of Mtel LATAM
or Mtel International to a Permitted Transferee. The Shares shall be freely
assignable and transferable by the Stockholders; provided, however, that as a
-------- -------
condition to any assignment or transfer (or any subsequent transfer) of the
shares of Common Stock or Preferred Stock by the Purchaser, the transferee (or
any subsequent transferee thereof) (each, a "Purchaser Trans-
----------------
51
<PAGE>
feree") of such shares shall enter into an agreement with Mtel International and
- -----
Mtel LATAM which shall provide that (i) in the event the Purchaser exercises its
right to exchange any of its shares of Common Stock into Mtel Common Stock
pursuant to Section 7.1 hereof, concurrently with the exchange of the
Purchaser's Common Stock, all shares of Preferred Stock Beneficially Owned by
such Purchaser Transferee will be exchanged into shares of Mtel Common Stock,
(ii) at the request of Mtel International, upon the occurrence of a Mtel
Mandatory Exchange, the Purchaser Transferee will exchange all the shares of
Company Stock Beneficially Owned by it into shares of Mtel Common Stock, (iii)
the Purchaser Transferee agrees to be subject to the "standstill" provisions set
forth in Section 4.1 of the Contribution, Standstill and Registration Rights
Agreement, (iv) the legends set forth in Section X hereof shall be placed on the
certificates of Company Stock owned by them and (v) the Purchase Transferee
designates the Purchaser as its agent for all purposes under Section III of this
Agreement.
(b) The provisions of this Agreement shall be binding upon and accrue
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Notwithstanding the foregoing, this Agreement may not be
amended, modified or supplemented, no waivers of, consents to or departures from
the provisions hereof may be given, and neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by Mtel LATAM or any Stockholder without the prior written consent of
the parties hereto.
(c) The rights and remedies of the Stockholders and Mtel LATAM under
this Agreement shall be cumulative and not exclusive of any rights or remedies
which either would otherwise have hereunder or at law or in equity or by
statute, and no failure or delay by either party in exercising any right or
remedy shall impair any such right or remedy or operate as a waiver of such
right or remedy, nor shall any single or partial exercise of any power or right
preclude such party's other or further exercise or the exercise of any other
power or right.
11.7 Defaults; No Circumvention of Agreement. A default by any party
---------------------------------------
to this Agreement in such party's compliance with any of the conditions or
covenants hereof
52
<PAGE>
or performance of any of the obligations of such party hereunder shall not
constitute a default by any other party. No Stockholder or any of its permitted
assigns may do indirectly, through the sale of capital stock of its or their
subsidiaries or otherwise, that which is not permitted by this Agreement.
11.8 Further Assurances. Each party hereto or person subject hereto
------------------
shall do and perform or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
11.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
53
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by each of
the parties hereto as of the date first written above.
MTEL LATIN AMERICA, INC.
By: /s/ John E. Welsh
-------------------------
Name: John E. Welsh III
Title: Vice Chairman
MTEL INTERNATIONAL, INC.
By: /s/ John E. Welsh
-------------------------
Name: John E. Welsh III
Title: Vice Chairman
NEWBRIDGE LATIN AMERICA, L.P.
By: LATAM GP, L.P.
By: LAF Advisors, L.L.C.
By: /s/ Richard P. Schifter
-------------------------
Name: Richard P. Schifter
Title:
54
<PAGE>
Exhibit 10.5
================================================================================
STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT
dated as of September 19, 1996
by and among
MTEL PUERTO RICO, INC.,
MTEL LATIN AMERICA, INC.
and
NEWBRIDGE LATIN AMERICA, L.P.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions........................................... 1
1.1 Definitions...................................... 1
2. Exchange Rights....................................... 5
2.1 Purchaser Exchange Right......................... 5
2.2 Mtel LATAM Exchange Right........................ 6
2.3 Mechanics of Exchange............................ 6
3. Redemption Rights..................................... 9
3.1 Optional Redemption.............................. 9
4. Corporate Governance.................................. 10
4.1 Mtel Puerto Rico Board of Directors.............. 10
4.2 Supermajority Voting Rights in the Charter;
Voting Matters Related to Charter Documents...... 11
5. Stock Legends........................................ 13
5.1 Stock Certificate Legends....................... 13
6. Miscellaneous........................................ 14
6.1 Headings; No Third-Party Beneficiaries.......... 14
6.2 Entire Agreement................................ 14
6.3 Notices......................................... 14
6.4 Applicable Law.................................. 16
6.5 Severability.................................... 16
6.6 Successors and Assigns; Amendments
and Waivers.................................. 16
6.7 Defaults; No Circumvention of Agreement......... 17
6.8 Further Assurances.............................. 17
6.9 Counterparts.................................... 17
</TABLE>
-i-
<PAGE>
This STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT, dated as of September
19, 1996 (the " Agreement"), by and among Mtel Puerto Rico, Inc. ("Mtel
--------- ----
Puerto Rico"), a Delaware corporation and an indirect wholly-owned subsidiary
-----------
of Mobile Telecommunication Technologies Corp. ("Mtel"), Mtel Latin America,
----
Inc., a Delaware corporation ("Mtel LATAM") and Newbridge Latin America,
----------
L.P., Cayman Islands a limited partnership (the "Purchaser").
---------
WHEREAS, Mtel Puerto Rico and the Purchaser have executed and
delivered a Subscription Agreement, dated as of September 19, 1996 (the
"Subscription Agreement"), pursuant to which, among other things, Mtel Puerto
-----------------------
Rico has agreed to issue to the Purchaser, and the Purchaser has agreed to
acquire from Mtel Puerto Rico, shares (the "Preferred Shares") of 12%
----------------
Cumulative, Redeemable Preferred Stock, par value $0.01 per share, of Mtel
Puerto Rico (the "Preferred Stock"), representing in the aggregate 100% of
---------------
the issued and outstanding Preferred Stock; and
WHEREAS, the Stockholders (as defined herein) believe it to be in
their best interests and in the best interests of Mtel Puerto Rico that they
enter into this Agreement providing for certain rights and restrictions with
respect to the shares of Mtel Puerto Rico Company Stock owned by them.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings ascribed to them below (such terms to be equally
applicable to both singular and plural forms of the terms defined or referred
to):
"Affiliate" or "affiliate" shall mean, with respect to any specified
--------- ---------
Person, any Person directly or indirectly controlling, controlled by, or
under common control with, such specified Person, at any time during the
period for which the determination of affiliation
<PAGE>
is being made; provided that in the case of a Person who is an individual,
--------
such terms shall also include members of such specified Person's immediate
family (as defined in Instruction 2 of Item 404(a) of Regulation S-K under
the Securities Act).
"Business" shall mean the business of telecommunications as it
--------
pertains to paging or messaging.
"Company Stock" shall mean (a) shares of Common Stock, par value $0.01
-------------
per share, of Mtel Puerto Rico and (b) shares of Preferred Stock, par value
$0.01 per share of Mtel Puerto Rico.
"Duly Endorsed" shall mean, as to any stock certificate, a stock
-------------
certificate that is (i) duly endorsed in blank by the Person or persons in
whose name such certificate is registered or (ii) accompanied by a duly
executed stock or security assignment separate from such certificate,
provided that such instrument of transfer shall be in form and substance
satisfactory to Mtel Puerto Rico.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"Exchange Date" shall have the meaning ascribed to such term in
-------------
Section 2.3(b) herein.
"Exchange Notice" shall have the meaning ascribed to such term in
---------------
Section 2.3(b) herein.
"Exchange Right" shall have the meaning ascribed to such term in
--------------
Section 2.1 herein.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well,
-2-
<PAGE>
to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the
-------- -------
term "Guarantee" shall not include endorsements for collection or deposit in
---------
the ordinary course of business. The term "Guarantee" used as a verb has a
---------
corresponding meaning.
"Indebtedness" shall mean, with respect to any Person at any date of
------------
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto), (iv) all
obligations of such Person as lessee under capitalized leases, (v) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such services; provided, however, that this
-------- -------
provision (v) hereof shall not include obligations which are included in any
capital or operating budget approved by the Board of Directors of Mtel Puerto
Rico, (vi) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of such Indebtedness shall be the lesser
-------- -------
of (A) the fair market value of such asset at such date of determination and
(B) the amount of such Indebtedness, and (vii) all Indebtedness of other
Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person. The amount of Indebtedness of any Person at any
date shall be (without duplication) the outstanding balance at such date of
all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation (unless the underlying contingency
has not occurred and the occurrence of the underlying contingency is entirely
within the control of such Person).
-3-
<PAGE>
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including, without limitation any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest.
"Mtel LATAM Exchange Right" shall have the meaning ascribed to such
-------------------------
term in Section 2.2 herein.
"Mtel LATAM Series A Preferred Stock" shall mean the shares of
-----------------------------------
Cumulative, Redeemable Variable Rate Preferred Stock, par value $0.01 per
share, of Mtel LATAM.
"Preferred Stock" shall mean the capital stock named as "Preferred
---------------
Stock" in the first Recital to this Agreement.
"Purchase Price" shall mean the price at which the Purchaser acquired
--------------
the Preferred Stock, the total Purchase Price being $3.5 million.
"Record Date" shall have the meaning ascribed to such term in the
-----------
Amended and Restated Certificate of Incorporation for Mtel Puerto Rico.
"Redemption Date" shall have the meaning ascribed to such term in
---------------
Section 3.1 herein.
"Representative" shall mean, with respect to a particular Person, any
--------------
director, officer, general partner, limited partner, co-owner, member,
nominee, managing director or controlling Person of such Person.
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
"Stockholders" shall mean the Purchaser and Mtel LATAM.
------------
"Third Party" shall mean any person other than Mtel Puerto Rico or any
-----------
Affiliate of Mtel Puerto Rico.
-4-
<PAGE>
ARTICLE II
EXCHANGE RIGHTS
---------------
2.1 Purchaser Exchange Right. Subject to the provisions of Section
------------------------
2.3 hereof, if, subsequent to the issue date of the Preferred Stock, the
Purchaser shall have either (i) made an investment or investments in an
"operating company" as such term is defined in Title 1 of ERISA in an amount
or amounts such that its assets shall not be considered "Plan Assets" as such
term is defined in Title 1 of ERISA (an "Operating Company Investment"), or
(ii) otherwise demonstrated to Mtel International's satisfaction that such
assets, as the case may be, shall not be considered "Plan Assets" as such
term is defined in Title 1 of ERISA at the Purchaser's option, the Purchaser
shall have the right (the "Exchange Right") to exchange all (but not less
--------------
than all) of its shares of Preferred Stock (including, unless waived as
provided below, those shares in respect of accrued, undeclared and unpaid
dividends on the Preferred Shares), at any time prior to the Redemption Date,
into an equal number of shares of Mtel LATAM Series A Preferred Stock, when,
if and provided that such class of stock shall have been authorized and
issued by Mtel LATAM. The Purchaser covenants and agrees to use all
reasonable efforts to effect the exchange as soon as practicable following
the date hereof provided, that the foregoing shall not be construed to
require the Purchaser to make any Operating Company Investment. It is
understood and agreed by the parties (who shall take or cause to be taken all
such actions as may be required to effect the following) that in the event of
such exchange, except as provided below, Mtel LATAM shall declare and pay a
dividend on each issued and outstanding share of Mtel LATAM Series A
Preferred Stock through the date of such exchange such that upon the
declaration and payment of such dividend and the exchange of the Preferred
Stock (if the exchange had taken place simultaneously with the original
issuance of the Mtel LATAM Series A Preferred Stock) for the Mtel LATAM
Series A Preferred Stock, Mtel International would have owned 80% and the
Purchaser would have owned 20% of the outstanding shares of Mtel LATAM
Preferred Stock. In the event that the foregoing Exchange Right is
exercised, the Purchaser may, at its option, waive and release its right to
any accrued, undeclared and
-5-
<PAGE>
unpaid dividends on the shares of Preferred Stock to be exchanged. In such
event, Mtel LATAM shall not pay the dividend contemplated by the second
preceding sentence on any shares of the Mtel LATAM Series A Preferred Stock.
2.2 Mtel LATAM Exchange Right. Subject to the provisions of Section
-------------------------
2.3 hereof, at any time after October 31, 1997 but prior to the Redemption
Date, Mtel LATAM shall have the right (the "Mtel LATAM Exchange Right") to
-------------------------
exchange all (but not less than all) of the Purchaser's shares of Preferred
Stock (including, unless waived as provided below, those shares in respect of
accrued and unpaid dividends), into an equal number of shares of Mtel LATAM
Series A Preferred Stock, when, if and provided that such class of stock
shall have been authorized and issued by Mtel LATAM. It is understood and
agreed by the parties that in the event of such exchange, except as provided
below, Mtel LATAM shall declare and pay a dividend on each share of issued
and outstanding Mtel LATAM Preferred Stock through the date of such exchange
such that following such dividend and exchange of the Preferred Stock (if the
exchange had taken place simultaneously with the original issuance of the
Mtel LATAM Series A Preferred Stock) for the Mtel LATAM Series A Preferred
Stock, Mtel International would have owned 80% and the Purchaser would have
owned 20% of the outstanding shares of Mtel LATAM Series A Preferred Stock.
In the event that the Mtel LATAM Exchange Right is exercised, the Purchaser
may, at its option, waive and release its right to any accrued, undeclared
and unpaid dividends on the shares of Preferred Stock to be exchanged. In
such event, Mtel LATAM shall not pay the dividend contemplated by the second
preceding sentence on any shares of the Mtel LATAM Series A Preferred Stock.
2.3 Mechanics of Exchange.
---------------------
(a) General. Subject to the provisions of this Section 2.3, the
-------
Preferred Stock is exchangeable, at the option of the holders thereof, or at
the option of Mtel LATAM, upon the exercise of the Exchange Right or the Mtel
LATAM Exchange Right, as the case may be, at any time from and after the
issue date of the Preferred Stock and prior to the close of business on the
date on which Mtel Puerto Rico shall redeem, pursuant to Section 3.1 hereof,
all shares of
-6-
<PAGE>
Preferred Stock (the "Redemption Date"). The right to exchange the Preferred
---------------
Stock called for redemption shall terminate immediately prior to the close of
business on the Redemption Date.
(b) Surrender Certificates; Notice of Exchange. In order to exchange
------------------------------------------
the Preferred Stock pursuant to this Section 2.3, the holder thereof shall
surrender the certificates evidencing the Preferred Stock to be exchanged at
the office or agency to be maintained by Mtel LATAM for that purpose, Duly
Endorsed to Mtel LATAM, together with written notice of exchange specifying
the number of shares of Preferred Stock to be exchanged (and the amount of
accrued, undeclared and unpaid dividends thereon) and specifying the name or
names (with addresses) in which the certificate or certificates representing
the Mtel LATAM Series A Preferred Stock deliverable on such exchange are to
be registered, and otherwise in accordance with exchange procedures
established by Mtel LATAM (each, an "Exchange Notice"). The Exchange Notice
---------------
shall be irrevocable, and each exchange shall be deemed to have been effected
immediately prior to the close of business on the date (the "Exchange Date")
-------------
on which (i) all of the requirements for such exchange shall have been
satisfied and (ii) the Purchaser has delivered an opinion of outside counsel,
reasonably satisfactory to Mtel LATAM and Mtel Puerto Rico, or Mtel LATAM has
received an opinion of counsel (either outside counsel or inside general
counsel) to the effect that Mtel LATAM is not required, under the Securities
Act or the rules and regulations of the SEC promulgated thereunder, to
deliver a current prospectus in connection with any exchange of the Preferred
Stock for shares of Mtel LATAM Series A Preferred Stock. In the event that
the Mtel LATAM is unable to comply with the requirement of clause (ii) above,
Mtel Puerto Rico, Mtel LATAM and the Purchaser shall use all reasonable
efforts to take such actions as are necessary or appropriate to effect such
exchange. In the event of a Mandatory Exchange Right, the Purchaser shall
use all reasonable efforts to deliver or cause to be delivered the
aforementioned opinion, in form and substance reasonably acceptable to Mtel
LATAM and Mtel Puerto Rico. If any transfer is involved in the issuance or
delivery of any certificate or certificates for shares of Mtel LATAM Series A
Preferred Stock in a name other than that of the registered holder of the
shares of the Preferred Stock surrendered for exchange, such holder shall
also deliver to Mtel LATAM a sum sufficient to pay all taxes, if any,
-7-
<PAGE>
payable in respect of such transfer or evidence satisfactory to Mtel LATAM
that such taxes have been paid. Except as provided in the immediately
preceding sentence, Mtel LATAM shall pay any issue, stamp or other similar
tax in respect of such issuance or delivery.
(c) Issuance of New Certificates. As promptly as practicable after the
----------------------------
Exchange Date, Mtel LATAM, in accordance with the provisions of and subject
to the conditions of this Section 2.3, shall issue and deliver at said office
or agency to the holder of the Preferred Stock so surrendered for exchange,
or on his or her written order, a certificate or certificates for the number
of full shares of Mtel LATAM Series A Preferred Stock rounded to the nearest
whole number issuable upon exchange of such shares in accordance with the
provisions of this Section 2.1.
(d) Effective Date of Exchange. The Person in whose name the
--------------------------
certificate for shares of Mtel LATAM Series A Preferred Stock is issued upon
such exchange shall be treated for all purposes as the stockholder of record
of such shares of Mtel LATAM Preferred Stock as of the close of business on
the Exchange Date; provided, however, that no surrender of the Preferred
--------
Stock on any date when the stock transfer books of Mtel LATAM are closed for
any purpose shall be effective to constitute the Person or Persons entitled
to receive the shares of Mtel LATAM Series A Preferred Stock deliverable upon
such exchange as the record holder(s) of such shares of Mtel LATAM Series A
Preferred Stock on such date, but such surrender shall be effective (assuming
all other requirements for the valid exchange of such shares have been
satisfied) to constitute such Person or Persons as the record holder(s) of
such shares of Mtel LATAM Preferred Stock for all purposes as of the opening
of business on the next succeeding day on which such stock transfer books are
open. Upon exchange of the Preferred Stock, the rights of the holder of such
shares, as a holder thereof, shall cease.
-8-
<PAGE>
ARTICLE III
REDEMPTION RIGHTS
3.1 Optional Redemption.
-------------------
(a) Mtel Puerto Rico may at its option, redeem all, but not less than
all, of the Preferred Stock for the Purchase Price at any time, (i) after
December 31, 1996, in the event that as of such date the Mtel LATAM Series A
Preferred Stock has not theretofore been issued or (ii) after November 30,
1997, in the event that as of such date, the Mtel LATAM Series A Preferred
Stock has been issued and the Purchaser has not made an Operating Company
Investment or otherwise demonstrated to Mtel International's satisfaction
that such assets shall not be considered "Plan Assets."
(b) In the event that Mtel Puerto Rico shall redeem the Preferred
Stock in accordance with the provisions of Section 3.1(a) above, a notice of
such redemption shall be given by first-class mail, postage prepaid, mailed
not less than 15 nor more than 30 business days prior to the Redemption Date,
to each holder of record of the Preferred Stock, at such holder's address as
the same appears on the stock books of Mtel Puerto Rico's transfer agent.
Each such notice shall state: (i) the Redemption Date; (ii) the place or
places where certificates for the shares of Preferred Stock are to be
surrendered for payment of the Purchase Price; (iii) that payment will be
made upon presentation and surrender of such shares of Preferred Stock; (iv)
that dividends on the to be redeemed shall cease to accrue following such
Redemption Date; and (v) that such redemption is at the option of Mtel Puerto
Rico. Notice having been mailed as aforesaid, on and after the Redemption
Date, unless Mtel Puerto Rico shall be in default in providing money for the
payment of the Purchase Price, (x) dividends on the 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 Mtel Puerto Rico (except the right to receive from Mtel Puerto Rico the
monies payable upon redemption, without interest thereon, upon surrender of
the certificates evidencing such shares) shall cease. Mtel Puerto Rico's
obligation to provide monies in accordance with the preceding sentence shall
be deemed fulfilled if, on or before the Redemption
-9-
<PAGE>
Date, Mtel Puerto Rico 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 million, the principal amount of funds
necessary for such redemption, in trust for the account of the holders of the
shares of Preferred Stock 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 Preferred Stock so called for redemption. Any interest accrued on such
funds shall be paid to Mtel Puerto Rico 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 Mtel Puerto Rico, after which, subject to any
applicable laws relating to escheat or unclaimed property, the holder or
holders of such shares of Preferred Stock so called for redemption shall look
only to Mtel Puerto Rico for payment of the redemption price.
Upon surrender in accordance with said notice of the certificates for
any such shares of Preferred Stock so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors shall so require and the notice shall
so state), such shares of Preferred Stock shall be redeemed by Mtel Puerto
Rico at the Purchase Price.
ARTICLE IV
CORPORATE GOVERNANCE
--------------------
4.1 Mtel Puerto Rico Board of Directors. From and after the Closing
-----------------------------------
Date, each of the Stockholders shall vote its shares of Company Stock (to the
extent entitled to vote), at each regular or special meeting of the
stockholders of Mtel Puerto Rico called for the purpose of filling positions
on the Board of Directors of Mtel Puerto Rico, or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all
actions reasonably necessary, to ensure the election to the Mtel Puerto Rico
Board of Directors of one individual selected by the Purchaser (the
"Purchaser Nominee"); provided, however, that if, at any time, the Purchaser
------------------ -------- -------
disposes of any shares of Preferred Stock such that after such disposition
the Purchaser shall hold an amount of Preferred Stock that is less than
-10-
<PAGE>
50% of the total amount of Preferred Stock outstanding, then the Purchaser's
right to elect a member the Mtel Puerto Rico Board of Directors and the Mtel
LATAM's obligation to vote its shares of Company Stock pursuant to this
Section 4.1 with respect to the Purchaser Nominee shall terminate.
4.2 Supermajority Voting Rights in the Charter; Voting Matters
----------------------------------------------------------
Related to Charter Documents. (a) The parties hereto acknowledge and agree
----------------------------
that Mtel Puerto Rico's Amended and Restated Certificate of Incorporation
(the "Mtel Puerto Rico Charter") shall be amended on the date hereof to
------------------------
provide that the approval of all of the members of the Mtel Puerto Rico Board
of Directors will be required to approve the following transactions (each, a
"Supermajority Event"):
-------------------
(i) a sale or merger of Mtel Puerto Rico, or a sale of all or
substantially all of the assets or capital stock of Mtel Puerto Rico, in each
case in any transaction or series of transactions;
(ii) a liquidation, recapitalization or dissolution of Mtel
Puerto Rico;
(iii) the filing of a bankruptcy petition by Mtel Puerto Rico;
(iv) a material change in the nature of Mtel Puerto Rico's
business such that Mtel Puerto Rico is no longer primarily engaged in the
Business;
(v) (1) the incurrence of Indebtedness by Mtel Puerto Rico in
an amount in any transaction or series of transactions, individually or in
the aggregate, totalling in excess of $15 million at any time outstanding and
(2) the amendment of any material term of any such Indebtedness in a manner
adverse or unfavorable to Mtel Puerto Rico;
(vi) the creation, assumption or incurrence of any Lien on the
assets of Mtel Puerto Rico, individually or in the aggregate, in excess of
$15 million at any time outstanding;
-11-
<PAGE>
(vii) the redemption, repurchase or issuance of Company Stock
(including options, warrants or other rights to acquire any such capital
stock, but excluding the redemption of the Preferred Shares and the issuance,
if any, of payment-in-kind dividends on the Preferred Shares, in each case as
contemplated by this Agreement or the Mtel Puerto Rico Charter);
(viii) any amendment to the Mtel Puerto Rico Charter or the
Amended and Restated By-laws of Mtel Puerto Rico (the "Mtel Puerto Rico By-
-------------------
laws") which would adversely affect any rights of the Purchaser (including
----
any change in the size of the Mtel Puerto Rico Board of Directors);
(ix) the creation of, or the delegation of any power to, any
committee of the Mtel Puerto Rico Board of Directors;
(x) the appointment of or any change in the independent public
auditors of Mtel Puerto Rico; or
(xi) any change in the accounting policies of Mtel Puerto Rico,
including any change in fiscal year, except as required by applicable
generally accepted accounting practices.
(b) From and after the Closing Date, each Stockholder shall vote its
shares of Company Stock (to the extent entitled to vote), at each regular or
special meeting of stockholders of Mtel LATAM or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all
actions reasonably necessary to ensure that the Mtel Puerto Rico Charter and
Mtel Puerto Rico By-laws (x) are consistent with the provisions of Section
4.2(a) herein and (y) do not, at any time, conflict with the provisions of
this Agreement. From and after the Closing Date, each Stockholder shall use
its reasonable best efforts to cause its respective Nominees (as defined in
Section 4.1 herein), if any, to act in a manner consistent with the
provisions of this Agreement (including the provisions of Section 4.2(a)
herein).
-12-
<PAGE>
ARTICLE V
STOCK LEGENDS
-------------
5.1 Stock Certificate Legends. A copy of this Agreement shall be
-------------------------
filed with the Secretary of Mtel Puerto Rico and kept with the records of
Mtel Puerto Rico. Each of the Stockholders agrees that the following legends
shall be placed on the certificates representing any shares of Preferred
Stock owned by them:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND TO CERTAIN OTHER RESTRICTIONS, AS
SPECIFIED IN A STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT, DATED AS OF
SEPTEMBER 19, 1996 (THE "STOCKHOLDERS AGREEMENT"), COPIES OF WHICH ARE
ON FILE WITH THE SECRETARY OF MTEL PUERTO RICO, INC. ("MTEL PUERTO
RICO") AND WHICH WILL BE FURNISHED WITHOUT CHARGE TO A STOCKHOLDER
UPON WRITTEN REQUEST THEREFOR FROM SUCH STOCKHOLDER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE
BOUND BY ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT PURSUANT TO THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE
-13-
<PAGE>
TRANSFERRED IN VIOLATION OF ANY SUCH LAWS THAT ARE APPLICABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO OPTIONAL
AND MANDATORY EXCHANGE RIGHTS, PURSUANT TO WHICH THESE SECURITIES WILL
BE EXCHANGED FOR PREFERRED STOCK OF MTEL LATIN AMERICA, INC. IN
ACCORDANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT AND MAY BE
REDEEMED AT THE OPTION OF MTEL PUERTO RICO UNDER CERTAIN
CIRCUMSTANCES."
All Stockholders shall be bound by the requirements of such legends to
the extent that such legends are applicable.
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Headings; No Third-Party Beneficiaries. The headings and
--------------------------------------
captions contained herein for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof. 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.
6.2 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
6.3 Notices. All notices, requests, instructions or and other
-------
communications to be given hereunder by any party hereto to
-14-
<PAGE>
another party hereto shall be in writing and, unless otherwise provided
herein, shall be deemed duly given if delivered personally, telecopied (which
is confirmed) or sent by registered or certified mail (postage prepaid,
return receipt requested) or by reputable overnight similar courier service
to Mtel Puerto Rico or the Purchaser at the addresses set forth below:
If to Mtel Puerto Rico, to it at:
Mobile Telecommunication Technologies Corp.
200 South Lamar Street
Security Centre, South Building
Jackson, Mississippi 39201
Attention: Leonard G. Kriss, Esq.
Telecopy: (601) 944-7291
With copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Martha E. McGarry
Telecopier: (212)735-2001
If to the Purchaser, to it at:
Newbridge Latin America, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: Richard P. Schifter/James O'Brien
Telecopier: (817)871-4010;
provided that in the event any of the parties referred to above desires to
--------
designate another address to which such notices should be sent to such party,
such party may designate such other address by giving notice to the other
parties hereto in writing as set forth in this Section 6.3 (provided that any
change of address shall be effective only upon receipt thereof).
-15-
<PAGE>
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.
6.4 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
--------------
THE PARTIES HEREUNDER AND THE PARTIES SUBJECT HERETO SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
6.5 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this
Agreement, including any such provision, in any other jurisdiction, it being
intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
6.6 Successors and Assigns; Amendments and Waivers.
----------------------------------------------
(a) None of the Purchaser's, Mtel LATAM's or Mtel Puerto Rico's
rights or obligations under this Agreement may be assigned without the prior
written consent of the other parties hereto. Any assignment in violation of
the foregoing shall be null and void. This Agreement may not be amended,
modified or supplemented, no waivers of, consents to or departures from the
provisions hereof may be given, and neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall
be assignable by Mtel LATAM, Mtel Puerto Rico or the Purchaser without the
prior written consent of the other parties hereto.
(b) The rights and remedies of the Purchaser and Mtel Puerto Rico
under this Agreement shall be cumulative and not exclusive of any rights or
remedies which either would otherwise have hereunder or at law or in equity
or by statute, and no failure or delay by either party in exercising any
right or remedy shall impair any such right or remedy or operate as a waiver
of such right or remedy, nor
-16-
<PAGE>
shall any single or partial exercise of any power or right preclude such
party's other or further exercise or the exercise of any other power or
right.
6.7 Defaults; No Circumvention of Agreement. A default by any party
---------------------------------------
to this Agreement in such party's compliance with any of the conditions or
covenants hereof or performance of any of the obligations of such party
hereunder shall not constitute a default by any other party. Neither party
to this Agreement may do indirectly, through the sale of capital stock of its
or their subsidiaries or otherwise, that which is not permitted by this
Agreement.
6.8 Further Assurances. Each party hereto or Person subject hereto
------------------
shall do and perform or cause to be done and performed all such further acts
and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person
subject hereto may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.
* * *
-17-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by each of
the parties hereto as of the date first written above.
MTEL LATIN AMERICA, INC.
By: /S/ JOHN E. WELSH
----------------------------
Name: John E. Welsh III
Title: Vice Chairman
MTEL PUERTO RICO, INC.
By: /S/ JOHN E. WELSH
----------------------------
Name: John E. Welsh III
Title: Vice Chairman
NEWBRIDGE LATIN AMERICA, L.P.
By: LATAM GP, L.P.
By: LAF Advisors, L.L.C.
By: /s/ Richard P. Schifter
----------------------------
Name: Richard P. Schifter
Title:
-18-
<PAGE>
EXHIBIT 10.4
SUBSCRIPTION AGREEMENT
dated as of September 19, 1996
by and between
NEWBRIDGE LATIN AMERICA, L.P.
and
MTEL PUERTO RICO, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Purchase of the Preferred Stock...................................... 1
1.1 Agreement to Purchase and Sell.................................. 1
1.2 Closing......................................................... 2
1.3 Delivery and Payment............................................ 2
2. Representations and Warranties of Mtel LATAM
and Mtel Puerto Rico................................................. 2
2.1 Incorporation and Organization.................................. 3
2.2 Subsidiaries.................................................... 3
2.3 Capitalization.................................................. 3
2.4 Authorization; Valid and Binding
Agreements...................................................... 4
2.5 Financial Statements............................................ 5
2.6 Undisclosed Liabilities......................................... 5
2.7 No Conflicts, Violation, Etc.................................... 6
2.8 Consents........................................................ 6
2.9 Exemption from Securities Act................................... 7
2.10 Litigation...................................................... 7
2.11 No Material Adverse Change...................................... 7
2.12 Compliance with Laws............................................ 7
2.13 Certificates, Authorizations, Permits
and Licenses.................................................... 8
2.14 Affiliate Transactions.......................................... 8
2.15 Brokers......................................................... 8
3. Representations and Warranties of the Purchaser...................... 8
3.1 Organization.................................................... 9
3.2 Authority....................................................... 9
3.3 Consents........................................................ 9
3.4 No Conflicts, Violation, Etc.................................... 9
3.5 Purchase for Investment......................................... 10
4. Counterparts......................................................... 12
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5. Successors and Assigns............................. 12
6. Collateral Agreements, Amendments and Waivers...... 12
7. Expenses........................................... 13
8. Invalid Provisions................................. 13
9. Notices............................................ 13
10. No Third-Party Beneficiaries....................... 14
11. Law Governing...................................... 14
12. Further Assurances................................. 15
13. Headings........................................... 15
14. No Recourse Against Others......................... 15
</TABLE>
-ii-
<PAGE>
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of September
19, 1996, by and between MTEL PUERTO RICO, INC., a Delaware corporation ("Mtel
Puerto Rico") and Newbridge Latin America, L.P., a Cayman Islands limited
partnership (the "Purchaser").
WHEREAS, Mtel Puerto Rico desires to issue and sell to the Purchaser,
and the Purchaser desires to purchase from Mtel Puerto Rico, 3,500 shares (the
"Preferred Shares") of 12% Cumulative Redeemable Preferred Stock, par value
$0.01 per share, of Mtel Puerto Rico (the "Preferred Stock"); and
WHEREAS, concurrently with the execution and the consummation of the
transactions contemplated by this Agreement, the Purchaser, Mtel Puerto Rico and
Mtel Latin America, Inc., a Delaware corporation ("Mtel LATAM"), are entering
into a Stockholders and Exchange Rights Agreement, dated as of the date hereof
and attached hereto as Exhibit A (the "Stockholders Agreement" and, collectively
with this Agreement and the other agreements and documents concerning the
transactions contemplated hereby and thereby, the "Transaction Documents")
pursuant to which (i) the Purchaser shall have the right under certain
circumstances to cause Mtel LATAM to exchange (a "Purchaser Exchange") the
Preferred Shares for shares of Cumulative Redeemable Convertible Variable Rate
Preferred Stock, par value $.01 per share, of Mtel LATAM (the "Mtel LATAM
Preferred Stock"), (ii) Mtel LATAM shall have the right, commencing after
November 30, 1997, to require the Purchaser to exchange (a "Mandatory Exchange")
the Preferred Shares for shares of Mtel LATAM Preferred Stock and (iii) certain
arrangements regarding the governance of Mtel Puerto Rico and the relationship
between the stockholders of Mtel Puerto Rico are specified;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
1. Purchase of the Preferred Stock.
-------------------------------
1.1. Agreement to Purchase and Sell. Upon the basis of the
------------------------------
representations and warranties, for the consideration, and subject to
<PAGE>
the terms and conditions set forth in this Agreement, at the Closing referred to
in Section 1.2 hereof and taking place simultaneously herewith, Mtel Puerto Rico
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase
from Mtel Puerto Rico, the Preferred Shares, the terms of which are set forth in
the Amended and Restated Certificate of Incorporation of Mtel Puerto Rico,
attached hereto as Exhibit B, free and clear of all claims, liens, charges and
encumbrances of any nature whatsoever (collectively, "Liens"). In consideration
of the issuance and sale of the Preferred Shares by Mtel Puerto Rico to the
Purchaser, the Purchaser agrees to pay in the aggregate to Mtel Puerto Rico
$3,500,000 (the "Purchase Price"), payable at the Closing.
1.2. Closing. The closing of the transactions contemplated hereby
-------
(the "Closing") is taking place at the offices of Skadden, Arps, Slate, Meagher
& Flom at 919 Third Avenue, New York, New York 10022, at 9:00 a.m., Eastern
Daylight Time, on September 19, 1996, simultaneously with the execution of this
Agreement and the Stockholders Agreement. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date."
1.3. Delivery and Payment. At the Closing, (a) Mtel Puerto Rico is
--------------------
delivering or causing to be delivered (if not previously delivered) to the
Purchaser (i) one or more stock certificates evidencing the Preferred Shares
issued in the name of the Purchaser, (ii) an executed copy of the Stockholders
Agreement and (iii) all other documents, instruments and writings required by it
to be delivered by Mtel Puerto Rico to the Purchaser pursuant to this Agreement
and the other Transaction Documents to which it is a party or otherwise required
in connection herewith and therewith by it, and (b) the Purchaser is delivering
or is causing to be delivered to Mtel Puerto Rico (if not previously delivered)
(i) $3,500,000 by wire transfer of immediately available funds to the account of
Mtel Puerto Rico to be designated by Mtel Puerto Rico in writing prior to the
Closing, (ii) an executed copy of the Stockholders Agreement and (iii) all other
documents, instruments and writings required to be delivered by the Purchaser to
Mtel Puerto Rico pursuant to this Agreement and the other Transaction Documents
or otherwise required in connection herewith or therewith.
2. Representations and Warranties of Mtel LATAM and Mtel Puerto
------------------------------------------------------------
Rico. Mtel Puerto Rico represents and warrants to the
- ----
-2-
<PAGE>
Purchaser as of the date hereof (except as otherwise set forth herein) as
follows:
2.1. Incorporation and Organization. Mtel Puerto Rico is a
------------------------------
corporation duly incorporated and organized, validly existing and in good
standing under the laws of the State of Delaware. Mtel Puerto Rico (i) has all
requisite corporate power and authority to transact its business as now or
heretofore transacted and as proposed to be transacted and (ii) is duly
qualified, licensed, or admitted to do business as a foreign corporation and is
(if applicable) in good standing in each jurisdiction in which the character of
its assets, properties and revenues (collectively, the "Assets") or the nature
of its business requires such qualification, licensing, or admission, except for
such jurisdictions where the failure to be so qualified, licensed, or admitted
or to be in good standing would not have a material adverse effect on the
business, operations or financial condition of Mtel Puerto Rico (a "Material
Adverse Effect").
2.2. Subsidiaries. Mtel Puerto Rico does not own, directly or
------------
indirectly, any capital stock, partnership interest, joint venture interest or
any other security issued by any other corporation, partnership, limited
liability company or other organization or entity.
2.3. Capitalization.
--------------
(a) As of the Closing, but prior to the issuance of the
Preferred Shares to the Purchaser, (i) the authorized capital stock of Mtel
Puerto Rico consists of 1,000 shares of Common Stock, par value $.01 per share,
1,000 of which are issued and outstanding and 10,000 shares of Preferred Stock,
none of which are issued and outstanding and (ii) all of such issued and
outstanding shares of Common Stock are owned by Mtel LATAM. All of the capital
stock of Mtel Puerto Rico that is or will be issued and outstanding as of the
Closing is or will beat such time duly authorized, validly issued, fully paid
and non-assessable, and free and clear of any Liens. Except as otherwise
contemplated by this Agreement or the other Transaction Documents, (i) there are
no restrictions on the transfer of shares of capital stock of Mtel Puerto Rico
other than those imposed by relevant state and federal securities laws, (ii)
there are no agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge, purchase and sale, or other transfer
of the capital stock of Mtel Puerto Rico to which
-3-
<PAGE>
Mtel Puerto Rico is a party or, to the knowledge of Mtel Puerto Rico, to which
any other person is a party, and (iii) no holder of any security of Mtel Puerto
Rico is entitled to preemptive, first refusal or similar statutory or
contractual rights, arising pursuant to any agreement or instrument to which
Mtel Puerto Rico is a party, or which are otherwise binding upon Mtel Puerto
Rico or, to the knowledge of Mtel Puerto Rico, to which any other person is a
party. To the knowledge of Mtel Puerto Rico, Mtel Puerto Rico does not have any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend or
make any other distribution in respect thereof, and no person has demand or
other rights to cause Mtel Puerto Rico to file any registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), relating to any
securities of Mtel Puerto Rico, or any right to participate in any such
registration.
(b) Except as set forth on Schedule 2.3 hereof and except for
the Mtel LATAM Preferred Shares, there are no outstanding securities convertible
into or exchangeable or exercisable for any shares of the capital stock of Mtel
Puerto Rico, nor are there outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, any shares of the capital stock of Mtel Puerto Rico
or any securities convertible into or exchangeable or exercisable for any shares
of such capital stock.
2.4. Authorization; Valid and Binding Agreements. Mtel Puerto Rico
-------------------------------------------
has all requisite corporate power and authority to execute and deliver this
Agreement and the other Transaction Documents and to perform all of its
obligations and undertakings hereunder and thereunder and to carry out the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the other Transaction Documents to which it is a party, the
performance by Mtel Puerto Rico of its obligations hereunder and thereunder, and
the issuance and sale of the Preferred Shares have been duly authorized by all
necessary corporate action including Board of Directors approval on the part of
Mtel Puerto Rico. This Agreement and the other Transaction Documents have been
duly and validly executed and delivered by Mtel Puerto Rico. Assuming due
authorization, execution and delivery by the Purchaser,
-4-
<PAGE>
this Agreement and the other Transaction Documents to which it is a party
constitute legal, valid and binding obligations of Mtel Puerto Rico, enforceable
against Mtel Puerto Rico in accordance with their terms, except as enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereinafter in effect affecting creditors' rights
generally and (ii) general principals of equity (regardless of whether the
application of such principals is considered in a proceeding in equity or at
law).
2.5. Financial Statements.
--------------------
(a) Mtel Puerto Rico has delivered to the Purchaser copies of
the following financial statements: (i) the audited Financial Statements (as
defined below) of Mtel Puerto Rico as of and for the fiscal year ended December
31, 1995, together with reports thereon of Mtel Puerto Rico's independent public
accountants and (ii) the unaudited trial account balances of Mtel Puerto Rico as
of and for the six month period ended June 30, 1996. "Financial Statements"
shall mean the balance sheet as of the date indicated and the related statements
of operations, cash flows and changes in shareholders' equity (including all
related notes and schedules thereto) for the period indicated. The Financial
Statements referred to in clauses (i) and (ii) are collectively referred to
herein as the "Mtel Puerto Rico Statements."
(b) All of the audited Mtel Puerto Rico Statements have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") , except as set forth in the notes thereto and all of the
Mtel Puerto Rico Statements accurately set forth and fairly present in all
material respects the financial position and results of operations of Mtel
Puerto Rico as of the respective date thereof and for the respective period
covered thereby.
2.6. Undisclosed Liabilities. As of the date hereof, except for
-----------------------
liabilities (i) reflected on or reserved against on the balance sheet as of
December 31, 1995 or June 30, 1996 of Mtel Puerto Rico or disclosed in any note
thereto provided to the Purchaser, (ii) incurred in the ordinary course of Mtel
Puerto Rico's business, (iii) set forth on Schedule 2.6 hereof, or (iv)
contemplated by this Agreement, Mtel Puerto Rico has no liabilities (absolute,
accrued, contingent or otherwise)
-5-
<PAGE>
which would be required by GAAP to be reflected on or reserved against the
balance sheet of Mtel Puerto Rico.
2.7. No Conflicts, Violation, Etc. The execution and delivery by
----------------------------
Mtel Puerto Rico of this Agreement and the other Transaction Documents to which
it is a party does not, and the performance by Mtel Puerto Rico of its
obligations under this Agreement and the other Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby, will not: (a) conflict with or result in a violation or breach of any
provision of the certificate of incorporation or by-laws of Mtel Puerto Rico;
(b) conflict with or result in a violation or breach of any law, regulation,
rule, judgment, decree or order of any court or governmental authority to which
Mtel Puerto Rico may be subject; (c) cause or give a right to cause the
acceleration of the maturity of any debt or obligation of Mtel Puerto Rico; or
(d) violate, or be in conflict with, or constitute a default under, or permit
the termination of, or result in the creation of any Lien upon any property of
Mtel Puerto Rico under, any agreement to which Mtel Puerto Rico is a party or by
which Mtel Puerto Rico is bound except, in the case of clauses (b), (c) and (d)
above, for such violations, conflicts or defaults which would not have a
Material Adverse Effect or to those as to which requisite waivers or consents
have been obtained.
2.8. Consents.
--------
(a) Assuming the accuracy of the representation of the
Purchaser set forth in Section 3.5 hereof, no consents, approvals, actions or
authorizations of, or registrations, declarations or filings with or notices to,
any administrative, governmental or other public authority are required to be
obtained or made by Mtel Puerto Rico in connection with (i) the execution,
delivery or performance of this Agreement and the other Transaction Documents to
which it is a party, (ii) the consummation of the transactions contemplated
hereby and thereby, or (iii) the issuance of the Preferred Shares, except where
the failure to obtain such consent, approval, action or authorization or make
such registration, declaration or filing would not have a Material Adverse
Effect.
(b) Mobile Telecommunication Technologies Corp., a Delaware
corporation ("Mtel"), has taken all actions necessary to
-6-
<PAGE>
designate Mtel Puerto Rico as an "Unrestricted Subsidiary" pursuant to the
Indenture, as amended, dated December 29, 1994 between Mtel and Texas Commerce
Bank National Association and the Credit, Security, Guaranty and Pledge
Agreement, dated as of December 21, 1995, as amended, among Skytel Corp., Mtel,
the Subsidiaries of Mtel referred to therein, the lenders referred to therein,
The Chase Manhattan Bank (formerly known as Chemical Bank), as administrative
agent for the lenders, Credit Lyonnais New York Branch, as documentation agent,
and J.P. Morgan Securities, Inc., as co-syndication agent.
2.9. Exemption from Securities Act. Assuming that the
-----------------------------
representations, warranties and acknowledgments of the Purchaser provided for in
Section 3.5 of this Agreement or otherwise contained herein are true and
correct, the sale of the Preferred Shares 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.
2.10. Litigation. There are no actions, suits, proceedings pending
----------
or, to the knowledge of Mtel Puerto Rico, threatened, against Mtel Puerto Rico
in any court or before or by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge this Agreement, any
Transaction Document or the issuance of the Preferred Shares, or which, if
adversely determined, would have a Material Adverse Effect.
2.11. No Material Adverse Change. Except as set forth in the June
--------------------------
30, 1996 Mtel Puerto Rico Financial Statement, since December 31, 1995, there
has not been a Material Adverse Effect.
2.12. Compliance with Laws. Mtel Puerto Rico is not in violation of
--------------------
any statutes, laws, ordinances, governmental rules or regulations or any
judgment, order or decree (federal, state, local or foreign) to which it is
subject and has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership or operation of its
properties or the conduct of its business, except for such violations or
failures to obtain as would not have a Material Adverse Effect.
-7-
<PAGE>
2.13. Certificates, Authorizations, Permits and Licenses.
--------------------------------------------------
(a) Mtel Puerto Rico possesses such certificates,
authorizations and permits issued by the appropriate federal, state and foreign
regulatory agencies or bodies as are necessary to conduct its business as now
operated, except where the failure to possess the same would not have a Material
Adverse Effect.
(b) All paging and messaging licenses, permits, and similar
regulatory documents which are material to the business or operations of Mtel
Puerto Rico (the "Licenses") are in full force and effect and free and clear of
all Liens which have been imposed by an action of Mtel Puerto Rico and such
validity and effectiveness have not been impaired by the passage of any law,
statute, or regulation by any governmental authority in an applicable
jurisdiction since the granting or assignment of the License. Mtel Puerto Rico
is not, and has not received any notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default) under, or has
violated, any such License. Mtel Puerto Rico has the right to use, and
following the Closing will have the right to use, the necessary licenses to
operate its paging and messaging services on the 931.9375 MHz frequency.
2.14. Affiliate Transactions. Schedule 2.22 lists (i) all material
----------------------
contracts, arrangements or transactions between, on the one hand, Mtel Puerto
Rico and, on the other hand, Mtel LATAM or any of Mtel LATAM's affiliates
including, without limitation, Mtel and Mtel International and (ii) any
agreements to enter into any such contracts, arrangements or transactions.
2.15. Brokers. Except as previously disclosed in writing to the
-------
Purchaser, neither Mtel LATAM nor Mtel Puerto Rico has dealt with any broker,
finder, commission agent or other person in connection with the sale of the
Preferred Shares and the transactions contemplated by this Agreement, and
neither of them is under any obligation to pay any broker's fee or commission in
connection with such transactions.
3. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to Mtel Puerto Rico as follows:
-8-
<PAGE>
3.1. Organization. The Purchaser is a limited partnership duly
------------
formed, validly existing and in good standing under the laws of the Cayman
Islands. Purchaser has full partnership power and authority to own and operate
its assets and properties and carry on its businesses as presently conducted.
3.2. Authority. The Purchaser has all requisite power and authority
---------
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to perform all of its obligations and undertakings
hereunder and thereunder and to carry out the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which the Purchaser is a party and the performance by
the Purchaser of its obligations hereunder and thereunder have been duly
authorized by all necessary action on the part of the Purchaser. This Agreement
and the other Transaction Documents to which the Purchaser is a party have been
duly and validly executed by the Purchaser. Assuming due authorization,
execution and delivery by Mtel LATAM and Mtel Puerto Rico, this Agreement and
the other Transaction Documents to which the Purchaser is a party constitute
legal, valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their terms.
3.3. Consents. No consents, approvals, actions or authorizations of,
--------
or registrations, declarations or filings with or notices to, any
administrative, governmental or other public authority in the Cayman Islands are
required to be obtained or made by the Purchaser in connection with (i) the
execution, delivery or performance of this Agreement and the other Transaction
Documents or (ii) the consummation of the transactions contemplated hereby and
thereby except for as required by reasons pertaining specifically to Mtel Puerto
Rico or except where the failure to obtain such consent, approval, action or
authorization or make such registration, declaration or filing would not have a
Material Adverse Effect and would not have a material adverse effect on the
consummation of the transactions contemplated hereby.
3.4. No Conflicts, Violation, Etc. The execution and delivery by
----------------------------
Purchaser of this Agreement and the other Transaction Documents to which it is a
party does not, and the performance by Purchaser of its obligations under this
Agreement and the other
-9-
<PAGE>
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby will not (a) conflict with or result in a violation or breach
of any provision of the limited partnership agreement or other organizational
documents of Purchaser; (b) conflict with or result in a violation or breach of
any law, regulation, rule, judgment, decree or order of any court or
governmental authority to which Purchaser may be subject; or (c) violate, or be
in conflict with, or constitute a default under, or permit the termination of,
or result in the creation of any Lien upon the Preferred Shares under, any
agreement to which Purchaser is a party or by which Purchaser is bound except,
in the case of clauses (b) and (c) above, for such violations, conflicts or
defaults which would not have a Material Adverse Effect or to those as to which
requisite waivers or consents have been obtained and would not have a material
adverse effect on the transactions contemplated hereby.
3.5. Purchase for Investment. The Purchaser represents that (i) it
-----------------------
is acquiring the Preferred Shares for its own account, for investment purposes
only and not with a view to the resale or distribution thereof or with any
present intention of distributing or selling any of the Preferred Stock, it
being understood that the right to dispose of such Preferred Shares shall be
entirely within the discretion of the Purchaser; (ii) it has authority to make
the representations contained in this Article 3; (iii) it has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Preferred Shares and
is capable of bearing the economic risk of such investment, including a complete
loss of the investment in the Preferred Stock; (iv) it is an "accredited
investor" within the meaning of Rule 501 of Regulation D of the Securities Act
or a similar institutional investor; (v) it is acquiring all the Preferred
Shares to be acquired by it hereunder with no view or intention to offer for
sale any of the Preferred Shares in a manner that would violate federal or state
securities laws; subject, however, to any requirement of law that the
disposition of its property shall at all times be and remain within its control;
(vi) it is aware that the Preferred Shares, and any shares issuable upon the
exchange of the Preferred Shares, have not been and, subject to the terms of the
Stockholders Agreement, will not be registered under the Securities Act and may
not be offered or sold within the United States to, or for the account or
benefit of, U.S. persons, except as provided below; and (vii) it has received
the information it has
-10-
<PAGE>
requested in connection with its execution of this Agreement and its purchase of
the Preferred Shares, and has been given the opportunity and right to meet, and
to ask questions and receive answers from, the representatives of Mtel and to
investigate and inquire into all aspects of Mtel Puerto Rico and the terms and
conditions of the purchase of the Preferred Shares.
The Purchaser agrees that the following restrictive legends will be
placed on certificates representing any or all of the Preferred Shares and that
transfer of any or all of the Preferred Shares may be refused by Mtel LATAM's
transfer agent unless such transfer is in accordance with the terms of this
Agreement and the Stockholders Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER CONDITIONS, AS SPECIFIED IN
A STOCKHOLDERS AND EXCHANGE RIGHTS AGREEMENT, DATED AS OF SEPTEMBER
19, 1996 (THE "STOCKHOLDERS AGREEMENT"), COPIES OF WHICH ARE ON FILE
WITH THE SECRETARY OF MTEL PUERTO RICO, INC. ("MTEL PUERTO RICO") AND
WHICH WILL BE FURNISHED WITHOUT CHARGE TO A STOCKHOLDER UPON WRITTEN
REQUEST THEREFOR FROM SUCH STOCKHOLDER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT PURSUANT TO THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.
IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED IN VIOLATION OF ANY
SUCH LAWS THAT ARE APPLICABLE.
-11-
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO OPTIONAL
AND MANDATORY EXCHANGE RIGHTS, PURSUANT TO WHICH THESE SECURITIES WILL
BE EXCHANGED FOR PREFERRED STOCK OF MTEL LATIN AMERICA, INC. IN
ACCORDANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT AND MAY BE
REDEEMED AT THE OPTION OF MTEL PUERTO RICO UNDER CERTAIN
CIRCUMSTANCES."
The Preferred Shares shall not be assigned, transferred, pledged,
hypothecated or otherwise conveyed or encumbered by the Purchaser, except (i) to
Mtel LATAM or Mtel Puerto Rico or (ii) with the written consent of Mtel LATAM
and Mtel Puerto Rico.
4. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
5. Successors and Assigns. Neither the Purchaser's nor Mtel Puerto
----------------------
Rico's rights or obligations under this Agreement may be assigned, except for an
assignment by the Purchaser of its Preferred Shares and its rights and
obligations under this Agreement to an affiliate of the Purchaser that is
controlled by the general partner of the Purchaser; provided, however, that (i)
such affiliate is financially able to meet the obligations of the Purchaser
hereunder and under the Transaction Documents; and (ii) such affiliate's assets
are not "Plan Assets" as such term is defined in Title I of ERISA. Any
assignment in violation of the foregoing shall be null and void. Subject to the
preceding sentences of this Section 5, the provisions of this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
6. Collateral Agreements, Amendments and Waivers. This Agreement
------------------------------------- -------
(together with the documents delivered pursuant hereto) supersedes all prior
documents, understandings and agreements, oral or written, relating to this
transaction and, except for any confidentiality 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
-12-
<PAGE>
of this Agreement may be made only by an instrument in writing executed by all
of the parties to this Agreement.
7. Expenses. Each party shall pay all costs and expenses incurred
--------
by it in connection with the negotiation, execution and delivery of this
Agreement and the transactions contemplated hereby.
8. Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under present or future laws, then, if
possible, 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 illegality, 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.
9. 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 14) 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 Mtel Puerto Rico, 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
with a copy to:
-13-
<PAGE>
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:
Newbridge Latin America, L.P.
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Attention: Richard P. Schifter/James O'Brien
Telecopy: (817) 871-4010
with a copy to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attention: Neil M. Goodman
Telecopy: (202) 942-5999
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.
10. 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.
11. Law Governing. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to the principles of conflicts or choice of laws thereof.
-14-
<PAGE>
12. Further Assurances. Each party hereto or person subject hereto
------------------
shall do and perform or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby.
13. Headings. The headings of the sections and subsections of this
--------
Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
14. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of Mtel Puerto Rico shall have any liability for any
obligations of Mtel Puerto Rico under the Preferred Stock or for any claim based
on, in respect or by reason of, such obligations or their creation. The
Purchaser, by execution of this Agreement, waives and releases all such persons
from all such liabilities.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
MTEL PUERTO RICO, INC.
By: /s/ John E. Welsh
----------------------------
Name: John E. Welsh III
Title: Vice Chairman
NEWBRIDGE LATIN AMERICA, L.P.
By: LATAM GP, L.P.
By: LAF Advisors, L.L.C.
By: /s/ Richard P. Schifter
----------------------------
Name: Richard P. Schifter
Title:
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
1st day of August, 1996 by and between Mobile Telecommunication Technologies
Corp., a Delaware corporation (hereinafter referred to as the "Company"), and
John T. Stupka (hereinafter referred to as "Executive").
WHEREAS, the Company is desirous of retaining Executive as President and
Chief Executive Officer of the Company; and
WHEREAS, Executive is willing to serve the Company in such capacities on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by Executive and the Company, the
parties hereto agree as follows:
ARTICLE 1
EMPLOYMENT
1.1 Term of Employment. The Executive shall be employed by the Company as
------------------
President and Chief Executive Officer for a period of four years commencing as
of the date hereof and terminating on July 31, 2000, unless earlier terminated
as provided in this Agreement (the "Term"); provided, however, that commencing
on the first anniversary of the date of this Agreement and on each anniversary
date thereafter, the Term shall automatically be extended for an additional year
unless the Company or Executive shall have given written notice not later than
120 days preceding such anniversary date, that the Company or the Executive, as
the case may be, does not wish to have the Term so extended.
1.2 Duties of Executive. The Executive shall be employed on a full time
-------------------
basis to hold the office of President and Chief Executive Officer of the
Company, and shall perform such duties as are normally performed by the
president and chief executive officer of a publicly-traded corporation in the
telecommunications industry. The Executive hereby accepts such employment and
undertakes to use his best efforts to discharge his duties and responsibilities.
During the Term, the Executive shall devote his full business time to the
discharge of his duties and responsibilities under this Agreement.
1.3 Compensation. During the Term, the Executive shall be entitled to a
------------
base salary equal to $400,000 per year payable bi-weekly, subject to any future
increases authorized by the Compensation Committee of the Board of Directors of
the Company.
<PAGE>
In the event that the Compensation Committee of the Board of Directors fails to
authorize an annual increase in the Executive's base salary, the Executive shall
be entitled to a cost of living adjustment for such year as of the anniversary
date of this Agreement in an amount determined by multiplying Executive's then
annual base salary (inclusive of any previous increases and cost of living
adjustments pursuant to this Section 1.3) by the percentage annual increase from
the preceding anniversary date in the Bureau of Labor Statistics, U.S.
Department of Labor, 1982 Revised consumer Price Index (1967 = 100), it being
the intention of the parties hereto that the annual base salary of Executive
shall be increased (but at no time decreased) by a percentage equal to the
increase from the prior year in the aforementioned Bureau of Labor Statistics,
U.S. Department of Labor, 1982 Revised Consumer Price Index (1967 = 100).
1.4 Expense Reimbursements. The Company shall reimburse the Executive for
----------------------
business expenses reasonably incurred in connection with his employment in
accordance with the Company's reimbursement practice for executive officers upon
presentation of adequate documentation.
1.5 Benefits.
--------
a) The Executive shall be entitled to four weeks annual paid vacation in
accordance with the Company's vacation policy applicable to executive
personnel as in effect from time to time.
b) The Executive shall be eligible for bonuses from time to time in
accordance with the Company's Short-Term Management Incentive Plan and
Long-Term Management Incentive Plan (or any successor plans) as may be
established or granted by the Compensation Committee of the Board of
Directors of the Company.
c) The Executive shall be granted options to purchase 500,000 shares of
Common Stock of the Company pursuant to the 1990 Executive Incentive
Plan at an exercise price equal to $12.00 per share which shall vest
over a period of four years at the rate of 25% per year.
d) The Executive shall be awarded 62,500 shares of Restricted Stock
pursuant to the 1990 Executive Incentive Plan which shall vest over a
period of four years at the rate of 25% per year.
e) The Executive shall be entitled to receive all other employee benefits
and to participate in any employee benefit plans or programs as are
generally offered to or provided for executive officers of the Company
from time to time during the Term, including, without limitation, the
following: (i) Section 401(k) Plan; (ii) automobile allowance of
$1,200 per month, (iii) cellular telephone; (iv) initiation and
monthly dues for one club; (v) medical insurance for the Executive and
dependents and disability
2
<PAGE>
insurance for the Executive; and (vi) life insurance coverage for the
Executive in the amount of $1,000,000.
f) The Company will make available to the Executive an interest free loan
in the principal amount of $2 million in accordance with the terms of
the promissory note attached hereto as Exhibit A, the proceeds of
which shall be used by the Executive for the purchase of Mtel Common
Stock.
g) The Executive acknowledges and agrees that he will relocate his
primary residence to Jackson, Mississippi in order to perform his
duties and responsibilities as President and Chief Executive Officer
of the Company, and the Company agrees to reimburse Executive for
customary relocation expenses in accordance with the Company's
relocation policy, which shall be grossed up for all applicable income
taxes. In addition to the above, the Company will provide Executive a
temporary living allowance in the amount of $40,000.
1.6 Disability of Executive. The Company has secured (or will secure, as
-----------------------
soon as practicable after the date hereof) disability income insurance for the
benefit of Executive such that, should Executive become totally disabled during
the Term, and, by reason of such total disability be unable to perform his
duties and responsibilities pursuant to this Agreement for a period of three
consecutive months, the Executive will receive monthly disability income
payments through such disability income insurance program in the amount of
$6,000 per month, commencing at the end of said three month period and
continuing until the termination or discontinuance of such disability or the
period provided for in the insurance program, whichever is longer. The
Executive's compensation provided for in Section 1.3 shall continue until the
commencement of disability payments provided in this Section 1.6. If and to the
extent disability income payments are not payable to the Executive through such
disability income insurance program by reason of the amendment or termination
thereof, then the Company shall itself pay such disability income payments to
Executive.
ARTICLE II
COVENANTS OF EXECUTIVE
2.1 Confidentiality. The Executive recognizes the interest of the Company
---------------
and its subsidiaries in maintaining the confidential nature of their proprietary
and other business and commercial information. During the Executive's
employment with the Company and following termination thereof for any reason,
the Executive shall not (except as authorized in writing by the Board of
Directors of the Company) publish, disclose or use for his own benefit or for
the benefit of a business or entity other than the Company, its subsidiaries or
otherwise, any secret, confidential, proprietary or other information not
generally known to public which was acquired by the Executive during
3
<PAGE>
his employment relating to the Company's or any of its subsidiaries' businesses,
operations, customers, suppliers, products, employees, financial affairs, trade
or industrial practices, trade secrets, technology, know-how or intellectual
property. All records, files, data, documents and the like relating to
suppliers, customers, costs, prices, systems, methods, personnel, technology and
other materials relating to the Company or its subsidiaries shall be and remain
the sole property of the Company and such subsidiaries. Upon termination of the
Executive's employment hereunder, Executive shall not remove from the Company's
premises or retain any of the materials described in this Section 2.1, and all
such materials in the Executive's possession shall be returned promptly to the
Company.
2.2 Non-Competition. During the Executive's employment with the Company,
---------------
and for the two-year period following the termination of Executive's employment
with the Company for any reason, Executive shall not, without the prior written
consent of the Board of Directors of the Company, which consent may be withheld
at the sole discretion of such Board of Directors, engage or participate in,
assist or have an interest in, directly or indirectly, whether as an officer,
director, partner, owner, employee, consultant, agent or otherwise, the
operation, management or conduct of any business or enterprise that directly
competes in the same geographical area with any primary line of business in
which the Company or any of its subsidiaries is now engaged or hereafter
engages; provided, however, that nothing in this Section 2.2 shall prohibit the
Executive from acquiring or holding, for investment purposes, securities of any
corporation which may compete directly or indirectly with the Company.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 Termination for Cause. The Executive's employment with the Company
---------------------
and this Agreement may be terminated by the Company during the Term upon the
occurrence of one or more of the following events:
a) The Executive's death;
b) If the Executive shall become totally disabled (within the meaning of
Section 1.6 hereof) and begins to receive disability income payments
as provided in Section 1.6 hereof; or
c) For cause, which for purposes of this Agreement shall mean that the
Executive shall have committed:
(i) an act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Company;
4
<PAGE>
(ii) intentional wrongful damage to property of the Company or any of
its subsidiaries; or
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any of its
subsidiaries;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act, or failure to act, on the part of Executive
shall be deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company. If the Executive's
employment with the Company is terminated upon the occurrence of one or more of
the events specified in clauses (a), (b), or (c) of this Section 3.1, then the
Executive shall only be entitled to receive Executive's then unpaid base salary
prorated to the date of termination, and the Executive shall not be entitled to
any other compensation or benefits for any period after the date of termination,
except as provided in Section 1.6 of this Agreement.
3.2 Termination by Company. The Executive's employment with the Company
----------------------
and this Agreement may be terminated by the Company at any time during the Term
for any reason other than the occurrence of one or more of the events specified
in clauses (a), (b) or (c) of Section 3.1; provided that in the event of
termination for any reason other than the occurrence of one or more of the
events specified in clauses (a), (b) or (c) of Section 3.1, the Executive shall
be entitled to receive his base salary and automobile allowance for the
remainder of the Term, which shall be in full satisfaction of the Company's
obligations hereunder, and Executive shall not be entitled to any other
compensation or benefits during such period arising out of or in connection with
this Agreement or the Executive's employment with the Company. In addition, in
the event that Executive's employment with the Company and this Agreement are
terminated by the Company pursuant to this Section 3.2, the provisions of
Section 2.2 hereof will not be applicable to the Executive.
3.3 Termination by Executive. This Agreement may be terminated by
------------------------
Executive at any time subsequent to the twelfth month following a filing
pursuant to any federal or state law in connection with any tender offer for
shares of the Company (other than a tender offer by the Company) or upon the
signing of any agreement for the merger or consolidation of the Company with
another corporation or for the sale of all or substantially all of the assets of
the Company or upon the adoption of any resolution of reorganization or
dissolution of the Company by the stockholders or upon the occurrence of any
other event or series of events, which tender offer, merger, consolidation,
sale, reorganization, dissolution or other event or series of events, in the
opinion of the Board of Directors of the Company, will, or is likely to, if
carried out, result in a change of control of the Company, or if during any
period of two consecutive years, individuals who at the beginning of such period
constituted the directors of the Company cease for any reason to constitute a
majority thereof (unless the election, or the nomination for
5
<PAGE>
election by the Company's stockholders, of each director elected during any
such period was approved by the vote of at least two-thirds of the directors
then still in office who were directors of the Company at the beginning of any
such period). In the event this Agreement is terminated by Executive pursuant to
this Section 3.3, (a) the Executive shall be entitled to receive his
base salary and automobile allowance for the remainder of the Term which shall
be in full satisfaction of the Company's obligations hereunder, and the
Executive shall not be entitled to any other compensation or benefits arising
out of or in connection with this Agreement or the Executive's employment with
the Company; and (b) the provisions of Section 2.2 hereof will not be
applicable to the Executive.
ARTICLE IV
GENERAL PROVISIONS
4.1 Withholding of Taxes. The Company may withhold from any amounts
--------------------
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
4.2 Notice. For purposes of this Agreement, all communications including,
------
without limitation, notices, consents, requests or approvals provided for herein
shall be in writing and shall be deemed to have been duly given when delivered
or five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive office and to Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
4.3 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such
State.
4.4 Validity. If any provisions of this Agreement or the application of
--------
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
4.5 Entire Agreement. This Agreement supersedes any other agreement, oral
----------------
or written, between the parties with respect to the employment of Executive by
the Company, and contains all of the agreements and understandings between the
parties with respect to such employment. Any waiver or modification of any term
of this Agreement shall be effective only if it is signed in writing by both
parties.
6
<PAGE>
4.6 Successors and Binding Agreements.
---------------------------------
a) This Agreement shall be binding upon and inure to the benefit of the
Company and any Successor of or to the Company, but shall not
otherwise be assignable or delegatable by the Company. "Successor"
shall mean any successor in interest, including, without limitation,
any entity, individual or group of persons acquiring directly or
indirectly all or substantially all of the business or assets of the
Company whether by sale, merger, consolidation, reorganization or
otherwise.
b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributee and legatees.
c) The Company shall require any successor to agree (by agreement in form
and substance satisfactory to Executive) within thirty (30) days after
becoming a Successor to perform this Agreement to the same extent as
the original parties would be required if no succession had occurred.
d) This Agreement is personal in nature and neither of the parties shall,
without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder.
4.7 Captions. The captions in this Agreement are solely for convenience
--------
of reference and shall not be given any effect in the construction or
interpretation of the Agreement.
4.8 Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior to subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject mater hereof
have been made by either party which are not set forth expressly in this
Agreement.
4.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John N. Palmer
----------------------------
John N. Palmer
Chairman of the Board
/s/ John T. Stupka
-------------------------------
John T. Stupka
8
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
15/th/ day of August, 1996 by and between Mobile Telecommunication Technologies
Corp., a Delaware corporation (hereinafter referred to as the "Company"), and
Robert Kaiser (hereinafter referred to as "Executive").
WHEREAS, the Company is desirous of retaining the Executive as Senior Vice
President - Finance and Chief Financial Officer of the Company; and
WHEREAS, the Executive is willing to serve the Company in such capacities
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Executive and the Company,
the parties hereto agree as follows:
ARTICLE 1
EMPLOYMENT
1.1 Term of Employment. The Executive shall be employed by the Company as
------------------
Senior Vice President - Finance and Chief Financial Officer for a period of
three years commencing as of the date hereof (the "Effective Date") and
terminating on August 14, 1999, unless earlier terminated as provided in this
Agreement (the "Term"); provided, however, that commencing on the first
anniversary of the Effective Date and on each anniversary thereafter, the Term
shall automatically be extended for an additional year unless the Company or the
Executive shall have given written notice not later than 120 days preceding such
anniversary that the Company or the Executive, as the case may be, does not wish
to have the Term so extended.
1.2 Duties of Executive. The Executive shall be employed on a full time
-------------------
basis to hold the office of Senior Vice President - Finance and Chief Financial
Officer of the Company, and shall perform such duties as are normally performed
by a senior vice president - finance and chief financial officer of a publicly-
traded corporation in the telecommunications industry. The Executive hereby
accepts such employment and undertakes to use his best efforts to discharge his
duties and responsibilities. During the Term, the Executive shall devote his
full business time to the discharge of his duties and responsibilities under
this Agreement.
<PAGE>
1.3 Compensation. During the Term, the Executive shall be entitled to a
------------
base salary equal to $215,000 per year payable twice monthly, subject to any
future increases authorized by the Compensation Committee of the Board of
Directors of the Company. In the event that the Compensation Committee of the
Board of Directors fails to authorize an annual increase in the Executive's base
salary, the Executive shall be entitled to a cost of living adjustment for such
year as of the anniversary date of this Agreement in an amount determined by
multiplying Executive's then annual base salary (inclusive of any previous
increases and cost of living adjustments pursuant to this Section 1.3) by the
percentage annual increase from the preceding anniversary date in the Bureau of
Labor Statistics, U.S. Department of Labor, 1982 Revised consumer Price Index
(1967 = 100), it being the intention of the parties hereto that the annual base
salary of Executive shall be increased (but at no time decreased) by a
percentage equal to the increase from the prior year in the aforementioned
Bureau of Labor Statistics, U.S. Department of Labor, 1982 Revised Consumer
Price Index (1967 = 100).
1.4 Expense Reimbursements. The Company shall reimburse the Executive for
----------------------
business expenses reasonably incurred in connection with his employment in
accordance with the Company's reimbursement practice for executive officers upon
presentation of adequate documentation.
1.5 Benefits.
--------
a) The Executive shall be entitled to four weeks annual paid vacation in
accordance with the Company's vacation policy applicable to executive
personnel as in effect from time to time.
b) The Executive shall be eligible for bonuses from time to time in
accordance with the Company's Short-Term Management Incentive Plan and
Long-Term Management Incentive Plan (or any successor plans) as may be
established or granted by the Compensation Committee of the Board of
Directors of the Company.
c) The Executive shall be granted options to purchase 150,000 shares of
Common Stock of the Company pursuant to the 1990 Executive Incentive
Plan at an exercise price equal to $12.00 per share and vesting over a
period of four years at the rate of 25% per year.
d) The Executive shall be awarded 25,000 shares of Restricted Stock
pursuant to the 1990 Executive Incentive Plan which shall vest over a
period of four years at the rate of 25% per year.
e) The Executive shall be entitled to receive all other employee benefits
and to participate in any employee benefit plans or programs as are
generally offered to or provided for executive officers of the Company
from time to
2
<PAGE>
time during the Term, including, without limitation, the
following: (i) Section 401(k) Plan; (ii) automobile allowance of
$1,000 per month, (iii) cellular telephone; (iv) initiation and
monthly dues for one club; (v) immediate medical insurance for the
Executive and dependents and disability insurance for the Executive;
and (vi) immediate life insurance coverage for the executive in the
amount of $100,000.
f) As an inducement and in further consideration of the Executive
entering into this Agreement, the Company agrees to pay the Executive
a signing bonus in the amount of $100,000, which amount will be
payable in two equal installments of $50,000 each, the first such
installment payable on the date the Executive commences employment
with the Company and the second such installment payable on August 15,
1997, subject in the case of the second installment to a determination
by the Compensation Committee of the Board of Directors of the Company
that the Executive has satisfactorily performed his duties and
responsibilities pursuant to this Agreement.
g) The Executive acknowledges and agrees that he will relocate his
primary residence to Jackson, Mississippi in order to perform his
duties and responsibilities as Senior Vice President - Finance and
Chief Financial Officer of the Company, and the Company agrees to
reimburse Executive for customary relocation expenses in accordance
with the Company's relocation policy. The Company also agrees to
reimburse Executive for the difference, if any, between $410,000 and
the actual sales price of Executive's residence in Dallas, Texas,
provided that such reimbursement shall not exceed $25,000 and shall be
grossed up for all applicable taxes. In addition to the above, the
Company will pay for reasonable travel expenses between Dallas, Texas
and Jackson, Mississippi pending the sale of the Dallas residence.
1.6 Disability of Executive. The Company has secured (or will secure, as
-----------------------
soon as practicable after the date hereof) disability income insurance for the
benefit of Executive such that, should Executive become totally disabled during
the Term, and, by reason of such total disability be unable to perform his
duties and responsibilities pursuant to this Agreement for a period of three
consecutive months, the Executive will receive monthly disability income
payments through such disability income insurance program in the amount of
$6,000 per month, commencing at the end of said three month period and
continuing until the termination or discontinuance of such disability or the
period provided for in the insurance program, whichever is longer. The
Executive's compensation provided for in Section 1.3 shall continue until the
commencement of disability payments provided in this Section 1.6. If and to the
extent disability income payments are not payable to the Executive through such
disability income insurance program by reason of the amendment or termination
thereof, then the Company shall itself pay such disability income payments to
Executive. In the event the Executive
3
<PAGE>
becomes totally disabled within the meaning of this Section 1.6 prior to July
15, 1997, all payments due and owing to Executive pursuant to Section 1.5(f)
will be paid to the Executive by the Company.
ARTICLE II
COVENANTS OF EXECUTIVE
2.1 Confidentiality. The Executive recognizes the interest of the Company
---------------
and its subsidiaries in maintaining the confidential nature of their proprietary
and other business and commercial information. During the Executive's
employment with the Company and following termination thereof for any reason,
the Executive shall not (except as authorized in writing by the Board of
Directors of the Company) publish, disclose or use for his own benefit or for
the benefit of a business or entity other than the Company, its subsidiaries or
otherwise, any secret, confidential, proprietary or other information not
generally known to public which was acquired by the Executive during his
employment relating to the Company's or any of its subsidiaries' businesses,
operations, customers, suppliers, products, employees, financial affairs, trade
or industrial practices, trade secrets, technology, know-how or intellectual
property. All records, files, data, documents and the like relating to
suppliers, customers, costs, prices, systems, methods, personnel, technology and
other materials relating to the Company or its subsidiaries shall be and remain
the sole property of the Company and such subsidiaries. Upon termination of the
Executive's employment hereunder, Executive shall not remove from the Company's
premises or retain any of the materials described in this Section 2.1, and all
such materials in the Executive's possession shall be returned promptly to the
Company.
2.2 Non-Competition. During the Executive's employment with the Company,
---------------
and for the two-year period following the termination of Executive's employment
with the Company for any reason (subject to the provisions of Section 3.2)
Executive shall not, without the prior written consent of the Board of Directors
of the Company, which consent may be withheld at the sole discretion of such
Board of Directors, engage or participate in, assist or have an interest in,
directly or indirectly, whether as an officer, director, partner, owner,
employee, consultant, agent or otherwise, the operation, management or conduct
of any business or enterprise that directly competes in the same geographical
area with any primary line of business in which the Company or any of its
subsidiaries is now engaged or hereafter engages; provided, however, that
nothing in this Section 2.2 shall prohibit the Executive from acquiring or
holding, for investment purposes, securities of any corporation which may
compete directly or indirectly with the Company.
4
<PAGE>
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 Termination For Cause. This Agreement and the Executive's employment
---------------------
with the Company may be terminated by the Company during the Term upon the
occurrence of one or more of the following events:
a) The Executive's death;
b) If the Executive shall become totally disabled (within the meaning of
Section 1.6 hereof) and begins to receive disability income payments
as provided in Section 1.6 hereof; or
c) For cause, which for purposes of this Agreement shall mean that the
Executive shall have committed:
(i) an act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Company;
(ii) intentional wrongful damage to property of the Company or any of
its subsidiaries; or
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any of its
subsidiaries;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act, or failure to act, on the part of Executive
shall be deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company. If the Executive's
employment with the Company is terminated upon the occurrence of one or more of
the events specified in clauses (a), (b), or (c) of this Section 3.1, then the
Executive shall only be entitled to receive Executive's then unpaid base salary
prorated to the date of termination, and the Executive shall not be entitled to
any other compensation or benefits for any period after the date of termination,
except as provided in Section 1.6 of this Agreement.
3.2 Termination by Company. This Agreement and the Executive's employment
----------------------
with the Company may be terminated by the Company at any time during the
Term for any reason other than the occurrence of one or more of the
events specified in clauses (a), (b) or (c) of Section 3.1; provided that
in the event of termination for any reason other than the occurrence of
one or more of the events specified in clauses (a), (b) or (c) of Section
3.1, the Executive shall be
5
<PAGE>
entitled to receive his base salary and automobile allowance for the
remainder of the term and any payments due and owing to Executive
pursuant to Section 1.5(f) hereof shall be paid by the Company, which
shall be in full satisfaction of the Company's obligations hereunder, and
Executive shall not be entitled to any other compensation or benefits
during such period arising out of or in connection with this Agreement or
the Executive's employment with the Company. In addition, in the event
that this Agreement and the Executive's employment with the Company are
terminated by the Company pursuant to this Section 3.2, Section 2.2 of
this Agreement will not be applicable to the Executive.
ARTICLE IV
GENERAL PROVISIONS
4.1 Withholding of Taxes. The Company may withhold from any amounts
--------------------
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
4.2 Notice. For purposes of this Agreement, all communications including,
------
without limitation, notices, consents, requests or approvals provided for herein
shall be in writing and shall be deemed to have been duly given when delivered
or five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive office and to Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
4.3 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such
State.
4.4 Validity. If any provisions of this Agreement or the application of
--------
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
4.5 Entire Agreement. This Agreement supersedes any other agreement, oral
----------------
or written, between the parties with respect to the employment of Executive by
the Company, and contains all of the agreements and understandings between the
parties with respect to such employment. Any waiver or modification of any term
of this Agreement shall be effective only if it is signed in writing by both
parties.
6
<PAGE>
4.6 Successors and Binding Agreements.
---------------------------------
a) This Agreement shall be binding upon and inure to the benefit of the
Company and any Successor of or to the Company, but shall not
otherwise be assignable or delegatable by the Company. "Successor"
shall mean any successor in interest, including, without limitation,
any entity, individual or group of persons acquiring directly or
indirectly all or substantially all of the business or assets of the
Company whether by sale, merger, consolidation, reorganization or
otherwise.
b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributee and legatees.
c) The Company shall require any successor to agree (by agreement in form
and substance satisfactory to Executive) within thirty (30) days after
becoming a Successor to perform this Agreement to the same extent as
the original parties would be required if no succession had occurred.
d) This Agreement is personal in nature and neither of the parties shall,
without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder.
4.7 Captions. The captions in this Agreement are solely for convenience
--------
of reference and shall not be given any effect in the construction or
interpretation of the Agreement.
4.8 Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior to subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject mater hereof
have been made by either party which are not set forth expressly in this
Agreement.
4.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John N. Palmer
----------------------------
John N. Palmer
Chairman of the Board
/s/ Robert Kaiser
----------------------------
Robert Kaiser
8
<PAGE>
Exhibit 10.8
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement"), dated as of
_________________, by and between Mobile Telecommunication Technologies Corp., a
Delaware corporation (the "Company"), and _____________ (the "Grantee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1990 Executive Incentive Plan (the
"Plan") for the purpose of providing officers and key employees of the Company
and its subsidiaries the ability to acquire a proprietary interest in the
Company in order to attract and retain executive personnel; and
WHEREAS, on ____________, the Compensation Committee of the Board of
Directors of the Company (the "Committee") authorized the grant to Grantee
pursuant to the Plan and in consideration of the acceptance by Grantee of
employment with the Company of __________ shares of Common Stock, par value $.01
per share (the "Common Stock") on the terms and subject to the conditions and
restrictions set forth in this Agreement;
NOW, THEREFORE, in consideration of these premises and the covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Grantee agree as follows:
1. Issuance of Common Stock. The Common Stock covered by this Agreement shall
------------------------
be issued, fully paid and nonassessable as of _______________ and shall be
represented by a certificate(s) registered in the name of the Grantee and
bearing a legend referring to the restrictions hereinafter set forth.
2. Restrictions on Transfer of Common Stock. The Common Stock subject to this
----------------------------------------
Agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of by the Grantee, except to the Company,
until they have become nonforfeitable in accordance with Section 3 hereof;
provided, however, that the Grantee's interest in the Common Stock covered
-------- -------
by this Agreement may be transferred at any time by will or the laws of
descent and distribution. Any purported transfer, encumbrance or other
disposition of the Common Stock covered by this Agreement that is in
violation of this Section 2 shall be null and void, and the other party to
any such purported transaction shall not obtain any rights to or interest in
the shares of Common Stock covered by this Agreement. When and as permitted
by the
<PAGE>
Plan, the Company may waive the restrictions set forth in this Section 2 with
respect to all or any portion of the shares of Common Stock covered by this
Agreement.
3. Vesting of Common Stock.
-----------------------
a) The Common Stock covered by this Agreement shall become nonforfeitable,
subject to the Grantee's remaining in the continuous employ of the
Company or a subsidiary during such period, at the rate of 25% of the
shares of Common Stock covered hereby on each of the first, second, third
and fourth anniversaries of the date of this Agreement, such that as of
the fourth anniversary of the date of this Agreement all of the Common
Stock covered hereby shall be nonforfeitable.
b) Notwithstanding the provisions of Section 3(a) hereof, all of the Common
Stock covered by this Agreement shall immediately become nonforfeitable
(i) upon a filing pursuant to any federal or state law in connection with
any tender offer for shares of the Company (other than a tender offer by
the Company or a subsidiary) or upon the execution of any agreement for
the merger or consolidation of the Company with another corporation or
the sale of all or substantially all of the assets of the Company or upon
the adoption of any resolution or reorganization or dissolution of the
Company by its stockholders or upon the occurrence of any other event or
series of events having an effect similar to any of the foregoing, which
tender offer, merger, consolidation, sale, reorganization, dissolution or
other event or series of events, in the opinion of the Board of Directors
of the Company, will, or is likely to, if carried out, result in a change
in control of the Company, or if, during any period of two consecutive
years from and after the Effective Date, individuals who at the beginning
of such period constituted the members of the Board of Directors of the
Company cease for any reason to constitute a majority thereof (unless the
election, or the nomination for election by the Company's stockholders,
of each member of the Board of Directors of the Company elected during
such period was approved by a vote of at least two-thirds of the members
of the Board of Directors then still in office who were members of the
Board of Directors at the beginning of such period) or (ii) in the event
the Grantee's employment with the Company is terminated for any reason
other than (1) pursuant to Section 3.1 (c) of the Employment Agreement
between the Company and Grantee dated as of ______________ (the
"Employment Agreement"), or (2) as a result of the determination by the
Board of Directors of the Company that the Grantee has failed to
satisfactorily perform the duties and responsibilities required to be
performed by Grantee pursuant to the Employment Agreement, all of the
Common Stock covered by this Agreement shall immediately become
nonforfeitable.
4. Forfeiture of Common Stock. Subject to Section 3(b) hereof, those shares of
--------------------------
Common Stock covered by this Agreement that have not vested in accordance
with Section 3(a) hereof shall be forfeited if the Grantee ceases to be
employed by the Company or a subsidiary unless the Committee determines to
provide otherwise at the
2
<PAGE>
time of the cessation of the Grantee's employment. In the event of a
forfeiture, the certificate(s) representing the shares of Common Stock
covered by this Agreement shall be cancelled.
5. Dividend, Voting and Other Rights. Except as otherwise provided herein, from
---------------------------------
and after the date of this Agreement, the Grantee shall have all of the
rights of a stockholder with respect to the Common Stock covered by this
Agreement, including the right to vote the shares of Common Stock and receive
any dividends that may be paid thereon; provided, however, that any
-------- -------
additional shares of Common Stock or other securities that the Grantee may
become entitled to receive pursuant to a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, separation or
reorganization or any other change in the capital structure of the Company
shall be subject to the same restrictions as the shares of Common Stock
covered by this Agreement.
6. Retention of Stock Certificate(s) by Company. The certificate(s)
--------------------------------------------
representing the shares of Common Stock covered by this Agreement shall be
held in custody by the Company, together with a stock power endorsed in blank
by the Grantee with respect thereto, until those shares have become
nonforfeitable in accordance with Section 3(a) hereof.
7. Compliance with Law. Notwithstanding any other provision of this Agreement,
-------------------
the Company shall not be obligated to issue any restricted or nonrestricted
shares of Common Stock pursuant to this Agreement if the issuance thereof
would result in a violation of any such law.
8. Withholding Taxes. If the Company shall be required to withhold any federal,
-----------------
state, local or foreign tax in connection with the issuance or vesting of the
shares of Common Stock pursuant to this Agreement, the Grantee shall pay the
tax or make provisions that are satisfactory to the Company for the payment
thereof.
9. Right to Terminate Employment. No provision of this Agreement shall limit in
-----------------------------
any way whatsoever any right that the Company or a subsidiary may otherwise
have to terminate the employment of the Grantee at any time.
10.Relation to Other Benefits. Any economic or other benefit to the Grantee
--------------------------
under this agreement or the Plan shall not be taken into account in
determining any benefits to which the Grantee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained
by the Company or any subsidiary.
11.Amendments. This Agreement may be amended, but only in accordance with the
----------
Plan and only in a writing which is signed by each of the parties. Any
amendment to the Plan shall be deemed to be an amendment to this Agreement to
the extent that the amendment is applicable hereto; provided, however, that
-------- -------
no such amendment shall
3
<PAGE>
adversely affect the rights of the Grantee with respect to the shares of
Common Stock or other securities covered by this Agreement without the
Grantee's consent.
12.Severability. In the event that one or more of the provisions of this
------------
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable
from the other provisions hereof, and the remaining provisions hereof shall
continue to be valid and fully enforceable.
13.Governing Law. This Agreement is made under, and shall be construed in
-------------
accordance with, the laws of the State of Delaware.
This Agreement is executed by the Company as of the _____ day of
.
_____________________
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By:
--------------------------------
John N. Palmer
Chairman
The undersigned Grantee hereby acknowledges receipt of an executed
original of this Agreement and accepts the right to receive the shares of Common
Stock covered hereby, subject to the terms and conditions of the Plan and the
terms, restrictions and conditions hereinabove set forth.
------------------------------------
Grantee
Date:
------------------------------
4
<PAGE>
Exhibit 4.1
AMENDMENT NO. 2 (the "Amendment") dated as of
August 23, 1996 to the Credit, Security, Guaranty and
Pledge Agreement dated as of December 21, 1995, as amended
(the "Agreement"), among SKYTEL CORP., a Delaware
corporation ("SkyTel"), MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP., a Delaware corporation ("Mtel"), the
Subsidiaries of Mtel referred to therein, the lenders
referred to therein (the "Lenders"), THE CHASE MANHATTAN
BANK (formerly known as Chemical Bank), as administrative
agent for the Lenders (the "Administrative Agent"), CREDIT
LYONNAIS NEW YORK BRANCH, as documentation agent, and J.P.
MORGAN SECURITIES INC., as co-syndication agent.
INTRODUCTORY STATEMENT
----------------------
All capitalized terms not otherwise defined in this Amendment are used
herein as defined in the Agreement.
Mtel has entered into a Supplemental Indenture dated as of July 18, 1996
with Texas Commerce Bank National Association, as trustee, in order to amend
certain terms and provisions of the Senior Note Indenture. In connection with
such Supplemental Indenture, the Borrower has requested that the Agreement be
amended to modify certain provisions of the Agreement as hereinafter set forth.
In consideration of the mutual agreements contained herein and other good
and valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. Amendment to the Agreement. Subject to the provisions of
--------------------------
Section 3 hereof, the Agreement is hereby amended effective as of the Effective
Date (such term being used herein as defined in Section 3 hereof) as follows:
(A) The definition of "Credit Party" appearing in Article 1 of the
Agreement is hereby amended by adding the following proviso at the end thereof:
<PAGE>
"; provided, however, that for purposes of this Agreement and the other
-------- -------
Fundamental Documents, an Unrestricted Subsidiary shall not be a Credit
Party."
(B) The definition of "Guarantor" appearing in Article 1 of the Agreement
is hereby amended by adding the following proviso at the end thereof:
"; provided, however, that for purposes of this Agreement and the other
-------- -------
Fundamental Documents, an Unrestricted Subsidiary, whether or not listed on
Schedule 3 hereto, shall not be a Guarantor."
(C) The definition of "Senior Note Indenture" appearing in Article 1 of
the Agreement is hereby amended in its entirety to read as follows:
"'Senior Note Indenture' shall mean the Indenture dated as of December
---------------------
29, 1994 between Mtel and Texas Commerce Bank, National Association, as
Trustee (the "Trustee"), as amended by the Supplemental Indenture dated as
of July 18, 1996 between Mtel and the Trustee and as such Indenture may be
further amended from time to time."
(D) The definition of "Subsidiary" is hereby amended by adding the
following proviso at the end thereof:
";provided, however, that for purposes of this Agreement (other than the
-------- -------
definition of Unrestricted Subsidiary) and the other Fundamental Documents,
an Unrestricted Subsidiary shall not be a Subsidiary of any Credit Party."
(E) The following definition is hereby added to Article 1 of the Agreement
in the correct alphabetical sequence:
"'Unrestricted Subsidiary' shall mean, from and after the date of
-----------------------
designation referred to below, (i) any Foreign Subsidiary of a Credit
Party, (ii) Mtel Puerto Rico, Inc., and (iii) any other Subsidiary of a
Credit Party which Subsidiary's sole purpose shall be to act as a holding
company and/or to provide administrative services for Mtel's or any of its
Subsidiaries' operations in a foreign jurisdiction or Puerto Rico and/or to
act as a holding company for Mtel's or any of its Subsidiaries' Investments
in any Foreign Subsidiaries, provided, that in the case of
--------
-2-
<PAGE>
clause (i), clause (ii) or clause (iii) above, the applicable Subsidiary
has been designated by the Board of Directors of Mtel as an Unrestricted
Subsidiary pursuant to a resolution of the Board of Directors of Mtel set
forth in an officers' certificate and delivered to the Administrative
Agent, and provided, further, that at the time of such designation no
Default or Event of Default shall have occurred and then be continuing or
would result from such designation. Any such designation as an Unrestricted
Subsidiary shall be irrevocable. Each Subsidiary, if any, of an
Unrestricted Subsidiary shall automatically be deemed to also be an
Unrestricted Subsidiary."
(F) Section 2.2 of the Credit Agreement is hereby amended by adding the
following Section thereto:
"(e) The Borrower hereby agrees it shall not request that any Loan be
made if, after giving effect thereto, the sum of the aggregate Loans then
outstanding plus the then current L/C Exposure would exceed (i)
$123,000,000 from July 18, 1996 to the effective date of Amendment No. 2 to
this Agreement, (ii) $160,000,000 at any time from the effective date of
Amendment No. 2 to this Agreement through and including September 30, 1996
and (iii) $175,000,000 at any time after October 1, 1996 and until such
time that Mtel provides the Lenders with a revised business plan for Mtel
and its subsidiaries, which business plan has been approved by the Required
Lenders in their discretion."
(G) The first sentence of Section 2.7(e) of the Agreement is hereby
amended by inserting the phrase "or any equity interests of an Unrestricted
Subsidiary pursuant to Section 6.4(e)(vi) hereof" immediately after the phrase
"pursuant to Section 6.4(e)(i) hereof" appearing therein.
(H) The first sentence of Section 2.10(d) of the Agreement is hereby
amended by inserting the phrase "or any equity interests of an Unrestricted
Subsidiary pursuant to Section 6.4(e)(vi) hereof" immediately after the phrase
"pursuant to Section 6.4(e)(i) hereof" appearing therein.
(I) Section 5.1(o) of the Agreement is hereby amended by inserting the
words ", any Unrestricted Subsidiary" after the phrase "any Subsidiary of a
Credit Party" appearing therein.
-3-
<PAGE>
(J) Section 5.21(a) of the Agreement is hereby amended in its entirety to
read as follows:
"(a) (i) On or before July 31, 1996, sell or otherwise dispose of all
the equity interests in Mercury Paging Limited owned by Mtel or any of its
Affiliates, in a transaction which results in the receipt by the Credit
Parties of Net Cash Proceeds of at least $20,000,000 and otherwise complies
with the provisions of Section 6.4(e) hereof and (ii) on or before
September 30, 1996, sell or otherwise dispose of equity interests in Mtel
Latin America, Inc. (or its subsidiaries) in a transaction which results in
Net Cash Proceeds of at least $25,000,000 and otherwise complies with the
provisions of Section 6.4(e) hereof."
(K) Section 5.21(b) of the Agreement is hereby amended by deleting the
words "the receipt by the Credit Parties of" appearing therein.
(L) Article 5 of the Agreement is hereby amended by adding the following
new Section:
"SECTION 5.22. Required Repayment of Intercompany Loans and Advances.
-----------------------------------------------------
Upon the consummation of the sale or other disposition of the equity
interests in Mtel Latin America, Inc. as required by Section 5.21(a), all
outstanding intercompany loans and advances made to Mtel Latin America,
Inc. by any Credit Party after January 1, 1996 shall be repaid in full."
(M) Section 6.2(f) of the Agreement is hereby amended by adding the phrase
"or Section 6.5(g)" immediately after the phrase "Section 6.5(d)" appearing
therein.
(N) Section 6.2(g) of the Agreement is hereby amended by adding the
following to the end thereof:
"provided, that any such Guaranty does not relate in any manner whatsoever
--------
to any Unrestricted Subsidiary."
(O) Section 6.4(e) of the Agreement is hereby amended by adding the
following new clause (vi) immediately after clause (v) appearing therein:
-4-
<PAGE>
", or (vi) equity interests in Unrestricted Subsidiaries (including,
without limitation, Mtel Latin America, Inc. or Mtel Asia, at any time
after such entity has been designated as an Unrestricted Subsidiary)
provided that the proceeds of any such sale or disposition received by a
--------
Credit Party or a Subsidiary of a Credit Party are used for capital
expenditures, working capital and other general corporate purposes of
Mtel's Subsidiaries in the United States within 265 days after receipt
thereof or are applied as a mandatory prepayment of outstanding Loans (and
the Total Commitment shall be permanently reduced by an amount equal to
such mandatory prepayment);"
(P) Section 6.4 of the Agreement is hereby amended by adding the following
new text at the end thereof:
"It is hereby agreed that this Section 6.4 shall not prohibit the
issuance of any new equity securities by any Unrestricted Subsidiary."
(Q) Section 6.5(c) of the Agreement is hereby amended by inserting the
words "Unrestricted Subsidiaries," immediately preceding the words "Joint
Venture Subsidiaries" appearing in the parenthetical phrase in such Section.
(R) Clause (iii) of Section 6.5(d) is hereby amended by inserting the
words "and clause (g) of this Section 6.5" immediately preceding the
parenthetical phrase appearing therein.
(S) Section 6.5(e) of the Agreement is hereby amended by adding the
following proviso at the end thereof:
"provided, that any such Investment is not in or to an Unrestricted
--------
Subsidiary; and"
(T) Section 6.5 of the Agreement is hereby amended by adding the following
new clause (g) thereto:
"(g) Investments of a Credit Party in an Unrestricted Subsidiary
which Investments were made in compliance with the terms of this Agreement
at a time after December 21, 1995 but prior to the designation of the
applicable entity as an Unrestricted Subsidiary by the Board of Directors
of Mtel provided, that the aggregate amount of all Investments permitted
pursuant to this clause (g) or clause (d) of this Section 6.5 (net of cash
proceeds from the disposition of such
-5-
<PAGE>
Investments and reductions of the amount of such Investments resulting from
the repayment of loans or advances and termination of Guaranties) shall not
exceed $25,000,000 in the aggregate on a consolidated basis; and provided,
--------
further, that this subsection (g) shall in no way be construed as
-------
permitting any Investment by a Credit Party or any Subsidiary of a Credit
Party in any Unrestricted Subsidiary after it is so designated by the Board
of Directors of Mtel."
(U) Section 6.6(i) of the Agreement is hereby amended by inserting the
words ", an Unrestricted Subsidiary" immediately after the words "Foreign
Subsidiary" appearing therein.
(V) Section 6.25 of the Agreement is hereby amended by inserting the words
"or an Unrestricted Subsidiary" immediately after the words "Foreign Subsidiary"
appearing therein.
(W) Section 6.30 of the Agreement is hereby amended by adding the
following new paragraph (c) thereto:
"(c) Permit any Unrestricted Subsidiary to conduct any operations
within the United States of America (excluding Puerto Rico), other than
administrative services for Mtel's or any of its Subsidiaries' or
Unrestricted Subsidiaries' or any Investment's, Joint Venture's or Joint
Venture Subsidiary's operations in a foreign jurisdiction or Puerto Rico."
(X) Paragraph (c) of Article 7 of the Agreement is hereby amended by
inserting the phrase ", Section 5.22" immediately after the phrase "Section
5.21" appearing therein.
SECTION 2. Confirmation and Authorization by the Lenders. Each of the
---------------------------------------------
Lenders hereby (i) confirms that upon the consummation of the sale or other
disposition of the equity interests in Mtel Latin America, Inc. as required by
Section 5.21(a) or Mtel Asia as required by Section 5.21(b) or upon an entity
becoming an Unrestricted Subsidiary, Mtel Latin America, Inc., Mtel Asia or such
Unrestricted Subsidiary (as applicable) shall automatically be released from all
of its obligations under and pursuant to the Agreement and the other Fundamental
Documents and its assets shall be automatically released from the lien pursuant
to the Fundamental Documents and (ii) authorizes the Agents to execute any and
all documents or other instruments as may be necessary or appropriate to
evidence such release.
-6-
<PAGE>
SECTION 3. Conditions to Effectiveness. The effectiveness of this
---------------------------
Amendment is subject to the satisfaction in full of the following conditions
precedent (the first date on which all such conditions have been satisfied being
herein referred to as the "Effective Date"):
(A) the Administrative Agent shall have received executed counterparts of
this Amendment, which, when taken together, bear the signatures of the Credit
Parties and those Lenders required by Section 13.9 of the Agreement;
(B) The Administrative Agent shall have received a fee on behalf of each
Lender (including the Administrative Agent) who returns an executed counterpart
of this Amendment to the Administrative Agent by 3:00 p.m. New York City time on
August 23, 1996, which fee shall be in an amount equal to 1/4 of 1% of such
Lender's Commitment under the Agreement; and
(C) all legal matters in connection with this Amendment shall be reasonably
satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agents.
SECTION 4. Representations and Warranties. The Credit Parties hereby
------------------------------
represent and warrant to the Lenders that:
(A) On the Effective Date, the aggregate amount of outstanding
intercompany loans and advances made after January 1, 1996 to Mtel Latin
America, Inc. by Credit Parties which will not be Unrestricted Subsidiaries is
approximately $8,000,000;
(B) the representations and warranties contained in the Agreement and in
the other Fundamental Documents are true and correct in all material respects on
and as of the date hereof as if such representations and warranties had been
made on and as of the date hereof (except to the extent such representations and
warranties expressly relate to an earlier date); and
(C) the Credit Parties are in compliance with all the terms and provisions
set forth in the Agreement and the other Fundamental Documents and no Default or
Event of Default has occurred or is continuing under the Agreement.
SECTION 5. Full Force and Effect.
---------------------
Except as expressly set forth herein, this Amendment does not constitute a
waiver or modification of any provision of the Agreement or a waiver of any
Default or Event of Default under the Agreement, in either case whether or not
known to the
-7-
<PAGE>
Agents. Except as expressly amended hereby, the Agreement shall continue in
full force and effect in accordance with the provisions thereof on the date
hereof. As used in the Agreement, the terms "Credit Agreement", "this
Agreement", "herein", "hereafter", "hereto", "hereof", and words of similar
import, shall, unless the context otherwise requires, mean the Agreement as
amended by this Amendment. References to the terms "Agreement" or "Credit
Agreement" appearing in the Exhibits or Schedules to the Agreement, shall,
unless the context otherwise requires, mean the Agreement as amended by this
Amendment.
SECTION 6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW
YORK.
SECTION 7. Counterparts. This Amendment may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
SECTION 8. Expenses. The Borrower agrees to pay all reasonable out-of-
--------
pocket expenses incurred by the Agents in connection with the preparation,
execution and delivery of this Amendment and any other documentation
contemplated hereby, including, but not limited to, the reasonable fees and
disbursements of counsel for the Agents.
SECTION 9. Headings. The headings of this Amendment are for the purposes
--------
of reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date and year
first written above.
BORROWER:
SKYTEL CORP.
By /s/ John E. Welsh
---------------------------------------
Name: John E. Welsh, III
Title: Vice Chairman & Acting Chief
Financial Officer
-8-
<PAGE>
GUARANTORS:
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
MTEL PAGING, INC.
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS, INC.
By /s/ John E. Welsh
---------------------------------------
Name: John E. Welsh, III
Title: Vice Chairman & Acting Chief
Financial Officer
LENDERS:
THE CHASE MANHATTAN BANK,
individually and as
Executed by The Chase Administrative Agent
Manhattan Bank
in New York, New York
By /s/ Ann B. Kerns
--------------------------------------
Name: Ann B. Kerns
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By /s/ Mark A. Campellone
---------------------------------------
Name: Mark A. Campellone
Title: Vice President
-9-
<PAGE>
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Mark A. Campellone
---------------------------------------
Name: Mark A. Campellone
Title: Authorized Signature
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By /s/ Michael Y. Leder
---------------------------------------
Name: Michael Y. Leder
Title: VP
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Robert Osieski
---------------------------------------
Name: Robert Osieski
Title: VP
ABN AMRO BANK N.V.
By /s/ Steven Gutman
---------------------------------------
Name: Steven Gutman
Title: Authorized Signer
By /s/ William J. Fitzgerald
---------------------------------------
Name: William J.Fitzgerald
Title: Authorized Signer
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Shepard D. Rainie
---------------------------------------
Name: Shepard D. Rainie
Title: Director
-10-
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By /s/ Craig A. Korte
---------------------------------------
Name: Craig A. Korte
Title: Corporate Banking Officer
CIBC INC.
By /s/ Marisa J. Harney
---------------------------------------
Name: Marisa J. Harney
Title: Director, CIBC Wood Gundy
Securiites Corp., As Agent
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
---------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
-11-
