<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
InterCel, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
INTERCEL, INC. [INTERCEL LOGO]
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
April 22, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of InterCel, Inc. ("InterCel" or the "Company") to be held on
Wednesday, May 21, 1997 at 10:00 a.m. local time, at The Cotton Duck, 6101 20th
Avenue, Valley, Alabama 36854. As described in the enclosed Proxy Statement, at
the Annual Meeting the stockholders of InterCel will be asked: (i) to consider
and vote upon a proposed amendment to the terms of the Certificate of
Designations for the Series B Convertible Preferred Stock (the "Series B
Preferred Stock"), which amendment would extend the earliest possible conversion
date for the Series B Preferred Stock from June 28, 2000 (the fourth anniversary
of the issuance of the Series B Preferred Stock) to March 14, 2002; (ii) to
consider and vote upon a proposed amendment to the Restated Certificate of
Incorporation to change the Company's name to Powertel, Inc.; (iii) to consider
and vote upon a proposed amendment to the 1991 Stock Option Plan (the "Employee
Plan") to increase the number of shares of Common Stock reserved for issuance
thereunder by 1,000,000 shares from 2,000,000 shares to 3,000,000 shares; (iv)
to elect four directors to serve on the Company's Board of Directors, each for a
three-year term; (v) to ratify the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the year ending December 31,
1997; and (vi) to transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has approved the matters being submitted by the
Company for stockholder approval at the Annual Meeting and recommends that
stockholders vote: (i) FOR approval and adoption of the proposed amendment to
the Certificate of Designations for the Series B Preferred Stock; (ii) FOR
approval and adoption of the proposed amendment to the Restated Certificate of
Incorporation to change the Company's name to Powertel, Inc.; (iii) FOR approval
and adoption of the proposed amendment to the Employee Plan; (iv) FOR the
election of the four nominees of the Board of Directors as directors, each for a
three-year term; and (v) FOR ratification of the appointment of Arthur Andersen
LLP as independent public accountants of the Company for the year ending
December 31, 1997.
Included with the Proxy Statement is a copy of the Company's Annual Report
to Stockholders. We encourage you to read the Annual Report. It includes the
Company's audited financial statements for the year ended December 31, 1996 as
well as information on the Company's operations, markets, products and services.
We urge you to review carefully the enclosed materials and to return your
proxy promptly. Whether or not you plan to attend the Annual Meeting, please
sign and promptly return your proxy card in the enclosed postage paid envelope.
If you attend the meeting, you may vote in person if you wish, even though you
have previously returned your proxy.
Sincerely,
/s/ ALLEN E. SMITH
Allen E. Smith
Chief Executive Officer
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INTERCEL, INC.
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
---------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
---------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of InterCel, Inc. ("InterCel" or the "Company") will be held on
Wednesday, May 21, 1997 at 10:00 a.m. local time, at The Cotton Duck, 6101 20th
Avenue, Valley, Alabama 36854, for the following purposes:
1. To consider and vote upon a proposed amendment to the terms of the
Certificate of Designations for the Series B Convertible Preferred Stock,
which amendment would extend the earliest possible conversion date for the
Series B Convertible Preferred Stock from June 28, 2000 (the fourth
anniversary of the issuance of the Series B Convertible Preferred Stock) to
March 14, 2002 (Proposal 1);
2. To consider and vote upon a proposed amendment to the Restated
Certificate of Incorporation to change the Company's name to Powertel, Inc.
(Proposal 2);
3. To consider and vote upon a proposed amendment to the 1991 Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 1,000,000 shares from 2,000,000 shares to 3,000,000
shares (Proposal 3);
4. To elect four directors to serve on the Company's Board of
Directors, each for a three-year term (Proposal 4);
5. To ratify the appointment by the Board of Directors of the firm of
Arthur Andersen LLP as independent public accountants of the Company for
the year ending December 31, 1997 (Proposal 5); and
6. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Pursuant to the Restated Bylaws, the Board of Directors of the Company has
fixed the close of business on Thursday, April 10, 1997 as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. Only record holders of the Common Stock of the Company at the
close of business on that date are entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
/s/ ALLEN E. SMITH
Allen E. Smith
Chief Executive Officer
West Point, Georgia
April 22, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. YOU MAY, IF YOU
WISH, REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
<PAGE> 4
TABLE OF CONTENTS
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SUMMARY..................................................... 2
INTRODUCTION................................................ 5
ANNUAL MEETING.............................................. 5
Outstanding Shares and Voting Rights...................... 5
Record Date............................................ 5
Quorum................................................. 5
Voting Rights and Related Matters...................... 5
Dissenters' Rights..................................... 6
Proxies................................................... 6
APPROVAL OF THE PROPOSED AMENDMENT TO THE TERMS OF THE
SERIES B PREFERRED STOCK.................................. 7
Text of Amendment......................................... 7
Reasons for the Proposed Amendment........................ 7
Potential Conflicts of Interest; Interests of Certain
Persons................................................ 7
Recommendation of the Board; Factors and Conclusions of
the Board Involved in its Determination................ 8
Required Vote and Related Matters......................... 8
APPROVAL OF THE PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION.............................. 9
Text of Amendment......................................... 9
Reasons for the Proposed Amendment........................ 9
Required Vote and Related Matters......................... 9
APPROVAL OF THE PROPOSED AMENDMENT TO THE EMPLOYEE PLAN..... 10
Description of the Employee Plan.......................... 10
Plan Benefits............................................. 13
Federal Income Tax Consequences of the Employee Plan...... 13
Required Vote and Related Matters......................... 15
ELECTION OF DIRECTORS....................................... 16
Information as to Nominees, Other Directors and Executive
Officers............................................... 16
Director Nominees......................................... 17
Other Directors and Executive Officers.................... 18
Committees of the Board of Directors and Nominations by
Stockholders........................................... 20
EXECUTIVE COMPENSATION...................................... 21
Option Grants............................................. 22
Option Exercises and Holdings............................. 22
Benefit Plans............................................. 22
Restricted Stock Plan.................................. 22
Employee Plan.......................................... 23
401(k) Plan............................................ 23
Pension Plans.......................................... 23
Compensation of the Company's Directors................... 24
Director Fees and Related Matters...................... 24
Nonemployee Stock Option Plan.......................... 24
Compensation Committee Interlocks and Insider
Participation.......................................... 24
Compensation/Stock Option Committee Report on Executive
Compensation........................................... 25
Base Salary............................................ 25
Management Incentive Compensation Plan................. 25
Long-term Incentive Compensation....................... 26
</TABLE>
i
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<TABLE>
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Other.................................................. 26
1996 Compensation of Chief Executive Officer........... 26
Pay Deductibility Limit................................ 27
Comparative Company Performance........................... 27
Certain Relationships and Related Transactions............ 28
ITC Holding............................................ 28
The Powertel Combination............................... 29
Loan from Powertel..................................... 29
Other Transactions..................................... 29
Compliance with Section 16(a) of the Exchange Act......... 30
BENEFICIAL OWNERSHIP OF CAPITAL STOCK....................... 31
RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS........................................ 33
Required Vote and Related Matters......................... 33
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS................ 33
VOTING PROCEDURES........................................... 33
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........... 34
AVAILABLE INFORMATION....................................... 34
OTHER MATTERS............................................... 34
</TABLE>
APPENDIX
Appendix A Amended and Restated 1991 Stock Option Plan
ii
<PAGE> 6
INTERCEL, INC.
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
---------------------------------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
---------------------------------------------
This Proxy Statement is being furnished to the stockholders of InterCel,
Inc., a Delaware corporation ("InterCel" or the "Company"), in connection with
the solicitation of proxies by the Board of Directors of InterCel (the "Board of
Directors" or the "Board") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") of InterCel to be held at 10:00 a.m. local time, on Wednesday,
May 21, 1997, at The Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854, and
at any adjournments thereof. This Proxy Statement and the accompanying form of
proxy are first being mailed to the stockholders of the Company on or about
April 24, 1997.
At the Annual Meeting, stockholders will be asked: (i) to consider and vote
upon a proposed amendment to the terms of the Certificate of Designations for
the Series B Convertible Preferred Stock (the "Series B Preferred Stock"), which
amendment would extend the earliest possible conversion date for the Series B
Preferred Stock from June 28, 2000 (the fourth anniversary of the issuance of
the Series B Preferred Stock) to March 14, 2002; (ii) to consider and vote upon
a proposed amendment to the Restated Certificate of Incorporation to change the
Company's name to Powertel, Inc.; (iii) to consider and vote upon a proposed
amendment to the 1991 Stock Option Plan (the "Employee Plan") to increase the
number of shares of common stock, par value $0.01 per share (the "Common
Stock"), reserved for issuance thereunder by 1,000,000 shares from 2,000,000
shares to 3,000,000 shares; (iv) to elect four directors to serve on the
Company's Board of Directors, each for a three-year term; (v) to ratify the
appointment of Arthur Andersen LLP as independent public accountants of the
Company for the year ending December 31, 1997; and (vi) to transact such other
business as may properly come before the Annual Meeting or any adjournments
thereof.
---------------------
IN DETERMINING WHETHER TO APPROVE THE PROPOSALS SET FORTH IN THIS PROXY
STATEMENT, STOCKHOLDERS SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION
INCLUDED IN THIS PROXY STATEMENT, INCLUDING THE APPENDIX ATTACHED HERETO.
---------------------
THE DATE OF THIS PROXY STATEMENT IS APRIL 22, 1997.
<PAGE> 7
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement and/or the Appendix attached hereto. Reference is made to, and this
Summary is qualified in its entirety by, the more detailed information contained
in this Proxy Statement and the Appendix. Stockholders are urged to review
carefully the entire Proxy Statement, including the Appendix attached hereto and
the documents incorporated by reference herein.
Date, Time, Place of
Meeting and Matters to be
Presented for Action..... The Annual Meeting of Stockholders of InterCel will
be held on Wednesday, May 21, 1997 at 10:00 a.m.
local time, at The Cotton Duck, 6101 20th Avenue,
Valley, Alabama 36854.
At the Annual Meeting, and at any adjournments
thereof, stockholders will be asked: (i) to
consider and vote upon a proposed amendment to
the terms of the Certificate of Designations for
the Series B Preferred Stock, which amendment
would extend the earliest possible conversion
date for the Series B Preferred Stock from June
28, 2000 (the fourth anniversary of the issuance
of the Series B Preferred Stock) to March 14,
2002 (Proposal 1, see page 7); (ii) to consider
and vote upon a proposed amendment to the
Restated Certificate of Incorporation to change
the Company's name to Powertel, Inc. (Proposal 2,
see page 9); (iii) to consider and vote upon a
proposed amendment to the Employee Plan to
increase the number of shares of Common Stock
reserved for issuance thereunder by 1,000,000
shares from 2,000,000 shares to 3,000,000 shares
(Proposal 3, see page 10); (iv) to elect four
directors to serve on the Company's Board of
Directors, each for a three-year term (Proposal
4, see page 16); (v) to ratify the appointment of
Arthur Andersen LLP as independent public
accountants of the Company for the year ending
December 31, 1997 (Proposal 5, see page 33); and
(vi) to transact such other business as may
properly come before the Annual Meeting or any
adjournments thereof. See "Introduction" and
"Annual Meeting."
Record Date................ Only stockholders of record at the close of
business on Thursday, April 10, 1997 (the "Record
Date") are entitled to notice of and to vote at
the Annual Meeting or any adjournment thereof.
See "Annual Meeting -- Outstanding Shares and
Voting Rights -- Record Date."
Quorum..................... The holders of a majority of the stock issued and
outstanding and entitled to vote, present in
person or represented by proxy, shall constitute
a quorum. See "Annual Meeting -- Outstanding
Shares and Voting Rights -- Quorum."
Voting Rights and Related
Matters.................. Each stockholder is entitled to one vote per share
with respect to all matters, including the
election of directors.
Approval of the amendment to the terms of the
Certificate of Designations for the Series B
Preferred Stock is required by the Delaware
General Corporation Law (the "Delaware Law") and
the Restated Certificate of Incorporation. The
affirmative vote of a (i) majority of the
outstanding shares of Common Stock entitled to
vote thereon and (ii) two-thirds of the
outstanding shares of Series B
2
<PAGE> 8
Preferred Stock is required to approve the
amendment to the terms of the Certificate of
Designations for the Series B Preferred Stock.
At the close of business on March 31, 1997, SCANA
Communications, Inc. ("SCANA Communications"), a
wholly owned subsidiary of SCANA Corp. ("SCANA"),
beneficially owned (i) 4,494,892 shares of Common
Stock, representing approximately 16.7% of the
Common Stock outstanding on that date, and (ii)
100,000 shares of Series B Preferred Stock,
representing 100% of the Series B Preferred Stock
outstanding on that date. In addition, SCANA
Communications has entered into a stock purchase
agreement whereby SCANA Communications agreed to
purchase 50,000 shares of the Company's Series D
Convertible Preferred Stock, subject to the
satisfaction of certain closing conditions. See
"Approval of the Proposed Amendment to the Terms
of the Series B Preferred Stock (Proposal 1)."
The Series B Preferred Stock currently becomes
convertible into Common Stock on June 28, 2000,
which date will be changed to March 14, 2002 if
Proposal 1 is approved by the Company's
stockholders. If the sale of the Series D
Convertible Preferred Stock to SCANA is
consummated, the Series D Convertible Preferred
Stock will become convertible into Common Stock
on March 14, 2002. If SCANA Communications were
to convert all of its shares of Series B
Preferred Stock and Series D Convertible
Preferred Stock into Common Stock, based on the
number of shares of Common Stock outstanding on
March 31, 1997, SCANA Communications would
beneficially own an additional 15.9%, or
approximately 32.6%, of the Common Stock
outstanding on such date. In such event, SCANA
Communications would be the Company's single
largest stockholder and would possess the ability
to exert significant influence over the Company's
operations.
The affirmative vote of a majority of the
outstanding shares of Common Stock entitled to
vote thereon is required to approve the amendment
to the Restated Certificate of Incorporation to
change the Company's name to Powertel, Inc.
The affirmative vote of: (i) a majority of the
shares present, or represented, and entitled to
vote thereon is required to approve the amendment
to the Employee Plan; and (ii) a majority of the
total votes cast is required to ratify the
appointment of Arthur Andersen LLP as independent
public accountants of the Company for the year
ending December 31, 1997. Directors will be
elected by a plurality of the votes cast by the
shares entitled to vote. See "Annual Meeting --
Outstanding Shares and Voting Rights -- Voting
Rights and Related Matters."
Dissenters' Rights......... Stockholders have no dissenters' rights in
connection with the approval of the amendment to
the terms of the Certificate of Designations for
the Series B Preferred Stock or the amendment to
the Restated Certificate of Incorporation to
change the Company's name. See "Annual
Meeting -- Outstanding Shares and Voting
Rights -- Dissenters' Rights."
3
<PAGE> 9
Revocability of Proxies.... An InterCel stockholder giving a proxy in the form
accompanying this Proxy Statement has the power
to revoke the proxy prior to its exercise. A
proxy may be revoked by: (i) delivering a written
notice of revocation to the Assistant Secretary
of the Company prior to the Annual Meeting; (ii)
delivering to the Company a duly executed proxy
bearing a later date; or (iii) attending the
Annual Meeting and voting in person. See "Annual
Meeting -- Proxies."
Board Recommendations...... The Board has approved and recommends the approval
by the stockholders of: (i) the proposed
amendment to the Certificate of Designations for
the Series B Preferred Stock; (ii) the proposed
amendment to the Restated Certificate of
Incorporation to change the Company's name to
Powertel, Inc.; (iii) the proposed amendment to
the Employee Plan; (iv) the election of four
directors to serve on the Company's Board of
Directors; and (v) the ratification of the
appointment of Arthur Andersen LLP as the
Company's independent public accountants for the
year ending December 31, 1997.
4
<PAGE> 10
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of InterCel in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders to be held on Wednesday, May 21, 1997 at 10:00 a.m. local time, at
The Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854.
At the Annual Meeting, stockholders will be asked: (i) to consider and vote
upon a proposed amendment to the terms of the Certificate of Designations for
the Series B Preferred Stock, which amendment would extend the earliest possible
conversion date for the Series B Preferred Stock from June 28, 2000 (the fourth
anniversary of the issuance of the Series B Preferred Stock) to March 14, 2002
(Proposal 1); (ii) to consider and vote upon a proposed amendment to the
Restated Certificate of Incorporation to change the Company's name to Powertel,
Inc. (Proposal 2); (iii) to consider and vote upon a proposed amendment to the
Employee Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 1,000,000 shares from 2,000,000 shares to 3,000,000
shares (Proposal 3); (iv) to elect four directors to serve on the Company's
Board of Directors, each for a three-year term (Proposal 4); (v) to ratify the
appointment of Arthur Andersen LLP as independent public accountants of the
Company for the year ending December 31, 1997 (Proposal 5); and (vi) to transact
such other business as may properly come before the Annual Meeting or any
adjournments thereof.
Except for procedural matters incident to the conduct of the Annual
Meeting, the Company does not know of any matters other than those described in
the Notice of Annual Meeting that are to come before the Annual Meeting. If any
other matters are properly brought before the Annual Meeting, the persons named
in the accompanying proxy will vote the shares represented by such proxies on
such matters as determined by a majority of the Board of Directors.
ANNUAL MEETING
OUTSTANDING SHARES AND VOTING RIGHTS
Record Date. Only stockholders of record at the close of business on
Thursday, April 10, 1997 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. At the close of business on the Record Date,
the Company had 26,864,511 outstanding shares of Common Stock, held of record by
approximately 480 persons.
Quorum. The Restated Bylaws provide that the holders of a majority of the
stock issued and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum. Abstentions and broker
non-votes will be treated as shares that are present, or represented, and
entitled to vote for purposes of determining the presence of a quorum at the
Annual Meeting.
Voting Rights and Related Matters. Each stockholder is entitled to one
vote per share with respect to all matters, including the election of directors.
There is no cumulative voting of shares. Stockholders' votes will be tabulated
by the persons appointed by the Chairman of the Annual Meeting to act as
inspectors of election for the Annual Meeting.
Approval of the amendment to the terms of the Certificate of Designations
for the Series B Preferred Stock is required by the Delaware Law and the
Restated Certificate of Incorporation. The affirmative vote of (i) a majority of
the outstanding shares of Common Stock entitled to vote thereon and (ii)
two-thirds of the outstanding shares of the Series B Preferred Stock is required
to approve the amendment to the terms of the Certificate of Designations for the
Series B Preferred Stock.
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote thereon is required to approve the amendment to the
Restated Certificate of Incorporation to change the Company's name to Powertel,
Inc. The affirmative vote of: (i) a majority of the shares present, or
represented, and entitled to vote thereon is required to approve the amendment
to the Employee Plan; and (ii) a majority of the total votes cast is required to
ratify the appointment of Arthur Andersen LLP as independent public accountants
of the Company for the year ending December 31, 1997. Directors will be elected
by a plurality of
5
<PAGE> 11
the votes cast by the shares entitled to vote. Abstentions are considered shares
present and entitled to vote under the Delaware Law and, therefore, will have
the same effect as a negative vote with respect to the proposal to amend the
terms of the Series B Preferred Stock, to amend the Restated Certificate of
Incorporation to change the Company's name and to amend the Employee Plan.
Broker non-votes will have the same effect as a negative vote with respect to
the proposal to amend the terms of the Certificate of Designations for the
Series B Preferred Stock and to amend the Restated Certificate of Incorporation.
Dissenters' Rights. Stockholders are not entitled under Delaware Law to
dissenters' rights in connection with the approval of the amendment to the terms
of the Certificate of Designations for the Series B Preferred Stock or the
amendment to the Restated Certificate of Incorporation to change the Company's
name to Powertel, Inc.
PROXIES
The presence of a stockholder at the Annual Meeting will not automatically
revoke such stockholder's proxy. However, a stockholder giving a proxy in the
form accompanying this Proxy Statement has the power to revoke the proxy prior
to its exercise by: (i) delivering prior to the Annual Meeting a written notice
of revocation bearing a later date to Lorena G. Turner, Assistant Secretary,
InterCel, Inc., 1233 O.G. Skinner Drive, West Point, Georgia 31833; (ii)
delivering to the Company a duly executed proxy bearing a later date; or (iii)
attending the Annual Meeting and voting in person. The shares represented by
each properly executed proxy not subsequently revoked will be voted at the
Annual Meeting in accordance with the instructions contained therein. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED: (I) FOR PROPOSAL 1 TO APPROVE
AND ADOPT THE AMENDMENT TO THE TERMS OF THE CERTIFICATE OF DESIGNATIONS FOR THE
SERIES B PREFERRED STOCK; (II) FOR PROPOSAL 2 TO APPROVE AND ADOPT THE PROPOSED
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S
NAME TO POWERTEL, INC.; (III) FOR PROPOSAL 3 TO APPROVE AND ADOPT THE PROPOSED
AMENDMENT TO THE EMPLOYEE PLAN; (IV) FOR PROPOSAL 4 TO ELECT THE FOUR NOMINEES
OF THE BOARD OF DIRECTORS AS DIRECTORS, EACH FOR A THREE-YEAR TERM; AND (V) FOR
PROPOSAL 5 TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally or by telephone or
facsimile transmission by officers, directors and employees of the Company, who
will not be compensated specifically for such solicitation activities.
Arrangements also will be made with brokerage houses and other custodians,
nominees and fiduciaries for forwarding solicitation materials to the beneficial
owners of shares held of record by such persons, and the Company will reimburse
such persons for their reasonable expenses incurred in that connection.
HOLDERS OF SHARES OF COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE POSTAGE PAID
ENVELOPE THAT HAS BEEN PROVIDED.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
6
<PAGE> 12
APPROVAL OF THE PROPOSED AMENDMENT TO THE TERMS OF
THE SERIES B PREFERRED STOCK
(PROPOSAL 1)
The Company's Board of Directors has approved and recommends the adoption
by the stockholders of the following amendment to Section 7(a) of the
Certificate of Designations for the Series B Preferred Stock, which amendment
would extend the earliest possible conversion date for the Series B Preferred
Stock from June 28, 2000 (the fourth anniversary of the issuance of the Series B
Preferred Stock) to March 14, 2002.
TEXT OF AMENDMENT
The Certificate of Designations for the Series B Preferred Stock is hereby
amended by deleting Section 7(a) in its entirety and inserting in lieu thereof
the following:
"Section 7. Conversion. Holders of shares of Series B Preferred Stock
shall have the right to convert all or a portion of such shares into shares of
Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
(7), a holder of shares of Series B Preferred Stock shall have the right,
at his, her or its option, at any time after March 14, 2002, to convert
such shares, in whole or in part, into the number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to
the nearest 1/100th of a share) obtained by dividing the aggregate
liquidation preference of such shares by the Conversion Price and by
surrender of such shares so to be converted by the holder thereof, such
surrender to be made in the manner provided in paragraph (b) of this
Section (7); provided, however, that the right to convert shares called for
redemption pursuant to Section (5) shall terminate at the close of business
on the date fixed for such redemption, unless the Corporation shall default
in making prompt payment of the amount payable upon such redemption. Any
share of Series B Preferred Stock may be converted, at the request of its
holder, in part into Common Stock. If a part of a share of Series B
Preferred Stock is converted, then the Corporation will convert such share
into the requested shares of Common Stock (subject to paragraph (c) of this
Section (7)) and issue a fractional share of Series B Preferred Stock
evidencing the remaining interest of such holder."
REASONS FOR THE PROPOSED AMENDMENT
SCANA Communications, a telecommunications company located in Cayce, South
Carolina, is a wholly owned subsidiary of SCANA. In connection with the stock
purchase agreement dated March 14, 1997 between the Company and SCANA
Communications, pursuant to which SCANA Communications agreed to purchase 50,000
shares of Series D Convertible Preferred Stock, subject to certain closing
conditions, SCANA Communications requested, and the Board of Directors approved,
an amendment to Section 7(a) of the Certificate of Designations for the Series B
Preferred Stock to extend the earliest possible conversion date for the Series B
Preferred Stock from June 28, 2000 to March 14, 2002. The Board believes the
extension of the conversion date to be in the best interests of the stockholders
of the Company because it postpones the date upon which the Series B Preferred
Stock can be converted into Common Stock thereby delaying the date upon which
such Common Stock can be voted or sold.
POTENTIAL CONFLICTS OF INTEREST; INTERESTS OF CERTAIN PERSONS
At the close of business on March 31, 1997, SCANA Communications
beneficially owned (i) 4,494,892 shares of Common Stock, representing
approximately 16.7% of the Common Stock outstanding on that date, and (ii)
100,000 shares of Series B Preferred Stock, representing 100% of the Series B
Preferred Stock outstanding on that date. In addition, SCANA Communications has
entered into a stock purchase agreement whereby SCANA Communications agreed to
purchase 50,000 shares of the Company's Series D Convertible Preferred Stock,
subject to the satisfaction of certain closing conditions. The Series B
Preferred Stock currently becomes convertible into Common Stock on June 28,
2000, which date will be changed to March 14, 2002 if Proposal 1 is approved by
the Company's stockholders. If the sale of the Series D Convertible Preferred
Stock to SCANA Communications is consummated, the Series D Convertible Preferred
Stock will
7
<PAGE> 13
become convertible into Common Stock on March 14, 2002. If SCANA Communications
were to convert all of its shares of Series B Preferred Stock and Series D
Convertible Preferred Stock into Common Stock, based on the number of shares of
Common Stock outstanding on March 31, 1997, SCANA Communications would
beneficially own an additional 15.9%, or approximately 32.6%, of the Common
Stock outstanding on such date. In such event, SCANA Communications would be the
Company's single largest stockholder and would possess the ability to exert
significant influence over the Company's operations.
SCANA, the parent company of SCANA Communications, is headquartered in
Columbia, South Carolina and is a holding company whose principal subsidiary,
South Carolina Electric & Gas Co., provides retail electric and natural gas
services and public transportation services. The stock of SCANA is traded on the
New York, Boston, Chicago, Cincinnati, Pacific and Philadelphia Stock Exchanges.
Certain directors of the Company also serve in various capacities with SCANA.
Lawrence M. Gressette, Jr. is the Chairman of the Executive Committee of the
Board of Directors of SCANA, and William B. Timmerman is the Chairman, Chief
Executive Officer and President of SCANA. Mr. Timmerman is also the Chairman and
Chief Executive Officer of SCANA Communications. The Board of Directors was
aware of these relationships and considered them, among other factors, in
approving the amendment and making its recommendation to the stockholders.
RECOMMENDATION OF THE BOARD; FACTORS AND CONCLUSIONS OF THE BOARD INVOLVED IN
ITS DETERMINATION
The Board of Directors has approved the proposed amendment to the
Certificate of Designations for the Series B Preferred Stock and has determined
that the amendment is in the best interests of the Company and its stockholders
because it postpones the date upon which the Series B Preferred Stock can be
converted into Common Stock thereby delaying the date upon which such Common
Stock can be voted or sold. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSAL.
REQUIRED VOTE AND RELATED MATTERS
The affirmative vote of (i) a majority of the outstanding shares of Common
Stock entitled to vote thereon and (ii) two-thirds of the outstanding shares of
Series B Preferred Stock is required to approve the amendment to the Certificate
of Designations for the Series B Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
8
<PAGE> 14
APPROVAL OF THE PROPOSED AMENDMENT TO
THE RESTATED CERTIFICATE OF INCORPORATION
(PROPOSAL 2)
The Company's Board of Directors has approved and recommends the adoption
by the stockholders of the following amendment to Section 1 of the Restated
Certificate of Incorporation, which amendment would change the Company's name to
Powertel, Inc.
TEXT OF AMENDMENT
The Restated Certificate of Incorporation of the Corporation hereby is
amended by deleting Section 1 thereof in its entirety and inserting in lieu
thereof the following:
"1. NAME
The name of the corporation is Powertel, Inc. (the "Corporation")."
REASONS FOR THE PROPOSED AMENDMENT
The Company provides personal communications services ("PCS") in the
southeastern United States under the name "Powertel" and provides cellular
telephone service in contiguous portions of western Georgia and eastern Alabama
under the name "InterCel." The Company's current name is not used to any
meaningful extent in its PCS operations. The Board believes that the adoption of
the Powertel name will emphasize the Company's PCS business and marketing focus
in the southeastern United States. The Company will continue to market its
cellular telephone service in Georgia and Alabama under the name "InterCel."
The change of the Company's name will not affect in any way the validity of
currently outstanding stock certificates. Upon approval of the change of the
Company's name, the Company intends to apply for a change in its trading symbol
on the Nasdaq National Market System (the "Nasdaq Stock Market") to "PTEL."
Stockholders will not be required to surrender or exchange any stock
certificates currently held by them.
REQUIRED VOTE AND RELATED MATTERS
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote thereon is required to approve the amendment to the
Restated Certificate of Incorporation to change the Company's name to Powertel,
Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
9
<PAGE> 15
APPROVAL OF THE PROPOSED AMENDMENT TO THE EMPLOYEE PLAN
(PROPOSAL 3)
The Employee Plan was adopted by the Board of Directors on April 8, 1991
and approved by the stockholders of the Company at the 1991 annual meeting. The
Employee Plan was amended in 1992 to increase the number of shares available for
issuance thereunder from 400,000 shares to 800,000 shares of Common Stock and in
1994 to limit the maximum number of shares that may be granted to any employee
during the year. The Employee Plan was further amended in 1995 to increase the
number of shares available for issuance thereunder from 800,000 shares to
2,000,000 shares of Common Stock. As of March 31, 1997, there were approximately
640 employees of the Company and its subsidiaries who were eligible to
participate in the Employee Plan.
The Board of Directors has voted, subject to stockholder approval, to amend
the Employee Plan to increase the number of shares of Common Stock reserved for
issuance under the Employee Plan by 1,000,000 shares from 2,000,000 shares to
3,000,000 shares. The number of shares reserved for issuance is subject to
adjustment upon the occurrence of certain events as described below. See
"-- Description of the Employee Plan." In addition, if any option expires,
terminates or is terminated for any reason prior to exercise in full, the shares
of Common Stock that were subject to the unexercised portion of such option will
be available for future option grants.
The Board of Directors of the Company believes that stock options are
important to attract and to encourage the continued employment and service of
officers and other key employees by facilitating their purchase of a stock
interest in the Company. The purpose of the Employee Plan is to further the
growth and success of the Company by enabling selected employees of the Company
to acquire shares of stock of the Company, thereby increasing their personal
interest in such growth and success and to provide a means of rewarding
outstanding performance by such persons. As of March 31, 1997, no shares
remained available for future option grants under the Employee Plan. Approval of
the proposed amendment will increase the number of shares available for issuance
under the Employee Plan by 1,000,000 shares to a total of 3,000,000 shares,
which would have been equal to approximately 11.2% of the Company's outstanding
Common Stock at March 31, 1997.
The Board of Directors has concluded that it is advisable that the Company
and its stockholders continue to have the incentive of stock options available
as a means of attracting and retaining its officers and other key employees.
Officers and other key employees are continually being retained or moving into
positions where, in the judgment of the Board of Directors, an initial or
increased option will be a valuable incentive and will benefit stockholders.
The principal provisions of the Employee Plan are summarized below. This
summary does not, however, purport to be complete and is subject to, and
qualified in its entirety by, reference to the Amended and Restated 1991 Stock
Option Plan (incorporating the proposed amendment), a copy of which is attached
hereto as Appendix A and incorporated herein by reference.
DESCRIPTION OF THE EMPLOYEE PLAN
The Employee Plan provides for the grant of options that are intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), to any employee of the Company, except to
the extent that any such option is specifically designated at the time of grant
as not being an "incentive stock option" or to the extent that any such option
would exceed certain limitations with respect to the aggregate fair market value
of the Common Stock with respect to which the option is exercisable, as
described below.
The Employee Plan is administered by the Compensation/Stock Option
Committee of the Board of Directors (the "Compensation/Stock Option Committee")
pursuant to delegated authority. The Compensation/Stock Option Committee must at
all times consist of no fewer than two members of the Board of Directors. No
member of the Compensation/Stock Option Committee may be an officer or other
salaried employee of the Company, and each member of the Compensation/Stock
Option Committee must qualify in
10
<PAGE> 16
all respects as a "disinterested person" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subject to the
limitations set forth in the Employee Plan, the Compensation/Stock Option
Committee has the authority to determine to whom options will be granted, based
on management's analysis of the Company's performance and the employee's
performance and level of responsibility.
The option exercise price for an incentive stock option under the Employee
Plan may not be less than 100% of the fair market value of the Common Stock on
the date of grant of the option (or 110% in the case of an incentive stock
option granted to an optionee beneficially owning more than 10% of the
outstanding Common Stock). The option exercise price for a non-incentive stock
option under the Employee Plan may not be less than the par value of the Common
Stock. The maximum option term is 10 years (10 years and 30 days in the case of
an option which is not designated as an incentive stock option and five years in
the case of an incentive stock option granted to an optionee beneficially owning
more than 10% of the outstanding Common Stock). Options may be exercised at any
time after grant, except as otherwise provided in the particular option
agreement. There is also a $100,000 limit on the value of stock (determined at
the time of grant) covered by incentive stock options that first become
exercisable by an optionee in any calendar year. The maximum number of shares of
Common Stock subject to options that may be granted under the Employee Plan to
any employee is 200,000 shares in any calendar year, and no option may be
granted more than 10 years after the effective date of the Employee Plan.
Options are non-transferable other than by will or the laws of descent and
distribution.
The Compensation/Stock Option Committee determines the periods within which
options may be exercised. Options granted to date generally become exercisable
as to 50% two years after the date of grant, as to an additional 25% three years
after the date of grant and as to the remaining 25% four years after the date of
grant. The Compensation/Stock Option Committee also may include in each option
granted under the Employee Plan certain additional limitations on the
recipient's right to exercise the option. The Compensation/Stock Option
Committee may rescind, modify or waive any such limitation at any time after the
date of grant of such option so as to accelerate the time at which the option
may be exercised. Payment for shares purchased under the Employee Plan may be
made in cash or, if permitted by the particular option agreement, either by
exchanging shares of Common Stock of the Company with a fair market value equal
to the total option exercise price or a combination of cash and shares of Common
Stock.
If an employee's employment with the Company or its subsidiaries terminates
by reason of death or permanent and total disability, his or her options,
whether or not then exercisable, may be exercised within one year after such
death or disability, provided that the Compensation/Stock Option Committee may
provide in the option agreement for a later date (but not later than the date
the option would otherwise expire) and/or for the continuation of the
installment limitations on exercise. If an employee's employment terminates for
any reason other than death or disability, options held by such optionee shall
terminate and such optionee shall have no further right to purchase shares of
Common Stock pursuant to such options; provided, that in the event such
termination is by reason of the employee's retirement with the consent of the
Company or its subsidiaries in accordance with normal retirement policies, then
his or her options, whether or not then exercisable, may be exercised within
three months after the date of such retirement; and provided, further, that the
Compensation/Stock Option Committee has not otherwise provided in the option
agreement for a later date and/or for the continuation of the installment
limitations on exercise upon termination of employment.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of the conversion of any outstanding shares of preferred stock to shares of
Common Stock of the Company or by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Company, the number and kinds of shares for the purchase of which options may be
granted under the Employee Plan will be adjusted proportionately and accordingly
by the Company, and the number and kind of shares for which options are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the holder of
11
<PAGE> 17
the option immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment in outstanding
options shall not change the aggregate option price but shall include a
corresponding proportionate adjustment in the option price per share.
Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company or with one or more other
entities in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction approved by the Board that results in any person or entity owning
80% or more of the combined voting power of all classes of stock of the Company,
the Employee Plan and all options outstanding shall terminate, except to the
extent provision is made in writing in connection with such transaction for the
continuation of the Employee Plan and/or the assumption of the options
theretofore granted or for the substitution for such options of new options
covering the stock of a successor corporation or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares and the per
share exercise price. In the event of such termination, all outstanding options
shall be exercisable in full during such period immediately prior to the
occurrence of such termination as the Board of Directors in its discretion shall
determine.
The Employee Plan may be amended by the Board of Directors at any time.
However, the Company's stockholders must approve any amendment that would: (i)
change the requirements as to eligibility; (ii) increase the maximum number of
shares subject to the Employee Plan (except for certain permitted changes in
capitalization); (iii) materially increase the benefits under the Employee Plan;
or (iv) otherwise cause the Employee Plan to not comply with Rule 16b-3 under
the Exchange Act (or any successor rule or other regulatory requirements) or the
Code. The Board of Directors at any time may terminate or suspend the Employee
Plan. Unless previously terminated, the Employee Plan will terminate
automatically on April 8, 2001, the tenth anniversary of the date of adoption of
the Employee Plan by the Board of Directors. No termination, suspension or
amendment of the Employee Plan may, without the consent of the optionee to whom
an option has been granted, adversely affect the rights of the holder of the
option.
12
<PAGE> 18
PLAN BENEFITS
As of March 31, 1997, options to purchase 1,935,478 shares of Common Stock
were outstanding under the Employee Plan, and the Board of Directors had
approved the issuance of options to purchase 240,119 shares under the Employee
Plan subject to stockholder approval of Proposal 3. Based on the closing sale
price of the Common Stock on March 31, 1997 of $10.00, the aggregate market
value of the 1,935,478 shares currently reserved for issuance under the Employee
Plan as of March 31, 1997 was $19,354,780.
The table below provides certain information regarding stock options
granted to date under the Employee Plan to: (i) the Chief Executive Officer and
the other most highly compensated executive officers of the Company whose
combined salary and bonus exceeded $100,000 during the fiscal year ended
December 31, 1996; (ii) each nominee for election as a director; (iii) all
executive officers of the Company as a group; (iv) all non-employee directors as
a group; and (v) all employees of the Company as a group (including all officers
who are not executive officers).
EMPLOYEE PLAN BENEFITS(A)
<TABLE>
<CAPTION>
NAME AND POSITION(S) EXERCISE PRICE(B) NUMBER OF OPTIONS
- -------------------- ----------------- -----------------
<S> <C> <C>
Allen E. Smith.............................................. $10.36 225,477
President, Chief Executive Officer and Director
Fred G. Astor, Jr........................................... 9.96 146,536
Executive Vice President and Chief Financial Officer
Walter R. Pettiss........................................... 13.76 67,026
Executive Vice President -- PCS
Nicholas J. Jebbia.......................................... 13.76 52,280
Executive Vice President -- PCS
George R. Johnson........................................... 13.54 63,946
Executive Vice President -- PCS
O. Gene Gabbard............................................. -- --
Director
William H. Scott, III....................................... 4.56 40,000
Director and Secretary
William B. Timmerman........................................ -- --
Director
Donald W. Weber............................................. -- --
Director
Executive Officer Group, including the 5 executive officers
named above (8 persons)................................... 12.12 694,202
Non-Employee Director Group (8 persons)..................... 5.30 61,100
Non-Executive Officer Employee Group (approximately
550 persons).............................................. 14.45 1,484,817
</TABLE>
- ---------------
(a) All option grants were made at 100% of the fair market value of the Common
Stock on the date of grant. Options have a five year term and have become or
will become exercisable as follows: (i) 50% of the options become
exercisable on the second anniversary of the date of grant; (ii) an
additional 25% of the options become exercisable on the third anniversary of
the date of grant; and (iii) the remaining 25% of the options become
exercisable on the fourth anniversary of the date of grant.
(b) Represents the weighted average exercise price of the options granted.
FEDERAL INCOME TAX CONSEQUENCES OF THE EMPLOYEE PLAN
The grant of an option is not a taxable event for the optionee or the
Company. With respect to "incentive stock options," an optionee will not
recognize taxable income upon grant or exercise of an incentive option, and any
gain realized upon a disposition of shares received pursuant to the exercise of
an incentive option will be taxed as long-term capital gain if the optionee
holds the shares for at least two years after the date of grant and for one year
after the date of exercise. However, the excess of the fair market value of the
shares subject to an incentive option on the exercise date over the option
exercise price will be included in the optionee's alternative minimum taxable
income in the year of exercise (except that, if the optionee is subject to
certain
13
<PAGE> 19
securities law restrictions, the determination of the amount included in the
alternative minimum taxable income may be delayed, unless the optionee elects
within 30 days following exercise to have income determined without regard to
such restrictions) for purposes of the alternative minimum tax. This excess
increases the optionee's basis in the shares for purposes of the alternative
minimum tax but not for purposes of the regular income tax. An optionee may be
entitled to a credit against regular tax liability in future years for minimum
taxes paid with respect to the exercise of incentive options (e.g., for a year
in which the shares are sold at a gain). Generally, the Company and its
subsidiaries will not be entitled to any business expense deduction with respect
to the grant or exercise of an incentive option, except as discussed below.
For the exercise of an incentive option to qualify for the foregoing tax
treatment, the optionee generally must be an employee of the Company or a
subsidiary from the date the option is granted through a date within three
months before the date of exercise. In the case of an optionee who is disabled,
this three-month period is extended to one year. In the case of an employee who
dies, the three-month period and the holding period for shares received pursuant
to the exercise of the option are waived.
If all of the requirements for incentive option treatment are met except
for the special holding period rules set forth above, the optionee will
recognize as ordinary income upon the disposition of the shares an amount equal
to the excess of the fair market value of the shares at the time the option was
exercised over the option exercise price. However, if the optionee was subject
to certain restrictions under the securities laws at the time the option was
exercised, the measurement date may be delayed, unless the optionee has made a
special tax election within 30 days after the date of exercise to have taxable
income determined without regard to such restrictions. The balance of the
realized gain, if any, will be long- or short-term capital gain, depending upon
whether or not the shares were sold more than one year after the option was
exercised. If the optionee sells the shares prior to the satisfaction of the
holding period rules but at a price below the fair market value of the shares at
the time the option was exercised (or other applicable measurement date), the
amount of ordinary income (and the amount included in alternative minimum
taxable income, if the sale occurs during the same year as the option was
exercised) will be limited to the excess of the amount realized on the sale over
the option exercise price. If the Company complies with applicable reporting (if
any) and other requirements, it will be allowed a business expense deduction to
the extent the optionee recognizes ordinary income.
If, pursuant to an option agreement, an optionee exercises an incentive
option by tendering shares of Common Stock with a fair market value equal to
part or all of the option exercise price, the exchange of shares will be treated
as a non-taxable exchange (except that this treatment would not apply if the
optionee had acquired the shares being transferred pursuant to the exercise of
an incentive option and had not satisfied the special holding period
requirements summarized above). If the exercise is treated as a tax free
exchange, the optionee would have no taxable income from the exchange and
exercise (other than minimum taxable income as discussed above) and the tax
basis of the shares exchanged would be treated as the substituted basis for the
shares received. These rules would not apply if the optionee used shares
received pursuant to the exercise of an incentive option (or another statutory
option) as to which the optionee had not satisfied the applicable holding period
requirement. In that case, the exchange would be treated as a taxable
disqualifying disposition of the exchanged shares, with the result that the
excess of the fair market value of the shares tendered over the optionee's basis
in the shares would be taxable.
Upon exercising a non-qualifying option, an optionee will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise (except
that, if the optionee is subject to certain restrictions imposed by the
securities laws, the measurement date may be delayed, unless the optionee makes
a special tax election within 30 days after exercise to have income determined
without regard to the restrictions). If the Company complies with applicable
reporting requirements, it will be entitled to a business expense deduction in
the same amount. Upon a subsequent sale or exchange of shares acquired pursuant
to the exercise of a non-incentive option, the optionee will have taxable gain
or loss, measured by the difference between the amount realized on the
disposition and the tax basis of the shares (generally, the amount paid for the
shares plus the amount treated as ordinary income at the time the option was
exercised).
14
<PAGE> 20
If, pursuant to an option agreement, the optionee surrenders shares of
Common Stock in payment of part or all of the exercise price for non-qualifying
options, no gain or loss will be recognized with respect to the shares
surrendered (regardless of whether the shares were acquired pursuant to the
exercise of an incentive option) and the optionee will be treated as receiving
an equivalent number of shares pursuant to the exercise of the option in a
non-taxable exchange. The basis of the shares surrendered will be treated as the
substitute tax basis for an equivalent number of option shares received and the
new shares will be treated as having been held for the same holding period as
had expired with respect to the transferred shares. However, the fair market
value of any shares received in excess of the number of shares surrendered
(i.e., the difference between the aggregate option exercise price and the
aggregate fair market value of the shares received pursuant to the exercise of
the option) will be taxed as ordinary income.
REQUIRED VOTE AND RELATED MATTERS
The affirmative vote of a majority of the shares present, or represented,
and entitled to vote thereon is required to approve the amendment to the
Employee Plan to increase the number of shares of Common Stock available for
issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
15
<PAGE> 21
ELECTION OF DIRECTORS
(PROPOSAL 4)
Pursuant to the Restated Certificate of Incorporation, the Board of
Directors shall consist of not fewer than three nor more than 15 directors,
divided into three classes, as nearly equal in number as possible, with the
number of directors determined within such limits by resolution of the Board of
Directors. The term of office of only one class of directors expires in each
year, and their successors are elected for terms of three years and until their
successors are elected and qualified. The directors elected at the Annual
Meeting will hold office for a term of three years and until their successors
are elected and qualified.
At the Annual Meeting, four directors will be elected, each for a
three-year term. Unless otherwise specified on the proxy, it is the intention of
the persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. All nominees are now directors of the Company. The Board of Directors
believes that the nominees will stand for election and will serve if elected as
directors. If, however, any person nominated by the Board fails to stand for
election or is unable to accept election, the proxies will be voted for the
election of such other person as the Board of Directors may recommend. Directors
will be elected by a plurality of the votes cast by the shares of Common Stock
entitled to vote in the election at the Annual Meeting. There are no cumulative
voting rights in the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE BOARD'S
NOMINEES FOR ELECTION AS DIRECTORS OF THE COMPANY.
INFORMATION AS TO NOMINEES, OTHER DIRECTORS AND EXECUTIVE OFFICERS
The director nominees, other directors and executive officers of the
Company and their ages and terms of office (in the case of directors) as of
February 28, 1997 are as follows:
<TABLE>
<CAPTION>
TERM
TO
DIRECTOR NOMINEES AGE POSITION(S) WITH COMPANY EXPIRE
----------------- --- ------------------------ ------
<S> <C> <C> <C>
O. Gene Gabbard........................ 56 Director 2000
William H. Scott, III.................. 49 Director and Secretary 2000
William B. Timmerman................... 50 Director 2000
Donald W. Weber........................ 60 Director 2000
</TABLE>
<TABLE>
<CAPTION>
TERM
OTHER DIRECTORS AND EXECUTIVE OFFICERS AGE POSITION(S) WITH COMPANY EXPIRES
- -------------------------------------- --- ------------------------ -------
<S> <C> <C> <C>
Campbell B. Lanier, III................ 46 Chairman of the Board of Directors 1998
Allen E. Smith......................... 47 President, Chief Executive Officer and 1998
Director
Fred G. Astor, Jr. .................... 45 Executive Vice President and Chief --
Financial Officer
Edward C. Horner....................... 45 Executive Vice President and Chief --
Operating Officer
George R. Johnson...................... 55 Executive Vice President -- PCS --
Walter R. Pettiss...................... 63 Executive Vice President -- PCS --
Nicholas J. Jebbia..................... 49 Executive Vice President -- PCS --
Rodney D. Dir.......................... 39 Executive Vice President -- PCS --
Michael P. Tatom....................... 44 Executive Vice President -- PCS --
Maurice P. O'Connor.................... 46 Vice President and Director 1999
Donald W. Burton....................... 51 Director 1999
Bert G. Clifford....................... 77 Director 1999
Lawrence M. Gressette, Jr. ............ 65 Director 1998
</TABLE>
16
<PAGE> 22
Certain of the officers and directors listed above hold or have held
positions in several corporations related to the Company, including ITC Holding,
SCANA and various subsidiaries of ITC Holding. In addition, certain officers and
directors have ownership interests in ITC Holding and SCANA. The Company has
adopted a policy requiring that any material transactions between the Company
and persons or entities affiliated with officers, directors or principal
stockholders of the Company be on terms no less favorable to the Company than
reasonably could have been obtained in arm's length transactions with
independent third parties. Any other matters involving potential conflicts of
interest are to be resolved on a case-by-case basis. See "Executive
Compensation -- Certain Relationships and Related Transactions."
Officers of the Company are appointed at the Board's first meeting after
each annual meeting of stockholders. Officers hold office for a term of one year
and until their successors are chosen and qualify or until their earlier
resignation or removal.
DIRECTOR NOMINEES
O. GENE GABBARD has been a Director of the Company since February 1992. He
has worked independently as an entrepreneur and consultant since February 1993.
Mr. Gabbard currently serves as a director of ITC Holding, MindSpring
Enterprises, Inc., an Internet access provider ("MindSpring"), Masada Security,
Inc., a security monitoring services company, and two telecommunications
technology companies, Dynatech Corporation and Adtran, Inc. From August 1990
through January 1993, he served as Executive Vice President and Chief Financial
Officer of MCI Communications Corporation ("MCI"). He served in various senior
executive capacities, including Chairman of the Board, President and Chief
Executive Officer of Telecom*USA, Inc. ("Telecom") from December 1988 until
Telecom's merger with MCI in August 1990. From July 1984 to December 1988, he
was Chairman and/or President of SouthernNet, Inc. ("SouthernNet").
WILLIAM H. SCOTT, III served as Vice Chairman of the Board of Directors of
the Company from its inception in April 1991 until February 7, 1996 and was
reappointed as a Director and Secretary on March 21, 1996. Mr. Scott has served
as President of ITC Holding since December 1991 and has been a director of ITC
Holding since May 1989. He served as a director and Executive Vice President of
Interstate Cellular from May 1989 until its dissolution in June 1995, and he
also is an officer and director of several other ITC Holding subsidiaries. Mr.
Scott has served on the Board of Directors of AvData Systems, Inc., a company
providing satellite data transmission services ("AvData"), since 1988 and on the
MindSpring Board of Directors since 1994. From 1985 to 1989, Mr. Scott was an
officer and director of Async Corporation, a company providing voice message
services ("Async"). Between 1984 and 1988, Mr. Scott held several offices with
SouthernNet, including Chief Operating Officer, Chief Financial Officer and Vice
President -- Administration. He was a director of that company from 1984 to
1987.
WILLIAM B. TIMMERMAN was appointed a Director of the Company in 1995. Mr.
Timmerman currently serves as Chairman, Chief Executive Officer and President of
SCANA and as Chairman and Chief Executive Officer of each of SCANA's
subsidiaries, including SCANA Communications. Since 1978, he has served in a
variety of management positions at SCANA, including President, Senior Vice
President, Executive Vice President and Chief Financial Officer.
DONALD W. WEBER has been a Director of the Company since December 1991. Mr.
Weber also is a director of ITC Holding, InterServ Services Corporation,
InterCall, Inc. and DPS Depot Inc. and Chairman of the Board and Chief Executive
Officer of ViewStar Entertainment Services, Inc., a company providing DBS
satellite systems hardware and programming. He is also a director of Healthdyne
Information Enterprise and Pegasus Communications Corporation, both of which are
public companies. From 1981 until his retirement in October 1991, Mr. Weber held
various executive positions, including President and Chief Executive Officer, at
Contel Corporation, a telecommunications company which merged with GTE
Corporation in March 1991 ("Contel"). Mr. Weber was a director of Contel from
1985 until 1991 and was a director of Contel Cellular, Inc., a cellular
telephone company, from 1981 until 1991.
17
<PAGE> 23
OTHER DIRECTORS AND EXECUTIVE OFFICERS
CAMPBELL B. LANIER, III has served as Chairman of the Board of Directors of
the Company since its inception in April 1991 and was Chief Executive Officer of
the Company from its inception to September 1993. Mr. Lanier serves as Chairman
of the Board and Chief Executive Officer of ITC Holding and has served as a
director of ITC Holding since its inception in 1985 through a predecessor
company. In addition, Mr. Lanier served as a director and President of
Interstate Cellular, Inc. since its inception in 1989 until its dissolution in
June 1995, and he also is an officer and director of several ITC Holding
subsidiaries. Since 1995, he has been a director of K&G Mens Centers, Inc., an
operator of retail mens clothing stores. Since 1994, he has been a director of
MindSpring. Since 1990, he has been a director of National Vision Associates,
Ltd., a full service optical retailer, and Vice Chairman of the Board of AvData.
He served as Chairman of the Board of AvData from 1988 to 1990. From 1984 to
1989, Mr. Lanier served as Chairman of the Board of Async. Mr. Lanier also
served as Vice President -- Industry Relations of Telecom from 1984 to 1988 and
as Senior Vice President Industry Relations from January 1989 until Telecom's
merger with MCI in August 1990. From 1984 to 1985, he served as Chief Executive
Officer of SouthernNet and from 1985 to 1986 he was Vice Chairman of the Board
of SouthernNet. Since 1988, Mr. Lanier has also been a special limited partner
in the South Atlantic Venture Fund II, Limited Partnership and South Atlantic
Venture Fund III, Limited Partnership, of which South Atlantic Venture Partners
II, Limited Partnership and South Atlantic Venture Partners III, Limited
Partnership, respectively, are the general partners and each of which Donald W.
Burton, who is a Director of the Company, is the managing general partner.
ALLEN E. SMITH has been Chief Executive Officer of the Company since
September 1993, has been the President and a Director of the Company since
January 1991, and was Chief Operating Officer of the Company from January 1991
to September 1993, when he became Chief Executive Officer. Mr. Smith has been a
Vice President of ITC Holding since January 1991. From 1988 to 1990, Mr. Smith
held several executive positions with Telecom, including Senior Vice
President -- Customer Services, Senior Vice President -- Administration and
Senior Vice President -- Human Resources and Administration. During 1988, Mr.
Smith was Vice President -- Telemarketing and Training at SouthernNet. From 1987
to 1988, Mr. Smith was the Vice President of Marketing of Southland
Communications Corporation ("Southland"), a telecommunications company. During
1986, Mr. Smith was the Executive Vice President and General Manager of
Southland Cellular, Inc., a subsidiary of Southland, where he managed the
Pensacola, Florida metropolitan service area, as well as voice and digital
paging services.
FRED G. ASTOR, JR. has been Chief Financial Officer of the Company since
May 1991, served as Treasurer of the Company from May 1991 until May 1995, and
was Vice President of the Company from May 1991 until May 1995, when he was
named Executive Vice President. Mr. Astor worked for Contel from 1976 to 1989 in
various financial capacities. From 1983 to 1987, he served as the Assistant
Corporate Controller in charge of financial reporting, and from 1987 until late
1989, he served as Vice President -- Finance for Contel Credit Corporation, a
finance subsidiary which was acquired by General Electric Capital Corporation.
In January 1990, he joined Telecom as its Vice President -- Finance/Southern
Division, and he served in that capacity until Telecom's merger with MCI was
consummated. In November 1990, Mr. Astor accepted a position with ProAir
Services, L.P. as Vice President -- Finance. He served as that company's Chief
Financial Officer until accepting his current position with the Company.
EDWARD C. HORNER joined the Company as Executive Vice President and Chief
Operating Officer in May 1996. Prior to joining InterCel, he served as Assistant
Vice President Marketing and Distribution for GTE Mobilnet Incorporated ("GTE
Mobilnet"). He became a director of GTE Telephone Operations in 1991. He was
previously with Contel in a number of positions, culminating as Assistant Vice
President Network Marketing at the time Contel merged with GTE Corporation.
GEORGE R. JOHNSON joined the Company as a Vice President -- PCS in May 1995
and was named Executive Vice President and General Manager for the Birmingham,
Alabama MTA in August 1995. From 1990 to 1995, he served as a Product Manager
for BellSouth Telecommunications, Inc. From 1989 to 1990, he was National Sales
Manager for BellSouth Products, Inc., a consumer telephone products company.
18
<PAGE> 24
WALTER R. PETTISS joined the Company as a Vice President -- PCS in April
1995 and was named Executive Vice President and General Manager for the
Jacksonville, Florida MTA in August 1995. From 1992 to 1994, Mr. Pettiss served
as Chief Operating Officer of WJB-TV, L.P., a provider of wireless cable
television service, and its successor corporation, Wireless Broadcasting System
of America, Inc. Since 1991, he has served as a director of Electronic Power
Technology, Inc. ("EPT"). In 1995, he became Chairman of the Board of Directors
of EPT. In December 1995, EPT filed for protection of its assets under Chapter 7
of the U.S. Bankruptcy Code. From 1990 to 1992, he served as Chief Operating
Officer of WJB-Video, L.P., a Blockbuster Video franchisee. From 1987 through
1989, he was a Senior Vice President of SouthernNet.
NICHOLAS J. JEBBIA joined the Company in January 1996 as Executive Vice
President and General Manager for the Memphis, Tennessee/Jackson, Mississippi
MTA. From 1990 to 1995, Mr. Jebbia served as Vice President and General Manager
of New Ventures for National Data Corporation. From 1983 to 1990, he was Vice
President of Service with United Telecommunications. Prior to 1983, he served in
various management positions with Ohio Bell Telephone.
RODNEY D. DIR joined the Company in August 1996 as Executive Vice President
and General Manager for the Atlanta, Georgia MTA. From 1995 to 1996, Mr. Dir
served as Area General Manager for GTE Mobilnet in California. He joined GTE
Telephone Operations in 1984 serving in various finance, accounting and
regulatory positions. In 1989, he joined GTE Mobilnet's cellular division.
Before joining GTE Telephone Operations, Mr. Dir worked with Kiesling and
Associates, a certified public accounting firm, providing accounting and
management services to telecommunications clients.
MICHAEL P. TATOM joined the Company in February 1995 as Director of Sales.
Since May 1995, he has served as Vice President and General Manager of the
Company's southern cellular division and, in March 1997, was named Executive
Vice President and General Manager for certain of the Company's to-be-acquired
PCS properties in Kentucky and Tennessee. From 1990 to 1995, Mr. Tatom served as
a Branch Manager and General Manager of the Small Business Division of AT&T
Corp.
MAURICE P. O'CONNOR was appointed a Director and Vice President of the
Company, with general responsibility for the operations of Unity Cellular
Systems, Inc. ("Unicel"), a wholly-owned subsidiary of the Company which
provides cellular telephone service in the State of Maine, on March 28, 1994
concurrent with the Company's acquisition of Unicel. He also serves as a
director of Unitel, Inc., a local exchange carrier in the State of Maine. Mr.
O'Connor served as General Manager of Unicel from 1991 until the Unicel
acquisition and had been employed by Unicel in other management capacities since
1989. From 1984 until joining Unicel in 1989, Mr. O'Connor was President and
General Manager of New England Landscape & Irrigation Company in Palmer,
Massachusetts. From 1977 to 1984, he was the President of Cypress Landscaping &
Construction in Houston, Texas. Mr. O'Connor is the son-in-law of Bert and Coral
Clifford. The Company recently entered into an agreement with Rural Cellular
Corporation to sell substantially all of its assets in the State of Maine. It is
contemplated that Mr. O'Connor intends to continue to serve as a Director of the
Company after the disposition of the Maine assets.
DONALD W. BURTON was appointed a Director of the Company in 1995. He has
served as the Managing General Partner of the South Atlantic Venture Funds since
1983. He has served as the General Partner of The Burton Partnership, Limited
Partnership since 1979. Mr. Burton serves as a Director of MTL Inc., a bulk
transportation service company, the Heritage Group of Mutual Funds and several
private companies.
BERT G. CLIFFORD was appointed Vice Chairman of the Board of Directors of
the Company on March 28, 1994 concurrent with the Company's acquisition of
Unicel. Mr. Clifford has been the Chairman of the Board and President of Unity
Telephone Company since 1963. In connection with the acquisition of Unicel, Mr.
Clifford retired from his positions as the Chairman of the Board of Directors,
President and Chief Executive Officer of Unicel, which positions he had held
since Unicel's inception in 1987. Mr. Clifford is the father-in-law of Maurice
P. O'Connor.
LAWRENCE M. GRESSETTE, JR. was appointed a Director of the Company in 1995.
Mr. Gressette currently serves as a director and as Chairman of the Executive
Committee of the Board of Directors of SCANA, a diversified utility company.
Since 1990, he has served as Chairman, President and Chief Executive Officer of
19
<PAGE> 25
SCANA from which positions he has recently announced his retirement. He also is
a director of Wachovia Corporation, a bank holding company, and The Liberty
Corporation, a holding company of Liberty Life Insurance Co. and Cosmos
Broadcasting Corp.
COMMITTEES OF THE BOARD OF DIRECTORS AND NOMINATIONS BY STOCKHOLDERS
The Audit Committee of the Board of Directors reviews, with the Company's
independent public accountants, the annual financial statements of the Company
prior to publication; reviews the work of such independent public accountants;
and makes annual recommendations to the Board of Directors for the appointment
of independent public accountants for the ensuing year. The Audit Committee also
reviews the effectiveness of the financial and accounting functions, and the
organization, operations and management of the Company. During the year ended
December 31, 1996, the Audit Committee was composed of Donald W. Burton,
Campbell B. Lanier, III and Donald W. Weber and held one meeting.
In February 1996, the Compensation Committee and the Stock Option Committee
combined to become the Compensation/Stock Option Committee. The
Compensation/Stock Option Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company and
administers the issuance of stock options to the Company's officers, employees,
consultants and advisors. The Compensation/Stock Option Committee also reviews
general policy matters relating to compensation and benefits of employees of the
Company. During the year ended December 31, 1996, the Compensation/Stock Option
Committee was composed of O. Gene Gabbard, Lawrence M. Gressette, Jr. and Donald
W. Weber and held two meetings.
The Company does not have a standing nominating committee. The Board of
Directors nominates candidates to stand for election as directors. The Restated
Certificate of Incorporation permits stockholders to make nominations for
directors but only if such nominations are made pursuant to timely notice in
writing to the Secretary of the Company. To be timely, notice of stockholder
nominations for directors must be delivered in writing to the Secretary of the
Company no later than 90 days prior to the meeting of stockholders at which such
directors are to be elected, together with the identity of the nominator and the
number of shares of Common Stock owned, directly or indirectly, by the
nominator.
During the year ended December 31, 1996, the Board of Directors of the
Company held ten meetings. All directors of the Company attended 75% or more of
the aggregate of all Board meetings and all meetings of committees of which they
were members.
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<PAGE> 26
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the cash and
non-cash compensation during the fiscal years 1996, 1995 and 1994 earned by or
awarded to the Chief Executive Officer and to the other most highly compensated
executive officers of the Company whose combined salary and bonus exceeded
$100,000 during the fiscal year ended December 31, 1996 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL ------------------------
COMPENSATION RESTRICTED SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS AWARDS OPTIONS COMPENSATION(A)
---------------------------- ---- -------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Allen E. Smith................... 1996 $188,519 $92,790 $ -- 35,310 $82,505(a)
President and Chief 1995 132,714 93,759 211,725(b) 41,174 5,424(c)
Executive Officer 1994 97,423 96,974 -- 20,750
Fred G. Astor, Jr................ 1996 132,080 57,889 -- 15,916 81,865(d)
Executive Vice President and 1995 104,269 57,430 211,725(b) 34,030 5,424(c)
Chief Financial Officer 1994 85,715 57,811 -- 12,550 --
Walter R. Pettiss................ 1996 132,080 57,889 -- 13,986 14,738(e)
Executive Vice President -- PCS 1995 76,675(f) 45,336 -- 20,000 1,186(c)
Nicholas J. Jebbia............... 1996 128,148 56,557 -- -- 22,016(g)
Executive Vice President -- PCS 1995 --(h) -- -- 20,000 --
George R. Johnson................ 1996 125,449 56,015 -- 11,976 12,893(i)
Executive Vice President -- PCS 1995 62,118(j) -- -- 20,000 1,062(c)
</TABLE>
- ---------------
(a) Represents: (i) tax gross-ups for 1995 restricted stock awards; (ii) auto
allowance; (iii) country club dues; (iv) imputed income for life insurance
benefits; and (v) matching contributions made by the Company to the
InterCel 401(k) Plan.
(b) On April 24, 1995, the Compensation Committee awarded Messrs. Smith and
Astor 15,000 shares each of restricted Common Stock in accordance with the
provisions of the 1995 Employee Restricted Stock Plan. The market value of
the Company's Common Stock on the date of award was $14.125 per share.
(c) Represents matching contributions made by the Company to the InterCel
401(k) Plan on behalf of each of the Named Executive Officers.
(d) Represents: (i) tax gross-ups for 1995 restricted stock awards; (ii) auto
allowance; (iii) imputed income for life insurance benefits; and (iv)
matching contributions made by the Company to the InterCel 401(k) Plan.
(e) Represents: (i) auto allowance; (ii) imputed income for life insurance
benefits; and (iii) matching contributions made by the Company to the
InterCel 401(k) Plan.
(f) Mr. Pettiss joined the Company in April 1995 and became an executive
officer in August 1995.
(g) Represents: (i) moving expenses; (ii) auto allowance; (iii) imputed income
for life insurance benefits; and (iv) matching contributions made by the
Company to the InterCel 401(k) Plan.
(h) Mr. Jebbia joined the Company in January 1996 as an executive officer;
however, his employment options were granted in December 1995.
(i) Represents: (i) auto allowance; (ii) imputed income for life insurance
benefits; and (iii) matching contributions made by the Company to the
InterCel 401(k) Plan.
(j) Mr. Johnson joined the Company in May 1995 and became an executive officer
in August 1995.
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<PAGE> 27
OPTION GRANTS
The following table sets forth information with respect to grants of stock
options to each of the Named Executive Officers during the year ended December
31, 1996.
OPTION GRANTS DURING 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS(A) VALUE AT ASSUMED
----------------------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(B)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR PRICE GRANT DATE DATE 5% 10%
- ---- ---------- ------------- -------- ----------------- ----------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen Smith................. 35,310 4.5% $16.50 February 16, 1996 February 16, 2006 $366,403 $928,538
Fred G. Astor............... 15,916 2.0 16.50 February 16, 1996 February 16, 2006 165,517 418,539
Walter R. Pettiss........... 13,986 1.8 16.50 February 16, 1996 February 16, 2006 145,129 367,786
Nicholas J. Jebbia.......... -- -- -- -- -- -- --
George R. Johnson........... 11,976 1.5 16.50 February 16, 1996 February 16, 2006 124,272 314,930
</TABLE>
- ---------------
(a) All option grants were made at 100% of the fair market value of the Common
Stock on the date of grant. Options will become exercisable as follows: (i)
50% of the options will become exercisable on the second anniversary of the
date of grant; (ii) an additional 25% of the options will become exercisable
on the third anniversary of the date of grant; and (iii) the remaining 25%
of the options will become exercisable on the fourth anniversary of the date
of grant.
(b) Based on exercise price.
OPTION EXERCISES AND HOLDINGS
During the year ended December 31, 1996, no stock options were exercised by
the Named Executive Officers. The following table sets forth information with
respect to each of the Named Executive Officers concerning the value of all
unexercised options held by such individuals at December 31, 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(A)
- ---- -------------------------- ----------------------------
<S> <C> <C>
Allen E. Smith................................ 167,234 $631,481
Fred G. Astor, Jr............................. 113,496 453,723
Walter R. Pettiss............................. 33,986 --
Nicholas J. Jebbia............................ 20,000 --
George R. Johnson............................. 31,976 --
</TABLE>
- ---------------
(a) Represents the difference between the exercise price per share and the
market value of the Common Stock at December 31, 1996.
BENEFIT PLANS
Restricted Stock Plan. Under the Company's 1995 Employee Restricted Stock
Plan adopted by the Board of Directors on April 24, 1995 and approved by
stockholders on December 20, 1995 (the "Restricted Stock Plan"), 200,000 shares
of authorized but unissued Common Stock (approximately 0.7% of the outstanding
shares of Common Stock at March 31, 1997) are reserved for issuance, 35,000
shares of which were issued and outstanding as of March 31, 1997. The Restricted
Stock Plan is administered by the Compensation/Stock Option Committee. The
purpose of the Restricted Stock Plan is to further the growth and success of the
Company by enabling selected employees of the Company to acquire shares of
Common Stock of the Company, thereby increasing their personal interest in such
growth and success and to provide a means of rewarding outstanding performance
by such persons. Recipients of restricted stock awards generally have the rights
and privileges of a stockholder of the Company, including the right to vote and
receive
22
<PAGE> 28
dividends, except that the recipient may not sell, transfer or otherwise dispose
of shares covered by the award until a specified time period, set by the
Compensation Committee, has lapsed. Restricted stock awards vest in three equal
installments on the first, second and third anniversaries of the date of grant.
On April 24, 1995, the Compensation Committee awarded each of Messrs. Smith and
Astor 15,000 shares of restricted Common Stock.
Employee Plan. Under the Employee Plan, 2,000,000 shares of Common Stock
have been authorized for issuance upon exercise of options. On January 29, 1997,
the Board of Directors approved the authorization of an additional 1,000,000
shares of Common Stock for issuance upon exercise of options, subject to
stockholder approval. See "Approval of the Proposed Amendment to the Employee
Plan (Proposal 3)." All employees of the Company and its subsidiaries are
eligible to receive options under the Employee Plan. The Employee Plan is
administered by the Compensation/Stock Option Committee. The purpose of the
Employee Plan is to further the growth and success of the Company by enabling
selected employees of the Company to acquire shares of Common Stock of the
Company, thereby increasing their personal interest in such growth and success
and to provide a means of rewarding outstanding performance by such persons.
Options granted under the Employee Plan are intended to qualify as "incentive
stock options" under Section 422 of the Code. Options generally become
exercisable as to 50% two years after the date of grant, as to an additional 25%
three years after the date of grant and as to the remaining 25% four years after
the date of grant. As of March 31, 1997, 1,935,478 options granted pursuant to
the Employee Plan were outstanding, and the Board of Directors had approved the
issuance of options to purchase 240,119 shares under the Employee Plan subject
to stockholder approval of Proposal 3.
401(k) Plan. On February 1, 1995, the Company established a savings plan
(the "InterCel 401(k) Plan") qualified under Section 401(k) of the Code for the
benefit of all full-time employees. A participant in the InterCel 401(k) Plan
may contribute up to 10% of his or her compensation on a pre-tax basis under the
InterCel 401(k) Plan. Also, under the InterCel 401(k) Plan, the Company makes
matching contributions for each participant equal to one-half of the first 2% of
annual compensation contributed by each participant. In addition, the Company
may make, in its discretion, certain additional contributions that generally
will be allocated to participants in proportion to compensation. The Company
made $395,989 in contributions to the InterCel 401(k) Plan during 1996.
Contributions made by, or on behalf of, a participant, and interest,
earnings, gains or losses on such amounts, are credited to accounts maintained
for the participant under the InterCel 401(k) Plan. A participant under the
InterCel 401(k) Plan is fully vested in his or her pre-tax, matching and
rollover contributions accounts. Vesting in a participant's discretionary profit
sharing contribution account is based upon his or her years of service with the
Company. A participant is initially 20% vested after the completion of one year
of service with the Company. The participant's vested percentage increases by
20% for each subsequent year of service with the Company, so that the
participant is 100% vested after the completion of five years of service. In
addition, a participant becomes fully vested in his or her accounts upon
retirement due to permanent disability, attainment of age 65 or death. Finally,
the InterCel 401(k) Plan provides that the Board of Directors may at any time
declare the InterCel 401(k) Plan partially or completely terminated, in which
event the accounts of each participant with respect to whom the InterCel 401(k)
Plan is terminated will become fully vested. In the event of a termination,
partial termination or a complete discontinuance of contributions, the accounts
of each affected participant will become fully vested.
Pension Plans. Prior to February 1, 1995, the Company, as a subsidiary of
ITC Holding, included its employees as participants in the ITC Holding Company
Pension Plan (the "ITC Plan"). The ITC Plan provided all eligible employees of
ITC Holding and its majority-owned subsidiaries with retirement, disability and
survivor benefits. Benefits that employees had accrued under the terms of the
ITC Plan were frozen as of February 1, 1995. In addition, following consummation
of the Company's acquisition of Unicel on January 31, 1994, benefits that
employees of Unicel had accrued under the terms of the plan sponsored by Unity
Telephone (the "Unity Plan") were frozen as of April 29, 1994. Messrs. Smith and
Astor each had three years of credited service under the ITC Plan and no
credited service under the Unity Plan as of the respective dates benefits under
such plans were frozen. Effective June 1, 1996 the two plans were combined when
the ITC Plan transferred the assets and liabilities attributable to the
retirement benefits of InterCel employees under such
23
<PAGE> 29
Plan to the Unity Cellular Systems, Inc. Pension Plan. To reflect the fact that
both groups of employees are included in one pension plan, the Unity Cellular
Systems, Inc. Plan was renamed the InterCel, Inc. Pension Plan (the "InterCel
Plan") effective June 1, 1996. The Company has initiated the process of
terminating the InterCel Plan, and notified employees of its intent to terminate
the InterCel Plan and submitted the necessary filing documents to the IRS and
the Pension Benefit Guaranty Corporation. The annual benefits payable from the
InterCel Plan upon retirement at normal retirement age for Messrs. Smith and
Astor are $10,583 and $8,314, respectively.
COMPENSATION OF THE COMPANY'S DIRECTORS
Director Fees and Related Matters. Prior to January 17, 1994, directors of
the Company (other than those who were considered employees of the Company and
received salaries for their services as such) did not receive cash compensation
for their services on the Board of Directors. Pursuant to a policy instituted by
the Company on January 17, 1994, the Company now compensates nonemployee
directors $750 for each Board meeting attended in person, $200 for each Board
meeting attended by telephone conference and $200 for each Board committee
meeting attended (whether in person or by telephone conference). In addition,
the Company reimburses nonemployee directors for out-of-pocket travel
expenditures relating to their service on the Board. The Company provides to
each of its directors (and to all of its employees) a free telephone and a
monthly airtime allowance; the users are responsible for payment of all
additional airtime charges and long distance and roaming charges they incur.
For the year ended December 31, 1996, Messrs. Clifford, Lanier and Scott
received additional compensation in consideration of their performance of
certain advisory and administrative services for the Company in the amount of
approximately $30,000, $40,000 and $30,000, respectively. Additionally, Messrs.
Lanier and Scott participate in the InterCel 401(k) Plan under which they
received profit sharing and matching contributions totaling approximately $1,600
and $1,200, respectively, in 1996. Such individuals will be paid similar
compensation for the year ending December 31, 1997 in consideration of their
performance of such services for the Company.
Nonemployee Stock Option Plan. Under the Company's Nonemployee Stock
Option Plan (the "Nonemployee Plan"), 400,000 shares of Common Stock are
authorized for issuance upon exercise of options. All nonemployee directors of
the Company, and all employees of affiliates of the Company, are eligible to
receive options under the Nonemployee Plan. Options were granted to each
nonemployee director upon his or her election or appointment as a director, and
are exercisable at the fair market value of the Common Stock (as determined by
the Board) on the date of grant. On January 17, 1994, the Company granted
additional options to purchase 10,000 shares of Common Stock to each of Messrs.
Gabbard and Weber.
On March 28, 1994, the Nonemployee Plan was amended to provide that options
to purchase 10,000 shares of Common Stock (at an exercise price equal to the
fair market value of the Common Stock on the date of grant) would be granted
pursuant thereto to nonemployee directors upon their initial election or
appointment to the Board. The Nonemployee Plan, as so amended, does not provide
for discretionary option grants. Options generally become exercisable as to 50%
two years after the date of grant, as to an additional 25% three years after the
date of grant and as to the remaining 25% four years after the date of grant.
On February 16, 1996, the Company granted options to purchase 10,000 shares
of Common Stock to each of Messrs. Burton, Gressette and Timmerman. Messrs.
Gressette and Timmerman declined such options, and the Company subsequently
reissued options to purchase 20,000 shares of Common Stock to SCANA on behalf of
Messrs. Gressette and Timmerman's service on the Company's Board of Directors.
As of March 31, 1997, 199,200 options granted pursuant to the Nonemployee Plan
were outstanding.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, O. Gene Gabbard, Lawrence M. Gressette, Jr. and Donald Weber
constituted the Compensation/Stock Option Committee. Messrs. Gabbard and Weber
are directors of ITC Holding, which as of March 31, 1997 held approximately
27.3% of the outstanding Common Stock of the Company. See "Certain Relationships
and Related Transactions -- ITC Holding." Mr. Gressette is a director of SCANA,
24
<PAGE> 30
which as of March 31, 1997 held approximately 16.7% of the outstanding Common
Stock of the Company. See "Certain Relationships and Related
Transactions -- Other Transactions."
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program is based on two major principles. First,
the Company strives to provide competitive levels of compensation -- at
performance levels that meet or exceed stated objectives -- in order to attract,
motivate and retain skilled and experienced executives. Second, the compensation
program is structured to create a common interest between the Company's
executives and the Company's stockholders by linking a significant portion of
each executive's compensation directly to increases in stockholder value.
The executive compensation program is designed to reward performance that
directly contributes to the Company's short-term and long-term success.
Accordingly, the Company generally provides both short-term and long-term
incentive compensation that varies based on individual performance and Company
performance.
The three major components of the compensation program are base salary,
annual cash incentives and long-term incentives (stock options and restricted
stock awards). The Company's philosophy is: (i) to pay to its executives base
salaries that generally alone (without the other compensation elements) provide
compensation equal to total compensation in the bottom quartile of the range of
total compensation generally paid to executives by comparable companies; (ii) to
provide cash incentive awards that, if fully earned, raise the executives' total
cash compensation (base salary plus cash awards) to the middle of the range of
total compensation generally paid to executives by comparable companies; and
(iii) to provide long-term incentives in the form of stock options and
restricted stock awards that, if fully earned, raise the executive's total
compensation (cash and equity) to the 75th percentile of the range of total
compensation generally paid to executives by comparable companies. The Company
analyzes the range of compensation provided by comparable companies based on
information provided by publicly traded wireless telecommunications companies
and on survey data provided by Hay Management Consultants, an internationally
recognized independent consulting firm.
Base Salary. Salary levels are based on the level of compensation
generally paid to executives by comparable companies, as described above, and on
each individual executive's responsibilities with the Company and his
performance in that role. Consequently, executives with higher levels of
sustained performance over time and/or executives assuming greater
responsibilities will be paid correspondingly higher salaries. Salaries for
executives are reviewed annually with respect to a number of factors, including
individual performance, Company and (where appropriate) business unit results
(including revenue, net income or loss, and cash flow), and general levels of
salary increases in comparable companies.
Management Incentive Compensation Plan. The Company's Management Incentive
Compensation Plan (the "Incentive Plan") provides competitive cash compensation
opportunities for Incentive Plan participants based on Company, business unit
(where appropriate) and individual performance. Incentive cash awards are paid
annually if performance objectives are achieved.
The Compensation/Stock Option Committee develops, and the Board of
Directors reviews and approves, the criteria and financial targets established
for Incentive Plan participants each year. For 1996, the Incentive Plan included
targets for: (i) total revenues; (ii) net income; and (iii) cash flow (earnings
before taxes, interest, depreciation and amortization). Each factor was weighted
equally.
Annual cash incentive bonus opportunities vary by individual position and
are expressed as an annual cash objective and as a percentage of total
compensation mix. The amount a particular executive may earn is dependent on the
individual's position, responsibility and ability to influence the Company's
financial success, as well as on the individual executive's performance in
meeting stated objectives. No bonus is payable if the Company does not achieve
at least 70% of the Incentive Plan's targets, and bonus payments are capped at
achievement of 300% of the Incentive Plan's targets.
25
<PAGE> 31
Long-term Incentive Compensation. The Company's long-term incentive
compensation, reflected in the Employee Plan and the Restricted Stock Plan, is
designed to focus executive efforts on the long-term goals of the Company,
including the important goal of maximizing total return to Company stockholders.
The Company believes that stock options align the interests of employees
with those of stockholders by providing value to employees through stock price
appreciation. Stock option grants are made by the Compensation/Stock Option
Committee. The Company generally grants options with an exercise price equal to
the fair market value of the Common Stock on the date of the option grant.
Option grants and the number of shares reserved for issuance under the Employee
Plan are established by analysis of practices at comparable companies. The
number of options actually granted to a particular participant is based on the
Company's financial success and the individual's performance, position and level
of responsibility within the Company. See "Approval of the Proposed Amendment to
the Employee Plan (Proposal 3)" for more information regarding the Employee
Plan.
Under the Company's Restricted Stock Plan the Company may issue to eligible
employees shares of the Company's Common Stock that are subject to certain
restrictions, are non-transferable during the restriction period and are subject
to forfeiture if the employee leaves the Company during the restriction period.
The Compensation/Stock Option Committee establishes a period of time or
performance goals that apply to restricted shares issued with respect to each
award pursuant to the Restricted Stock Plan. Performance goals can be based on
one or more business criteria that apply to the individual recipient, a business
unit (where appropriate) or the Company. Performance goals generally will be
based on stock price, sales, earnings per share, earnings before taxes or return
on net assets. Performance goals may include positive results, maintaining the
status quo or limiting economic losses. See "-- Benefit Plans -- Restricted
Stock Plan" for more information regarding the Company's Restricted Stock Plan.
Other. In addition to the compensation paid to executive officers as
described above, executive officers receive, along with and on the same terms as
other employees, certain benefits pursuant to the Company's 401(k) Plan and,
prior to the adoption of the 401(k) Plan, the InterCel Plan. See "-- Benefit
Plans -- 401(k) Plan" and "-- Pension Plans."
1996 Compensation of Chief Executive Officer. As previously described, the
Compensation/Stock Option Committee considers several factors in developing an
executive compensation package. For the Chief Executive Officer, these factors
generally include compensation practices of comparable companies, individual
performance, experience, achievement of strategic goals and the Company's
financial and operational results. Specific actions taken by the
Compensation/Stock Option Committee regarding Mr. Smith's compensation for 1996
are summarized below.
- Base Salary. The Chief Executive Officer's 1996 base salary was
$188,519, an increase of 42% over his 1995 base salary. Mr. Smith's salary
increase reflects the Company's growth in revenues, net income, cash flow
and stockholder value, as well as a one-time adjustment to put his base
salary in the 25th percentile of compensation paid to chief executives by
comparable companies.
- Annual Incentive. In addition, Mr. Smith received an annual cash
incentive award for 1996 of $92,790. This award was based on results for
the year, which exceeded the performance benchmarks established by the
Compensation/Stock Option Committee and the Board. Mr. Smith's 1996
incentive targets were exceeded by 8.29% (net income), 1.15% (total
service revenues) and 2.02% (cash flow). The Company believes that Mr.
Smith's total 1996 cash (salary plus incentive) compensation was below the
average total cash compensation paid to chief executives by comparable
companies.
- Long-term Incentive. Mr. Smith is eligible to participate in the
Employee Plan and Restricted Stock Plan. During 1996, Mr. Smith was
granted options to purchase 35,310 shares of Common Stock at an exercise
price of $16.50 (the fair market value of the Common Stock on the date of
option grant). Such options become exercisable with respect to: (i) 50% of
the shares issuable thereunder on the second anniversary of the date of
grant; (ii) an additional 25% of the shares issuable thereunder on the
third anniversary of the date of grant; and (iii) the remaining 25% of the
shares issuable hereunder on the fourth anniversary of the date of grant.
26
<PAGE> 32
Pay Deductibility Limit. Under a 1993 amendment to the Code and proposed
federal tax regulations, public companies are prohibited from receiving a tax
deduction for compensation in excess of $1 million paid to the Chief Executive
Officer or any of the four other most highly compensated executive officers for
any fiscal year. The prohibition does not apply to certain performance based
compensation. The Company takes into consideration this compensation
deductibility limit in structuring its compensation programs and in determining
executive compensation. At this time, the Company's applicable executive officer
compensation does not exceed $1 million, and the Company does not expect that it
is likely to be affected by these nondeductibility rules in the near future.
COMPENSATION/STOCK OPTION COMMITTEE
O. Gene Gabbard
Lawrence M. Gressette, Jr.
Donald W. Weber
COMPARATIVE COMPANY PERFORMANCE
The graph shown below is a line-graph presentation comparing the Company's
cumulative stockholder return on an indexed basis based on an investment of $100
on December 31, 1993 with the CRSP Index for Nasdaq Telecommunications Stocks
and the CRSP Index for the Nasdaq Stock Market (U.S. Companies).
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
<TABLE>
<CAPTION>
CRSP INDEX FOR
CRSP NASDAQ NASDAQ
MEASUREMENT PERIOD STOCK MARKET TELECOMMUNICATIONS
(FISCAL YEAR COVERED) (U.S. COMPANIES) STOCKS INTERCEL, INC.
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/31/94 97.48 82.66 131.82
12/31/95 138.26 99.56 206.06
12/31/96 170.02 111.66 148.88
</TABLE>
NOTES:
A. The lines represent annual index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighed daily, using the market capitalization on the
previous trading day.
C. If the fiscal year end is not a trading day, the preceding trading day is
used.
D. The index level for all series was set to 100.00 on December 31, 1993.
E. The Company's Common Stock began trading on the Nasdaq Stock Market on
February 7, 1994.
27
<PAGE> 33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy requiring that any material transactions
between the Company and persons or entities affiliated with officers, directors
or principal stockholders of the Company be on terms no less favorable to the
Company than reasonably could have been obtained in arm's length transactions
with independent third parties. The following is a summary of certain
transactions and relationships among the Company and its associated entities,
and among the directors, executive officers and stockholders of the Company and
its associated entities.
ITC Holding. As of March 31, 1997, ITC Holding owned approximately 27.3%
of the outstanding Common Stock of the Company. ITC Holding, through certain of
its subsidiaries, from time to time provides the Company with various services,
consisting principally of administrative and staff services, technical services
and access services (switch technicians and maintenance) and facilities for the
Company's switching office. The amounts paid by the Company to ITC Holding
during the fiscal years ended December 31, 1994, 1995 and 1996 for such services
were $553,873, $568,252 and $841,230, respectively. The Company will
periodically have outstanding affiliated receivables and payables related to
timing of payments for such administrative services.
The Company has previously participated in a $5.0 million credit facility
through Valley Finance, Inc. an indirect wholly owned subsidiary of ITC Holding
("Valley Finance"). Repayment of this prior credit facility was guaranteed by
ITC Holding, and ITC Holding agreed with the Company that, among other things,
ITC Holding would obtain or provide alternative financing for the Company
substantially equivalent to the credit facility in the event that actions taken
by ITC Holding or any of its affiliates (other than the Company) were to result
in termination of the credit facility. In connection with the Company's
acquisition of Unicel, Valley Finance entered into a credit facility with
National Bank for Cooperatives. All amounts drawn under such credit facility by
Valley Finance were loaned by Valley Finance to InterCel and were repaid in full
with a portion of the proceeds from the Company's offering of common stock in
1996 (the "Stock Offering") and offering of units composed of 12% senior
discount notes and warrants in 1996 (the "Unit Offering").
On January 1, 1995, the Company, ITC Holding, InterServ Services
Corporation, a subsidiary of ITC Holding, and other parties entered into a
Georgia general partnership, pursuant to which the partners own and operate a
multi-engine plane. The Company owns a 0.175% interest in this partnership. The
Company paid $76,055 to this partnership during the fiscal year ended December
31, 1996.
On March 10, 1994, the Company entered into a lending arrangement with ITC
Holding pursuant to which the Company borrowed $9.4 million from ITC Holding to
repay previously outstanding borrowings under the credit facility with National
Bank for Cooperatives. The loan from ITC Holding, which was unsecured and
prepayable (without penalty) at any time, bore interest at the same rates that
the Company would have been paying had the amounts remained outstanding under
such credit facility. Amounts due under the loan are payable at various times
through March 1997, but all amounts may be made immediately due and payable on
demand (with advance written notice) by ITC Holding. The Company repaid the loan
from ITC Holding with a portion of the net proceeds of the Stock Offering and
the Unit Offering. ITC Holding paid all costs associated with establishing this
loan.
The Company utilizes fiber optic facilities of Interstate FiberNet, Inc.,
an ITC Holding subsidiary ("IFN"), for backhaul and transport of its PCS and
cellular service operations. The Company paid $898,415 to IFN during the fiscal
year ended December 31, 1996. In addition, the Company has recently entered into
a co-location agreement with IFN for the lease of space to allow the Company to
co-locate certain of its network equipment with facilities of IFN. The Company
has also entered into an agreement with InterQuest, Inc., a subsidiary of IFN,
for the provision of operator and directory assistance services branded with the
"Powertel" name. The Company paid $4,293 to InterQuest during the fiscal year
ended December 31, 1996. The Company has entered into an 18-month agreement,
effective November 1, 1996, with DeltaCom, Inc., another subsidiary of ITC
Holding ("DeltaCom"), for the provision of long-distance services, which the
Company then re-sells to its customers. The Company paid $249,528 to DeltaCom
during the fiscal year ended December 31, 1996.
28
<PAGE> 34
Certain officers and directors of the Company hold or have held positions
in ITC Holding and various subsidiaries of ITC Holding. See "Directors and
Executive Officers." In addition, certain Company officers and directors have
ownership interests in ITC Holding.
The Powertel Combination. Powertel, Inc., a wholly owned subsidiary of the
Company ("Powertel"), and Powertel PCS Partners L.P. ("Powertel PCS Partners")
entered into a management agreement, dated as of October 28, 1994, pursuant to
which Powertel agreed to manage Powertel PCS Partners' acquisition of PCS
licenses and its subsequent development, construction and operation of its PCS
system, in exchange for a carried partnership interest in Powertel valued at 10%
of the excess of the fair value of Powertel PCS Partners (on the valuation date)
over the capital contributions of the partners (subject to certain
restrictions).
On February 7, 1996, pursuant to a Business Combination Agreement dated as
of August 23, 1995, the Company, Powertel PCS Partners and the owners of
Powertel PCS Partners (other than the Company) exchanged their ownership
interest in Powertel PCS Partners for an aggregate of 9,686,410 shares of Common
Stock (the "Powertel Combination"). As of December 31, 1995 (prior to
consummation of the transaction), ITC Holding owned approximately 50.2% of the
outstanding Common Stock of the Company. Prior to the Powertel Combination, ITC
Holding was a partner in Powertel PCS Partners, holding (through a wholly owned
subsidiary) a 20.910% interest, as of December 31, 1995. In addition, certain
other former partners of Powertel PCS Partners and/or their affiliates directly
or indirectly owned interests in ITC Holding, including SCANA (which, as of
December 31, 1995, owned approximately 9.9% of ITC Holding's outstanding stock),
and certain affiliates of NEIPCS Inc. (which, as of December 31, 1995, owned
approximately 11.2% of ITC Holding's outstanding stock) and certain affiliates
of South Atlantic PCS Corporation (which, as of December 31, 1995, owned
approximately 2.4% of ITC Holding's outstanding stock). Mr. Timmerman and Robert
A. Dolson, President of NEIPCS Inc., serve on the Board of Directors of ITC
Holding. ITC Holding and certain directors and officers of ITC Holding and
InterCel have substantial investments in affiliates of South Atlantic PCS
Corporation.
Loan from Powertel. Powertel PCS Partners loaned approximately $900,000 to
the Company, at an annual interest rate of 8% (the "Powertel Loan"), to pay
expenses associated with the Company's combination with Powertel PCS Partners
and the Stock Offering and the Unit Offering. The Powertel Loan was eliminated
on February 7, 1996 in connection with the Company's combination with Powertel
PCS Partners.
Other Transactions. As of March 31, 1997, SCANA owned approximately 16.7%
of the outstanding Common Stock of the Company. In addition, Messrs. Gressette
and Timmerman are directors of the Company and are directors and executive
officers of SCANA, and SCANA, through SCANA Communications, owns all of the
Series B Preferred Stock of the Company. Pursuant to a stock purchase agreement
dated as of March 14, 1997, SCANA Communications has agreed, subject to certain
closing conditions, to purchase 50,000 shares of Series D Convertible Preferred
Stock for $22.5 million. The Company also purchased certain generating equipment
from SCANA for approximately $3.5 million in 1996.
As of March 31, 1997, The Huff Alternative Income Fund, L.P. ("Huff") owned
approximately 7.5% of the outstanding Common Stock of the Company. Pursuant to a
stock purchase agreement dated as of March 14, 1997, Huff has agreed, subject to
certain closing conditions, to purchase 50,000 shares of Series C Convertible
Preferred Stock for $22.5 million.
The Company purchases certain equipment and services related to the
buildout of its PCS system from Ericsson Inc. ("Ericsson") and certain of
Ericsson's subsidiaries. Ericsson owns all of the Series A Convertible Preferred
Stock of the Company. The Company's total purchases for equipment and services
were $71.0 million in 1996. In addition, Ericsson provides the Company with
financing for such purchases under a $165.0 million credit agreement.
The Company sells cellular telephones and provides cellular services to
certain of its affiliates and their employees. Revenues recorded by the Company
for these sales and services were approximately $258,411, $248,176 and $233,956
in 1994, 1995 and 1996, respectively.
The Company is currently negotiating a master site lease agreement and
construction management agreement with TowerCom, Inc. ("TowerCom"), a company
that is 45% owned by South Atlantic Venture
29
<PAGE> 35
Fund III, Limited Partnership of which Donald W. Burton is the managing general
partner. Under the proposed terms of these agreements, TowerCom would fund the
construction of certain new tower facilities where the Company would perform
construction management services for such construction projects. Subsequent to
construction, the Company would lease tower space at such facilities for
equipment cell sites. The Company anticipates that approximately five sites will
be built and leased pursuant to these agreements.
Beginning in November 1991 the Company has been leasing a building located
in Lanett, Alabama, from Riverside Corporation, in which the mother and sisters
of William H. Scott, III have the majority ownership interest. The lease runs
for a period of five years, with options to renew for three successive five-year
periods. ITC Holding subleased the building from the Company during the period
from November 1991 to April 1992. The total amount payable during the term of
this lease (not including any renewal thereof) is $141,000 (approximately $2.94
per square foot per year).
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who beneficially own more than 10% of a registered
class of the Company's equity securities to file reports of securities ownership
and changes in such ownership with the Securities and Exchange Commission (the
"SEC" or the "Commission") and the Nasdaq National Market. Officers, directors
and greater than 10% beneficial owners also are required by rules promulgated by
the SEC to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that, during fiscal 1996, it executive officers, directors and greater
than 10% beneficial owners complied with all applicable Section 16(a) filing
requirements, except that reports covering transactions on Form 3 were filed
late by Rodney D. Dir, Edward C. Horner and Nicholas J. Jebbia and reports
covering transactions on Form 4 were filed late by Fred G. Astor, Jr., Edward C.
Horner, Nicholas J. Jebbia and Walter R. Pettiss. All such transactions have
been reported by each of the foregoing.
30
<PAGE> 36
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table provides information, as of March 31, 1997 concerning
beneficial ownership of Common Stock by: (i) each person or entity known by the
Company to beneficially own more than 5% of the outstanding Common Stock; (ii)
each director of the Company; (iii) each Named Executive Officer; and (iv) all
directors and executive officers of the Company as a group. The information in
the table is based on information from the named persons regarding ownership of
Common Stock. Unless otherwise indicated, each of the stockholders has sole
voting and investment power with respect to the shares shown as beneficially
owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME AND ADDRESS(A) OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(B) STOCK OUTSTANDING
--------------------------------------- ----------------------- -----------------
<S> <C> <C>
ITC Holding Company, Inc.(c)........................... 7,337,711 27.3%
SCANA Communications, Inc.(d).......................... 4,494,892 16.7
W.R. Huff(e)........................................... 2,015,450 7.5
The Huff Alternative Income Fund, L.P.(f).............. 2,009,200 7.5
Fred G. Astor, Jr.(g).................................. 99,227 *
Donald W. Burton(h).................................... 1,583,727 5.9
Bert G. Clifford(g)(i)................................. 1,189,361 4.4
O. Gene Gabbard(g)(j).................................. 193,691 *
Lawrence M. Gressette, Jr.............................. -- --
Nicholas J. Jebbia..................................... 2,500 *
George R. Johnson(g)................................... 10,000 *
Campbell B. Lanier, III(g)(j)(k)....................... 233,991 *
Maurice P. O'Connor(g)(l).............................. 31,529 *
Walter R. Pettiss(g)(m)................................ 11,128 *
William H. Scott, III(g)(n)............................ 59,800 *
Allen E. Smith(g)...................................... 132,749 *
William B. Timmerman................................... -- --
Donald W. Weber(g)..................................... 19,500 *
All executive officers and directors as a group (17
persons)(g)-(n)...................................... 3,399,142 12.6
</TABLE>
- ---------------
* Less than one percent.
(a) The addresses of the beneficial owners of more than 5% of the Common Stock
are as follows: ITC Holding -- 1239 O.G. Skinner Drive, West Point, Georgia
31833; SCANA Communications, Inc. (a wholly owned subsidiary of
SCANA) -- 440 Knox Abbott Drive, Suite 240, Cayce, South Carolina 29033;
Mr. Huff and The Huff Alternative Income Fund, L.P. -- 67 Park Place,
Morristown, New Jersey 07960; and Mr. Burton -- 614 West Bay Street, Suite
200, Tampa, Florida 33606.
(b) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if such person has or shares voting power or investment power
with respect to such security, or has the right to acquire beneficial
ownership at any time within 60 days from March 31, 1997. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares.
(c) ITC Holding has pledged all of its stock in the Company to certain lenders
in connection with a credit facility.
(d) Does not include: (i) 4,545,450 shares of Common Stock issuable upon
conversion of the Series B Preferred Stock; and (ii) 1,764,706 shares of
Common Stock issuable upon conversion of the Series D Convertible Preferred
Stock.
(e) Includes 2,009,200 shares held by The Huff Alternative Income Fund, L.P.
and 6,250 shares held by Mr. Huff in his personal account. Mr. Huff is
president of Paladin Court Co., Inc., the general manager of WRH Partners,
LLC, which is the general partner of The Huff Alternative Income Fund, L.P.
Mr. Huff disclaims beneficial ownership of the shares held by The Huff
Alternative Income Fund, L.P.
31
<PAGE> 37
(f) Does not include 1,764,706 shares of Common Stock issuable upon conversion
of the Series C Convertible Preferred Stock.
(g) Includes the following shares that the named individuals have the right to
purchase within 60 days from March 31, 1997 pursuant to options:
<TABLE>
<S> <C>
Fred G. Astor, Jr........................................... 77,427
Bert G. Clifford............................................ 8,325
O. Gene Gabbard............................................. 17,500
George R. Johnson........................................... 10,000
Campbell B. Lanier, III..................................... 7,500
Maurice P. O'Connor......................................... 25,554
Walter R. Pettiss........................................... 10,000
William H. Scott, III....................................... 37,500
Allen E. Smith.............................................. 106,149
Donald W. Weber............................................. 17,500
-------
Total............................................. 317,455
=======
</TABLE>
(h) Includes 464,417 shares held of record by The Burton Partnership, Limited
Partnership, of which Mr. Burton is the sole general partner; 654,893
shares held of record by South Atlantic Venture Fund II, Limited
Partnership, of which South Atlantic Venture Partners II, Limited
Partnership is the sole general partner, of which Mr. Burton is the
managing general partner; and 464,417 shares held of record by South
Atlantic Venture Fund III, Limited Partnership, of which South Atlantic
Venture Partners III, Limited Partnership is the sole general partner, of
which Mr. Burton is the managing general partner.
(i) Includes 116,012 shares held in escrow by the First National Bank of West
Point in connection with the Company's acquisition of Unicel. Also includes
542,176 shares (108,288 shares of which are currently held in escrow) held
of record by Coral B. Clifford, Mr. Clifford's wife.
(j) Includes 176,191 shares held of record by The Charitable Remainder
Education Trust III, of which Messrs. Gabbard and Lanier are trustees.
Messrs. Gabbard and Lanier disclaim beneficial ownership of these shares.
(k) Includes 2,200 shares held of record by Jane Lanier, Mr. Lanier's wife, and
500 shares held by Mr. Lanier as custodian for his son. Mr. Lanier
disclaims beneficial ownership of such shares.
(l) Includes 151 shares held in escrow by the First National Bank of West Point
in connection with the Company's acquisition of Unicel, 105 shares held by
Mr. O'Connor as trustee for his son and 100 shares held by Mr. O'Connor's
wife as trustee for his daughter.
(m) Includes warrants to purchase 128 shares which are exercisable immediately.
(n) Includes 500 shares held of record by Martha Scott, Mr. Scott's wife,
individually, 3,600 shares held by Martha Scott as trustee, and 100 shares
held of record by Mr. Scott's minor daughter. Mr. Scott disclaims
beneficial ownership of such shares.
32
<PAGE> 38
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 5)
The Board of Directors has appointed the firm of Arthur Andersen LLP to
continue as independent public accountants for the Company for the year ending
December 31, 1997, subject to ratification of such appointment by the
stockholders. Arthur Andersen LLP has served as the Company's independent public
accountants since 1991. Unless otherwise indicated, properly executed proxies
will be voted in favor of ratifying the appointment of Arthur Andersen LLP,
independent certified public accountants, to audit the books and accounts of the
Company for the year ending December 31, 1997. No determination has been made as
to what action the Board of Directors would take if the stockholders do not
ratify the appointment.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
REQUIRED VOTE AND RELATED MATTERS
The approval by a majority of the total votes cast on the proposal is
required to approve the proposal to ratify the selection of Arthur Andersen LLP
as independent public accountants for the fiscal year ending December 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 5.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
The Company provides all stockholders with the opportunity, under certain
circumstances, to participate in the governance of the Company by submitting
proposals that they believe merit consideration at the next Annual Meeting of
Stockholders, which currently is expected to be held in May 1998. To enable
management to analyze and respond adequately to proposals and to prepare
appropriate proposals for presentation in the Company's Proxy Statement for the
next Annual Meeting of Stockholders, any such proposal should be submitted to
the Company no later than January 21, 1998, to the attention of its Secretary,
at its principal place of business in West Point, Georgia. Stockholders may also
submit the names of individuals who they wish to be considered by the Board of
Directors as nominees for directors.
VOTING PROCEDURES
Stockholders' votes will be tabulated by the persons appointed by the
Chairman of the Annual Meeting to act as inspectors of election for the Annual
Meeting. All shares represented and entitled to vote on a proposal, whether
voted for or against the proposal, or abstaining from voting, will be counted as
present and entitled to vote on the proposal. Accordingly, an abstention from
voting on the proposal by a stockholder present in person or represented by
proxy at the Annual Meeting will have the same legal effect as a vote against
the matter, even though the stockholder may interpret an abstention differently.
33
<PAGE> 39
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference into this Proxy Statement the
following sections of the Company's Annual Report, a copy of which is included
herewith: (i) Management's Discussion and Analysis set forth at pages 15 through
27 thereof; (ii) Consolidated Financial Statements set forth at pages 28 through
33 thereof; (iii) Notes to Consolidated Financial Statements set forth at pages
34 through 50 thereof; and (iv) Report of Independent Auditors set forth at page
51 thereof.
The Company will provide without charge to each person to whom a copy of
this Proxy Statement is delivered, on the written or oral request of such person
and by first class mail or other equally prompt means within one business day of
receipt of such request, a copy of any and all of the documents referred to
above which have been incorporated by reference in this Proxy Statement. Such
written or oral request should be directed to Fred G. Astor, Jr., Executive Vice
President and Chief Financial Officer, InterCel, Inc., 1233 O.G. Skinner Drive,
West Point, Georgia 31833; (706) 645-2000.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, is required to file reports, proxy statements
and other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of the reports, proxy statements and
other information can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549, at prescribed rates. The Common Stock of the
Company is traded on the Nasdaq Stock Market (Symbol: ICEL), and such reports,
proxy statements and other information concerning the Company also can be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1996 accompanies this Proxy Statement. THE COMPANY HAS FILED AN
ANNUAL REPORT ON FORM 10-K FOR ITS 1996 FISCAL YEAR WITH THE COMMISSION.
STOCKHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF THE ANNUAL REPORT ON FORM
10-K BY WRITING TO OR TELEPHONING FRED G. ASTOR, JR., EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, INTERCEL, INC., 1233 O.G. SKINNER DRIVE, WEST
POINT, GEORGIA 31833; (706) 645-2000.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
for action by the stockholders at the Annual Meeting. If, however, any other
matters not now known are properly brought before the Annual Meeting, the
persons named in the accompanying proxy will vote such proxy on such matters as
determined by a majority of the Board of Directors.
By Order of the Board of Directors
/s/ ALLEN E. SMITH
Allen E. Smith
Chief Executive Officer
West Point, Georgia
Dated: April 22, 1997
34
<PAGE> 40
APPENDIX A
INTERCEL, INC.
AMENDED AND RESTATED 1991 STOCK OPTION PIAN
<PAGE> 41
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. PURPOSE................................................ A-3
2. ADMINISTRATION......................................... A-3
2.1. Board.......................................... A-3
2.2. Committee...................................... A-3
2.3. No Liability................................... A-3
3. STOCK.................................................. A-3
4. ELIGIBILITY............................................ A-4
5. EFFECTIVE DATE AND TERM OF THE PLAN.................... A-4
5.1. Effective Date................................. A-4
5.2. Term........................................... A-4
6. GRANT OF OPTIONS....................................... A-4
7. LIMITATION ON INCENTIVE STOCK OPTIONS.................. A-4
8. OPTION AGREEMENTS...................................... A-4
9. OPTION PRICE........................................... A-5
10. TERM AND EXERCISE OF OPTIONS........................... A-5
10.1. Term.......................................... A-5
10.2. Option Period and Limitations on Exercise..... A-5
10.3. Method of Exercise............................ A-6
11. TRANSFERABILITY OF OPTIONS............................. A-6
12. TERMINATION OF EMPLOYMENT.............................. A-6
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY............. A-7
13.1. Death......................................... A-7
13.2. Disability.................................... A-7
14. USE OF PROCEEDS........................................ A-7
15. SECURITIES ACT OF 1933................................. A-7
16. SECURITIES EXCHANGE ACT OF 1934: RULE 16B-3............ A-8
16.1. General....................................... A-8
16.2. Stock Option Committee........................ A-8
16.3. Action by the Board........................... A-8
16.4. Additional Restriction on Transfer of Stock... A-8
16.5. Additional Requirement of Stockholders'
Approval............................................ A-8
17. AMENDMENT AND TERMINATION OF THE PLAN.................. A-9
18. EFFECT OF CHANGES IN CAPITALIZATION.................... A-9
18.1. Changes in Stock.............................. A-9
18.2. Reorganization With Corporation Surviving..... A-9
18.3. Other Reorganizations; Sale of Assets/Stock... A-9
18.4. Adjustments................................... A-10
18.5. No Limitations on Corporation................. A-10
19. DISCLAIMER OF RIGHTS................................... A-10
20. NONEXCLUSIVITY OF THE PLAN............................. A-10
</TABLE>
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<PAGE> 42
INTERCEL, INC.
AMENDED AND RESTATED 1991 STOCK OPTION PLAN
InterCel, Inc., a Delaware corporation (the "Corporation"), sets forth
herein the terms of this Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 below) an
opportunity to acquire (or increase) a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to remain in the employ or service of the Corporation
or that of one or more of its subsidiaries. Each stock option granted under the
Plan (an "Option") is intended to be an "incentive stock option" ("Incentive
Stock Option") within the meaning of Section 422 of the Internal Revenue Code of
1986, or the corresponding provision of any subsequently enacted tax statute, as
amended from time to time (the "Code"), except to the extent that any such
Option would exceed the limitations set forth in Section 7 below and except for
Options specifically designated at the time of grant as not being "incentive
stock options."
2. ADMINISTRATION
2.1. BOARD
The Plan shall be administered by the Board of Directors of the Corporation
(the "Board"), which shall have the full power and authority to take all actions
and to make all determinations required or provided for under the Plan or any
Option granted or Option Agreement (as defined in Section 8 below) entered into
hereunder and all such other actions and determinations not inconsistent with
the specific terms and provisions of the Plan deemed by the Board to be
necessary or appropriate to the administration of the Plan or any Option granted
or Option Agreement entered into hereunder. The interpretation and construction
by the Board of any provision of the Plan or of any Option granted or Option
Agreement entered into hereunder shall be final and conclusive.
2.2. COMMITTEE
The Board may from time to time appoint a Stock Option Committee (the
"Committee"). The Board, in its sole discretion, may provide that the role of
the Committee shall be limited to making recommendations to the Board concerning
any determinations to be made and actions to be taken by the Board pursuant to
or with respect to the Plan, or the Board may delegate to the Committee such
powers and authorities related to the administration of the Plan, as set forth
in Section 2.1. above, as the Board shall determine, consistent with the
Certificate of Incorporation and By-laws of the Corporation and applicable law.
In the event that the Plan or any Option granted or Option Agreement entered
into hereunder provides for any action to be taken by or determination to be
made by the Board, such action may be taken by or such determination may be made
by the Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final and conclusive.
2.3. NO LIABILITY
No member of the Board or of the Committee shall be liable for any action
or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of Common Stock and/or shares of Preferred Stock of the
Corporation (such shares of Common Stock and Preferred
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<PAGE> 43
Stock being collectively referred to herein as the "Stock"), which shares may be
treasury shares or authorized but unissued shares. The number of shares of Stock
that may be issued pursuant to Options granted under the Plan shall not exceed
in the aggregate 3,000,000 shares of Stock, which number of shares is subject to
adjustment as provided in Section 18.4. below. If any Option expires, terminates
or is terminated for any reason prior to exercise in full, the shares of Stock
that were subject to the unexercised portion of such Option shall be available
for future Options granted under the Plan.
4. ELIGIBILITY
Options may be granted under the Plan to any employee of the Corporation or
any "subsidiary corporation" thereof within the meaning of Section 424(f) of the
Code (a "Subsidiary") (including any such employee who is an officer or director
of the Corporation or any Subsidiary) as the Board shall determine and designate
from time to time prior to expiration or termination of the Plan. An individual
may hold more than one Option, subject to such restrictions as are provided
herein. The maximum number of shares of Stock subject to Options that may be
granted under the Plan to any employee of the Corporation or any Subsidiary is
200,000 shares in any calendar year (subject to adjustment pursuant to Section
18 hereof).
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1. EFFECTIVE DATE
The Plan shall be effective as of the date of adoption by the Board,
subject to approval of the Plan within one year of such effective date by the
affirmative votes of the holders of a majority of the shares present, or
represented, and entitled to vote at a duly held meeting of the stockholders of
the Corporation at which a quorum is present, either in person or by proxy, or
by written consent in accordance with applicable state law and the articles of
incorporation and by-laws of the Corporation; provided, however, that upon
approval of the Plan by the stockholders of the Corporation as set forth above,
all options granted under the Plan on or after the effective date shall be fully
effective as if the stockholders of the Corporation had approved the Plan on the
effective date. If the stockholders fail to approve the Plan within one year of
such effective date, any options granted hereunder shall be null, void and of no
effect.
5.2. TERM
The Plan shall terminate on the date ten years after the effective date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time prior to the date of termination of the Plan, grant to
such eligible individuals as the Board may determine ("Optionees") Options to
purchase such number of shares of the Stock on such terms and conditions as the
Board may determine, including any terms or conditions which may be necessary to
qualify such Options as "incentive stock options" under Section 422 of the Code.
The date on which the Board approves the grant of an Option shall be considered
the date on which such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option shall constitute an Incentive Stock Option only to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee's employer corporation and its
parent and subsidiary corporations within the meaning of Section 422(d) of the
Code) does not exceed $100,000.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements") to be executed by the Corporation and by the
Optionee, in such form or forms as the Board
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<PAGE> 44
shall from time to time determine. Option Agreements covering Options granted
from time to time or at the same time need not contain similar provisions;
provided, however, that all such Option Agreements shall comply with all terms
of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement.
In the case of an Option that is intended to constitute an Incentive Stock
Option, the option price shall be not less than the greater of par value or 100
percent of the fair market value of a share of the Stock covered by the Option
on the date the Option is granted (as determined in good faith by the Board);
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than ten
percent), the Option Price of an Option which is intended to be an Incentive
Stock Option shall be not less than the greater of par value or 110 percent of
the fair market value of a share of the Stock covered by the Option at the time
such Option is granted. In the event that the Stock is listed on an established
national or regional stock exchange, is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or is publicly
traded in an established securities market, in determining the fair market value
of the Stock, the Board shall use the closing price of the Stock on such
exchange or System or in such market (the highest such closing price if there is
more than one such exchange or market) on the date the Option is granted (or, if
there is no such closing price, then the Board shall use the mean between the
highest bid and lowest asked prices or between the high and low prices on such
date), or, if no sale of the Stock has been made on such day, on the next
preceding day on which any such sale shall have been made. In the case of an
Option not intended to constitute an Incentive Stock Option, the Option Price
shall be not less than the par value of the Stock covered by the Option.
10. TERM AND EXERCISE OF OPTIONS
10.1. TERM
Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of ten years (ten
years and 30 days, in the case of an Option which is not designated as an
Incentive Stock Option) from the date such Option is granted, or on such date
prior thereto as may be fixed by the Board and stated in the Option Agreement
relating to such Option; provided, however, that in the event the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock
ownership of more than ten percent), an Option granted to such Optionee which is
intended to be an Incentive Stock Option shall in no event be exercisable after
the expiration of five years from the date it is granted.
10.2. OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable, in whole or in
part, at any time and from time to time over a period commencing on or after the
date of grant and ending upon the expiration or termination of the Option, as
the Board shall determine and set forth in the Option Agreement relating to such
Option. Without limiting the foregoing, the Board, subject to the terms and
conditions of the Plan, may in its sole discretion provide that an Option may
not be exercised in whole or in part for a stated period or periods of time
during which such Option is outstanding; provided, however, that any such
limitation on the exercise of an Option contained in any Option Agreement may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised. Notwithstanding any
other provisions of the Plan, no Option shall be exercisable in whole or in part
prior to the date the Plan is approved by the stockholders of the Corporation as
provided above.
A-5
<PAGE> 45
10.3. METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by delivery to the
Corporation on any business day, at its principal office addressed to the
attention of the President, of written notice of exercise, which notice shall
specify the number of shares with respect to which the Option is being exercised
and shall be accompanied by payment in full of the Option Price of the shares
for which the Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in part, at any
time shall be the lesser of 100 shares or the maximum number of shares available
for purchase under the Option at the time of exercise. Payment of the Option
Price for the shares of Stock purchased pursuant to the exercise of an Option
shall be made, as determined by the Board and set forth in the Option Agreement
pertaining to an Option, either (i) in cash or by check payable to the order of
the Corporation (which check may, in the discretion of the Corporation, be
required to be certified); (ii) through the tender to the Corporation of shares
of Stock, which shares shall be valued, for purposes of determining the extent
to which the Option Price has been paid thereby, at their fair market value
(determined in the manner described in Section 9 above) on the date of exercise;
or (iii) by a combination of the methods described in (i) and (ii); provided,
however, that the Board may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. An attempt to
exercise any Option granted hereunder other than as set forth above shall be
invalid and of no force and effect. Promptly after the exercise of an Option and
the payment in full of the Option Price of the shares of Stock covered thereby,
the individual exercising the Option shall be entitled to the issuance of a
Stock certificate or certificates evidencing his ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares which
were purchased pursuant to the exercise of an Option which is not an Incentive
Stock Option. An individual holding or exercising an Option shall have none of
the rights of a stockholder until the shares of Stock covered thereby are fully
paid and issued to him, and, except as provided in Section 18. below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.
11. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee, only such Optionee (or, in the event of
legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
12. TERMINATION OF EMPLOYMENT
Upon the termination of the employment of an Optionee with the Corporation
or a Subsidiary, other than by reason of the death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option granted to an Optionee pursuant to the Plan shall
terminate, and such Optionee shall have no further right to purchase shares of
Stock pursuant to such Option; provided, however, that in the event that such
termination of employment is by reason of the Optionee's retirement with the
consent of the Corporation or a Subsidiary in accordance with the normal
retirement policies of the Corporation or a Subsidiary, as the case may be, then
such Optionee shall have the right (subject to the general limitations on
exercise set forth in Section 10.2. above), at any time within three months
after such retirement and prior to termination of the Option pursuant to Section
10.1. above, to exercise, in whole or in part, any Option held by such Optionee
at the date of such retirement, whether or not such Option was exercisable
immediately prior to such retirement; provided further, that the Board may
provide, by inclusion of appropriate language in any Option Agreement, that an
Optionee may (subject to the general limitations on exercise set forth in
Section 10.2. above), in the event of termination of employment of the Optionee
with the Corporation or a Subsidiary, exercise an Option, in whole or in part,
at any time subsequent to such termination of employment and prior to
termination of the Option pursuant to Section 10.1. above either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 10.2. above, as the Board, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement.
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<PAGE> 46
Whether a termination of employment is to be considered by reason of retirement
with the consent of the Corporation or a Subsidiary in accordance with the
normal retirement policies of the Corporation or a Subsidiary, as the case may
be, and whether a leave of absence or leave on military or government service
shall constitute a termination of employment for purposes of the Plan, shall be
determined by the Board, which determination shall be final and conclusive. For
purposes of the Plan, a termination of employment with the Corporation or a
Subsidiary shall not be deemed to occur if the Optionee is immediately
thereafter employed with the Corporation or any other Subsidiary.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
13.1. DEATH
If an Optionee dies while employed by the Corporation or a Subsidiary, the
executors or administrators or legatees or distributees of such Optionee's
estate shall have the right (subject to the general limitations on exercise set
forth in Section 10.2. above), at any time within one year after the date of
such Optionee's death and prior to termination of the Option pursuant to Section
10.1. above, to exercise any Option held by such Optionee at the date of such
Optionee's death, whether or not such Option was exercisable immediately prior
to such Optionee's death; provided, however, that the Board may provide by
inclusion of appropriate language in any Option Agreement that, in the event of
the death of an Optionee, the executors or administrators or legatees or
distributees of such Optionee's estate may exercise an Option (subject to the
general limitations on exercise set forth in Section 10.2. above), in whole or
in part, at any time subsequent to such Optionee's death and prior to
termination of the Option pursuant to Section 10.1. above, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 10.2. above, as the Board, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement.
13.2. DISABILITY
If an Optionee terminates employment with the Corporation or a Subsidiary
by reason of the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, then such Optionee shall have the right
(subject to the general limitations on exercise set forth in Section 10.2.
above), at any time within one year after such termination of employment and
prior to termination of the Option pursuant to Section 10.1. above, to exercise,
in whole or in part, any Option held by such Optionee at the date of such
termination of employment, whether or not such Option was exercisable
immediately prior to such termination of employment; provided, however, that the
Board may provide, by inclusion of appropriate language in any Option Agreement
that an Optionee may (subject to the general limitations on exercise set forth
in Section 10.2. above), in the event of the termination of employment of the
Optionee with the Corporation or a Subsidiary by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option, in whole or in part, at any time subsequent to
such termination of employment and prior to termination of the Option pursuant
to Section 10.1. above, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 10.2. above, as the Board, in
its sole and absolute discretion, shall determine and set forth in the Option
Agreement. Whether a termination of employment is to be considered by reason of
"permanent and total disability" for purposes of this Plan shall be determined
by the Board, which determination shall be final and conclusive.
14. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the
Corporation.
15. SECURITIES ACT OF 1933
The Corporation shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or the Corporation of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.
Specifically in connection with the Securities Act of 1933, as
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<PAGE> 47
amended (the "Securities Act"), upon exercise of any Option, unless a
registration statement under such Act is in effect with respect to the shares of
Stock covered by such Option, the Corporation shall not be required to sell or
issue such shares unless the Corporation has received evidence satisfactory to
it that the holder of such Option may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in this connection
by the Corporation shall be final, binding, and conclusive. The Corporation may,
but shall in no event be obligated to, register any securities covered hereby
pursuant to the Securities Act. The Corporation shall not be obligated to take
any affirmative action in order to cause the exercise of an Option or the
issuance of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
16. SECURITIES EXCHANGE ACT OF 1934: RULE 16B-3
16.1. GENERAL
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and after
the date on which the Corporation first registers a class of equity security
under Section 12 of the Exchange Act (the "Registration Date"). From and after
the Registration Date, any provision inconsistent with Rule 16b-3 (as in effect
on the Registration Date) shall, to the extent permitted by law and determined
to be advisable by the Committee (constituted in accordance with Section 2.2.)
or the Board (acting pursuant to Section 2.1.), be inoperative and void.
Moreover, in the event the Plan does not include a provision required by Rule
16b-3 to be stated therein, such provision (other than one relating to
eligibility requirements and the amount and timing of awards) shall be deemed
automatically to be incorporated into the Plan insofar as participants subject
to Section 16 are concerned. In addition, from and after the Registration Date
the provisions set forth in Sections 16.2. through 16.5. shall apply.
16.2. STOCK OPTION COMMITTEE
From and after the Registration Date, the Committee appointed pursuant to
Section 2.2. shall consist of not fewer than two members of the Board, none of
whom, during the twelve months prior to service on such Committee, shall have
been granted an Option under this Plan and each of whom shall qualify (at the
time of appointment to the Committee and during all periods of service on the
Committee) in all respects as a "disinterested person" as defined in Rule 16b-3.
16.3. ACTION BY THE BOARD
From and after the Registration Date, the Board may act under the Plan
other than by, or in accordance with the recommendations of, the Committee,
constituted as set forth in Section 2.2. above, only if all members of the Board
are "disinterested persons" as defined in Rule 16b-3.
16.4. ADDITIONAL RESTRICTION ON TRANSFER OF STOCK
From and after the Registration Date, no director, officer or other
"insider" of the Corporation subject to Section 16 of the Exchange Act shall be
permitted to sell Stock (which such "insider" had received upon exercise of an
Option) during the six months immediately following the grant of such Option.
16.5. ADDITIONAL REQUIREMENT OF STOCKHOLDERS' APPROVAL
From and after the Registration Date, no amendment by the Board shall,
without approval by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or by proxy, and voting on the
amendment, or by written consent in accordance with applicable state law and the
articles of incorporation and by-laws of the
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<PAGE> 48
Corporation, materially increase the benefits accruing to eligible individuals
under the Plan or take any other action that would require the approval of such
stockholders pursuant to Rule 16b-3.
17. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by the affirmative votes of the holders of a majority of the shares
present, or represented, and entitled to vote at a duly held meeting of the
stockholders of the Corporation at which a quorum is present, either in person
or by proxy, or by written consent in accordance with applicable state law and
the articles of incorporation and by-laws of the Corporation, (i) change Plan
eligibility requirements; (ii) increase the maximum number of shares subject to
the Plan (except as permitted under Section 18 hereof); (iii) materially
increase the benefits under the Plan; or (iv) otherwise cause the Plan to not
comply with Rule 16b-3 (or any successor rule or other regulatory requirements)
or the Code. Except as permitted under Section 18 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the holder
of the Option, alter or impair rights or obligations under any Option
theretofore granted under the Plan.
18. EFFECT OF CHANGES IN CAPITALIZATION
18.1. CHANGES IN STOCK
If the outstanding shares of Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Corporation by reason of the conversion of the outstanding shares of
Preferred Stock to shares of Common Stock of the Corporation pursuant to the
terms of the Certificate of Incorporation of the Corporation, or by reason of
any recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective date of the
Plan, the number and kinds of shares for the purchase of which Options may be
granted under the Plan shall be adjusted proportionately and accordingly by the
Corporation. In addition, the number and kind of shares for which Options are
outstanding shall be adjusted proportionately and accordingly, so that the
proportionate interest of the holder of the Option immediately following such
event shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share.
18.2. REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 18.3. hereof, if the Corporation shall be the surviving
corporation in any reorganization, merger or consolidation of the Corporation
with one or more other corporations, any Option theretofore granted pursuant to
the Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Option would have been entitled
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option immediately prior to such
reorganization, merger or consolidation.
18.3. OTHER REORGANIZATIONS; SALE OF ASSETS/STOCK
Upon the dissolution or liquidation of the Corporation, or upon a merger,
consolidation or reorganization of the Corporation with one or more other
corporations in which the Corporation is not the surviving corporation, or upon
a sale of substantially all of the assets of the Corporation to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving corporation) approved
by the Board which results in any person or entity owning 80 percent or more of
the combined voting power of all classes of stock of the Corporation, the Plan
and all Options outstanding
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<PAGE> 49
which event the Plan and Options theretofore granted shall continue in the
manner and under the terms so provided. In the event of any such termination of
the Plan, each individual holding an Option shall have the right (subject to the
general limitations on exercise set forth in Section 10.2. above), immediately
prior to the occurrence of such termination and during such period occurring
prior to such termination as the Board in its sole discretion shall designate,
to exercise such Option in whole or in part, whether or not such Option was
otherwise exercisable at the time such termination occurs and without regard to
any installment limitation on exercise imposed pursuant to Section 10.2. above,
but subject to any additional limitations that the Board may, in its sole
discretion, include in any Option Agreement. The Board shall send written notice
of an event that will result in such a termination to all individuals who hold
Options not later than the time at which the Corporation gives notice thereof to
its stockholders.
18.4. ADJUSTMENTS
Adjustments under this Section 18. related to stock or securities of the
Corporation shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
18.5. NO LIMITATIONS ON CORPORATION
The grant of an Option pursuant to the Plan shall not affect or limit in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
19. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Corporation or any
Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation of
any individual at any time, or to terminate any employment or other relationship
between any individual and the Corporation or any Subsidiary.
20. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
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<PAGE> 50
APPENDIX
PROXY SOLICITED FOR ANNUAL MEETING OF STOCKHOLDERS OF INTERCEL, INC.
TO BE HELD MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints ALLEN E. SMITH and FRED G.
ASTOR, JR., and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent and vote, as indicated below, all of
the shares of Common Stock of InterCel, Inc. ("InterCel") that the undersigned
would be entitled to vote at the 1997 Annual Meeting of Stockholders of InterCel
to be held at The Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854 at 10:00
a.m. local time, and at any adjournment, upon the matters described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement,
receipt of which is acknowledged, and upon any other business that may properly
come before the meeting or any adjournment. Said proxies are directed to vote on
the matters described in the Notice of Annual Meeting of Stockholders and Proxy
Statement as follows, and otherwise in their discretion upon such other business
as may properly come before the meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED: (I) FOR PROPOSAL 1 TO APPROVE AND ADOPT THE PROPOSED AMENDMENT TO THE
TERMS OF THE CERTIFICATE OF DESIGNATIONS FOR THE SERIES B PREFERRED STOCK; (II)
FOR PROPOSAL 2 TO APPROVE AND ADOPT THE PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO POWERTEL, INC.;
(III) FOR PROPOSAL 3 TO APPROVE AND ADOPT THE PROPOSED AMENDMENT TO THE EMPLOYEE
PLAN; (IV) FOR PROPOSAL 4 TO ELECT THE FOUR NOMINEES OF THE BOARD OF DIRECTORS
AS DIRECTORS, EACH FOR A THREE-YEAR TERM; AND (V) FOR PROPOSAL 5 TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997; AND AS THE PROXY HOLDER MAY
DETERMINE IN HIS DISCRETION WITH REGARD TO ANY OTHER MATTER PROPERLY BROUGHT
BEFORE THE ANNUAL MEETING.
PLEASE MARK, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
1. PROPOSAL to approve and adopt the proposed amendment to the terms of the
Certificate of Designations for the Series B Preferred Stock, which
amendment would extend the earliest possible conversion date for the
Series B Preferred Stock from June 28, 2000 (the fourth anniversary of the
issuance of the Series B Preferred Stock) to March 14, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL to approve and adopt the proposed amendment to the Restated
Certificate of Incorporation to change the Company's name to Powertel,
Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to approve and adopt the proposed amendment to the Employee Plan
to increase the number of shares reserved for issuance thereunder by
1,000,000 shares from 2,000,000 shares to 3,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on reverse side)
(continued from other side)
4. ELECTION OF DIRECTORS:
O. Gene Gabbard, William H. Scott, III, William B. Timmerman,
Donald W. Weber
[ ] FOR all nominees listed (except as
marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all
nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name(s) in the space provided below.)
5. PROPOSAL to ratify the appointment of Arthur Andersen LLP as independent
public accountants of the Company for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. IN THEIR DISCRETION, to act upon such other business as may properly come
before the meeting or any adjournment thereof.
Dated: , 1997
--------------------
--------------------------------
Signature of Stockholder(s)
--------------------------------
Signature of Stockholder(s)
Please sign exactly as your
name appears on this Proxy Card.
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
