<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>
POWERTEL, 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
(POWERTEL LOGO)
POWERTEL, INC.
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
April 20, 1999
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Powertel, Inc. to be held on Thursday, May 20, 1999 at 10:00 a.m. local time at
The Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854. At the Annual Meeting,
the Board of Directors will ask the stockholders to:
1. ratify the issuance of Powertel's Series E 6.5% Cumulative
Convertible Preferred Stock and Series F 6.5% Cumulative Convertible
Preferred Stock and approve all shares of common stock that may be issued
upon conversion of, and as dividends on, the preferred stock;
2. approve an amendment to Powertel's 1991 Stock Option Plan to
increase the number of shares of common stock reserved for issuance
thereunder from 3,000,000 shares to 5,000,000 shares;
3. elect two directors to serve on Powertel's Board of Directors, each
for a three-year term;
4. ratify the appointment of Arthur Andersen LLP as Powertel's
independent public accountants for the year ending December 31, 1999; and
5. transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
We have included a copy of Powertel's Annual Report to Stockholders with
the Proxy Statement. We encourage you to read the Annual Report. It includes our
audited financial statements for the year ended December 31, 1998 as well as
information about our operations, markets, products and services.
We urge you to carefully review the enclosed materials. Whether or not you
plan to attend the Annual Meeting, we ask that you read the information on the
following pages and promptly submit 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.
Your vote is very important, and we appreciate your cooperation in
considering and acting on the matters presented.
Sincerely,
/s/ Allen E. Smith
Allen E. Smith
Chief Executive Officer
<PAGE> 3
POWERTEL, INC.
1233 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-2000
---------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
---------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Powertel,
Inc. will be held on Thursday, May 20, 1999 at 10:00 a.m. local time at The
Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854, for the following
purposes:
1. To ratify Powertel's issuance of the Series E 6.5% Cumulative
Convertible Preferred Stock and Series F 6.5% Cumulative Convertible
Preferred Stock and approve all the shares of common stock that may be
issued upon conversion of, and as dividends on, the preferred stock
(Proposal 1);
2. To approve an amendment to Powertel's 1991 Stock Option Plan to
increase the number of shares of common stock reserved for issuance
thereunder from 3,000,000 shares to 5,000,000 shares (Proposal 2);
3. To elect two directors to serve on the Board of Directors, each for
a three-year term (Proposal 3);
4. To ratify the appointment of Arthur Andersen LLP as Powertel's
independent public accountants for the year ending December 31, 1999
(Proposal 4); and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on Monday, April 12,
1999 as the record date for determining the stockholders who will be entitled to
vote at the Annual Meeting. Only stockholders of record as of that time and date
will be 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
April 20, 1999
<PAGE> 4
POWERTEL, 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 20, 1999
---------------------------------------------
The Board of Directors of Powertel, Inc. ("Powertel," the "Company" or
"we") is soliciting your proxy for use at the Annual Meeting of Stockholders of
Powertel to be held at 10:00 a.m. local time, on Thursday, May 20, 1999 at The
Cotton Duck, 6101 20th Avenue, Valley, Alabama 36854, and at any adjournments
thereof. This Proxy Statement and the proxy card are first being mailed to the
stockholders of Powertel on or about April 23, 1999.
At the Annual Meeting, the Board of Directors will ask the stockholders to:
1. ratify the issuance of Powertel's Series E 6.5% Cumulative
Convertible Preferred Stock and Series F 6.5% Cumulative Convertible
Preferred Stock and approve all shares of common stock that may be issued
upon conversion of, or as dividends on, the preferred stock;
2. approve an amendment to Powertel's 1991 Stock Option Plan to
increase the number of shares of common stock reserved for issuance
thereunder from 3,000,000 shares to 5,000,000 shares;
3. elect two directors to serve on the Board of Directors, each for a
three-year term;
4. ratify the appointment of Arthur Andersen LLP as Powertel's
independent public accountants for the year ending December 31, 1999; and
5. transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Except for procedural matters, the Board of Directors 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, a majority of the Board of Directors will determine the
manner in which the persons named in the proxy card will vote the shares
represented by the proxies on such matters.
---------------------
STOCKHOLDERS SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION INCLUDED
IN THIS PROXY STATEMENT PRIOR TO RETURNING THEIR PROXIES.
---------------------
THE DATE OF THIS PROXY STATEMENT IS APRIL 20, 1999.
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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<S> <C>
PROXY AND VOTING INFORMATION................................ 1
APPROVAL OF CERTAIN MATTERS REGARDING POWERTEL'S SERIES E
PREFERRED STOCK AND SERIES F PREFERRED STOCK.............. 2
Terms of the Preferred Stock........................... 2
NASDAQ Stockholder Approval Requirements............... 3
Impact of Preferred Stock Issuance..................... 3
Impact of a Vote Against Issuance...................... 3
Potential Conflicts of Interest; Interests of Certain
Persons............................................... 4
Required Vote and Related Matters...................... 4
APPROVAL OF THE PROPOSED AMENDMENT TO THE 1991 STOCK OPTION
PLAN...................................................... 5
Description of the Stock Option Plan................... 5
Plan Benefits.......................................... 7
Federal Income Tax Consequences of the Stock Option
Plan.................................................. 7
Required Vote and Related Matters...................... 9
ELECTION OF DIRECTORS....................................... 10
Information as to Nominees, Other Directors and
Executive Officers.................................... 10
Director Nominees...................................... 11
Other Directors and Executive Officers................. 11
Committees of the Board of Directors and Nominations by
Stockholders.......................................... 13
Certain Relationships and Related Transactions......... 13
Compliance with Section 16(a) of the Exchange Act...... 15
EXECUTIVE COMPENSATION...................................... 16
Option Grants.......................................... 17
Option Exercises and Holdings.......................... 17
Benefit Plans.......................................... 17
Compensation of the Company's Directors................ 18
Compensation Committee Interlocks and Insider
Participation......................................... 19
Compensation/Stock Option Committee Report on Executive
Compensation.......................................... 19
Comparative Company Performance........................ 22
Beneficial Ownership of Capital Stock.................. 23
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS............................................... 25
Required Vote and Related Matters...................... 25
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS................ 25
VOTING PROCEDURES........................................... 25
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........... 25
AVAILABLE INFORMATION....................................... 26
OTHER MATTERS............................................... 26
</TABLE>
<TABLE>
<CAPTION>
APPENDICES
<S> <C> <C>
Appendix A Stock Purchase Agreement dated June 22, 1998 between
Powertel, Inc. and SCANA Communications, Inc. .............. A-1
Appendix B Stock Purchase Agreement dated June 22, 1998 between
Powertel, Inc. and ITC Wireless, Inc. ...................... B-1
Appendix C Amended and Restated 1991 Stock Option Plan................. C-1
</TABLE>
i
<PAGE> 6
PROXY AND VOTING INFORMATION
Who is Entitled to Vote. Holders of record of shares of common stock of
Powertel at the close of business on Monday, April 12, 1999 (the "Record Date")
may vote at the Annual Meeting or any adjournments thereof. On the Record Date,
27,435,283 shares of common stock were issued and outstanding and held of record
by approximately 478 holders. Each stockholder is entitled to one vote per
share.
Quorum. A quorum will exist if a majority of the shares of Powertel common
stock outstanding on the Record Date are present in person or represented by
proxy at the meeting. Proxies that are submitted by brokers as holders of record
and that do not indicate a vote for some of the proposals, because the brokers
have not received instructions from their customers or other beneficial owners
on how to vote on those proposals and do not have discretionary voting
authority, are called "broker non-votes." Abstentions, votes withheld with
respect to the election of one or more nominees as directors, and broker
non-votes will be counted as present at the Annual Meeting for the purpose of
determining whether a quorum is present.
How You May Vote. You may submit a proxy with your voting instructions by
completing, signing and mailing the enclosed proxy card. You should complete,
sign and mail the enclosed proxy card in accordance with its instructions. If
you sign and return a proxy card without indicating your voting instructions,
the named proxies will vote your shares FOR Proposal 1 to ratify certain matters
regarding Powertel's Series E Preferred Stock and Series F Preferred Stock, FOR
Proposal 2 to approve and adopt the amendment to the Stock Option Plan, FOR
Proposal 3 to elect two nominees of the Board of Directors as directors and FOR
Proposal 4 to ratify the appointment of Arthur Andersen LLP as independent
public accountants of Powertel for the year ending December 31, 1999.
Revocation of Proxies. You can revoke your proxy at any time before the
Annual Meeting by sending a properly signed written notice of your revocation to
the Assistant Secretary of Powertel, by submitting another proxy that is
properly signed and bears a later date or by voting in person at the Annual
Meeting. Attendance at the Annual Meeting will not itself revoke an earlier
submitted proxy. You should direct any written notices of revocation and related
correspondence to: Powertel, Inc., 1233 O.G. Skinner Drive, West Point, Georgia
31833, Attention: Lorrie G. Turner, Assistant Secretary.
Required Votes. There are different voting requirements for the various
proposals. Directors will be elected by a plurality of the votes cast at the
Annual Meeting. This means that only votes cast for a nominee will be counted,
and the nominees for director who receive the most votes will be elected as
directors. Broker non-votes and instructions to withhold authority to vote for
one or more of the nominees will result in those nominees receiving fewer votes,
but will not reduce the number of votes otherwise received by the nominees. Each
of the other proposals requires the approval of a majority of the shares of
Powertel common stock present or represented by proxy at the Annual Meeting and
entitled to vote on the proposal. Abstentions will have the same effect as votes
against such proposals, and broker non-votes will have no effect on the vote.
Cost of Proxy Solicitation. The cost of soliciting proxies will be borne
by Powertel. In addition to the use of the mails, Powertel's officers, directors
and employees will solicit proxies personally or by telephone or facsimile
transmission. These individuals will not be compensated specifically for their
solicitation activities. We will also make arrangements 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
Powertel will reimburse such persons for their reasonable expenses.
<PAGE> 7
APPROVAL OF CERTAIN MATTERS REGARDING POWERTEL'S
SERIES E PREFERRED STOCK AND SERIES F PREFERRED STOCK
(PROPOSAL 1)
The following is a summary of certain matters relating to Powertel's Series
E 6.5% Cumulative Convertible Preferred Stock (the "Series E Preferred") and
Series F 6.5% Cumulative Convertible Preferred Stock (the "Series F Preferred"
and, together with the Series E Preferred, the "Preferred Stock"). The following
summary is not complete and is qualified in its entirety by reference to the
Stock Purchase Agreements relating to the Series E Preferred and Series F
Preferred, and all annexes thereto, copies of which are being filed as Appendix
A and Appendix B, respectively, to this Proxy Statement.
TERMS OF THE PREFERRED STOCK
On June 22, 1998, Powertel sold to SCANA Communications, Inc. ("SCANA
Communications"), a wholly owned subsidiary of SCANA Corporation ("SCANA"),
50,000 shares of Series E Preferred for an aggregate purchase price of
$75,000,000. Also on June 22, 1998, Powertel sold to ITC Wireless, Inc. ("ITC
Wireless"), a wholly owned subsidiary of ITC Holding Company, Inc. ("ITC
Holding"), 50,000 shares of Series F Preferred for an aggregate purchase price
of $75,000,000. Proceeds from the sale of the Preferred Stock are being used to
fund the continuing buildout of Powertel's personal communications services
("PCS") network.
Each share of the Preferred Stock has a liquidation preference over the
Company's common stock and any other junior stock of $1,500 per share, plus
accrued and unpaid dividends, in the event of a liquidation, dissolution or
winding up of the Company. The 6.5% annual dividend on the Preferred Stock is
payable quarterly in common stock or cash. The Preferred Stock is redeemable at
the option of the Company on and after June 22, 2003 at a redemption price of
$1,500 per share, subject to adjustment, plus accrued and unpaid dividends, and
is required to be redeemed on June 22, 2010. The Preferred Stock becomes
convertible on June 22, 2003 at the option of the holder into common stock at a
conversion price equal to $22.01 per share of common stock, subject to
adjustment.
Holders of the Preferred Stock have no voting rights, except as otherwise
required by law and except that the consent of the holders of at least
two-thirds of the outstanding shares of Series E Preferred and Series F
Preferred is necessary to permit, effect or validate (a) the authorization,
creation or issuance, or any increase in the authorized or issued amount, of any
class or series of stock ranking prior to the Preferred Stock; (b) the increase
in the authorized or issued amount of the Series E Preferred or Series F
Preferred; or (c) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Third Restated
Certificate of Incorporation of the Company that would affect any right,
preference or voting power of the Preferred Stock or the holders thereof.
The offer and sale of the Preferred Stock and the common stock into which
such Preferred Stock is convertible were not registered under the Securities Act
of 1933, as amended (the "Securities Act"), in reliance upon the exemptions from
registration provided by Section 4(2) and Rule 506 of the Securities Act.
However, SCANA Communications and ITC Wireless have been granted certain
"demand" and "piggyback" registration rights with respect to the shares of
common stock issued upon conversion of, or as dividends on, the Series E
Preferred and Series F Preferred, respectively.
In connection with the sale of the Preferred Stock, the Company indemnified
SCANA Communications and ITC Wireless, and SCANA Communications and ITC Wireless
indemnified the Company, for certain losses arising out of breaches of their
respective representations and covenants. The Company also indemnified the
lender from which ITC Wireless borrowed funds to purchase the Series F Preferred
for certain fees, costs, expenses and claims related to the loan.
Each of SCANA Communications and ITC Wireless have agreed, among other
things, that without the prior written consent of Powertel and except for
transfers to their affiliates, they will not transfer, directly or indirectly,
any shares of Series E Preferred or Series F Preferred, as the case may be, or
any shares of common stock into which such Preferred Stock is convertible, until
after June 22, 1999.
2
<PAGE> 8
NASDAQ STOCKHOLDER APPROVAL REQUIREMENTS
Stockholder ratification and approval of the issuance of the Preferred
Stock and the common stock issuable upon conversion of, or as dividends on, the
Preferred Stock are not required under the Delaware General Corporation Law, the
Company's Third Restated Certificate of Incorporation, or the Company's Restated
Bylaws. Stockholder ratification and approval are also currently not required
under the Marketplace Rules of the Nasdaq Stock Market National Market System
("NASDAQ"), through which Powertel's common stock is traded. However, in order
to qualify for continued inclusion in NASDAQ, it is necessary to satisfy certain
financial and other criteria set forth in the Marketplace Rules and to follow
certain corporate governance procedures, including obtaining stockholder
approval in connection with certain corporate transactions. For example, Rule
4460(i)(1)(D)(ii) requires stockholder approval if the Company issues common
stock or securities exercisable or convertible into common stock representing
20% or more of the Company's outstanding shares of common stock or voting power
at a price that is below the greater of book value or market value per share
(the "20% Rule").
Although the 20% Rule is not implicated by the provisions governing the
conversion of the Preferred Stock into shares of common stock (since the $22.01
conversion price established for both the Series E Preferred and Series F
Preferred is greater than the market and book value of the Company's common
stock on the date of issuance), the holders of the Preferred Stock are entitled
to receive stock dividends on a quarterly basis which are calculated pursuant to
a formula that is based on 95% of the average closing sales price of the
Company's common stock for the five trading days immediately preceding each
dividend payment date. As a result, the shares of common stock to be issued as
stock dividends on the Preferred Stock may be issued for less than the greater
of book value or market value of such shares which could, in the future,
implicate the 20% Rule.
Whether or not the 20% Rule is implicated by these dividend issuances will
depend on the amount of common stock that is issued as dividends, which in turn
depends on the price of the common stock on the various dividend payment dates.
It is possible that the 20% Rule will never be implicated. However, if the
market price of the Company's common stock declined and did not recover for a
significant period of time, the 20% Rule could be implicated. Although
stockholder approval is not currently required to satisfy the listing
requirements under the Rules for the continued inclusion of the Company in
NASDAQ, it is possible that stockholder approval may be required in the future.
Therefore, the Board of Directors has determined to seek stockholder approval at
this time rather than possibly being required to call a special meeting of
stockholders if the 20% Rule is implicated.
IMPACT OF PREFERRED STOCK ISSUANCE
Assuming the conversion of all the shares of Preferred Stock outstanding
pursuant to the terms of the Stock Purchase Agreements, the holders of the
Preferred Stock would be entitled to receive an aggregate of approximately 6.8
million shares of the Company's common stock. These shares, in addition to the
indeterminable number of shares of common stock which are required to be issued
as future stock dividends, will, upon issuance, result in an increase in the
number of shares of common stock outstanding, which will result in a dilution of
the percentage ownership of other stockholders.
IMPACT OF A VOTE AGAINST ISSUANCE
The Company is obligated, under the terms of the Preferred Stock, to issue
dividends in the form of cash or stock. The Company is prohibited by the
Indentures governing all of its publicly-traded bonds from issuing dividends in
the form of cash as long as those bonds are outstanding. Currently, the Company
may only satisfy its obligations to pay dividends on the Preferred Stock through
the issuance of common stock. If the stock dividend issuances on the Preferred
Stock implicate the 20% Rule, Powertel would be required to obtain stockholder
approval. If Powertel could not obtain stockholder approval at that time,
Powertel could be out of compliance with NASDAQ's Rules unless it was able to
renegotiate the terms of the Preferred Stock. There is no assurance that
Powertel would be able to renegotiate the terms of the Preferred Stock on terms
favorable to Powertel or at all.
3
<PAGE> 9
POTENTIAL CONFLICTS OF INTEREST; INTERESTS OF CERTAIN PERSONS
SCANA. At the close of business on April 12, 1999, SCANA Communications
beneficially owned 4,725,363 shares of common stock, representing approximately
17.2% of the total number of shares of common stock outstanding on that date.
SCANA Communications owns all of Powertel's Series B Convertible Preferred Stock
(the "Series B Preferred"), Series D Convertible Preferred Stock (the "Series D
Preferred") and Series E Preferred, none of which is currently convertible.
SCANA, headquartered in Columbia, South Carolina, 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. 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. Ann Milligan is the Chief
Marketing Officer of SCANA.
ITC Holding. At the close of business on April 12, 1999, ITC Holding
beneficially owned 7,553,282 shares of common stock, representing approximately
27.5% of the total number of shares of common stock outstanding on that date.
ITC Wireless owns all of Powertel's Series F Preferred, which is not presently
convertible. ITC Holding, headquartered in West Point, Georgia, is a private
holding company whose various subsidiaries, affiliates and related parties
provide the Company from time to time with various services, consisting
principally of access services, interconnection and transport facilities, local
telephone service for Powertel's corporate headquarters and conference calling
services. Certain directors of the Company also serve in various capacities with
ITC Holding. Campbell B. Lanier, III is Chairman and Chief Executive Officer of
ITC Holding and is a director and officer of several ITC Holding subsidiaries.
O. Gene Gabbard and Donald W. Weber are also directors of ITC Holding. William
H. Scott, III is a director of ITC Holding and is a director and officer of
several ITC Holding subsidiaries.
The Board of Directors was aware of these relationships and considered
them, among other factors, in approving the Preferred Stock issuances and making
its recommendation to the stockholders that the stockholders ratify the
Preferred Stock and approve the common stock issuable upon conversion of, or as
dividends on, the Preferred Stock.
REQUIRED VOTE AND RELATED MATTERS
The approval by a majority of the shares present in person or represented
by proxy is required to approve the proposal to ratify the issuance of the
Series E Preferred and the Series F Preferred and approve all shares of common
stock issuable upon conversion of, or as dividends on, the Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
4
<PAGE> 10
APPROVAL OF THE PROPOSED AMENDMENT TO THE 1991 STOCK OPTION PLAN
(PROPOSAL 2)
The Stock Option Plan was adopted by the Board of Directors on April 8,
1991 and approved by the stockholders at the 1991 annual meeting. The Stock
Option Plan was amended in 1997 to increase the number of shares available for
issuance thereunder to 3,000,000 shares of common stock. The Board of Directors
has voted, subject to stockholder approval, to amend the Stock Option Plan to
increase the number of shares of common stock reserved for issuance thereunder
to 5,000,000 shares.
The Board of Directors 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 an equity interest in the Company.
The purpose of the Stock Option Plan is to further the growth and success of
Powertel by enabling selected employees to acquire shares of common stock,
thereby increasing their personal interest in such growth and success, and to
provide a means of rewarding outstanding performance by such persons. The Board
of Directors believes that it is advisable that Powertel and its stockholders
continue to have the incentive of stock options available as a means of
attracting and retaining officers and other key employees. As of December 31,
1998, options to purchase 449,734 shares remained available for grants under the
Stock Option Plan, and approximately 1,600 employees of Powertel and its
subsidiaries were eligible to participate in the Stock Option Plan. Approval of
the proposed amendment will increase the number of shares available for issuance
under the Stock Option Plan to a total of 5,000,000 shares.
The principal provisions of the Stock Option Plan are summarized below.
This summary is not complete and is 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 C.
DESCRIPTION OF THE STOCK OPTION PLAN
The Stock Option 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 Powertel or
its subsidiaries, except to the extent that any option is specifically
designated at the time of grant as not being an "incentive stock option" or to
the extent that any option would exceed certain aggregate fair market value
limitations with respect to the underlying common stock, as described below.
The Stock Option Plan is administered by the Compensation/Stock Option
Committee of the Board of Directors (the "Compensation Committee") pursuant to
delegated authority. The Compensation Committee must at all times consist of no
less than two members of the Board of Directors. No member of the Compensation
Committee may be an officer or other salaried employee of the Company, and each
member of the Compensation Committee must qualify in 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 Stock Option Plan, the Compensation Committee has the authority to
determine which employees will receive options, based on management's analysis
of the Company's performance and the employee's performance and level of
responsibility.
The exercise price for an incentive stock option 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 exercise
price for a non-incentive stock option 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 a non-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 common 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 Stock Option Plan to any employee is
200,000 shares in any calendar year, and no option may be granted more
5
<PAGE> 11
than 10 years after the effective date of the Stock Option Plan. Options are
non-transferable other than by will or the laws of descent and distribution.
The Compensation Committee determines the exercise periods for options.
Options granted to date generally vest and become exercisable as to 50% two
years after the date of grant, an additional 25% three years after the date of
grant and the remaining 25% four years after the date of grant. The Compensation
Committee also may include in each option certain additional limitations on the
recipient's right to exercise the option. The Compensation 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 Stock Option Plan may be made
in cash or, if permitted by the particular option agreement, either by
exchanging shares of Powertel common stock with a fair market value equal to the
total option exercise price or by a combination of cash and shares of common
stock.
If an employee's employment with Powertel or its subsidiaries terminates by
reason of death or disability, his or her options, whether or not then
exercisable, may be exercised within one year after such death or disability;
however, the Compensation 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,
the employee's options shall terminate, and the employee shall have no further
right to purchase shares of common stock pursuant to such options. However, if
such termination is because of an employee's retirement in accordance with
Powertel's normal retirement policies, then his or her options, whether or not
then exercisable, may be exercised within three months after the date of
retirement. The Compensation Committee may provide in an employee's option
agreement for a later date and/or for the continuation of the installment
limitations on exercise upon termination of employment.
If (a) the number of outstanding shares of common stock is increased or
decreased or (b) shares of common stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company, the
Company shall proportionately adjust the number and kinds of shares for which
options may be granted under the Stock Option Plan and for which options are
outstanding so that a holder's proportionate interest 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 (a) any dissolution or liquidation of the Company, (b) a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, (c) a sale of substantially
all of the assets of the Company to another entity, or (d) any transaction
approved by the Board of Directors 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 Stock Option 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 Stock Option Plan and/or the assumption of the outstanding
options or for the substitution of such options into new options covering the
stock of a successor corporation or its parent or subsidiary, 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 Stock Option Plan may be amended by the Board of Directors at any time.
However, the stockholders must approve any amendment that would: (i) change the
requirements as to eligibility; (ii) increase the maximum number of shares
subject to the Stock Option Plan (except for certain permitted changes in
capitalization); (iii) materially increase the benefits under the Stock Option
Plan; or (iv) otherwise cause the Stock Option 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 may terminate or suspend the
Stock Option Plan at any time. Unless previously terminated, the Stock Option
Plan will terminate automatically on April 8, 2001, the tenth anniversary of the
date of adoption of the Stock Option Plan by the Board of Directors. No
termination, suspension or amendment of the Stock Option Plan may,
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<PAGE> 12
without the consent of the optionee to whom an option has been granted,
adversely affect the rights of the holder of the option.
PLAN BENEFITS
As of December 31, 1998, options to purchase 2,396,750 shares of common
stock were outstanding under the Stock Option Plan. Based on the closing sale
price of the common stock on December 31, 1998 of $13.563, the aggregate market
value of the 2,396,750 shares currently reserved for issuance under options
currently outstanding under the Stock Option Plan as of December 31, 1998 was
$32,507,120.
The table below provides certain information regarding stock options
granted as of December 31, 1998 under the Stock Option Plan to: (i) the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company whose combined salary and bonus exceeded $100,000 during the
fiscal year ended December 31, 1998; (ii) each nominee for election as a
director; (iii) all current executive officers of the Company as a group; (iv)
all current non-employee directors as a group; and (v) all employees of the
Company as a group (including all officers who are not executive officers).
STOCK OPTION PLAN BENEFITS(A)
<TABLE>
<CAPTION>
NUMBER
EXERCISE OF
NAME AND POSITION(S) PRICE(B) OPTIONS
- -------------------- -------- ---------
<S> <C> <C>
Allen E. Smith.............................................. $10.67 255,480
President, Chief Executive Officer and Director
Fred G. Astor, Jr........................................... 10.67 159,476
Executive Vice President and Chief Financial Officer
Rodney D. Dir............................................... 17.35 39,136
Chief Operating Officer
Nicholas J. Jebbia.......................................... 15.69 60,501
Executive Vice President and General Manager
George R. Johnson........................................... 15.30 70,823
Executive Vice President and General Manager
Donald W. Burton............................................ -- --
Director
Maurice P. O'Connor......................................... 12.75 81,940
Director
Executive officer group, including the 5 executive officers
named above (8 persons)................................... 13.18 764,894
Non-employee director group (7 persons)..................... 13.48 91,940
Non-executive officer and other employee group (1,592
persons).................................................. 14.35 1,638,733
</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 ten-year term and have become or
will become exercisable as follows: (i) 50% on the second anniversary of the
date of grant; (ii) additional 25% on the third anniversary of the date of
grant; and (iii) remaining 25% 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 STOCK OPTION 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
7
<PAGE> 13
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).
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<PAGE> 14
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 in person or
represented by proxy is required to approve the amendment to the Stock Option
Plan to increase the number of shares of common stock available for issuance
thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
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<PAGE> 15
ELECTION OF DIRECTORS
(PROPOSAL 3)
Pursuant to the Third 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
Board of Directors determining the number of directors within such limits. The
term of office of only one class of directors expires in each year. 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, two directors will be elected. Unless otherwise
specified on the proxy card, it is the intention of the persons named as proxies
in the enclosed proxy card to vote in favor of the election 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 persons named as proxies
will vote in favor of the election of such other person as the Board of
Directors may recommend. Directors will be elected by a plurality of the votes
cast at the Annual Meeting. There are no cumulative voting rights in the
election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
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
April 12, 1999 are as follows:
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
DIRECTOR NOMINEES AGE POSITION(S) WITH COMPANY EXPIRES
- ----------------- --- ------------------------ --------
<S> <C> <C> <C>
Donald W. Burton................... 55 Director 1999
Maurice P. O'Connor................ 48 Director 1999
</TABLE>
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
OTHER DIRECTORS AND EXECUTIVE OFFICERS AGE POSITION(S) WITH COMPANY EXPIRES
- -------------------------------------- --- ------------------------ --------
<S> <C> <C> <C>
Campbell B. Lanier, III.............. 48 Chairman of the Board of Directors 2001
Allen E. Smith....................... 49 President, Chief Executive Officer 2001
and Director
Fred G. Astor, Jr.................... 47 Executive Vice President and Chief --
Financial Officer
Rodney D. Dir........................ 41 Chief Operating Officer --
Nicholas J. Jebbia................... 51 Executive Vice President and General --
Manager
George R. Johnson.................... 57 Executive Vice President and General --
Manager
Walter R. Pettiss.................... 65 Executive Vice President -- Customer --
Service
Michael P. Tatom..................... 46 Executive Vice President and General --
Manager
O. Gene Gabbard...................... 58 Director 2000
Ann Milligan......................... 40 Director 2001
William B. Scott, III................ 51 Director and Secretary 2000
William B. Timmerman................. 52 Director 2000
Donald W. Weber...................... 62 Director 2000
</TABLE>
On October 16, 1998, Lawrence Gressette resigned from the Board of
Directors of the Company. Effective October 16, 1998, the Board of Directors
filled the vacancy created by Mr. Gressette's resignation through the election
of Ann Milligan to the Board. On October 28, 1998, Bert G. Clifford resigned
from the
10
<PAGE> 16
Board of Directors. The Board of Directors has not yet filled the vacancy
created by Mr. Clifford's resignation. Mr. Clifford's term expired in 1999.
Certain of the executive officers and directors listed above hold or have
held positions in several corporations related to the Company through common
directors or stock ownership, including ITC Holding, SCANA and various
subsidiaries of ITC Holding and SCANA. 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 "-- 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 qualified or until their earlier
resignation or removal.
DIRECTOR NOMINEES
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, K&G Men's Centers, Inc., an operator of retail
men's clothing stores, ITC-DeltaCom, Inc., a provider of retail and wholesale
telecommunications services, the Heritage Group of Mutual Funds and several
private companies. He is also a director of the National Venture Capital
Association.
MAURICE P. O'CONNOR has been a director of the Company since March 1994 and
served until May 1997 as a Vice President of the Company, with general
responsibility for the operations of Unity Cellular Systems, Inc., a subsidiary
of the Company that provided cellular telephone service in the State of Maine.
In 1997, the Company sold substantially all of Unicel's assets in the State of
Maine to MRCC, Inc., a subsidiary of Rural Cellular Corporation. Mr. O'Connor
currently serves as Vice President and General Manager of MRCC. 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 March 1994 and
had been employed by Unicel in other management capacities since 1989.
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 until 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 (or its predecessor companies) since that company's
inception in 1985. 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 1994, he has been a director of MindSpring Enterprises,
Inc., an Internet access provider. Since 1997, Mr. Lanier has been a director of
Innotrac Corporation, which provides customized, technology-based marketing
support services, and Chairman of the Board and a director of ITC-DeltaCom.
Since 1995, he has been a director of K&G Men's Centers and of KNOLOGY Holdings,
Inc., a broadband communications services company. 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 Systems, Inc., a company providing
satellite data transmission services. He served as Chairman of the Board of
AvData from 1988 to 1990. Since 1988, Mr. Lanier has been a special limited
partner in the South Atlantic Venture Fund II, Limited Partnership and South
Atlantic Venture Fund III, Limited Partnership. Donald W. Burton, a director of
the Company, is the managing general partner of the general partners of these
two funds. Mr. Lanier also has served as a managing director of South Atlantic
Private Equity Fund IV, Limited Partnership since 1997.
11
<PAGE> 17
ALLEN E. SMITH has been the Chief Executive Officer of the Company since
September 1993 and has been the President and a director of the Company since
January 1991. He was the 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.
FRED G. ASTOR, JR. has been the Chief Financial Officer of the Company
since May 1991. He 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.
RODNEY D. DIR has been the Chief Operating Officer of the Company since
March 1999 and was the Executive Vice President and General Manager for the
Atlanta, Georgia major trading area ("MTA") from August 1996 to March 1999. From
1995 to 1996, Mr. Dir served as Area General Manager for GTE Mobilnet
Incorporated 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.
NICHOLAS J. JEBBIA joined the Company in January 1996 as the Executive Vice
President and General Manager for the Memphis, Tennessee MTA. From 1990 to 1995,
Mr. Jebbia served as Vice President and General Manager of New Ventures for
National Data Corporation.
GEORGE R. JOHNSON has been the Executive Vice President and General Manager
for the Birmingham, Alabama MTA since August 1995 and was a Vice
President -- PCS from May 1995 to August 1995. From 1990 to 1995, he served as a
Product Manager for BellSouth Telecommunications, Inc.
WALTER R. PETTISS has been the Executive Vice President -- Customer Service
of the Company since January 1999 and was the Executive Vice President and
General Manager for the Jacksonville, Florida MTA from August 1995 to January
1999. He was a Vice President -- PCS from April 1995 to 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. 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.
MICHAEL P. TATOM has been the Executive Vice President and General Manager
for the Jacksonville, Florida MTA since January 1999. Mr. Tatom joined the
Company in February 1995 as Director of Sales. From May 1995 to March 1997, he
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 the Company's basic trading area markets 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.
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,
ITC-DeltaCom 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.
ANN MILLIGAN was appointed a director of the Company in October 1998. Ms.
Milligan has served as Chief Marketing Officer of SCANA since September 1998.
From January 1998 through September 1998, she served as Director of Consumer
Credit Marketing of NationsBank. From October 1993 through January 1998, Ms.
Milligan served as Director of Consumer Credit Marketing of Barnett Banks, Inc.
and as Senior Vice President of Marketing for Barnett Card Services.
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 (or its predecessor company) since December 1991 and
has been a director of ITC Holding (or its predecessor company) 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
Boards of
12
<PAGE> 18
Directors of AvData since 1988, of MindSpring since 1994, of KNOLOGY since 1995
and of ITC-DeltaCom and Innotrac since 1997. Since 1997, Mr. Scott also has
served as a director of IQI, Inc., a company which provides telemarketing
services.
WILLIAM B. TIMMERMAN was appointed a director of the Company in 1995. Since
April 1997, Mr. Timmerman has served as Chairman, Chief Executive Officer and
President of SCANA and as Chairman and Chief Executive Officer of each of
SCANA's subsidiaries. Since 1978, he has served in a variety of other 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. In addition, he is a director of
Healthdyne Information Enterprise and Pegasus Communications Corporation, both
of which are public companies. In October 1991, Mr. Weber retired from Contel
Corporation, a telecommunications company that merged with GTE Corporation in
March 1991. At his retirement, Mr. Weber was the President and Chief Executive
Officer of Contel Corporation.
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,
organization, operations and management of the Company. During the year ended
December 31, 1998, the Audit Committee was composed of Donald W. Burton, William
B. Timmerman and Donald W. Weber and held two meetings.
The Compensation 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 Committee also reviews general policy matters
relating to compensation and benefits of employees of the Company. During the
year ended December 31, 1998, the Compensation Committee was composed of O. Gene
Gabbard, Lawrence M. Gressette, Jr., Donald W. Weber and William H. Scott, III.
Lawrence M. Gressette, Jr. served on the Compensation Committee until April 28,
1998. The Compensation Committee held one meeting.
The Company does not have a standing nominating committee. The Board of
Directors nominates candidates to stand for election as directors. The Third
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, 1998, the Board of Directors of the
Company held four meetings. Lawrence M. Gressette, Jr. did not attend any of the
board meetings and did not attend the Compensation Committee meeting. All other
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain transactions and relationships among
the Company and its subsidiaries and the Company's directors, executive officers
and greater than 5% stockholders.
ITC Holding. As of April 12, 1999, ITC Holding owned approximately 27.5%
of the outstanding common stock of the Company. Messrs. Lanier, Gabbard, Weber
and Scott are directors of the Company and are directors and executive officers
of ITC Holding. Also, certain of the Company's officers and directors have
ownership interests in ITC Holding. ITC Holding, through ITC Wireless, owns all
of the Company's Series F Preferred. The Series F Preferred requires the payment
of dividends, in cash or stock, on a quarterly basis. To
13
<PAGE> 19
date, the Company has issued a total of 215,471 shares of common stock to ITC
Wireless as stock dividends. ITC Holding, through certain of its subsidiaries,
from time to time provides the Company with various services, consisting
principally of access services, interconnection and transport facilities, local
telephone service for Powertel's corporate headquarters and conference calling
services. The amount paid by the Company to ITC Holding and its subsidiaries
during the fiscal year ended December 31, 1998 for such services was
approximately $274,000. The Company will periodically have outstanding
affiliated receivables and payables related to timing of payments for such
administrative services.
In October, 1997, the Company was a co-purchaser of a plane, along with ITC
Service Company, Inc., a wholly-owned subsidiary of ITC Holding, ITC-DeltaCom
and KNOLOGY. This group of companies also purchased a second aircraft in
November, 1997. The Company paid approximately $42,000 during the fiscal year
ended December 31, 1998 for its interest in and use of these aircraft.
The Company uses the fiber optic facilities of ITC-DeltaCom for backhaul
and transport of its PCS and cellular service operations. In addition, the
Company entered into a co-location agreement with ITC-DeltaCom for the lease of
space to allow the Company to co-locate certain of its network equipment with
facilities of ITC-DeltaCom. ITC-DeltaCom also provides the Company with certain
long-distance services, which the Company then re-sells to its customers, and
with operator and directory assistance services branded with the "Powertel"
name. The Company paid approximately $7,920,000 to ITC-DeltaCom during the
fiscal year ended December 31, 1998.
The Company utilizes certain telemarketing and other services of IQI, Inc.,
a tele-services company into which a former subsidiary of ITC Holding,
InterServ, Inc., merged. ITC Holding holds a 14% interest in IQI, and William H.
Scott, III sits on its Board of Directors. The Company paid IQI approximately
$216,000 during the fiscal year ended December 31, 1998.
Other Transactions. As of April 12, 1999, SCANA owned approximately 17.2%
of the outstanding common stock. In addition, Mr. Timmerman is a director of the
Company and is a director and executive officer of SCANA. Ms. Milligan is also a
director of the Company and is the Chief Marketing Officer of SCANA. SCANA,
through SCANA Communications, owns all of the Company's Series B Preferred,
Series D Preferred and Series E Preferred. The Series E Preferred requires the
payment of dividends, in cash or stock, on a quarterly basis. To date, the
Company has issued a total of 215,471 shares of common stock to SCANA
Communications as stock dividends. In addition, a subsidiary of SCANA,
ProSolutions, installs alternate power sources for the Company. The Company paid
approximately $4,512,000 to ProSolutions during the fiscal year ended December
31, 1998.
Powertel and SCANA have entered into an agreement with Team Amick Motor
Sports LLC to jointly sponsor a NASCAR sanctioned racing car which participates
in the Busch Grand National Racing Series for the 1999 season. Powertel's
sponsorship of the race car is at the level of $600,000 for the 1999 season.
Powertel shares its sponsorship with certain companies related to Powertel, such
as KNOLOGY. SCANA's sponsorship of the race car is a base level of $800,000 with
incentives to increase the level of sponsorship up to an additional $200,000.
Ericsson is also participating in the sponsorship of this racing car. This
agreement is subject to termination with 30 days' notice.
As of April 12, 1999, The Huff Alternative Income Fund, L.P. ("Huff") owned
approximately 7.6% of the outstanding common stock. In addition, Huff owns all
of the Company's Series C Convertible Preferred Stock, which, if converted at
the present time, would result in Huff owning approximately 13.2% of the
outstanding common stock.
The Company purchases certain equipment and services related to the
buildout of its PCS system from Ericsson Inc. and certain of Ericsson's
subsidiaries. Ericsson owns all of the Company's Series A Convertible Preferred
Stock, which, if converted at the present time, would result in Ericsson owning
approximately 14.2% of the outstanding common stock. The Company's total
purchases for equipment and services from Ericsson were approximately
$133,000,000 in 1998.
14
<PAGE> 20
The Company sells cellular and PCS telephones and provides cellular and PCS
services to certain of its affiliates and their employees. Revenue recorded by
the Company for these sales and services was approximately $421,000 in 1998.
The Company has entered into a master site lease agreement and construction
management agreement with TowerCom, Inc., a company that is 45% owned by South
Atlantic Venture Fund III, Limited Partnership of which Donald W. Burton is the
managing general partner. Under the terms of these agreements, TowerCom funds
the construction of certain new tower facilities where the Company performs
construction management services for such construction projects. Subsequent to
construction, the Company leases tower space at such facilities. The Company has
built and leased 13 sites pursuant to this agreement to date. The Company paid
approximately $1,004,000 to TowerCom during the fiscal year ended December 31,
1998.
Since November 1991, the Company has leased a building located in Lanett,
Alabama from Riverside Corporation, in which the mother and sisters of William
H. Scott, III hold a majority ownership interest. The lease was originally for a
five-year term, with options to renew for three successive five-year terms. The
lease for the Lanett space was renewed in October 1996, and the current lease
term expires in October 2001. 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 the renewal lease is $55,000. Beginning on January
10, 1998, the Company entered into a long-term lease with KNOLOGY for 10,000
square feet of office space in West Point, Georgia. The monthly rental for the
initial 10-year term of the lease is $10,000.
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
"Commission") and NASDAQ. Officers, directors and greater than 10% beneficial
owners also are required by rules promulgated by the Commission 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, except for the late filing
of a Form 3 on behalf of Ann Milligan, the Company believes that, during fiscal
1998, its executive officers, directors and greater than 10% beneficial owners
complied with all applicable Section 16(a) filing requirements.
15
<PAGE> 21
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the cash and
non-cash compensation during the fiscal years 1998, 1997 and 1996 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, 1998 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS AWARDS OPTIONS COMPENSATION
- ---------------------------- ---- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Allen E. Smith..................................... 1998 $268,968 $268,434 $ -- 30,003 $75,499(a)
President and Chief Executive Officer 1997 196,119 227,449 -- 58,243 93,642(a)
1996 188,519 92,790 -- 35,310 82,505(b)
Fred G. Astor, Jr.................................. 1998 188,776 134,119 -- 12,940 74,216(c)
Executive Vice President and Chief 1997 134,647 104,885 -- 33,040 88,607(c)
Financial Officer 1996 132,080 57,889 -- 15,916 81,865(c)
Rodney D. Dir...................................... 1998 145,400 67,384 -- 9,877 12,378(d)
Chief Operating Officer 1997 125,890 104,102 5,362(e) 9,259 10,379(d)
1996 38,949(f) 16,223 -- 20,000 67,715(g)
Nicholas J. Jebbia................................. 1998 148,065 58,536 -- 8,221 13,799(d)
Executive Vice President and 1997 128,919 55,237 1,989(e) 32,280 10,784(d)
General Manager 1996 128,148(h) 56,557 -- -- 22,016(g)
George R. Johnson.................................. 1998 146,247 83,645 -- 6,877 14,981(d)
Executive Vice President and 1997 126,370 43,317 864(e) 31,970 11,678(d)
General Manager 1996 125,449 56,015 -- 11,976 12,893(d)
</TABLE>
- ---------------
(a)Represents: (i) tax gross-ups for 1995 restricted stock awards; (ii) auto
allowance; (iii) personal use of the Company aircraft; (iv) imputed income
for life insurance benefits; and (v) matching contributions made by the
Company to the 401(k) Plan.
(b)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 401(k)
Plan.
(c)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 401(k) Plan.
(d)Represents: (i) auto allowance; (ii) imputed income for life insurance
benefits; and (iii) matching contributions made by the Company to the 401(k)
Plan.
(e)On July 30, 1997, the Board of the Directors of the Company awarded a total
of 86,207 shares of restricted common stock to several individual employees.
Restricted stock awards vest in three equal installments on the first, second
and third anniversaries of the date of grant. The market value of the
Company's common stock on the date of award was $16.125 per share.
(f)Mr. Dir joined the Company in August 1996 as an executive officer.
(g)Represents: (i) auto allowance; (ii) imputed income for life insurance
benefits; (iii) matching contributions made by the Company to the 401(k)
Plan; and (iv) moving expenses.
(h)Mr. Jebbia joined the Company in January 1996 as an executive officer;
however, his options were granted in December 1995.
16
<PAGE> 22
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, 1998.
OPTION GRANTS DURING 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(A) POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR 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 E. Smith................. 30,003 13.9% $18.688 2/11/98 2/11/08 $352,619 $893,605
Fred G. Astor, Jr.............. 12,940 6.0 18.688 2/11/98 2/11/08 152,081 385,403
Rodney D. Dir.................. 9,877 4.6 18.688 2/11/98 2/11/08 116,082 294,175
Nicholas J. Jebbia............. 8,221 3.8 18.688 2/11/98 2/11/08 96,620 244,853
George R. Johnson.............. 6,877 3.2 18.688 2/11/98 2/11/08 80,847 204,883
</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, 1998, 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, 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT
YEAR-END FISCAL YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(A)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Allen E. Smith................................... 139,285/116,195 $763,529/77,535
Fred G. Astor, Jr................................ 97,030/62,446 544,362/39,473
Rodney D. Dir.................................... 10,000/29,136 0/10,566
Nicholas J. Jebbia............................... 15,000/45,501 0/21,094
George R. Johnson................................ 20,988/49,835 0/37,980
</TABLE>
- ---------------
(a) Represents the difference between the exercise price per share and the
market value of the common stock at December 31, 1998.
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 common stock are reserved for issuance, 122,939 shares of which were issued
and outstanding as of December 31, 1998. The Restricted Stock Plan is
administered by the Compensation 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 and to provide a
means of rewarding outstanding performance by such persons. Recipients of
restricted stock awards generally have the
17
<PAGE> 23
rights and privileges of a stockholder of the Company, including the right to
vote and receive 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.
Stock Option Plan. Under the Stock Option Plan, 5,000,000 shares of common
stock have been authorized for issuance upon exercise of options, subject to
stockholder approval. See "Approval of the Proposed Amendment to the Stock
Option Plan (Proposal 2)." All employees of the Company and its subsidiaries are
eligible to receive options under the Stock Option Plan. The Stock Option Plan
is administered by the Compensation Committee. The purpose of the Stock Option
Plan is to further the growth and success of the Company by enabling selected
employees of the Company to acquire shares of common stock, 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
Stock Option 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, an additional 25% three years after the date of
grant and the remaining 25% four years after the date of grant. As of December
31, 1998, 2,396,750 options granted pursuant to the Stock Option Plan were
outstanding.
401(k) Plan. On February 1, 1995, the Company established a savings plan
(the "401(k) Plan") qualified under Section 401(k) of the Code for the benefit
of all full-time employees. A participant in the 401(k) Plan may contribute up
to 10% of his or her compensation on a pre-tax basis under the 401(k) Plan.
Also, under the 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 $1,383,788 in
contributions to the 401(k) Plan during 1998.
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 401(k) Plan. A participant under the 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 401(k) Plan provides
that the Board of Directors may at any time declare the 401(k) Plan partially or
completely terminated, in which event the accounts of each participant with
respect to whom the 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.
COMPENSATION OF THE COMPANY'S DIRECTORS
Director Fees and Related Matters. The Company 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, 1998, Messrs. 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 $41,539 and $31,154, respectively. Additionally, Messrs. Lanier
and Scott participate in the 401(k) Plan under which they received profit
sharing and matching contributions totaling approximately $1,655 and $1,240,
respectively, in 1998. Such individuals will be paid similar compensation for
the year ending December 31, 1999 in consideration of their performance of such
services for the Company.
18
<PAGE> 24
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 thereunder. All nonemployee directors of the Company,
and all employees of affiliates of the Company, are eligible to receive options
under the Nonemployee Plan. 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 amended,
does not provide for discretionary option grants. Options generally become
exercisable as to 50% two years after the date of grant, an additional 25% three
years after the date of grant and the remaining 25% four years after the date of
grant. As of December 31, 1998, 193,650 options granted pursuant to the
Nonemployee Plan were outstanding.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Messrs. Gabbard, Scott and Weber constituted the Compensation
Committee, and Mr. Gressette was a member of the Compensation Committee until
April 28, 1998. Messrs. Gabbard, Scott and Weber are directors of ITC Holding,
which as of April 12, 1999 held approximately 27.5% of the outstanding common
stock of the Company. Mr. Gressette is a director of SCANA, which as of April
12, 1999 held approximately 17.2% of the outstanding common stock of the
Company. See "Election of Directors (Proposal 3) -- Certain Relationships and
Related Transactions."
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act or the Exchange Act that
might incorporate this Proxy Statement or future filings with the Commission, in
whole or in part, the following report and the Stock Performance Chart which
follows shall not be deemed to be incorporated by reference into any such
filing.
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 Company and/or business unit
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 executives 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
19
<PAGE> 25
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 and/or business
unit performance. Incentive cash awards are paid annually if performance
objectives are achieved.
The Compensation Committee develops, and the Board of Directors reviews and
approves, the criteria and financial targets established for Incentive Plan
participants each year. For 1998, the Incentive Plan included targets for: (i)
total revenues; (ii) operating income; (iii) cost per net add; (iv) ending
subscribers; and (v) capital expenditures. 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. 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.
Long-term Incentive Compensation. The Company's long-term incentive
compensation, reflected in the Stock Option 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 the Company's
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 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 Stock Option 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 position and level of responsibility
within the Company.
Under the Restricted Stock Plan the Company may issue to eligible employees
shares of the Company's common stock that are subject to certain restrictions,
non-transferable during the restriction period and subject to forfeiture if the
employee leaves the Company during the restriction period. The Compensation
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.
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. See
"-- Benefit Plans."
1998 Compensation of Chief Executive Officer. As previously described, the
Compensation 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 Committee
regarding Mr. Smith's compensation for 1998 are summarized below.
- Base Salary. The Chief Executive Officer's 1998 base salary was
$268,968, an increase of 37% over his 1997 base salary. Mr. Smith's salary
increase reflects the Company's growth in revenues, net income, cash flow
and stockholder value.
- Annual Incentive. In addition, Mr. Smith received an annual cash
incentive award for 1998 of $268,434. This award was based on results for
the year, which exceeded the performance benchmarks
20
<PAGE> 26
established by the Compensation Committee and the Board of Directors. Mr.
Smith's 1998 incentive targets were exceeded by an average of 6.1%. The
Company believes that Mr. Smith's total 1998 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
Stock Option Plan and Restricted Stock Plan. During 1998, Mr. Smith was
granted options to purchase 30,003 shares of common stock at an exercise
price of $18.688 (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 on the second anniversary of the date of grant; (ii) an
additional 25% of the shares on the third anniversary of the date of grant;
and (iii) the remaining 25% of the shares on the fourth anniversary of the
date of grant.
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
William H. Scott, III
Donald W. Weber
21
<PAGE> 27
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 National Market (U.S. Companies).
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
<TABLE>
<CAPTION>
CRSP
NASDAQ CRSP INDEX
STOCK FOR NASDAQ
MEASUREMENT PERIOD MARKET (U.S. TELECOMMUNICATIONS
(FISCAL YEAR COVERED) COMPANIES) STOCKS POWERTEL, INC.
<S> <C> <C> <C>
02/08/94 100 100 100
12/31/94 97 87 118
12/31/95 138 114 184
12/31/96 169 116 132
12/31/97 207 171 181
12/31/98 292 281 147
</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 8, 1994.
22
<PAGE> 28
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table provides information, as of April 12, 1999, 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 their
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 PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME AND ADDRESS(A) OF BENEFICIAL OWNER OWNERSHIP(B) OUTSTANDING
- --------------------------------------- ------------ -----------
<S> <C> <C>
ITC Holding Company, Inc.(c)................................ 7,553,282 27.5%
SCANA Communications, Inc.(d)............................... 4,725,363 17.2
Ericsson Inc.(e)............................................ 4,545,450 14.2
W.R. Huff(f)(g)............................................. 3,894,056 13.3
The Huff Alternative Income Fund, L.P.(g)................... 3,842,806 13.2
Donald W. Burton(h)(i)...................................... 1,601,227 5.8
Campbell B. Lanier, III(h)(j)(k)............................ 236,491 *
Allen E. Smith(h)........................................... 214,127 *
O. Gene Gabbard(h)(j)....................................... 196,191 *
Maurice P. O'Connor(h)(l)................................... 84,920 *
William H. Scott, III(h)(m)................................. 62,300 *
Donald W. Weber(h).......................................... 22,000 *
Ann Milligan................................................ -- --
William B. Timmerman........................................ -- --
Fred G. Astor, Jr.(h)(n).................................... 150,437 *
George R. Johnson(h)........................................ 47,381 *
Nicholas J. Jebbia(h)....................................... 40,629 *
Rodney D. Dir (h)........................................... 24,991 *
All executive officers and directors as a group (15
persons)(h)-(n)........................................... 2,597,042 9.2
</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. -- 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; Ericsson Inc. -- 740
E. Campbell Rd., Richardson, Texas 75081; 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 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 April 12, 1999. 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 Series B Preferred Stock; (ii) 1,764,706 shares of common
stock issuable upon conversion of Series D Preferred Stock and (iii)
3,407,500 shares of common stock issuable upon conversion of Series E
Preferred Stock. Includes options to acquire 15,000 shares of common stock
that are currently exercisable at an exercise price of $21.50 per share.
(e) These 4,545,450 shares of common stock are issuable upon conversion of
Series A Preferred Stock.
23
<PAGE> 29
(f) Includes 3,842,806 shares beneficially owned by The Huff Alternative Income
Fund, L.P. 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.
(g) Includes 1,764,706 shares of common stock issuable upon conversion of
Series C Preferred Stock.
(h) Includes the following shares that the named individuals have the right to
purchase within 60 days from April 12, 1999 pursuant to options:
<TABLE>
<S> <C>
Donald W. Burton............................................ 7,500
Campbell B. Lanier, III..................................... 10,000
Allen E. Smith.............................................. 187,527
O. Gene Gabbard............................................. 20,000
Maurice P. O'Connor......................................... 78,940
William H. Scott, III....................................... 40,000
Donald W. Weber............................................. 20,000
Fred G. Astor, Jr........................................... 126,037
George R. Johnson........................................... 44,967
Nicholas J. Jebbia.......................................... 36,140
Rodney D. Dir............................................... 19,629
-------
Total............................................. 590,740
=======
</TABLE>
(i) 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, 4,200 shares held of
record by South Atlantic Private Equity Fund IV, Limited Partnership, of
which South Atlantic Private Equity Partners IV, Inc. is the sole general
partner, of which Mr. Burton is the chairman; and 5,800 shares held of
record by South Atlantic Private Equity Fund IV (QP) Limited Partnership,
of which South Atlantic Private Equity Partners IV, Inc. is the sole
general partner, of which Mr. Burton is the chairman.
(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 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 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.
(n) Includes 1,000 shares and 300 shares held of record by Mr. Astor's wife and
minor sons, respectively. Mr. Astor disclaims beneficial ownership of such
shares.
24
<PAGE> 30
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
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, 1999, 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, the persons named as proxies
in the proxy card will vote 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, 1999. The Board of
Directors has not determined 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 shares present in person or represented
by proxy 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, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.
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 2000. 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, stockholders must submit any such proposal to the Company
no later than January 1, 2000, to the attention of its Assistant 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. Any proposals submitted by a stockholder
outside the processes of Rule 14a-8 under the Exchange Act for presentation at
the Company's next annual meeting will be considered untimely for purposes of
Rules 14a-4 and 14a-5 if received by the Company after March 6, 2000.
VOTING PROCEDURES
Persons appointed by the chairman of the Annual Meeting to act as
inspectors of election for the Annual Meeting will tabulate stockholders' votes.
The inspectors of election will count all shares represented and entitled to
vote on a proposal, whether voted for or against the proposal, or abstaining
from voting, 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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1998 accompanies this Proxy Statement. The Company hereby
incorporates by reference into this Proxy Statement the following sections of
the Company's annual report on Form 10-K for the year ended December 31, 1998:
(i) Management's Discussion and Analysis set forth at pages 14 through 23
thereof; (ii) Consolidated Financial Statements set forth at pages F-3 through
F-6 thereof; (iii) Notes to Consolidated Financial
25
<PAGE> 31
Statements set forth at pages F-7 through F-21 thereof; and (iv) Report of
Independent Auditors set forth at page F-2 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 Lorrie G. Turner, Assistant
Secretary, Powertel, 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. Stockholders may inspect and copy
such reports, proxy statements and other information 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. Stockholders may also obtain copies of the
reports, proxy statements and other information from the Public Reference
Section of the Commission, Washington, D.C. 20549, at prescribed rates. The
Commission maintains a World Wide Web site on the internet at http://www.sec.gov
that contains reports, proxies, information statements, and registration
statements and other information filed with the Commission through the EDGAR
system. The common stock of the Company is traded on the Nasdaq National Market
(Symbol: PTEL), 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.
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 proxy card 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 20, 1999
26
<PAGE> 32
APPENDIX A
- --------------------------------------------------------------------------------
------------------------------------------------------------
STOCK PURCHASE AGREEMENT
------------------------------------------------------------
BETWEEN
POWERTEL, INC.
AND
SCANA COMMUNICATIONS, INC.
DATED AS OF JUNE 22, 1998
- --------------------------------------------------------------------------------
A-1
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I -- DEFINITIONS.................................... A-4
SECTION 1.1 Certain Defined Terms....................... A-4
ARTICLE II -- PURCHASE AND SALE............................. A-7
SECTION 2.1 Purchase and Sale of the Shares............. A-7
SECTION 2.2 Purchase Price.............................. A-7
SECTION 2.3 Closing..................................... A-7
SECTION 2.4 Closing Deliveries by the Seller............ A-7
SECTION 2.5 Closing Deliveries by the Purchaser......... A-7
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE
SELLER.................................................... A-7
SECTION 3.1 Organization, Authority and Qualification of
the Seller............................................. A-7
SECTION 3.2 Capitalization of the Seller................ A-8
SECTION 3.3 Subsidiaries................................ A-8
SECTION 3.4 No Conflict................................. A-8
SECTION 3.5 Governmental Consents and Approvals......... A-9
SECTION 3.6 Seller SEC Reports; Financial Statements.... A-9
SECTION 3.7 No Undisclosed Liabilities.................. A-9
SECTION 3.8 Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions...... A-10
SECTION 3.9 Litigation.................................. A-10
SECTION 3.10 Compliance with Laws......................... A-10
SECTION 3.11 Full Disclosure.............................. A-10
SECTION 3.12 Private Placement............................ A-10
SECTION 3.13 FCC Regulations.............................. A-10
SECTION 3.14 Brokers...................................... A-10
SECTION 3.15 Delivery of Certain Documents................ A-10
SECTION 3.16 No Consideration for Consent................. A-11
SECTION 3.17 Delivery of Business Plan.................... A-11
SECTION 3.18 Licenses..................................... A-11
SECTION 3.19 Other Licenses and Approvals................. A-11
SECTION 3.20 Tax Matters.................................. A-11
SECTION 3.21 FCC Change of Control........................ A-12
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER................................................. A-12
SECTION 4.1 Organization and Authority of the Purchaser... A-12
SECTION 4.2 No Conflict................................... A-12
SECTION 4.3 Governmental Consents and Approvals........... A-12
SECTION 4.4 Litigation.................................... A-12
SECTION 4.5 Investment Purpose............................ A-13
SECTION 4.6 Accredited Investor........................... A-13
SECTION 4.7 Brokers....................................... A-13
ARTICLE V -- ADDITIONAL AGREEMENTS.......................... A-13
SECTION 5.1 Filing of Certificate of Designations......... A-13
SECTION 5.2 Treatment of Shares as Equity................. A-13
SECTION 5.3 Regulatory and Other Authorizations; Notices
and Consents........................................... A-13
SECTION 5.4 Notice of Developments........................ A-13
SECTION 5.5 Registration Rights........................... A-14
SECTION 5.6 Resale Restrictions........................... A-14
SECTION 5.7 Registration of Shares........................ A-14
SECTION 5.8 Reservation of Common Stock................... A-14
SECTION 5.9 Delivery of Certain Documents................. A-14
</TABLE>
A-2
<PAGE> 34
<TABLE>
<S> <C>
SECTION 5.10 Certain Information.......................... A-14
SECTION 5.11 Conduct of Business of the Seller............ A-15
SECTION 5.12 Use of Funds................................. A-15
SECTION 5.13 Further Action............................... A-15
ARTICLE VI -- CONDITIONS TO CLOSING......................... A-15
SECTION 6.1 Conditions to Obligations of the Seller....... A-15
SECTION 6.2 Conditions to Obligations of the Purchaser.... A-16
ARTICLE VII -- INDEMNIFICATION.............................. A-17
SECTION 7.1 Survival of Representations and Warranties.... A-17
SECTION 7.2 Indemnification............................... A-17
SECTION 7.3 Limits on Indemnification..................... A-18
ARTICLE VIII -- TERMINATION AND WAIVER...................... A-19
SECTION 8.1 Termination................................... A-19
SECTION 8.2 Effect of Termination......................... A-19
SECTION 8.3 Waiver........................................ A-19
ARTICLE IX -- GENERAL PROVISIONS............................ A-20
SECTION 9.1 Expenses...................................... A-20
SECTION 9.2 Notices....................................... A-20
SECTION 9.3 Public Announcements.......................... A-20
SECTION 9.4 Headings...................................... A-21
SECTION 9.5 Severability.................................. A-21
SECTION 9.6 Entire Agreement.............................. A-21
SECTION 9.7 Assignment.................................... A-21
SECTION 9.8 No Third Party Beneficiaries.................. A-21
SECTION 9.9 Amendment..................................... A-21
SECTION 9.10 Governing Law................................ A-21
SECTION 9.11 Counterparts................................. A-21
SECTION 9.12 Specific Performance......................... A-21
</TABLE>
<TABLE>
<S> <C>
EXHIBITS
6.1(e) Form of Opinion of Purchaser's Legal Counsel
6.2(e) Form of Opinion of Seller's Legal Counsel
ANNEXES
Annex I................................................... I-1
Annex II.................................................. II-1
</TABLE>
A-3
<PAGE> 35
This STOCK PURCHASE AGREEMENT, dated as of June 22, 1998, is entered into
between POWERTEL, INC., a Delaware corporation (the "Seller"), and SCANA
COMMUNICATIONS, INC., a South Carolina corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller wishes to issue and to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, 50,000 shares (the "Shares") of a
new series of convertible preferred stock of the Seller designated Series E 6.5%
Cumulative Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the terms of the Preferred Stock are set forth in the form of
Certificate of Designations attached as Annex I hereto (the "Certificate of
Designations");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Seller hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" or "this Agreement" means this Stock Purchase Agreement, dated
as of June 22, 1998, between the Seller and the Purchaser (including the
Exhibits and Annexes hereto and the Disclosure Schedule) and all amendments
hereto made in accordance with the provisions of Section 9.9.
"Approvals" has the meaning specified in Section 3.5.
"Assets" means the properties, assets (including, without limitation,
Licenses) and contract rights used or intended to be used in the conduct of the
Business or otherwise owned, leased or used by the Seller or any Subsidiary or,
with respect to contract rights, to which the Seller or any Subsidiary is a
party or is bound.
"Beneficially Own" with respect to any securities means having beneficial
ownership as determined pursuant to Rule 13d-3 under the Exchange Act, including
having beneficial ownership pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Business" means the business of the Seller and the Subsidiaries as
currently conducted and, as contemplated by the Seller on the date hereof and on
the Closing Date, to be conducted.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Certificate of Designations" has the meaning specified in the recitals to
this Agreement.
"Closing" has the meaning specified in Section 2.3.
"Closing Date" has the meaning specified in Section 2.3.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.01 per share, of the
Seller.
A-4
<PAGE> 36
"Communications Act" means the Federal Communications Act of 1934, as
amended.
"Control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"Disclosed by Seller" with respect to information concerning any event,
fact or circumstance, includes information contained in the Seller's SEC
Reports, annual and other reports furnished by Seller to its stockholders as a
group, and press releases of the Seller disseminated to (i) the Dow Jones News
Service or (ii) the National Association of Securities Dealers, Inc. Automated
Quotation System or other national securities exchange ("Press Releases"), as
well as information disclosed directly to the Purchaser by the Seller in this
Agreement, the 1997 Financial Statements, the 1998 Financial Statements or in
writing and attached hereto or delivered pursuant to Section 6.2. If the
Purchaser has a representative on the Seller's Board of Directors, "Disclosed by
Seller" shall also mean written information and materials which are or have been
disclosed or distributed during the term of service of such representative to
the Seller's Board of Directors or any committee thereof on which such
representative serves or written evidence (such as minutes, resolutions and
written consents) of the meetings of the Board of Directors or any committee
thereof on which such representative serves which are distributed during the
term of service of such representative.
"Disclosure Schedule" means the Disclosure Schedule attached hereto, dated
as of the date hereof, and forming a part of this Agreement.
"Encumbrance" means any security interest, pledge, mortgage, lien, charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Executive Officer" has the meaning set forth in Rule 405 of Regulation C
adopted by the Commission under the Securities Act without regard to whether any
party to this Agreement is a registrant as used in Rule 405.
"FCC" means the United States Federal Communications Commission.
"FCC Licenses" means all licenses granted by the FCC to the Seller for and
related to the provision of personal communications services and cellular
services in connection with the Seller's Business.
"Governmental Authority" means any United States federal, state or local or
any foreign government, regulatory or administrative authority, or any
governmental agency, department, board or commission, or any court, tribunal, or
judicial, arbitral or investigative body or other governmental tribunal.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" of a party with respect to such party's representation or
warranty concerning any event, fact or circumstance means the current actual
knowledge of that party's Executive Officers of information which, after
reasonable consideration by such Executive Officers, would be recognized by
reasonable persons of similar experience in such positions as relevant to the
representation or warranty qualified by the words "to the knowledge" of a party,
"known to" a party or a similar phrase. Knowledge does not include information
not within such current actual knowledge that might be revealed if the party's
files were searched or if any other investigation were made.
A-5
<PAGE> 37
"Law" means any United States federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, order, other requirement or rule of law,
including, without limitation, any requirement or rule of law of the FCC.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Law, Action
or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Licenses" means all FCC Licenses and all other licenses, permits
(including construction permits), consents, approvals and other authority issued
by any Governmental Authority in connection with the legal and proper operation
of the Seller's Business.
"Loss" has the meaning specified in Section 7.2(a).
"Material Adverse Effect" means any circumstance, change in or effect on
the Business, the Seller or any Subsidiary that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the Business,
the Seller or any Subsidiary: (a) is, or would reasonably be expected to be,
materially adverse to the Business, operations, Assets or Liabilities,
prospects, results of operations or financial condition of the Seller and the
Subsidiaries, taken as a whole; or (b) would reasonably be expected to
materially adversely affect the ability of the Seller and the Subsidiaries to
operate or conduct the Business.
"1997 Financial Statements" means the audited annual consolidated financial
statements of the Company and the notes and schedules thereto for the year ended
December 31, 1997.
"1998 Financial Statements" has the meaning specified in Section 3.2(b).
"Person" means any individual, partnership, limited liability company,
firm, corporation, association, trust, joint venture, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Exchange Act.
"Preferred Stock" has the meaning specified in the recitals to this
Agreement.
"Purchase Price" has the meaning specified in Section 2.2.
"Purchaser" has the meaning specified in the preamble to this Agreement.
"Reference Balance Sheet Date" means March 31, 1998.
"Related Agreements" has the meaning specified in Section 3.15.
"Sale" means any sale, assignment, transfer, distribution or other
disposition of shares of Common Stock or of a participation therein, whether
voluntarily or by operation of law.
"SEC Reports" has the meaning specified in Section 3.6(a).
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Seller" has the meaning specified in the preamble to this Agreement.
"Series F Stock Purchase Agreement" means that certain Stock Purchase
Agreement of even date herewith between the Seller and ITC Wireless, Inc., as
purchaser thereunder, with respect to the sale and purchase of 50,000 shares of
the Seller's Series F 6.5% Cumulative Convertible Preferred Stock.
"Shares" has the meaning specified in the recitals to this Agreement.
"Subsidiaries" means any and all corporations, partnerships, limited
liability companies, joint ventures, associations and other entities controlled
by the Seller directly or indirectly through one or more intermediaries.
"Tax" or "taxes" means any and all taxes, fees, levies, assessments,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation:
A-6
<PAGE> 38
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains, taxes; license, registration
and documentation fees; and customs duties, tariffs, and similar charges.
"Third Party Claims" has the meaning specified in Section 7.2(b).
"U.S. GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of the Shares. Upon the terms and subject
to the conditions of this Agreement, at the Closing, the Seller shall sell to
the Purchaser, and the Purchaser shall purchase from the Seller, the Shares.
SECTION 2.2 Purchase Price. The aggregate purchase price for the Shares
shall be $75,000,000.00 (the "Purchase Price"), representing a purchase price of
$1,500.00 per Share.
SECTION 2.3 Closing. Upon the terms and subject to the conditions of this
Agreement, the issuance, sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at 10:00 A.M.
local time on a date and at a location mutually agreed to by the parties upon
the satisfaction or waiver of all conditions to the obligations of the parties
set forth in Article VI, or at such other place or at such other time or on such
other date as the Seller and the Purchaser may mutually agree upon in writing
(the day on which the Closing takes place being the "Closing Date").
SECTION 2.4 Closing Deliveries by the Seller. At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser a receipt for the
Purchase Price, stock certificates evidencing the Shares duly registered in the
name of the Purchaser, in a form reasonably satisfactory to the Purchaser, and
the opinions, certificates and other documents required to be delivered pursuant
to Section 6.2.
SECTION 2.5 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver to the Seller the Purchase Price in immediately
available funds together with the opinions, certificates and other documents
required to be delivered pursuant to Section 6.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
hereby represents and warrants to the Purchaser as follows:
SECTION 3.1 Organization, Authority and Qualification of the Seller. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder,
to consummate the transactions contemplated hereby and to conduct its Business,
except where the failure to be in good standing would not have a Material
Adverse Effect. The Seller is duly licensed or qualified to do Business and is
in good standing in each jurisdiction in which the properties owned or leased by
it or the operation of its Business makes such licensing or qualification
necessary, except as would not have a Material Adverse Effect. The execution and
delivery of this Agreement by the Seller, the performance by the Seller of its
obligations hereunder and the consummation by the Seller of the transactions
contemplated hereby, including, without limitation, the issuance of the
Preferred Stock in accordance with the terms of this Agreement and the
Certificate of Designations, have been duly authorized by all requisite action
on the part of the Seller. This Agreement has been duly executed and delivered
by the Seller, and (assuming due
A-7
<PAGE> 39
authorization, execution and delivery by the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms.
SECTION 3.2 Capitalization of the Seller. (a) The authorized capital stock
of the Seller consists of 100,000,000 shares of Common Stock and 1,000,000
shares of preferred stock, par value $0.01 per share. As of the date hereof, (i)
26,948,955 shares of Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and (ii) 300,000 shares of
preferred stock (not including the Preferred Stock) are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. None of the
issued and outstanding shares of Common Stock or preferred stock was issued in
violation of any preemptive rights. All issuances of such issued and outstanding
shares when made were registered or exempt from registration under the
Securities Act, except where the failure of such issuances to be registered or
exempt from registration would not, individually or in the aggregate, have a
Material Adverse Effect. Except as disclosed in the SEC Reports and in Schedule
3.2 of the Disclosure Schedule, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character to which the Seller is a party relating to the issuance or sale of
capital stock of the Seller or obligating the Seller to issue or sell any shares
of capital stock of, or any other equity interest in, the Seller or its
Subsidiaries. Except as disclosed in Schedule 3.2 of the Disclosure Schedule,
there are no outstanding contractual obligations of the Seller to repurchase,
redeem or otherwise acquire any shares of Common Stock or shares of capital
stock of its Subsidiaries. Upon issuance of the Shares to the Purchaser at the
Closing and payment therefor pursuant to this Agreement and the Certificate of
Designations, the Shares will be validly issued, fully paid and nonassessable
and free of preemptive rights. By the Closing Date, the shares of Common Stock
issuable upon conversion of the Shares will be duly authorized and reserved for
issuance upon such conversion and, upon issuance of such shares in accordance
with the Certificate of Designations, will be validly issued, fully paid and
nonassessable and free of preemptive rights. Upon consummation of the
transactions contemplated by this Agreement, including the issuance of the
Shares, registration of the Shares in the name of the Purchaser in the stock
records of the Seller and delivery of the Shares, the Purchaser will own the
Shares free and clear of all Encumbrances, other than Encumbrances resulting
from any action, or failure to take action, by the Purchaser. All shares of
Common Stock issued as dividends with respect to the Shares will be validly
issued, fully paid and nonassessable and free of preemptive rights. Upon the due
declaration and issuance of a dividend payable in Common Stock with respect to
the Shares, the registration of such shares of Common Stock in the name of the
Purchaser in the stock records of the Seller and delivery of such shares of
Common Stock, the Purchaser will own all such shares of Common Stock free and
clear of all Encumbrances, other than Encumbrances resulting from any action, or
failure to take any action, by the Purchaser.
(b) The outstanding indebtedness of Seller as of March 31, 1998 is
accurately reflected (subject to normal and recurring adjustments and other
revisions which were not and are not known or reasonably expected to be material
in amount) in the Seller's balance sheet at March 31, 1998 contained in the
Seller's unaudited quarterly consolidated financial statements and the notes and
schedules thereto for the quarter ended March 31, 1998 (the "1998 Financial
Statements").
SECTION 3.3 Subsidiaries. Each Subsidiary: (i) is duly organized and
validly existing under the laws of its jurisdiction of organization; (ii) has
all necessary power and authority to own, operate or lease the properties and
assets owned, operated or leased by such Subsidiary and to carry on its business
as it has been and is currently conducted by such Subsidiary; and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary or desirable,
except where the failure to be so duly licensed or qualified would not have a
Material Adverse Effect. Each Subsidiary is wholly owned, directly or
indirectly, by the Seller.
SECTION 3.4 No Conflict. Assuming that all Approvals described in Section
3.5 have been obtained, that approval of the Certificate of Designations and the
issuance of the Shares has been obtained from the holders of the Seller's Series
A, Series B, Series C and Series D Preferred Stock and that all filings and
notifications listed in Schedule 3.5 of the Disclosure Schedule have been made,
the execution, delivery and performance of this Agreement by the Seller, and the
issuance of the Shares and the performance of the Seller's obligations in
accordance with the Certificate of Designations, do not and will not: (i)
violate, conflict
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with or result in the breach of any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of the Seller or
any Subsidiary as in effect on the date hereof or on the Closing Date; (ii)
conflict with or violate (or cause an event which could have a Material Adverse
Effect as a result of) any Law or Governmental Order as in effect on the date
hereof or on the Closing Date applicable to the Seller, any Subsidiary or any of
their respective assets, properties or businesses; or (iii) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any Encumbrance on any of the Shares or on any of the assets or
properties of the Seller or any Subsidiary pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement as in effect on the date hereof or on the
Closing Date to which the Seller or any Subsidiary is a party or by which any of
the Shares or any of such assets or properties is bound or affected.
SECTION 3.5 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Seller and the performance of the
Seller's obligations in accordance with the Certificate of Designations do not
and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental Authority on the part
of the Seller pursuant to Laws as they are in effect on the Closing Date
(collectively, the "Approvals"), except: (i) as described in Schedule 3.5 of the
Disclosure Schedule; (ii) pursuant to the notification requirements of the HSR
Act; (iii) the filing with the Secretary of State of the State of Delaware of
the Certificate of Designations contemplated by Section 5.1; and (iv) any
filings required to effect any registration pursuant to Section 5.5. Subject to
the exceptions set forth in clauses (i), (ii) and (iv) above, the Seller will
obtain all such Approvals on or before the Closing Date.
SECTION 3.6 Seller SEC Reports; Financial Statements.
(a) The Seller has filed all forms, reports and documents required to be
filed by it with the Commission, and has heretofore made available to the
Purchaser, in the form filed with the Commission (excluding any exhibits
thereto), (i) its Annual Report on Form 10-K for the fiscal years ended December
31, 1995, 1996 and 1997, (ii) its Quarterly Report on Form 10-Q for the period
ended March 31, 1998 and (iii) all proxy statements relating to the Seller's
meetings of stockholders (whether annual or special) held since December 31,
1995 (collectively, the "SEC Reports").
(b) Except as set forth in Schedule 3.6 of the Disclosure Schedule, the SEC
Reports and any other forms, reports and other documents filed by the Seller
with the Commission as of the date of this Agreement (i) were prepared in all
material respects in accordance with the requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations thereunder
and (ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) The financial statements (including, in each case, any notes thereto)
contained in the SEC Reports were prepared in accordance with U.S. GAAP applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto), and each fairly presented the financial
position, results of operations and cash flows of the Seller and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not known or reasonably expected, individually or in the aggregate, to be
material in amount).
(d) Since March 31, 1998 there has not been any change, occurrence or
circumstance affecting the Business, results of operations or financial
condition of the Seller or any Subsidiary that has had, individually or in the
aggregate, a Material Adverse Effect, other than changes, occurrences and
circumstances referred to in any subsequently filed SEC Reports or otherwise
Disclosed by Seller.
SECTION 3.7 No Undisclosed Liabilities. There are no Liabilities of the
Seller or any Subsidiary, other than Liabilities (i) disclosed in Schedule 3.7
of the Disclosure Schedule, (ii) reflected in the SEC
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Reports, the 1997 Financial Statements, the 1998 Financial Statements or
otherwise Disclosed by Seller, (iii) not required to be reflected in a
consolidated balance sheet of the Seller and its Subsidiaries or in the notes
thereto prepared in accordance with U.S. GAAP or (iv) incurred since the
Reference Balance Sheet Date in the ordinary course of business and which do not
have a Material Adverse Effect.
SECTION 3.8 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions. Since the Reference Balance Sheet Date, except as
Disclosed by Seller in any subsequently filed SEC Reports or Press Releases, as
reflected in the 1997 Financial Statements, the 1998 Financial Statements or as
contemplated by this Agreement, the Business of the Seller and the Subsidiaries
has been conducted in the ordinary course, and the Seller has not suffered any
Material Adverse Effect.
SECTION 3.9 Litigation. Except as set forth in the SEC Reports, as
reflected in the 1997 Financial Statements or the 1998 Financial Statements, as
disclosed in Schedule 3.9 of the Disclosure Schedule or otherwise Disclosed by
Seller, there are no Actions by or against the Seller or any Subsidiary (or by
or against any Affiliate thereof and relating to the Business, the Seller or any
Subsidiary), or affecting the Business or any of the Assets, pending before any
Governmental Authority (or, to the knowledge of the Seller, threatened to be
brought by or before any Governmental Authority) that has, has had or could
reasonably be expected to have a Material Adverse Effect or could reasonably be
expected to affect the legality, validity or enforceability of this Agreement or
the consummation of the transactions contemplated hereby. None of the Seller,
the Subsidiaries nor any of the Assets is subject to any Governmental Order
(nor, to the knowledge of the Seller, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has, has had or
could have a Material Adverse Effect.
SECTION 3.10 Compliance with Laws. The Seller and the Subsidiaries have
each conducted and continue to conduct the Business in all material respects in
accordance with all Laws and Governmental Orders applicable to the Seller or any
Subsidiary or any of the Assets or the Business, and neither the Seller nor any
Subsidiary is in material violation of any such Law or Governmental Order.
SECTION 3.11 Full Disclosure. The Seller is not aware of any facts
pertaining to the Seller, any Subsidiary or the Business which could reasonably
be expected to have a Material Adverse Effect and which have not been disclosed
in this Agreement, the Disclosure Schedule or the SEC Reports or otherwise
Disclosed by Seller.
SECTION 3.12 Private Placement. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Sections 4.5 and
4.6, the offer and sale of the Shares to the Purchaser pursuant to this
Agreement are, and the issuance of Common Stock (i) upon conversion of the
Shares and (ii) as dividends with respect to the Shares will be, exempt from
registration under the Securities Act as in effect on the Closing Date.
SECTION 3.13 FCC Regulations. After giving effect to the issuance of the
Shares to the Purchaser, the ownership of capital stock of the Seller by aliens
or their representatives or by a foreign government or representative thereof or
by any corporation organized under the laws of a foreign country does not exceed
the limitations set forth in the rules and regulations of the FCC.
SECTION 3.14 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller.
SECTION 3.15 Delivery of Certain Documents. The Seller has delivered (or
will deliver pursuant to Section 5.9) to the Purchaser a true and complete copy
of: (i) the 1997 Financial Statements, the 1998 Financial Statements and the
Certificate of Designations; and (ii) all agreements set forth on Schedule 3.15
of the Disclosure Schedule (including all appendices, schedules, exhibits and
other attachments thereto), including, without limitation, the Series F Stock
Purchase Agreement (collectively, the "Related Agreements"). Assuming due
execution and delivery thereof by all parties thereto, each of the Related
Agreements to which the Seller is a party creates a legally binding obligation
of each party thereto, enforceable against such parties in accordance with the
respective terms and conditions thereof, except (i) as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including,
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without limitation, the effect of statutory and other laws regarding fraudulent
conveyances, fraudulent transfers and preferential transfers), and (ii) as may
be limited by the exercise of judicial discretion and the application of
principles of equity including, without limitation, requirements of good faith,
fair dealing, conscionability and materiality (regardless of whether such
agreements are considered in a proceeding in equity or at law).
SECTION 3.16 No Consideration for Consent. No Person has received or will
receive any consideration of any kind for or in connection with the granting of
any consent by such Person to the sale and issuance of the Preferred Stock or of
the Seller's Series F 6.5% Cumulative Convertible Preferred Stock.
SECTION 3.17 Delivery of Business Plan. The Seller has delivered (or will
deliver pursuant to Section 5.9) to the Purchaser a true and complete copy of
the Seller's business plan and such plan is, on and as of the date hereof, the
current business plan of the Seller. The historical factual information
contained in such business plan is correct in all material respects, does not,
when read together with the SEC Reports, omit to state any material fact
necessary to make the statements therein not misleading and fairly reflects the
Seller's projections as of the date hereof.
SECTION 3.18 Licenses. Except to the extent it would not have a Material
Adverse Effect: (i) all FCC Licenses are in full force and effect and have been
duly issued in the name of, or validly assigned to, the Seller or one of its
Subsidiaries and no default or breach exists thereunder; (ii) no event has
occurred with respect to the FCC Licenses that permits, or after giving notice,
lapse of time or both would permit, revocation or termination of such FCC
Licenses or would result in any material impairment of the rights of the holder
thereof; and (iii) all FCC Licenses are in effect for the usual FCC License
terms and are unimpaired by any condition or other restriction imposed by the
FCC or other Governmental Authority (other than restrictions and conditions
generally applicable to licenses of the same or similar type or class).
Except to the extent it would not have a Material Adverse Effect: (i) all
applications necessary for renewal or extension of the FCC Licenses have been
timely filed in accordance with the requirements of the FCC or other
Governmental Authority issuing such FCC Licenses; (ii) the Seller has not been
informed that any of the FCC Licenses will not be renewed in the ordinary
course; and (iii) no allegations, complaints, charges, investigations, renewal
or revocation hearings, or other proceedings have been threatened or initiated
in any forum, nor has any Governmental Authority (including, but not limited to,
the FCC) proposed, announced, used, or adopted any amendment, modification, or
change to any law or regulation, with respect to or impacting upon such FCC
Licenses.
Except to the extent that it would not have a Material Adverse Effect, each
of the Seller and its Subsidiaries: (i) is in compliance with the provisions of
the Communications Act as implemented, interpreted and applied by the FCC; (ii)
is in compliance with FCC requirements immediately following the Closing; (iii)
has duly and timely filed all reports and other filings which are required to be
filed by it under the Communications Act or any other applicable law, rule or
regulation of any Governmental Authority; and (iv) is in compliance with all
such laws, rules and regulations, the noncompliance with which would have a
Material Adverse Effect on the continuation of any License held by the Seller or
any of its Subsidiaries. Except to the extent it would not have a Material
Adverse Effect, all information provided by or on behalf of Seller or any
Subsidiary in any filing with the FCC was, at the time of filing, true, complete
and correct in all material respects when made, and the FCC has been notified of
any substantial or significant changes in such information as may be required in
accordance with applicable laws, rules and regulations.
SECTION 3.19 Other Licenses and Approvals. Except to the extent it would
not have a Material Adverse Effect, each of the Seller and its Subsidiaries has
or has the right to use all Licenses and Approvals that are necessary for the
Seller and its Subsidiaries to carry on the Business as currently conducted.
SECTION 3.20 Tax Matters. Except to the extent it would not have a
Material Adverse Effect: (i) each of Seller and its Subsidiaries has filed all
federal, state, local and other tax returns which are required to be filed by it
within the period required for such filings and any extensions granted therefor
and within the period that the same may be filed without interest or penalties;
(ii) each such Person has paid, or made adequate provision for the payment of,
all taxes (if any), including any interest and penalties thereon, which
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have or may become due and payable pursuant to any of the said returns or
pursuant to any matters raised by audits or for other reasons known to it; and
(iii) each such Person has made adequate provision for all current taxes. Except
as disclosed in Schedule 3.20 of the Disclosure Schedule, no audit by any
Governmental Authority of the federal, state, local or other tax returns, forms
or information statements of the Seller or any of its Subsidiaries with respect
to such taxes is currently in progress or overtly threatened.
SECTION 3.21 FCC Change of Control. Based upon the Seller's knowledge of
the ownership of its stock as of the Closing Date, no assignment or transfer of
control for purposes of the rules and regulations of the FCC will occur by
reason of the sale of the Shares and the Series F 6.5% Cumulative Convertible
Preferred Stock; provided, however, that no representation or warranty is made
as to the effect of the issuance of dividends or other distributions with
respect to the Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller as follows:
SECTION 4.1 Organization and Authority of the Purchaser. The Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of South Carolina and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Seller) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.
SECTION 4.2 No Conflict. Except as disclosed by the Purchaser to the
Seller in writing prior to Closing, assuming compliance with the notification
requirements of the HSR Act and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.3, except as may result from any facts or circumstances relating
solely to the Seller, the execution, delivery and performance of this Agreement
by the Purchaser do not and will not as of the Closing Date: (i) violate,
conflict with or result in the breach of any provision of the articles of
incorporation or by-laws of the Purchaser; (ii) conflict with or violate any Law
or Governmental Order applicable to the Purchaser; or (iii) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent that has not been obtained under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation, or cancellation
of, or result in the creation of any Encumbrance on any of the assets or
properties of the Purchaser pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected, which in any such case would
have a material adverse effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement.
SECTION 4.3 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Purchaser do not and will not require
any Approvals on the part of the Purchaser except pursuant to the notification
requirements of the HSR Act and the filing requirements of Sections 13 and 16(a)
of the Exchange Act. The Purchaser shall obtain or comply with such Approval
requirements in a timely manner.
SECTION 4.4 Litigation. There are no Actions by or against the Purchaser,
pending before any Governmental Authority (or, to the knowledge of the
Purchaser, threatened to be brought by or before any Governmental Authority)
that could reasonably be expected to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby. The Purchaser is not subject to any Governmental Order
(nor, to the knowledge of the Purchaser, are there any such Governmental Orders
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threatened to be imposed by any Governmental Authority), which could reasonably
be expected to materially adversely affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 4.5 Investment Purpose. The Purchaser is acquiring the Shares
and, if any of the Common Stock to be issued upon conversion of the Shares or as
dividends with respect to the Shares is, when acquired, not subject to immediate
resale under Rule 144 promulgated pursuant to the Securities Act or is not to be
resold solely pursuant to a registration statement to be filed and declared
effective pursuant to the Securities Act, the Purchaser will acquire such shares
of Common Stock for the Purchaser's own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.
SECTION 4.6 Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities Act.
SECTION 4.7 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Filing of Certificate of Designations. The Seller covenants
and agrees that at or prior to the Closing, the Seller will file the Certificate
of Designations with the Secretary of State of the State of Delaware in
accordance with the Delaware General Corporation Law.
SECTION 5.2 Treatment of Shares as Equity. The Seller covenants and
agrees that it will treat the Shares as equity, and not as debt, for accounting
and tax purposes and further covenants and agrees that it will not take any
action or position that is inconsistent with such treatment.
SECTION 5.3 Regulatory and Other Authorizations; Notices and Consents.
(a) The Seller and the Purchaser shall use all reasonable efforts to obtain
all Approvals of all Governmental Authorities that may be or become necessary
for each of them to obtain for their execution and delivery of, and the
performance of their respective obligations pursuant to, this Agreement. Each
party hereto agrees to make an appropriate filing pursuant to the HSR Act, if
required, with respect to the conversion of the Shares and any shares of Common
Stock issued as dividends with respect thereto at such times as the Purchaser
may request and to supply as promptly as practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act.
(b) The Seller shall or shall cause the Subsidiaries to give promptly such
notices to third parties and use its or their reasonable efforts to obtain such
third party consents as are necessary in connection with the transactions
contemplated by this Agreement.
(c) The Purchaser shall cooperate and use all reasonable efforts to assist
the Seller in giving such notices and obtaining such consents; provided,
however, that the Purchaser shall have no obligation to give any guarantee or
other consideration of any nature in connection with any such notice or consent
or to consent to any change in the terms of any agreement or arrangement which
the Purchaser in its sole and absolute discretion may deem adverse to the
interests of the Purchaser.
SECTION 5.4 Notice of Developments.
(a) Prior to the Closing, the Seller shall promptly notify the Purchaser in
writing of (i) all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could reasonably be expected to
result in any breach of a representation or warranty or covenant of the Seller
in this Agreement or which could reasonably be expected to have the effect of
making any representation or warranty of the Seller in this Agreement untrue or
incorrect and (ii) all other developments material to the Seller and the
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Subsidiaries, taken as a whole, affecting the Assets, Liabilities, business,
financial condition, operations, results of operations or prospects of the
Seller, any Subsidiary or the Business.
(b) Prior to the Closing, the Purchaser shall promptly notify the Seller in
writing of all events, circumstances, facts and occurrences arising subsequent
to the date of this Agreement which could reasonably be expected to result in
any breach of a representation or warranty or covenant of the Purchaser in this
Agreement or which could reasonably be expected to have the effect of making any
representation or warranty of the Purchaser in this Agreement untrue or
incorrect.
SECTION 5.5 Registration Rights. Effective at the Closing, the Purchaser
and the Seller shall each have the rights and obligations set forth in Annex II,
which is incorporated by reference herein.
SECTION 5.6 Resale Restrictions.
(a) The Purchaser acknowledges that the Shares, the shares of Common Stock
into which the Shares are convertible and all shares of Common Stock that are to
be issued as dividends with respect to the Shares have not been registered under
the Securities Act or any state securities law, and the Purchaser hereby agrees
not to offer, sell or otherwise transfer, pledge or hypothecate such shares
unless and until registered under the Securities Act and any applicable state
securities law or unless such offer, sale, transfer, pledge or hypothecation is
exempt from registration or is otherwise in compliance with the Securities Act
and such laws.
(b) During the period ending one year after the Closing Date, the Purchaser
shall not, without the prior written consent of the Seller which shall not be
unreasonably withheld, (i) offer, pledge, sell or otherwise transfer or dispose
of, directly or indirectly, any Shares or any shares of Common Stock into which
any of such Shares may be converted, or (ii) enter into any swap or similar
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of such Shares or any shares of Common Stock into which such Shares
may be converted, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Shares or such other securities, in cash
or otherwise, other than a pledge, grant of security interest or other
encumbrance effected in a bona fide transaction with an unrelated and
unaffiliated pledgee; provided, however, that the Purchaser may at any time
enter into any such transaction described in clause (i) or (ii) above with an
Affiliate of the Purchaser without the prior written consent of the Seller.
SECTION 5.7 Registration of Shares. The Seller shall, upon issuance of
the Shares and prior to the delivery of stock certificates evidencing the Shares
pursuant to Section 2.4, register the Shares in the name of the Purchaser in the
stock records of the Seller.
SECTION 5.8 Reservation of Common Stock. The Seller agrees that as of the
Closing Date the Seller will reserve and will thereafter keep reserved for
issuance out of the authorized but unissued shares of the Common Stock such
number of shares of Common Stock into which the outstanding shares of the
Preferred Stock are from time to time convertible.
SECTION 5.9 Delivery of Certain Documents. The Seller shall deliver to
the Purchaser true and correct copies of this Agreement and the Related
Agreements, all exhibits, schedules, annexes and agreements related hereto as
soon as practicable following the execution and delivery hereof by the parties
hereto.
SECTION 5.10 Certain Information. For a period commencing on the date of
this Agreement and ending not earlier than two years from the date that the
Preferred Stock first becomes convertible into Common Stock, for so long as the
Seller is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Seller shall file all reports and other information required
to be filed by Section 13 or 15(d) under the Exchange Act, as the case may be,
as shall be necessary in order that the conditions to the availability of Rule
144 under the Securities Act, as such Rule may be amended, in connection with
any Sale of shares of Common Stock by the Purchaser shall be met. For so long as
the Seller is required to file reports and other information pursuant to Section
13 or 15(d) of the Exchange Act and this Section 5.10, unless the Purchaser no
longer holds any Shares or shares of Common Stock issued upon conversion of the
Shares, the Seller shall provide the Purchaser with a paper copy of each such
report and other information within a reasonable period of time following the
filing of such report or other information with the Commission.
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SECTION 5.11 Conduct of Business of the Seller. Prior to the Closing, the
Seller agrees (except to the extent that the Purchaser shall otherwise consent
in writing) as follows:
(a) Dividends; Changes in Stock. The Seller shall not take or permit
to be taken any action that would result in an adjustment to the Conversion
Price (as defined in the Certificate of Designations) pursuant to Section
(7)(d) of the Certificate of Designations if the Shares were issued and
outstanding at the time of such action.
(b) Certain Matters. The Seller shall not take or permit to be taken
any action in respect of which holders of Shares would be entitled to vote
pursuant to Section (9) of the Certificate of Designations if the Shares
were outstanding at the time of such action.
SECTION 5.12 Use of Funds. The Seller shall use the proceeds from the
sale of the Preferred Stock and the Seller's Series F 6.5% Cumulative
Convertible Preferred Stock by December 31, 1999 solely for the buildout of
existing personal communications services (PCS) markets for which Licenses have
been issued to Powertel or its Subsidiaries.
SECTION 5.13 Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Obligations of the Seller. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction (or waiver by the Seller, at its sole
discretion), at or prior to the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Purchaser contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true and correct
in all material respects as of such date (provided, however, that if any
portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 6.1(a) has
been satisfied with respect to such portion of such representation or
warranty, such portion of such representation or warranty as so qualified
must be true and correct in all respects), and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or
before the Closing shall have been complied with in all material respects,
and the Seller shall have received a certificate from the Purchaser to such
effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Seller, is likely to render it impossible or
unlawful to consummate such transactions; provided, however, that the
provisions of this Section 6.1(b) shall not apply if the Seller has
directly or indirectly solicited or encouraged any such Action;
(c) Resolutions of the Purchaser. The Seller shall have received a
true and complete copy, certified by the Secretary or an Assistant
Secretary of the Purchaser, of the resolutions duly and validly adopted by
the Board of Directors of the Purchaser evidencing its authorization, if
required by law, of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
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(d) Incumbency Certificate of the Purchaser. The Seller shall have
received a certificate of the Secretary or an Assistant Secretary of the
Purchaser certifying the names and signatures of the officers of the
Purchaser authorized to sign this Agreement and the other documents to be
delivered hereunder;
(e) Legal Opinion. The Seller shall have received from McNair Law
Firm, P.A., counsel to the Purchaser, a legal opinion, addressed to the
Seller and dated the Closing Date, the form and substance of which shall be
substantially as set forth in Exhibit 6.1(e) attached hereto;
(f) Consents and Approvals. The Seller shall have received (or
received evidence of), each in form and substance reasonably satisfactory
to the Seller, all Approvals and all third party consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement; and
(g) Closing of Series F Transaction. Closing of the transaction
contemplated by the Series F Stock Purchase Agreement shall have occurred
or shall occur simultaneously with the Closing.
SECTION 6.2 Conditions to Obligations of the Purchaser. The obligations
of the Purchaser shall be subject to the satisfaction (or waiver by the
Purchaser, at its sole discretion), at or prior to the Closing, of each of the
following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Seller contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true and correct
as of such date (provided, however, that if any portion of any
representation or warranty is already qualified by materiality, for
purposes of determining whether this Section 6.2(a) has been satisfied with
respect to such portion of such representation or warranty, such portion of
such representation or warranty as so qualified must be true and correct in
all respects), and the covenants and agreements contained in this Agreement
to be complied with by the Seller at or before the Closing shall have been
complied with in all material respects, and the Purchaser shall have
received a certificate of the Seller to such effect signed by a duly
authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Purchaser, is likely to render it impossible or
unlawful to consummate such transactions or which could have a Material
Adverse Effect; provided, however, that the provisions of this Section
6.2(b) shall not apply if the Purchaser has directly or indirectly
solicited or encouraged any such Action;
(c) Resolutions of the Seller. The Purchaser shall have received a
true and complete copy, certified by the Secretary or an Assistant
Secretary of the Seller, of the resolutions duly and validly adopted by the
Board of Directors of the Seller and, to the extent that such authorization
is necessary, the stockholders of the Seller evidencing their authorization
of the execution and delivery of this Agreement, the issuance and terms of
the Shares including, without limitation, the convertibility thereof into
shares of Common Stock, and the consummation of the transactions
contemplated hereby;
(d) Incumbency Certificate of the Seller. The Purchaser shall have
received a certificate of the Secretary or an Assistant Secretary of the
Seller certifying the names and signatures of the officers of the Seller
authorized to sign this Agreement and the other documents to be delivered
hereunder;
(e) Legal Opinion. The Purchaser shall have received from Nelson
Mullins Riley & Scarborough, L.L.P., counsel to the Seller, a legal
opinion, addressed to the Purchaser and dated the Closing Date, the form
and substance of which shall be substantially as set forth in Exhibit
6.2(e) attached hereto;
(f) Consents and Approvals. The Purchaser shall have received (or
received evidence of), each in form and substance reasonably satisfactory
to the Purchaser, all Approvals and all third party consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement which the Seller has the obligation to obtain;
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(g) Organizational Documents. The Purchaser shall have received a
copy of (i) the certificate of incorporation, as amended, of the Seller,
certified by the Secretary of State of the State of Delaware, as of a date
not earlier than five Business Days prior to the Closing Date and
accompanied by a certificate of the Secretary or an Assistant Secretary of
the Seller, dated as of the Closing Date, stating that no amendments have
been made to such certificate of incorporation since such date, (ii) the
by-laws of the Seller, certified by the Secretary or an Assistant Secretary
of the Seller and (iii) a true and correct copy of the Certificate of
Designations and evidence of the filing thereof;
(h) Good Standing. The Purchaser shall have received a good standing
certificate for the Seller from the Secretary of State of the State of
Delaware, dated as of a date not earlier than five Business Days prior to
the Closing Date and accompanied by a bring-down certificate signed by the
Secretary or an Assistant Secretary of the Seller dated within one day
prior to the Closing Date;
(i) No Material Adverse Effect. No event or events shall have
occurred which, individually or in the aggregate, have, or could have, a
Material Adverse Effect; and
(j) Closing of Series F Transaction. Closing of the transaction
contemplated by the Series F Stock Purchase Agreement shall have occurred
or shall occur simultaneously with the Closing.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations and Warranties.
(a) The representations and warranties of the Seller to the Purchaser
contained in this Agreement shall survive the Closing until the later of the
second anniversary of the Closing Date or the conversion of all Shares into
Common Stock. Neither the period of survival nor the liability of the Seller
with respect to the Seller's representations and warranties shall be reduced by
any investigation made at any time by or on behalf of the Purchaser. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties by the Purchaser to the Seller, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
(b) The representations and warranties of the Purchaser to the Seller
contained in this Agreement shall survive the Closing until the later of the
second anniversary of the Closing Date or the conversion of all Shares into
Common Stock. Neither the period of survival nor the liability of the Purchaser
with respect to the Purchaser's representations and warranties shall be reduced
by any investigation made at any time by or on behalf of the Seller. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties by the Seller to the Purchaser, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
SECTION 7.2 Indemnification.
(a)(i) The Purchaser, its successors and assigns, and the stockholders,
officers, directors, employees, Affiliates and agents of the Purchaser and its
successors and assigns shall be indemnified and held harmless by the Seller for
any and all Liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
(A) the breach of any representation or warranty made by the Seller
contained in this Agreement; or
(B) the breach of any covenant or agreement by the Seller contained in
this Agreement.
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(ii) The Seller, its successors and assigns, and the stockholders,
officers, directors, employees, Affiliates and agents of the Seller and its
successors and assigns shall be indemnified and held harmless by the Purchaser
for any and all Losses actually suffered or incurred by them, arising out of or
resulting from:
(A) the breach of any representation or warranty made by the Purchaser
in this Agreement; or
(B) the breach of any covenant or agreement by the Purchaser contained
in this Agreement.
To the extent that the Seller's or the Purchaser's undertakings set forth in
this Section 7.2 may be unenforceable, the Seller or the Purchaser, as the case
may be, shall contribute the maximum amount that it is permitted to contribute
under applicable law to the payment and satisfaction of all Losses incurred by
the Purchaser or the Seller, as the case may be.
(b) An indemnified party shall give the party from which indemnification is
sought notice of any matter which an indemnified party has determined has given
or could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article
VII except to the extent the indemnifying party is materially prejudiced by such
failure and shall not relieve the indemnifying party from any other obligation
or Liability that it may have to any indemnified party otherwise than under this
Article VII. The obligations and Liabilities of an indemnifying party under this
Article VII with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VII ("Third
Party Claims") shall be governed by and contingent upon the following additional
terms and conditions: If an indemnified party shall receive notice of any Third
Party Claim, the indemnified party shall give the indemnifying party notice of
such Third Party Claim within 30 days of the receipt by the indemnified party of
such notice; provided, however, that the failure to provide such notice shall
not release the indemnifying party from any of its obligations under this
Article VII except to the extent the indemnifying party is materially prejudiced
by such failure and shall not relieve the indemnifying party from any other
obligation or Liability that it may have to any indemnified party otherwise than
under this Article VII. If the indemnifying party acknowledges in writing its
obligation to indemnify the indemnified party hereunder against any Losses that
may result from such Third Party Claim, then the indemnifying party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the indemnified party within five days of the receipt of such notice
from the indemnified party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the indemnified party, in its sole and absolute
discretion, for the same counsel to represent both the indemnified party and the
indemnifying party, then the indemnified party shall be entitled to retain its
own counsel, in each jurisdiction for which the indemnified party determines
counsel is required, at the expense of the indemnifying party. In the event the
indemnifying party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the indemnified party shall cooperate
with the indemnifying party in such defense and make available to the
indemnifying party, at the indemnifying party's expense, all witnesses,
pertinent records, materials and information in the indemnified party's
possession or under the indemnified party's control relating thereto as is
reasonably required by the indemnifying party. Similarly, in the event the
indemnified party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the indemnifying party shall cooperate with the
indemnified party in such defense and make available to the indemnified party,
at the indemnifying party's expense, all such witnesses, pertinent records,
materials and information in the indemnifying party's possession or under the
indemnifying party's control relating thereto as is reasonably required by the
indemnified party. No such Third Party Claim may be settled by the indemnifying
party or the indemnified party without the prior written consent of the other.
SECTION 7.3 Limits on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement, the maximum amount of indemnifiable Losses
which may be recovered from an indemnifying party arising out of or resulting
from the causes enumerated in Section 7.2 shall be an amount equal to the
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Purchase Price. The provisions of this Article VII shall survive the Closing and
any termination of this Agreement.
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated as follows:
(a) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has
resulted in a Material Adverse Effect; (ii) any representation or warranty
of the Seller contained in this Agreement shall not have been true and
correct in all material respects when made or as of the Closing Date; (iii)
the Seller shall not have complied in all material respects with any
covenant or agreement to be complied with by it and contained in this
Agreement; or (iv) the Seller or any Subsidiary makes a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against the Seller or any Subsidiary seeking to adjudicate any of them a
bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition
of its debts under any Law relating to bankruptcy, insolvency or
reorganization; or
(b) by the Seller if, between the date hereof and the time scheduled
for the Closing: (i) any representation or warranty of the Purchaser
contained in this Agreement shall not have been true and correct in all
material respects when made; (ii) the Purchaser shall not have complied in
all material respects with any covenant or agreement to be complied with by
it and contained in this Agreement; or (iii) the Purchaser makes a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against the Purchaser seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any Law relating to bankruptcy, insolvency or reorganization; or
(c) by either the Seller or the Purchaser if the Closing shall not
have occurred on or prior to June 30, 1998; or
(d) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable; or
(e) by the mutual written consent of the Seller and the Purchaser.
SECTION 8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability on the part of either party hereto except that
nothing herein shall relieve either party from liability for any breach of this
Agreement occurring prior to termination.
SECTION 8.3 Waiver. Either party to this Agreement may: (i) extend the
time for the performance of any of the obligations or other acts of the other
party; (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto; or (iii) waive compliance with any of the agreements or
conditions of the other party contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Expenses. If the Closing occurs, upon presentation to the
Seller of a reasonably detailed invoice, the Seller shall reimburse the
Purchaser for up to $100,000 in costs and expenses, including, without
limitation, fees and disbursements of counsel, actually incurred by the
Purchaser in connection with this Agreement and the transactions contemplated
hereby. Except as otherwise specified in this Agreement (including in the
preceding sentence of this Section 9.1), all costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.2):
(a) if to the Seller:
Powertel, Inc.
1233 O.G. Skinner Drive
West Point, Georgia 31833
Telecopy: (706) 645-9523
Attention: Jill F. Dorsey, Esq.
with a copy (which shall not constitute notice) to:
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street
Suite 1400
Atlanta, Georgia 30309
Telecopy: (404) 817-6050
Attention: James Walker IV, Esq.
(b) if to the Purchaser:
SCANA Communications, Inc.
c/o SCANA Corporation
1426 Main Street
Columbia, South Carolina 29201
Telecopy: (803) 748-3336
Attention: Kevin Marsh
with a copy (which shall not constitute notice) to:
SCANA Communications, Inc.
c/o SCANA Corporation
1426 Main Street
Columbia, South Carolina 29201
Telecopy: (803) 748-3336
Attention: H. Thomas Arthur II, Esq.
SECTION 9.3 Public Announcements. No party to this Agreement shall make,
or cause to be made, any press release or public announcement or otherwise
communicate with any news media in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the other party (which
shall not be unreasonably withheld or delayed), and the parties shall cooperate
as to the timing and contents of any such press release or public announcement;
provided, however, that with respect to any
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disclosure required by law or by a listing agreement with the National
Association of Securities Dealers, Inc. Automated Quotation System National
Market System or any national securities exchange to which the Purchaser or the
Seller is a party, the party required to make such disclosure shall use its best
efforts to consult with the other party as to the timing and contents of such
disclosure and to obtain such consent prior to the time such disclosure is
required to be made.
SECTION 9.4 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 9.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the Seller and the Purchaser with respect to the subject matter hereof.
SECTION 9.7 Assignment. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of the Seller and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Seller or the Purchaser); provided, however, that the Purchaser may, without
the consent of the Seller, assign this Agreement to SCANA Corporation or to a
subsidiary controlled by SCANA Corporation, but no such assignment shall relieve
the Purchaser of any of its obligations under this Agreement; and provided
further, however, that the rights granted pursuant to Annex II may be
transferred in accordance with Annex II.
SECTION 9.8 No Third Party Beneficiaries. Except for the provisions of
Article VII relating to indemnified parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their successors
and permitted assigns, and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.9 Amendment. This Agreement may not be amended or modified,
except: (i) by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser; or (ii) by a waiver in accordance with Section 8.3.
SECTION 9.10 Governing Law. This Agreement shall be governed by the laws
of the State of New York without reference to the principles or rules governing
conflicts of laws.
SECTION 9.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the term hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
POWERTEL, INC.
By: /s/ ALLEN E. SMITH
------------------------------------
Name: Allen E. Smith
Title: President and Chief Executive
Officer
SCANA COMMUNICATIONS, INC.
By: /s/ MARK R. CANNON
------------------------------------
Name: Mark R. Cannon
Title: Treasurer
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ANNEX I
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE PARTICIPATING
OR OTHER RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES E 6.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
POWERTEL, INC.
---------------------------------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
---------------------------------------------
POWERTEL, INC., a Delaware corporation (the "Corporation"), does hereby
certify that the following resolutions were duly adopted by the Board of
Directors of the Corporation pursuant to authority conferred upon the Board of
Directors by Article FOURTH of the Certificate of Incorporation of the
Corporation, which authorizes the issuance of up to 1,000,000 shares of
preferred stock, by consent of the Board of Directors dated June 15, 1998:
RESOLVED, that the issue of a series of preferred stock, $0.01 par value,
of the Corporation is hereby authorized and the designations, powers,
preferences and relative, participating or other rights, and qualifications,
limitations or restrictions thereof, in addition to those set forth in the
Certificate of Incorporation of the Corporation, are hereby fixed as follows:
Section (1) Number of Shares and Designation. 50,000 shares of the
preferred stock, $0.01 par value, of the Corporation are hereby constituted as a
series of the preferred stock designated as Series E 6.5% Cumulative Convertible
Preferred Stock (the "Series E Preferred Stock"). Without the consent of the
then current holders of shares of Series E Preferred Stock as provided for
herein, the number of shares of Series E Preferred Stock may not be increased
and may not be decreased below the number of then currently outstanding shares
of Series E Preferred Stock.
Section (2) Definitions. For purposes of the Series E Preferred Stock,
the following terms shall have the meanings indicated:
"Base Shares" shall have the meaning set forth in paragraph (a) of
Section (3).
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series E Preferred
Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock of the Corporation, par
value $0.01 per share.
"Conversion Price" shall mean the conversion price per share of Common
Stock into which the Series E Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to Section (7). The initial
Conversion Price shall be $22.01 (equivalent to the rate of approximately
68.15 shares of Common Stock for each share of Series E Preferred Stock).
"Current Market Price" shall mean, as of a particular date, the
average of the closing high bid and low asked prices per share of Common
Stock in the over-the-counter market, as reported by the Nasdaq Stock
Market or such other system then in use, or such other exchange or
inter-dealer quotation system on which the Common Stock is principally
traded or authorized to be quoted.
"Dividend Junior Stock" shall have the meaning set forth in paragraph
(d) of Section (3).
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"Dividend Parity Stock" shall have the meaning set forth in paragraph
(c) of Section (3).
"Dividend Payment Date" shall have the meaning set forth in paragraph
(a) of Section (3).
"Dividend Period" shall have the meaning set forth in paragraph (a) of
Section (3).
"Dividend Value" shall have the meaning set forth in paragraph (a) of
Section (3).
"Excess Dividend Amount" shall have the meaning set forth in paragraph
(e) of Section 3.
"Initial Convertibility Date" shall mean the fifth anniversary of the
Issue Date.
"Initial Market Price" shall mean $17.75 per share, and shall be
proportionately adjusted for any: (i) dividend or distribution made on the
Common Stock in shares of Common Stock; (ii) subdivision of the Common
Stock into a greater number of shares; (iii) combination of the Common
Stock into a smaller number of shares; or (iv) issuance of shares of
capital stock by reclassification of the Common Stock.
"Issue Date" shall mean the first date on which shares of Series E
Preferred Stock are issued.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section (4).
"Mandatory Redemption Date" shall have the meaning set forth in
paragraph (b) of Section (5).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (b) of Section (5).
"Minimum Price" shall have the meaning set forth in paragraph (d)(ii)
of Section (7).
"Nasdaq Stock Market" shall mean the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation
System.
"Optional Redemption Date" shall have the meaning set forth in
paragraph (a) of Section (5).
"Optional Redemption Price" shall have the meaning set forth in
paragraph (a) of Section (5).
"Person" shall mean any individual, firm, partnership, joint venture,
corporation, limited liability company, association or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Redemption Date" shall have the meaning set forth in paragraph (c) of
Section (5).
"Redemption Notice" shall have the meaning set forth in paragraph (c)
of Section (5).
"Redemption Price" shall have the meaning set forth in paragraph (c)
of Section (5).
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section (7).
"Series A Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series A Convertible
Preferred Stock.
"Series B Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series B Convertible
Preferred Stock.
"Series C Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series C Convertible
Preferred Stock.
"Series D Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series D Convertible
Preferred Stock.
"Series F Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series F 6.5% Cumulative
Convertible Preferred Stock.
"Series F Certificate of Designations" shall mean the Certificate of
the Designations, Powers, Preferences and Relative Participating or Other
Rights, and the Qualifications, Limitations or Restrictions Thereof, of
Series F 6.5% Cumulative Convertible Preferred Stock ($0.01 Par Value) of
Powertel,
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Inc., as filed with the Secretary of State of the State of Delaware, as
such may be amended from time to time.
"Specified Indentures" shall mean the following: (i) the Indenture
dated June 10, 1997 governing the 11 1/8% Senior Notes Due 2007 of the
Corporation; (ii) the Indenture dated April 19, 1996 governing the 12%
Senior Discount Notes Due May 2006 of the Corporation; and (iii) the
Indenture dated February 7, 1996 governing the 12% Senior Discount Notes
Due February 2006 of the Corporation.
"Subsidiaries" shall mean any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other
entities controlled by the Corporation directly or indirectly through one
or more intermediaries.
"Trading Day" means a day on which the Nasdaq Stock Market, or such
other exchange or inter-dealer quotation system on which the Common Stock
is principally traded or authorized to be quoted, is open for the
transaction of business.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section (7).
"Transfer Agent" means such agent or agents of the Corporation as may
be designated by the Board of Directors as the transfer agent for the
Series E Preferred Stock.
Section (3) Dividends.
(a) Holders of the outstanding shares of Series E Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, dividends on each share of the Series E
Preferred Stock, calculated and payable quarterly (each such quarterly period
being hereinafter called a "Dividend Period"), at a rate per annum equal to 6.5%
of the Liquidation Preference of such share; provided, however, that without
first obtaining stockholder approval pursuant to the rules of the Nasdaq Stock
Market, or, in lieu thereof, if allowed by the Nasdaq Stock Market, otherwise
delivering notice to stockholders, the aggregate number of shares of Common
Stock that are issued as dividends pursuant to this Section (3) at a price below
the Initial Market Price shall not exceed 20% of the number of shares of Common
Stock that are issued and outstanding as of the Issue Date (the "Base Shares").
If the aggregate number of shares of Common Stock that have been issued as
dividends on the Series E Preferred Stock pursuant to this Section (3) at a
price below the Initial Market Price exceeds at any time 5% of the Base Shares,
the Corporation agrees, for the benefit of the holders of the Series E Preferred
Stock, to seek (if not previously obtained) approval at the next annual meeting
of the Corporation's stockholders of the issuance of any future dividends
payable in Common Stock pursuant to this paragraph (a) of this Section (3) which
may exceed 20% of the Base Shares.
All dividends on shares of the Series E Preferred Stock, to the extent
accrued, shall be cumulative, whether or not earned or declared, on a daily
basis from the last date through which dividends have been paid or, if no
dividends have been paid, from the date upon which each such share of Series E
Preferred Stock was initially issued, and shall be payable quarterly in arrears
on March 15, June 15, September 15 and December 15 of each year (each a
"Dividend Payment Date"), commencing on September 15, 1998, to holders of record
on the Business Day immediately preceding the relevant Dividend Payment Date.
Such dividends shall accrue whether or not they have been declared and whether
or not there are net profits, surplus or other funds of the Corporation legally
available for the payment of dividends.
Dividends on the Series E Preferred Stock shall be, at the option of the
Corporation, payable (i) in cash or (ii) through the issuance of a number of
fully paid and nonassessable shares (rounded up or down to the nearest whole
number) of Common Stock equal to the amount of the dividend owed divided by the
Dividend Value of the Common Stock; provided, however, that the Corporation
shall not pay any dividends on the Series E Preferred Stock in cash prior to the
date that all obligations under each of the Specified Indentures shall have been
satisfied in full unless all restrictions set forth in the Specified Indentures
with respect to the payment of such cash dividends have been waived or otherwise
satisfied in accordance with the terms of such Specified Indentures; and
provided further, however, that dividends with respect to a Dividend Payment
Date that are not paid in cash within 90 days of such Dividend Payment Date
shall thereafter be payable solely in
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shares of Common Stock on the basis of the Dividend Value with respect to such
Dividend Payment Date, as set forth in this Section (3), and shall no longer be
payable in cash.
The "Dividend Value" of the Common Stock with respect to a Dividend Payment
Date means the product of (x) 95% and (y) the average of the last sales price
for the Common Stock as reported by the Nasdaq Stock Market, or the principal
securities exchange or other securities market on which the Common Stock is then
being traded, for the five Trading Days immediately preceding such Dividend
Payment Date.
(b) All dividends paid with respect to shares of the Series E Preferred
Stock pursuant to paragraph (a) of this Section (3) shall be paid pro rata to
the holders entitled thereto.
(c) No dividend whatsoever shall be declared or paid upon, or any funds or
shares of Common Stock set apart for the payment of dividends upon, any
outstanding share of the Series E Preferred Stock with respect to any Dividend
Period unless all dividends for all preceding Dividend Periods have been
declared and paid (or declared and a sufficient sum or number of shares of
Common Stock set apart for the payment of such dividend) upon all outstanding
shares of Series E Preferred Stock. No dividend will be declared or paid upon
any stock that ranks on a parity with the Series E Preferred Stock with respect
to dividends (the "Dividend Parity Stock"), and no shares of Dividend Parity
Stock shall be redeemed, purchased or otherwise acquired by the Corporation for
consideration through a sinking fund or otherwise, unless (A) all accrued and
unpaid dividends have been paid on the Series E Preferred Stock for all prior
Dividend Periods and (B) sufficient funds or shares of Common Stock have been
paid or set apart for the payment of the dividend for the Dividend Period for
which a dividend is next payable on the Series E Preferred Stock.
Notwithstanding the provisions of this paragraph (c), if accrued dividends on
the Series E Preferred Stock for all prior Dividend Periods have not been paid
in full and sufficient funds or shares of Common Stock have not been paid or set
apart for the payment of the dividend for the Dividend Period for which a
dividend is next payable on the Series E Preferred Stock, the Corporation may
declare a dividend on the Series E Preferred Stock and any Dividend Parity Stock
for any Dividend Period if such dividend will be declared ratably in proportion
to accrued and unpaid dividends on the Series E Preferred Stock and such
Dividend Parity Stock.
(d) The Corporation will not (i) declare, pay or set apart funds or shares
of Common Stock for the payment of any dividend or other distribution with
respect to any stock that ranks junior to the Series E Preferred Stock with
respect to dividends ("Dividend Junior Stock") or (ii) redeem, purchase or
otherwise acquire for consideration any Dividend Junior Stock through a sinking
fund or otherwise, unless (A) all accrued and unpaid dividends with respect to
the Series E Preferred Stock at the time of such event have been paid or funds
or shares of Common Stock have been set apart for payment of such dividends and
(B) sufficient funds or shares of Common Stock have been paid or set apart for
the payment of the dividend for the Dividend Period for which a dividend is next
payable on the Series E Preferred Stock. Notwithstanding anything in this
Certificate of Designations to the contrary, the Corporation may repurchase,
redeem or otherwise acquire Dividend Junior Stock in exchange for Dividend
Junior Stock and Dividend Parity Stock in exchange for Dividend Parity Stock or
Dividend Junior Stock.
(e) So long as any shares of the Series E Preferred Stock are outstanding,
if dividends in excess of the quarterly dividend amount set forth in paragraph
(a) of Section (3) (such excess being the "Excess Dividend Amount") shall be
declared or paid or set apart for payment in any Dividend Period on any Dividend
Junior Stock or Dividend Parity Stock, dividends equal to the Excess Dividend
Amount shall be contemporaneously declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series E
Preferred Stock with such payment with respect to each share of Series E
Preferred Stock being equal to the distributions that would be made in respect
of the aggregate of: (i) the number of shares of Common Stock into which such
share of Series E Preferred Stock is then convertible; and (ii) the number of
shares of Common Stock that the Corporation would be required to issue as of
such date in payment of all dividends that, pursuant to paragraph (a) of Section
(3), have accrued but remain unpaid as of such date.
(f) Dividends on the Series E Preferred Stock on account of arrears for any
past Dividend Period and dividends on the Series E Preferred Stock in connection
with any optional redemption may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on the Business Day
immediately prior to the payment thereof, as may be fixed by the Board of
Directors.
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(g) Dividends payable on the Series E Preferred Stock for any period other
than a Dividend Period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. If a Dividend Payment Date is not a Business
Day, payment of dividends shall be made on the next succeeding Business Day and
dividends accruing for the intervening period shall be paid on the next
succeeding Dividend Payment Date.
Section (4) Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Common Stock or any other series or
class or classes of stock of the Corporation ranking junior to the Series E
Preferred Stock upon liquidation, dissolution or winding up, the holders of the
shares of Series E Preferred Stock shall be entitled to receive $1,500.00 per
share (the "Liquidation Preference"); thereafter, such holders shall be
entitled, with respect to their Series E Preferred Stock and all dividends
accrued and unpaid thereon to the date of final distribution to such holders, to
share on an as if converted to Common Stock basis with the holders of the shares
of Common Stock as provided in paragraph (b) of this Section (4). If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and
any other shares of stock ranking, as to liquidation, dissolution or winding up,
on a parity with the Series E Preferred Stock, shall be insufficient to pay in
full the liquidation preferences of all of such series and liquidating payments
in respect thereof, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and any such other stock ratably in
accordance with the respective amounts which would be payable with respect to
the liquidation preferences of such shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and any such other stock if all
liquidation preferences payable thereon were paid in full. For the purposes of
this Section (4), (i) a consolidation or merger of the Corporation with one or
more entities, (ii) a sale or transfer of all or substantially all of the
Corporation's assets or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary; provided,
however, that any subsequent distribution, liquidation, dissolution or winding
up of the Corporation shall remain subject to this Section (4).
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to Series E Preferred
Stock, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of Series E Preferred Stock,
as provided in paragraph (a) of this Section (4), holders of shares of Series E
Preferred Stock shall be entitled to share ratably with holders of shares of
Common Stock and any other class or series entitled to participate with the
Common Stock in the event of liquidation, dissolution or winding up, in any and
all assets remaining to be paid or distributed, such that distributions shall be
made in respect of each share of Series E Preferred Stock in an amount equal to
the distributions made in respect of the aggregate of: (i) the number of shares
of Common Stock into which such share of Series E Preferred Stock is then
convertible; and (ii) the number of shares of Common Stock that the Corporation
would be required to issue as of such date in payment of all dividends that,
pursuant to paragraph (a) of Section (3), have accrued but remain unpaid as of
such date.
Section (5) Redemption.
(a) Series E Preferred Stock may not be redeemed by the Corporation prior
to the Initial Convertibility Date. After the Initial Convertibility Date and
subject to the restrictions set forth in Section (3) hereof, the Corporation, at
its option, may redeem the shares of Series E Preferred Stock, in whole or in
part, at any time or from time to time upon such date or dates as may be fixed
by the Corporation for redemption (each an "Optional Redemption Date"), for an
aggregate redemption price in cash equal to the Liquidation Preference per share
plus an amount per share equal to the value on a day selected by the Board of
Directors of the Corporation that is within five days of the Optional Redemption
Date of all accrued and unpaid dividends, if any, to the applicable Optional
Redemption Date (the "Optional Redemption Price"), out of funds legally
available therefor, subject to the notice provisions and provisions for partial
redemption described below;
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provided, however, that in connection with any redemption effected pursuant to
this paragraph (a) of Section (5), the Corporation must redeem the shares of
Series A Preferred Stock, the shares of Series B Preferred Stock, the shares of
Series C Preferred Stock, the shares of Series D Preferred Stock, the Shares of
Series E Preferred Stock and the shares of Series F Preferred Stock then
eligible for redemption pro rata in proportion to their respective liquidation
preferences.
(b) Each share of Series E Preferred Stock (if not earlier redeemed or
converted) shall be subject to mandatory redemption in whole (to the extent of
lawfully available funds therefor) on June 1, 2010 (the "Mandatory Redemption
Date") at a redemption price in cash equal to the Liquidation Preference per
share plus the value on a day selected by the Board of Directors of the
Corporation that is within five days of the Mandatory Redemption Date of an
amount per share equal to all accrued and unpaid dividends thereon, if any, to
the Mandatory Redemption Date (the "Mandatory Redemption Price"). The
Corporation shall take all actions required or permitted by the Delaware General
Corporation Law to permit the redemption described in this paragraph (b) of
Section (5).
(c) In the event of a redemption pursuant to paragraph (a) or (b) of this
Section (5), the Corporation shall give notice of such redemption (a "Redemption
Notice") by first class mail, postage prepaid, mailed not less than 20 nor more
than 60 days prior to the Optional Redemption Date or the Mandatory Redemption
Date, as the case may be (each a "Redemption Date"), to each holder of record of
the shares of Series E Preferred Stock to be redeemed, at such holder's address
as the same appears on the stock records of the Corporation, which Redemption
Notice shall be unconditional and irrevocable. Each such Redemption Notice shall
state: (1) the Redemption Date; (2) the number of shares of each series to be
redeemed and, if less than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be
(each a "Redemption Price"); (4) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price; (5) the then
current Conversion Price; and (6) that no default of the Corporation is then
existing under any material loan document, indenture or other borrowing, which
default has a material adverse effect on the Corporation. The Redemption Notice
having been mailed as aforesaid, from and after the applicable Redemption Date
(unless default shall be made by the Corporation in providing money for the
prompt payment of the applicable Redemption Price), (i) the shares of the Series
E Preferred Stock so called for redemption and not converted prior to 5:00 p.m.
New York time on the Redemption Date shall no longer be deemed to be
outstanding, and (ii) all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the Redemption
Price without interest thereon after the Redemption Date) shall cease. If the
Corporation fails to provide money for the payment of the Redemption Price
within 30 days after the Redemption Date, the Redemption Price shall accrue
interest at the rate of 15% per annum until paid.
Upon surrender in accordance with a Redemption Notice of the certificates
for the shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the Redemption Notice shall so state), such
shares shall be redeemed by the Corporation at the applicable Redemption Price.
If fewer than all the outstanding shares of Series E Preferred Stock are to be
redeemed, the shares of Series E Preferred Stock to be redeemed shall be
selected pro rata (as nearly as may be possible) by the Corporation from
outstanding shares of Series E Preferred Stock held by each holder thereof and
not previously called for redemption. If fewer than all the shares represented
by any certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
Section (6) Shares to be Retired. All shares of Series E Preferred Stock
purchased or redeemed by the Corporation or converted shall be retired and
canceled and shall be restored to the status of authorized but unissued shares
of preferred stock, without designation as to series.
Section (7) Conversion. Holders of shares of Series E 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 E Preferred Stock shall have the right,
at his, her or its option, at any time on or after the Initial
Convertibility Date, to convert such shares, in whole or in part, into the
number of fully paid and
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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 5:00 p.m. New York
time on the Redemption Date for such redemption, unless the Corporation
shall default in making prompt payment of the amount payable upon such
redemption. Any share of Series E Preferred Stock may be converted, at the
request of its holder, in part into Common Stock. If a part of a share of
Series E 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 E Preferred
Stock evidencing the remaining interest of such holder. The Corporation
shall issue, pay and deliver all accrued and unpaid dividends with respect
to the shares of Series E Preferred Stock so converted in accordance with
paragraph (b) of this Section (7).
(b) In order to exercise the conversion right, the holder of each
share of Series E Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent or, if no
Transfer Agent has been appointed by the Corporation, at the principal
office of the Corporation, accompanied by written notice to the Corporation
that the holder thereof elects to convert its shares of Series E Preferred
Stock or a specified portion thereof. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
share of Series E Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of shares of Series E Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares (except that holders of shares called for redemption
on a Redemption Date between such record date and the Dividend Payment Date
shall not be entitled to receive such dividend on such Dividend Payment
Date) on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to
such Dividend Payment Date.
As promptly as practicable after the surrender of certificates for
shares of Series E Preferred Stock as aforesaid, the Corporation shall
issue, pay and deliver at such office to such holder, or on his, her or its
written order, (i) a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section (7), (ii) if less than the
full number of shares of Series E Preferred Stock evidenced by the
surrendered certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificates less the number of shares being converted, (iii)
all accrued and unpaid dividends with respect to the shares of Series E
Preferred Stock so converted and (iv) any fractional interest in respect of
a share of Common Stock arising upon such conversion shall be settled as
provided in paragraph (c) of this Section (7).
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series E Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby at such
time on such date and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at
the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion
Price in effect on the date upon which such shares shall have been
surrendered and such
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notice received by the Corporation. All shares of Common Stock delivered
upon conversion of the Series E Preferred Stock shall upon delivery be duly
and validly issued and fully paid and nonassessable.
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series E Preferred
Stock. Instead of any fractional interest in a share of Common Stock which
would otherwise be deliverable upon the conversion of a share of Series E
Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash (computed to the nearest cent) equal to such fraction of a
share multiplied by the Current Market Price of one share of Common Stock
on the Trading Day immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series E Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) In case the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Stock in shares of its
Common Stock without making a corresponding dividend or distribution
with respect to its Series E Preferred Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares, (C) combine
its outstanding Common Stock into a smaller number of shares or (D)
issue any shares of capital stock by reclassification of its Common
Stock, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any share of Series E Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or capital stock of the Corporation
which such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such share
of Series E Preferred Stock been converted immediately prior to the
happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the close of business on the record
date in the case of a dividend or distribution (except as provided in
paragraph (h) below) and shall become effective immediately after the
close of business on the record date in the case of a subdivision,
combination or reclassification.
(ii) In case the Corporation shall issue after the Issue Date (a)
options, warrants or other rights to all holders of Common Stock
entitling them (for a period expiring within 180 days after the record
date mentioned below) to subscribe for or purchase Common Stock at a
price per share less than the lower of the Initial Market Price or the
Conversion Price (the "Minimum Price") at the record date for the
determination of stockholders entitled to receive such options, warrants
or other rights or (b) shares of Common Stock (excluding shares of
Common Stock issued or issuable as dividends with respect to the Series
E Preferred Stock pursuant to paragraph (a) of Section (3) hereof and
Common Stock issued or issuable as dividends with respect to the Series
F Preferred Stock pursuant to paragraph (a) of Section (3) of the Series
F Certificate of Designations) or securities exercisable for (including
options, warrants or other rights other than those referred to in clause
(a) above and subparagraph (iii) below) or exchangeable or convertible
into shares of Common Stock) at a price per share (or having an
exercise, exchange or conversion price per share) less than the then
current Minimum Price (other than securities issued in a transaction in
which a pro rata share of such securities have been reserved by the
Corporation for distribution to the holders of Series E Preferred Stock
upon conversion), then in each such case the Conversion Price in effect
immediately prior thereto shall be adjusted to equal the price
determined by multiplying (I) the Conversion Price in effect immediately
prior to the date of issuance of such options, warrants, other rights or
shares of Common Stock (or securities exercisable for or exchangeable or
convertible into shares of Common Stock) by (II) a fraction, the
numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding on the date of issuance of such options,
warrants or other rights or shares of Common Stock (or securities
exercisable for or exchangeable or convertible into shares of Common
Stock) (without giving effect to any such issuance) and (B), in the case
of (a) above, the number of shares which the aggregate proceeds from the
exercise of such options, warrants or other rights for Common Stock or,
in the case of (b) above, the number of shares which
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the aggregate consideration receivable by the Corporation for the total
number of shares of Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Common Stock) so issued would
purchase at the Minimum Price in effect immediately prior to the date of
issuance, and the denominator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of issuance of
such options, warrants or other rights or shares of Common Stock (or
securities exercisable for or exchangeable or convertible into Common
Stock) (without giving effect to any such issuance) and (B), in the case
of clause (a) above, the number of additional shares of Common Stock
offered for subscription or purchase or, in the case of clause (b)
above, the number of shares of Common Stock so issued or into which the
exercisable, exchangeable or convertible securities may be exercised,
exchanged or converted. Such adjustment shall be made successively
whenever any such options, warrants or other rights or shares of Common
Stock (or securities exercisable for or exchangeable or convertible into
Common Stock) are issued, and shall become effective immediately after
such record date or, in the case of the issuance of Common Stock, after
the date of issuance thereof (or in the case of securities exercisable
for or exchangeable or convertible into shares of Common Stock, the date
on which holders may first exercise, exchange or convert the same in
accordance with the respective terms thereof). In determining whether
any options, warrants or other rights entitle the holders of Common
Stock to subscribe for or purchase shares of Common Stock at less than
the Minimum Price in effect immediately prior to the date of such
issuance, and in determining the aggregate offering price of shares of
Common Stock (or securities exercisable for or exchangeable or
convertible into shares of Common Stock), there shall be taken into
account any net consideration received or receivable by the Corporation
upon issuance and upon exercise of such options, warrants or other
rights or upon issuance of shares of Common Stock (or securities
exercisable for or exchangeable or convertible into shares of Common
Stock), the value of such consideration, if other than cash, to be
determined by the Board of Directors in good faith or, if higher, the
aggregate exercise, exchange or conversion price set forth in such
exercisable, exchangeable or convertible securities. The aggregate
consideration received by the Corporation in connection with the
issuance of shares of Common Stock or of options, warrants or other
rights or securities exercisable for or exchangeable or convertible into
shares of Common Stock shall be deemed to be equal to the sum of the
aggregate net offering price of all such securities plus the minimum
aggregate amount, if any, payable upon the exercise of such options,
warrants or other rights and conversion of any such exercisable,
exchangeable or convertible securities into shares of Common Stock.
(iii) In case the Corporation shall distribute to all holders of
its Common Stock as a class any shares of capital stock of the
Corporation (other than Common Stock) or evidences of its indebtedness
or assets (other than a regular cash dividend that the Board of
Directors determines, in good faith, can be maintained by the
Corporation for at least four consecutive periods covering not less than
one year and that the Board of Directors intends to maintain for at
least four consecutive periods covering not less than one year, out of
profits or surplus) or options, warrants or other rights to subscribe
for or purchase any of its securities (excluding those referred to in
subparagraph (ii)(a) above) (any of the foregoing being hereinafter in
this subparagraph (iii) called the "Securities"), then in each such
case, unless the Corporation elects to reserve shares or other units of
such Securities for distribution to the holders of the Series E
Preferred Stock upon the conversion of the shares of Series E Preferred
Stock so that any such holder converting shares of Series E Preferred
Stock will receive upon such conversion, in addition to the shares of
the Common Stock to which such holder is entitled, the amount and kind
of such Securities which such holder would have received if such holder
had, immediately prior to the record date for the distribution of the
Securities, converted his or her shares of Series E Preferred Stock into
Common Stock (such election to be based upon a determination by the
Board of Directors that such reservation will not materially adversely
affect the interests of any holder of Series E Preferred Stock in any
such reserved Securities), the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the date of such
distribution by (II) a fraction, the numerator of which shall be the
Current Market Price per share
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of the Common Stock on the record date mentioned below less the fair
market value (as determined by the Board of Directors, whose
determination shall, if made in good faith, be conclusive) of the
portion of the capital stock or assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of
Common Stock, and the denominator of which shall be the Current Market
Price per share of the Common Stock. Such adjustment shall become
effective immediately, except as provided in paragraph (h) below, after
the record date for the determination of stockholders entitled to
receive such distribution.
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this subparagraph (iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and
provided further that any adjustment shall be required and made in
accordance with the provisions of this Section (7) (other than this
subparagraph (iv)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of
shares of Common Stock. All calculations under this Section (7) shall be
made to the nearest cent (with $.005 being rounded upward) or to the
nearest 1/100 of a share (with .005 of a share being rounded upward), as
the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of options, warrants or
other rights to purchase stock or securities, or a distribution of other
assets (other than cash dividends) hereafter made by the Corporation to
its stockholders shall not be taxable.
(v) No adjustment in the Conversion Price shall be required in the
event of any dividend, distribution or issuance to holders of shares of
Common Stock pursuant to subparagraph (i), (ii) or (iii) above if
holders of shares of Series E Preferred Stock have received the same
dividend, distribution or issuance in accordance with Section (3)
hereof.
(e) In case the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of the
Common Stock and excluding any transaction as to which paragraph (d)(i) of
this Section (7) applies) (each of the foregoing being referred to as a
"Transaction"), in each case as a result of which shares of Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), each share of Series
E Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares or
fraction thereof of Common Stock into which one share of Series E Preferred
Stock was convertible immediately prior to such Transaction. The
Corporation shall use reasonable efforts to deliver notice of any
Transaction to the holders of Series E Preferred Stock at least 20 days
prior to the earlier of the consummation or the record date therefor;
provided however, that any unintentional failure by the Corporation to
deliver such required notice shall not impair or affect the validity or
provisions of any such Transaction; and provided, further, that any failure
by the Corporation to deliver such required notice shall toll the time
period in which the holders of Series E Preferred Stock may convert their
shares as aforementioned until such notice is delivered by the Corporation.
The Corporation shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this paragraph (e)
and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of
the Series E Preferred Stock which will contain provisions enabling the
holders of the Series E Preferred Stock which remains outstanding after
such Transaction to convert into the consideration received by holders of
Common Stock at the Conversion Price immediately after such Transaction.
The provisions of this paragraph (e) shall similarly apply to successive
Transactions.
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(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than a regular cash dividend
that the Board of Directors determines can be maintained by the
Corporation for at least four consecutive periods covering at least one
year and that the Board of Directors intends to maintain for at least
four consecutive periods covering at least one year out of profits or
surplus); or
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any options, warrants or other rights; or
(iii) there shall be any reclassification of the Common Stock
(other than an event to which paragraph (d)(i) of this Section (7)
applies) or any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the Corporation is
required, or the sale or transfer of all or substantially all of the
assets of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and
shall cause to be mailed to the holders of shares of the Series E Preferred
Stock at their addresses as shown on the stock records of the Corporation,
as promptly as possible, but at least 15 days prior to the applicable date
specified in clauses (A) and (B) below, a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation, merger, sale or
transfer is expected, that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale or transfer. Failure to give such notice or any defect therein shall
not affect the legality or validity of the proceedings described in this
Section (7).
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price, the calculation of such
adjusted Conversion Price and the date on which such adjustment becomes
effective and shall promptly mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series E Preferred Stock at
his, her or its last address as shown on the stock records of the
Corporation.
(h) In any case in which paragraph (d) of this Section (7) provides
that an adjustment shall become effective immediately after a record date
for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the holder of any share of Series E Preferred Stock
converted after such record date and before the occurrence of such event
the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any fraction
pursuant to paragraph (c) of this Section (7).
(i) For purposes of this Section (7), the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Corporation.
(j) If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one paragraph of this Section (7),
only one adjustment shall be made and such adjustment shall be the amount
of adjustment which has the highest absolute value.
(k) In case the Corporation shall take any action affecting the Common
Stock other than action described in this Section (7), which in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of the shares of Series E Preferred Stock, the
Conversion Price for the Series E Preferred Stock may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances.
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(l) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversion of the Series E Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
Series E Preferred Stock not theretofore converted. For purposes of this
paragraph (1), the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Series E
Preferred Stock shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
(m) Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value of the shares of Common Stock
deliverable upon conversion of the Series E Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(n) The Corporation shall use all reasonable efforts to list the
shares of Common Stock required to be delivered upon conversion of the
Series E Preferred Stock and all shares of Common Stock issued as dividends
with respect to the Shares, prior to such issuance and delivery, on the
Nasdaq Stock Market or such other exchange or interdealer quotation system
on which the Common Stock is principally traded or authorized to be quoted.
(o) Prior to the delivery of any securities which the Corporation
shall be obligated to deliver upon conversion of the Series E Preferred
Stock or upon the payment of dividends with respect to the Shares, the
Corporation shall use all reasonable efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by,
any governmental authority, and any such conversion or delivery shall be
subject to any applicable requirements of law or regulation.
(p) The Corporation shall pay any and all documentary stamp or similar
issue or transfer taxes or fees payable in respect of the issue or delivery
of shares of Common Stock on conversion of the Series E Preferred Stock or
upon the payment of dividends with respect to the Shares pursuant hereto
imposed by any Governmental Authority (including, without limitation, any
fee in respect of an HSR Act filing); provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the holder of the Series E
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to
the Corporation the amount of any such tax or has established, to the
reasonable satisfaction of the Corporation, that such tax has been paid.
Section(8) Ranking. Any class or series of stock of the Corporation shall
be deemed to rank:
(i) prior to the Series E Preferred Stock, as to dividends or as to
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series E Preferred
Stock;
(ii) on a parity with the Series E Preferred Stock, (A) as to
dividends, if such stock is Series F Preferred Stock or if the holders of
such class of stock and the Series E Preferred Stock shall be entitled to
the receipt of dividends in proportion to their respective amounts of
declared and unpaid dividends per share, without preference or priority one
over the other, or (B) as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the redemption or liquidation
prices per share thereof be different from those of the Series E Preferred
Stock, if such stock shall be Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series F
Preferred Stock or if the holders of such class of stock and the Series E
Preferred Stock shall be entitled to the receipt of amounts distributable
upon liquidation, dissolution or winding up in proportion to their
respective amounts of liquidation prices, without preference or priority
one over the other; and
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(iii) junior to the Series E Preferred Stock, (A) as to dividends
payable pursuant to paragraph (a) of Section (3) hereof, if such stock is
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Common Stock, or as to all dividends, if
holders of Series E Preferred Stock shall be entitled to the receipt of all
dividends in preference or priority to the holders of shares of such stock,
or (B) as to distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holders of Series
E Preferred Stock shall be entitled to receipt of amounts distributable
upon liquidation, dissolution or winding up in preference or priority to
the holders of shares of such stock.
Section (9) Voting.
(a) Except as herein provided or as otherwise from time to time required by
law, holders of Series E Preferred Stock shall have no voting rights.
(b) So long as any shares of the Series E Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds of the shares of
Series E Preferred Stock outstanding at the time given in person or by proxy,
either in writing or at any special or annual meeting, shall be necessary to
permit, effect or validate any one or more of the following:
(i) the authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior
to (or convertible, exercisable or exchangeable into any class or series of
stock ranking prior to) Series E Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up;
(ii) the increase in the authorized or issued amount of Series E
Preferred Stock; or
(iii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Certificate of
Incorporation of the Corporation (including any of the provisions hereof)
which would affect any right, preference or voting power of Series E
Preferred Stock or of the holders thereof, provided, however, that any
increase in the amount of authorized preferred stock or the creation and
issuance of other series of preferred stock, or any increase in the amount
of authorized shares of such series or of any other series of preferred
stock, in each case ranking on a parity with or junior to the Series E
Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up, shall
not be deemed to affect such rights, preferences or voting powers.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series E Preferred Stock shall have been
redeemed or sufficient funds shall have been deposited in trust to effect such
redemption, scheduled to be consummated within 30 days after such time.
Section (10) Record Holders. The Corporation and the Transfer Agent may
deem and treat the record holder of any shares of Series E Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to the contrary.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be made
under the seal of the Corporation and signed by [ ], its [ ],
and attested by [ ] its [ ], this [ ] day of [ ],
1998.
POWERTEL, INC.
By
--------------------------------------
(Corporate Seal)
Attest:
By
- -----------------------------------------------------
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ANNEX II
REGISTRATION RIGHTS
(a) The Purchaser or any party to whom the rights granted pursuant to this
Annex II are transferred pursuant to paragraph (i) of this Annex II shall have
the right at any time following the second anniversary of the Closing to make
three requests of the Seller in writing for registration under the Securities
Act of shares of Common Stock into which Shares have been converted or are to be
converted prior to the closing of the offering pursuant to such registration
and/or shares of Common Stock that have been issued with respect to the Shares
(the "Securities"): with respect to the first such request to register under the
Securities Act at least $20 million in market value of Securities Beneficially
Owned by the Purchaser (the shares subject to such request and any other request
hereunder being referred to as the "Subject Stock"), and with each subsequent
such request being at least 6 months following the completion of the prior
offering pursuant to a registration statement with respect to the Subject Stock
which was effective until the earlier of the completion of such offering or
three months. The Seller shall use all reasonable efforts to cause the Subject
Stock to be registered under the Securities Act as soon as reasonably
practicable after receipt of a request so as to permit promptly the sale
thereof, and in connection therewith, the Seller shall prepare and file, on such
appropriate form as the Seller in its discretion shall determine, a registration
statement under the Securities Act to effect such registration. The Seller shall
use all reasonable efforts to list all Subject Stock covered by such
registration statement on any national securities exchange on which the Common
Stock is then listed or to list such Subject Stock on the National Association
of Securities Dealers, Inc. Automated Quotation System or National Market
System. The Purchaser hereby undertakes to provide all such information and
materials and take all such action as may be required in order to permit the
Seller to comply with all applicable requirements of the Commission and to
obtain any desired acceleration of the effective date of such registration
statement. Any registration statement filed at the Purchaser's request hereunder
will not count as a requested registration unless effectiveness is maintained
until the earlier of completion of the offering or three months. Notwithstanding
the foregoing, the Seller (i) shall not be obligated to cause any special audit
to be undertaken in connection with any such registration (provided that this
provision shall not relieve the Seller of its obligation to obtain any required
consents with respect to financial statements in prior periods) and (ii) shall
be entitled to postpone for a reasonable period (not to exceed 90 days) of time
the filing of any registration statement otherwise required to be prepared and
filed by the Seller if the Seller is, at such time, either (A) conducting, or
proposing to file with the Commission within 90 days a registration statement
with respect to, an underwritten public offering for the account of the Seller
of equity securities (or securities convertible into equity securities) or is
subject to a contractual obligation not to engage in a public offering and is
advised in writing by its managing underwriter or underwriters (with a copy to
the Purchaser) that such offering would in its or their opinion be adversely
affected by the registration so requested or (B) subject to an existing
contractual obligation to its underwriters not to engage in a public offering.
Notwithstanding any other provision of this Annex II, the Seller may postpone
action under this Annex II for as long as it reasonably deems necessary (but no
longer than 90 days) if the Seller determines, in its reasonable discretion,
that effecting the registration at such time might (i) adversely affect a
pending or contemplated financing, acquisition, disposition of assets or stock,
merger or other significant transaction, or (ii) require the Seller to make
public disclosure of information the public disclosure of which at such time the
Seller in good faith believes could have a significant adverse effect upon the
Seller.
No securities may be registered on a registration statement requested by
the Purchaser pursuant to the first paragraph of paragraph (a) of this Annex II
without the Purchaser's express written consent, unless the amount of such
securities is subject to reduction prior to any reduction in the number of
securities originally requested by the Purchaser in the event the lead
underwriter of the related offering believes that the success of such offering
would be materially and adversely affected by inclusion of all the securities
requested to be included therein.
At any time after the Closing, if the Seller proposes to file a
registration statement under the Securities Act with respect to an offering of
its equity securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 or any substitute form that may be adopted by the
Commission) or (ii) for the account of any holders of its securities (including
pursuant to a demand registration), then the Seller shall give
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written notice of such proposed filing to the Purchaser as soon as practicable
(but in any event not less than 5 Business Days before the anticipated filing
date), and such notice shall offer the Purchaser the opportunity to register
such number of shares of Securities as the Purchaser requests. If the Purchaser
wishes to register securities of the same class or series as the Seller or such
holder, such registration shall be on the same terms and conditions as the
registration of the Seller's or such holders' securities (a "Piggyback
Registration"). Notwithstanding anything contained herein, if the lead
underwriter of an offering involving a Piggyback Registration delivers a written
opinion to the Seller that the success of such offering would be materially and
adversely affected by inclusion of all the securities requested to be included,
then the number of securities to be registered by the Purchaser shall be reduced
prior to any reduction in the number of securities to be registered pursuant to
clauses (i) and (ii) of the first sentence of this paragraph; provided, however,
that the Seller must provide prompt written notice of such written opinion to
the Purchaser. The Purchaser shall have the right at any time to convert its
request for a Piggyback Registration into a requested registration pursuant to
the first paragraph of paragraph (a) of this Annex II.
(b) In connection with any offering of shares of Subject Stock registered
pursuant to this Annex II, the Seller (i) shall furnish to the Purchaser such
number of copies of any prospectus (including any preliminary prospectus) as it
may reasonably request in order to effect the offering and sale of the Subject
Stock to be offered and sold, but only while the Seller shall be required under
the provisions hereof to cause the registration statement to remain current and
(ii) take such action as shall be necessary to qualify the shares covered by
such registration statement under such "blue sky" or other state securities laws
for offer and sale as the Purchaser shall reasonably request; provided, however,
that the Seller shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it shall not then be
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed. If
applicable, the Seller and the Purchaser shall enter into an underwriting
agreement with a managing underwriter or underwriters selected by the Purchaser
(reasonably satisfactory to the Seller) containing representations, warranties,
indemnities and agreements then customarily included by an issuer in
underwriting agreements with respect to secondary distributions; provided,
however, that such underwriter or underwriters shall agree to use their best
efforts to ensure that the offering results in a distribution of the Subject
Stock sold in accordance with the terms of this Agreement. In connection with
any offering of Subject Stock registered pursuant to this Annex II, the Seller
shall (x) furnish to the underwriter, at the Seller's expense, unlegended
certificates representing ownership of the Subject Stock being sold in such
denominations as reasonably requested and (y) instruct any transfer agent and
registrar of the Subject Stock to release any stop transfer orders with respect
to such Subject Stock. If Purchaser enters into an underwriting agreement with
respect to the Subject Stock, Purchaser's representations, warranties and
indemnities contained therein shall be made severally rather than jointly with
the Company or any other selling stockholder and shall be limited to (i)
Purchaser's ownership of the Subject Stock, (ii) Purchaser's authority to enter
into the underwriting agreement and related matters, (iii) any information
provided by Purchaser for inclusion in the registration statement, and (iv) such
other matters as are at the time of such underwriting customarily included in
underwriting agreements with the Managing Underwriter relating to sales of
common stock by a selling stockholder where the failure by the Purchaser to make
such representations, warranties or indemnities causes the Managing Underwriter
to refuse to conduct or complete the offering. In the event an offering of
Subject Stock fails to close due to the Purchaser's unwillingness, inability or
other failure to comply with clause (iv) of the immediately preceding sentence,
then Purchaser agrees that the Seller shall be deemed to have satisfied all of
its obligations to conduct the related offering of such Subject Stock, shall be
excused from any failure of any obligation of Seller with respect thereto and
shall not be liable for the failure of such offering of such Subject Stock to
close. Upon any registration becoming effective pursuant to this Annex II, the
Seller shall use all reasonable efforts to keep such registration statement
current for such period as shall be required for the disposition of all of said
Subject Stock; provided, however, that such period need not exceed three months.
(c) The Purchaser shall pay all underwriting discounts and commissions
related to shares of Subject Stock being sold by the Purchaser and the fees and
disbursements of counsel and other advisors to the Purchaser. All other fees and
expenses in connection with the first requested registration pursuant to the
first paragraph of paragraph (a) of this Annex II, including, without
limitation, all registration and filing fees, all
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fees and expenses of complying with securities or "blue sky" laws, fees and
disbursements of the Seller's counsel and accountants (including the expenses of
"cold comfort" letters required by or incident to such performance and
compliance) and any fees and disbursements of underwriters customarily paid by
issuers in secondary offerings, shall be paid by the Seller, and all such other
fees and expenses in connection with the second and third requested
registrations pursuant to this Annex II shall be borne equally by the Purchaser
and the Seller; provided, however, that in the event the Purchaser fails to
convert Shares into Common Stock prior to any such offering, such that such
offering is not able to be completed, the Purchaser shall pay all such other
fees and expenses.
(d) In the case of any offering registered pursuant to this Annex II, the
Seller agrees to indemnify and hold the Purchaser, each underwriter of
Securities under such registration and each person who controls any of the
foregoing within the meaning of Section 15 of the Securities Act and the
directors and officers of the Purchaser, harmless against any and all losses,
claims, damages, liabilities or action to which they or any of them may become
subject under the Securities Act or any other statute or common law or
otherwise, and to reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or actions
shall arise out of or shall be based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement
relating to the sale of such Subject Stock, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus (as amended or
supplemented if the Seller shall have filed with the Commission any amendment
thereof or supplement thereto), if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented if the Seller shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the indemnification agreement contained in this paragraph (d)
shall not apply to such losses, claims, damages, liabilities or actions which
shall arise from the sale of Subject Stock by the Purchaser if such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, (x) made in reliance upon and in conformity with
information furnished in writing to the Seller by the Purchaser or any such
underwriter specifically for use in connection with the preparation of the
registration statement or any preliminary prospectus or prospectus contained in
the registration statement or any such amendment thereof or supplement thereto
or (y) made in any preliminary prospectus, and the prospectus contained in the
registration statement in the form filed by the Seller with the Commission
pursuant to Rule 424(b) under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not have been sent or
given to such person at or prior to the confirmation of such sale to him.
(e) In the case of each offering registered pursuant to this Annex II, the
Purchaser and each underwriter participating therein shall agree, in the same
manner and to the same extent as set forth in paragraph (d) of this Annex II,
severally to indemnify and hold harmless the Seller and each person, if any, who
controls the Seller within the meaning of Section 15 of the Securities Act, and
the directors and officers of the Seller, and in the case of each such
underwriter, the Purchaser, each person, if any, who controls the Purchaser
within the meaning of the Securities Act and the directors, officers and
partners of the Purchaser, with respect to any statement in or omission from
such registration statement or any preliminary prospectus (as amended or as
supplemented, if amended or supplemented as aforesaid) or prospectus contained
in such registration statement (as amended or as supplemented, if amended or
supplemented as aforesaid), if such statement or omission shall have been made
in reliance upon and in conformity with information furnished in writing to the
Seller by the Purchaser or such underwriter specifically for use in connection
with the preparation of such registration statement or any preliminary
prospectus or prospectus contained in such registration statement or any such
amendment thereof or supplement thereto.
(f) Each party indemnified under paragraph (d) or (e) of this Annex II
shall, promptly after receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may
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be sought hereunder, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party to so notify an
indemnifying party of any such action shall not relieve the indemnifying party
from any liability in respect of such action which it may have to such
indemnified party on account of the indemnity agreement contained in paragraph
(d) or (e) of this Annex II, unless the indemnifying party was prejudiced by
such omission, and in no event shall relieve the indemnifying party from any
other liability which it may have to such indemnified party. In case any such
action shall be brought against any indemnified party and it shall notify an
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may desire, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under paragraph (d) or (e) of this Annex
II for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof, other than reasonable costs of
investigation; provided, however, that if there exists or is reasonably likely
to exist a conflict of interest that would make it inappropriate in the judgment
of the indemnified party, in its sole and absolute discretion, for the same
counsel to represent both the indemnified party and the indemnifying party, then
the indemnified party shall be entitled to retain its own counsel, in each
jurisdiction for which the indemnified party determines counsel is required, at
the expense of the indemnifying party. No such third party claim may be settled
by the indemnifying party or the indemnified party without the prior written
consent of the other, which consent shall not be unreasonably withheld.
(g) If the indemnification provided for under paragraph (d) or (e) shall
for any reason be held by a court to be unavailable to an indemnified party
under paragraph (d) or (e) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under paragraph (d) or (e) hereof, the indemnified party and the
indemnifying party under paragraph (d) or (e) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Seller
and the prospective seller of Securities covered by the registration statement
which resulted in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as shall
be appropriate to reflect the relative benefits received by the Seller and such
prospective seller from the offering of the securities covered by such
registration statement. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be unreasonably
withheld.
(h) Notwithstanding anything to the contrary contained in this Agreement,
the maximum amount of indemnifiable losses which may be recovered from an
indemnifying party arising out of or resulting from the causes enumerated in
paragraph (d) or (e) shall be an amount equal to the Purchase Price.
(i) All, but not less than all, of the rights and obligations granted under
this Annex II to cause the Seller to register Securities may be assigned,
transferred or otherwise conveyed, in whole but not in part, by the Purchaser to
(i) any Affiliate of the Purchaser, or (ii) to any transferee other than an
Affiliate of the Purchaser who acquires at least 500,000 shares of Securities,
provided that in either circumstance the Purchaser gives the Seller written
notice (at the time of, or within a reasonable time after, such transfer)
stating the name and address of such Affiliate or other transferee, and such
Affiliate or other transferee provides its agreement, in a form reasonably
satisfactory to the Seller, to be bound by the provisions of this Annex II.
(j) Capitalized terms not defined in this Annex II shall have the meanings
set forth in the Agreement.
(k) Any successor to Seller (whether by merger, consolidation, sale of
assets, assignment or otherwise) shall expressly assume in writing the Seller's
obligations hereunder.
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(l) Notwithstanding the foregoing, to the extent that the provisions of
indemnification and contribution contained in an underwriting agreement entered
into in connection with any underwritten public offering are in conflict with
the foregoing provisions, the provisions set forth in the underwriting agreement
shall control.
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APPENDIX B
- --------------------------------------------------------------------------------
------------------------------------------------------------
STOCK PURCHASE AGREEMENT
------------------------------------------------------------
BETWEEN
POWERTEL, INC.
AND
ITC WIRELESS, INC.
DATED AS OF JUNE 22, 1998
- --------------------------------------------------------------------------------
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<PAGE> 74
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I--DEFINITIONS...................................... B-4
SECTION 1.1 Certain Defined Terms....................... B-4
ARTICLE II--PURCHASE AND SALE............................... B-7
SECTION 2.1 Purchase and Sale of the Shares............. B-7
SECTION 2.2 Purchase Price.............................. B-7
SECTION 2.3 Closing..................................... B-7
SECTION 2.4 Closing Deliveries by the Seller............ B-7
SECTION 2.5 Closing Deliveries by the Purchaser......... B-7
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE SELLER... B-7
SECTION 3.1 Organization, Authority and Qualification of
the Seller............................................. B-7
SECTION 3.2 Capitalization of the Seller................ B-8
SECTION 3.3 Subsidiaries................................ B-8
SECTION 3.4 No Conflict................................. B-8
SECTION 3.5 Governmental Consents and Approvals......... B-9
SECTION 3.6 Seller SEC Reports; Financial Statements.... B-9
SECTION 3.7 No Undisclosed Liabilities.................. B-9
SECTION 3.8 Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions...... B-10
SECTION 3.9 Litigation.................................. B-10
SECTION 3.10 Compliance with Laws........................ B-10
SECTION 3.11 Full Disclosure............................. B-10
SECTION 3.12 Private Placement........................... B-10
SECTION 3.13 FCC Regulations............................. B-10
SECTION 3.14 Brokers..................................... B-10
SECTION 3.15 Delivery of Certain Documents............... B-10
SECTION 3.16 No Consideration for Consent................ B-11
SECTION 3.17 Delivery of Business Plan................... B-11
SECTION 3.18 Licenses.................................... B-11
SECTION 3.19 Other Licenses and Approvals................ B-11
SECTION 3.20 Tax Matters................................. B-11
SECTION 3.21 FCC Change of Control....................... B-12
ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER................................................. B-12
SECTION 4.1 Organization and Authority of the
Purchaser.............................................. B-12
SECTION 4.2 No Conflict................................. B-12
SECTION 4.3 Governmental Consents and Approvals......... B-12
SECTION 4.4 Litigation.................................. B-12
SECTION 4.5 Investment Purpose.......................... B-13
SECTION 4.6 Accredited Investor......................... B-13
SECTION 4.7 Brokers..................................... B-13
ARTICLE V--ADDITIONAL AGREEMENTS............................ B-13
SECTION 5.1 Filing of Certificate of Designations....... B-13
SECTION 5.2 Treatment of Shares as Equity............... B-13
SECTION 5.3 Regulatory and Other Authorizations; Notices
and Consents........................................... B-13
SECTION 5.4 Notice of Developments...................... B-13
SECTION 5.5 Registration Rights......................... B-14
SECTION 5.6 Resale Restrictions......................... B-14
SECTION 5.7 Registration of Shares...................... B-14
SECTION 5.8 Reservation of Common Stock................. B-14
SECTION 5.9 Delivery of Certain Documents............... B-14
SECTION 5.10 Certain Information......................... B-14
</TABLE>
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<TABLE>
<S> <C>
SECTION 5.11 Conduct of Business of the Seller........... B-15
SECTION 5.12 Use of Funds................................ B-15
SECTION 5.13 Further Action.............................. B-15
ARTICLE VI--CONDITIONS TO CLOSING........................... B-15
SECTION 6.1 Conditions to Obligations of the Seller..... B-15
SECTION 6.2 Conditions to Obligations of the
Purchaser.............................................. B-16
ARTICLE VII--INDEMNIFICATION................................ B-17
SECTION 7.1 Survival of Representations and
Warranties............................................. B-17
SECTION 7.2 Indemnification............................. B-17
SECTION 7.3 Limits on Indemnification................... B-18
ARTICLE VIII--TERMINATION AND WAIVER........................ B-19
SECTION 8.1 Termination................................. B-19
SECTION 8.2 Effect of Termination....................... B-19
SECTION 8.3 Waiver...................................... B-19
ARTICLE IX--GENERAL PROVISIONS.............................. B-19
SECTION 9.1 Expenses.................................... B-19
SECTION 9.2 Notices..................................... B-20
SECTION 9.3 Public Announcements........................ B-20
SECTION 9.4 Headings.................................... B-21
SECTION 9.5 Severability................................ B-21
SECTION 9.6 Entire Agreement............................ B-21
SECTION 9.7 Assignment.................................. B-21
SECTION 9.8 No Third Party Beneficiaries................ B-21
SECTION 9.9 Amendment................................... B-21
SECTION 9.10 Governing Law............................... B-21
SECTION 9.11 Counterparts................................ B-21
SECTION 9.12 Specific Performance........................ B-21
EXHIBITS
6.1(e) Form of Opinion of Purchaser's Legal Counsel
6.2(e) Form of Opinion of Seller's Legal Counsel
ANNEXES
Annex I................................................... I-1
Annex II.................................................. II-1
</TABLE>
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This STOCK PURCHASE AGREEMENT, dated as of June 22, 1998, is entered into
between POWERTEL, INC., a Delaware corporation (the "Seller"), and ITC WIRELESS,
INC., a Delaware corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Seller wishes to issue and to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, 50,000 shares (the "Shares") of a
new series of convertible preferred stock of the Seller designated Series F 6.5%
Cumulative Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the terms of the Preferred Stock are set forth in the form of
Certificate of Designations attached as Annex I hereto (the "Certificate of
Designations");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Seller hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" or "this Agreement" means this Stock Purchase Agreement, dated
as of June 22, 1998, between the Seller and the Purchaser (including the
Exhibits and Annexes hereto and the Disclosure Schedule) and all amendments
hereto made in accordance with the provisions of Section 9.9.
"Approvals" has the meaning specified in Section 3.5.
"Assets" means the properties, assets (including, without limitation,
Licenses) and contract rights used or intended to be used in the conduct of the
Business or otherwise owned, leased or used by the Seller or any Subsidiary or,
with respect to contract rights, to which the Seller or any Subsidiary is a
party or is bound.
"Beneficially Own" with respect to any securities means having beneficial
ownership as determined pursuant to Rule 13d-3 under the Exchange Act, including
having beneficial ownership pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Business" means the business of the Seller and the Subsidiaries as
currently conducted and, as contemplated by the Seller on the date hereof and on
the Closing Date, to be conducted.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Certificate of Designations" has the meaning specified in the recitals to
this Agreement.
"Closing" has the meaning specified in Section 2.3.
"Closing Date" has the meaning specified in Section 2.3.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.01 per share, of the
Seller.
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"Communications Act" means the Federal Communications Act of 1934, as
amended.
"Control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"Disclosed by Seller" with respect to information concerning any event,
fact or circumstance, includes information contained in the Seller's SEC
Reports, annual and other reports furnished by Seller to its stockholders as a
group, and press releases of the Seller disseminated to (i) the Dow Jones News
Service or (ii) the National Association of Securities Dealers, Inc. Automated
Quotation System or other national securities exchange ("Press Releases"), as
well as information disclosed directly to the Purchaser by the Seller in this
Agreement, the 1997 Financial Statements, the 1998 Financial Statements or in
writing and attached hereto or delivered pursuant to Section 6.2. If the
Purchaser has a representative on the Seller's Board of Directors, "Disclosed by
Seller" shall also mean written information and materials which are or have been
disclosed or distributed during the term of service of such representative to
the Seller's Board of Directors or any committee thereof on which such
representative serves or written evidence (such as minutes, resolutions and
written consents) of the meetings of the Board of Directors or any committee
thereof on which such representative serves which are distributed during the
term of service of such representative.
"Disclosure Schedule" means the Disclosure Schedule attached hereto, dated
as of the date hereof, and forming a part of this Agreement.
"Encumbrance" means any security interest, pledge, mortgage, lien, charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Executive Officer" has the meaning set forth in Rule 405 of Regulation C
adopted by the Commission under the Securities Act without regard to whether any
party to this Agreement is a registrant as used in Rule 405.
"FCC" means the United States Federal Communications Commission.
"FCC Licenses" means all licenses granted by the FCC to the Seller for and
related to the provision of personal communications services and cellular
services in connection with the Seller's Business.
"Governmental Authority" means any United States federal, state or local or
any foreign government, regulatory or administrative authority, or any
governmental agency, department, board or commission, or any court, tribunal, or
judicial, arbitral or investigative body or other governmental tribunal.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" of a party with respect to such party's representation or
warranty concerning any event, fact or circumstance means the current actual
knowledge of that party's Executive Officers of information which, after
reasonable consideration by such Executive Officers, would be recognized by
reasonable persons of similar experience in such positions as relevant to the
representation or warranty qualified by the words "to the knowledge" of a party,
"known to" a party or a similar phrase. Knowledge does not include information
not within such current actual knowledge that might be revealed if the party's
files were searched or if any other investigation were made.
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"Law" means any United States federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, order, other requirement or rule of law,
including, without limitation, any requirement or rule of law of the FCC.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Law, Action
or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Licenses" means all FCC Licenses and all other licenses, permits
(including construction permits), consents, approvals and other authority issued
by any Governmental Authority in connection with the legal and proper operation
of the Seller's Business.
"Loss" has the meaning specified in Section 7.2(a).
"Material Adverse Effect" means any circumstance, change in or effect on
the Business, the Seller or any Subsidiary that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the Business,
the Seller or any Subsidiary: (a) is, or would reasonably be expected to be,
materially adverse to the Business, operations, Assets or Liabilities,
prospects, results of operations or financial condition of the Seller and the
Subsidiaries, taken as a whole; or (b) would reasonably be expected to
materially adversely affect the ability of the Seller and the Subsidiaries to
operate or conduct the Business.
"1997 Financial Statements" means the audited annual consolidated financial
statements of the Company and the notes and schedules thereto for the year ended
December 31, 1997.
"1998 Financial Statements" has the meaning specified in Section 3.2(b).
"Person" means any individual, partnership, limited liability company,
firm, corporation, association, trust, joint venture, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Exchange Act.
"Preferred Stock" has the meaning specified in the recitals to this
Agreement.
"Purchase Price" has the meaning specified in Section 2.2.
"Purchaser" has the meaning specified in the preamble to this Agreement.
"Reference Balance Sheet Date" means March 31, 1998.
"Related Agreements" has the meaning specified in Section 3.15.
"Sale" means any sale, assignment, transfer, distribution or other
disposition of shares of Common Stock or of a participation therein, whether
voluntarily or by operation of law.
"SEC Reports" has the meaning specified in Section 3.6(a).
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Seller" has the meaning specified in the preamble to this Agreement.
"Series E Stock Purchase Agreement" means that certain Stock Purchase
Agreement of even date herewith between the Seller and SCANA Communications,
Inc., as purchaser thereunder, with respect to the sale and purchase of 50,000
shares of the Seller's Series E 6.5% Cumulative Convertible Preferred Stock.
"Shares" has the meaning specified in the recitals to this Agreement.
"Subsidiaries" means any and all corporations, partnerships, limited
liability companies, joint ventures, associations and other entities controlled
by the Seller directly or indirectly through one or more intermediaries.
"Tax" or "taxes" means any and all taxes, fees, levies, assessments,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation:
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taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains, taxes; license, registration
and documentation fees; and customs duties, tariffs, and similar charges.
"Third Party Claims" has the meaning specified in Section 7.2(b).
"U.S. GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of the Shares. Upon the terms and subject
to the conditions of this Agreement, at the Closing, the Seller shall sell to
the Purchaser, and the Purchaser shall purchase from the Seller, the Shares.
SECTION 2.2 Purchase Price. The aggregate purchase price for the Shares
shall be $75,000,000.00 (the "Purchase Price"), representing a purchase price of
$1,500.00 per Share.
SECTION 2.3 Closing. Upon the terms and subject to the conditions of this
Agreement, the issuance, sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at 10:00 A.M.
local time on a date and at a location mutually agreed to by the parties upon
the satisfaction or waiver of all conditions to the obligations of the parties
set forth in Article VI, or at such other place or at such other time or on such
other date as the Seller and the Purchaser may mutually agree upon in writing
(the day on which the Closing takes place being the "Closing Date").
SECTION 2.4 Closing Deliveries by the Seller. At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser a receipt for the
Purchase Price, stock certificates evidencing the Shares duly registered in the
name of the Purchaser, in a form reasonably satisfactory to the Purchaser, and
the opinions, certificates and other documents required to be delivered pursuant
to Section 6.2.
SECTION 2.5 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver to the Seller the Purchase Price in immediately
available funds together with the opinions, certificates and other documents
required to be delivered pursuant to Section 6.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
hereby represents and warrants to the Purchaser as follows:
SECTION 3.1 Organization, Authority and Qualification of the Seller. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder,
to consummate the transactions contemplated hereby and to conduct its Business,
except where the failure to be in good standing would not have a Material
Adverse Effect. The Seller is duly licensed or qualified to do Business and is
in good standing in each jurisdiction in which the properties owned or leased by
it or the operation of its Business makes such licensing or qualification
necessary, except as would not have a Material Adverse Effect. The execution and
delivery of this Agreement by the Seller, the performance by the Seller of its
obligations hereunder and the consummation by the Seller of the transactions
contemplated hereby, including, without limitation, the issuance of the
Preferred Stock in accordance with the terms of this Agreement and the
Certificate of Designations, have been duly authorized by all requisite action
on the part of the Seller. This Agreement has been duly executed and delivered
by the Seller, and (assuming due
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<PAGE> 80
authorization, execution and delivery by the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms.
SECTION 3.2 Capitalization of the Seller. (a) The authorized capital
stock of the Seller consists of 100,000,000 shares of Common Stock and 1,000,000
shares of preferred stock, par value $0.01 per share. As of the date hereof, (i)
26,948,955 shares of Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and (ii) 300,000 shares of
preferred stock (not including the Preferred Stock) are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. None of the
issued and outstanding shares of Common Stock or preferred stock was issued in
violation of any preemptive rights. All issuances of such issued and outstanding
shares when made were registered or exempt from registration under the
Securities Act, except where the failure of such issuances to be registered or
exempt from registration would not, individually or in the aggregate, have a
Material Adverse Effect. Except as disclosed in the SEC Reports and in Schedule
3.2 of the Disclosure Schedule, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character to which the Seller is a party relating to the issuance or sale of
capital stock of the Seller or obligating the Seller to issue or sell any shares
of capital stock of, or any other equity interest in, the Seller or its
Subsidiaries. Except as disclosed in Schedule 3.2 of the Disclosure Schedule,
there are no outstanding contractual obligations of the Seller to repurchase,
redeem or otherwise acquire any shares of Common Stock or shares of capital
stock of its Subsidiaries. Upon issuance of the Shares to the Purchaser at the
Closing and payment therefor pursuant to this Agreement and the Certificate of
Designations, the Shares will be validly issued, fully paid and nonassessable
and free of preemptive rights. By the Closing Date, the shares of Common Stock
issuable upon conversion of the Shares will be duly authorized and reserved for
issuance upon such conversion and, upon issuance of such shares in accordance
with the Certificate of Designations, will be validly issued, fully paid and
nonassessable and free of preemptive rights. Upon consummation of the
transactions contemplated by this Agreement, including the issuance of the
Shares, registration of the Shares in the name of the Purchaser in the stock
records of the Seller and delivery of the Shares, the Purchaser will own the
Shares free and clear of all Encumbrances, other than Encumbrances resulting
from any action, or failure to take action, by the Purchaser. All shares of
Common Stock issued as dividends with respect to the Shares will be validly
issued, fully paid and nonassessable and free of preemptive rights. Upon the due
declaration and issuance of a dividend payable in Common Stock with respect to
the Shares, the registration of such shares of Common Stock in the name of the
Purchaser in the stock records of the Seller and delivery of such shares of
Common Stock, the Purchaser will own all such shares of Common Stock free and
clear of all Encumbrances, other than Encumbrances resulting from any action, or
failure to take any action, by the Purchaser.
(b) The outstanding indebtedness of Seller as of March 31, 1998 is
accurately reflected (subject to normal and recurring adjustments and other
revisions which were not and are not known or reasonably expected to be material
in amount) in the Seller's balance sheet at March 31, 1998 contained in the
Seller's unaudited quarterly consolidated financial statements and the notes and
schedules thereto for the quarter ended March 31, 1998 (the "1998 Financial
Statements").
SECTION 3.3 Subsidiaries. Each Subsidiary: (i) is duly organized and
validly existing under the laws of its jurisdiction of organization; (ii) has
all necessary power and authority to own, operate or lease the properties and
assets owned, operated or leased by such Subsidiary and to carry on its business
as it has been and is currently conducted by such Subsidiary; and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary or desirable,
except where the failure to be so duly licensed or qualified would not have a
Material Adverse Effect. Each Subsidiary is wholly owned, directly or
indirectly, by the Seller.
SECTION 3.4 No Conflict. Assuming that all Approvals described in Section
3.5 have been obtained, that approval of the Certificate of Designations and the
issuance of the Shares has been obtained from the holders of the Seller's Series
A, Series B, Series C and Series D Preferred Stock and that all filings and
notifications listed in Schedule 3.5 of the Disclosure Schedule have been made,
the execution, delivery and performance of this Agreement by the Seller, and the
issuance of the Shares and the performance of the Seller's obligations in
accordance with the Certificate of Designations, do not and will not: (i)
violate, conflict
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with or result in the breach of any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of the Seller or
any Subsidiary as in effect on the date hereof or on the Closing Date; (ii)
conflict with or violate (or cause an event which could have a Material Adverse
Effect as a result of) any Law or Governmental Order as in effect on the date
hereof or on the Closing Date applicable to the Seller, any Subsidiary or any of
their respective assets, properties or businesses; or (iii) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any Encumbrance on any of the Shares or on any of the assets or
properties of the Seller or any Subsidiary pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement as in effect on the date hereof or on the
Closing Date to which the Seller or any Subsidiary is a party or by which any of
the Shares or any of such assets or properties is bound or affected.
SECTION 3.5 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Seller and the performance of the
Seller's obligations in accordance with the Certificate of Designations do not
and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental Authority on the part
of the Seller pursuant to Laws as they are in effect on the Closing Date
(collectively, the "Approvals"), except: (i) as described in Schedule 3.5 of the
Disclosure Schedule; (ii) pursuant to the notification requirements of the HSR
Act; (iii) the filing with the Secretary of State of the State of Delaware of
the Certificate of Designations contemplated by Section 5.1; and (iv) any
filings required to effect any registration pursuant to Section 5.5. Subject to
the exceptions set forth in clauses (i), (ii) and (iv) above, the Seller will
obtain all such Approvals on or before the Closing Date.
SECTION 3.6 Seller SEC Reports; Financial Statements.
(a) The Seller has filed all forms, reports and documents required to be
filed by it with the Commission, and has heretofore made available to the
Purchaser, in the form filed with the Commission (excluding any exhibits
thereto), (i) its Annual Report on Form 10-K for the fiscal years ended December
31, 1995, 1996 and 1997, (ii) its Quarterly Report on Form 10-Q for the period
ended March 31, 1998 and (iii) all proxy statements relating to the Seller's
meetings of stockholders (whether annual or special) held since December 31,
1995 (collectively, the "SEC Reports").
(b) Except as set forth in Schedule 3.6 of the Disclosure Schedule, the SEC
Reports and any other forms, reports and other documents filed by the Seller
with the Commission as of the date of this Agreement (i) were prepared in all
material respects in accordance with the requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations thereunder
and (ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) The financial statements (including, in each case, any notes thereto)
contained in the SEC Reports were prepared in accordance with U.S. GAAP applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto), and each fairly presented the financial
position, results of operations and cash flows of the Seller and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not known or reasonably expected, individually or in the aggregate, to be
material in amount).
(d) Since March 31, 1998 there has not been any change, occurrence or
circumstance affecting the Business, results of operations or financial
condition of the Seller or any Subsidiary that has had, individually or in the
aggregate, a Material Adverse Effect, other than changes, occurrences and
circumstances referred to in any subsequently filed SEC Reports or otherwise
Disclosed by Seller.
SECTION 3.7 No Undisclosed Liabilities. There are no Liabilities of the
Seller or any Subsidiary, other than Liabilities (i) disclosed in Schedule 3.7
of the Disclosure Schedule, (ii) reflected in the SEC
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Reports, the 1997 Financial Statements, the 1998 Financial Statements or
otherwise Disclosed by Seller, (iii) not required to be reflected in a
consolidated balance sheet of the Seller and its Subsidiaries or in the notes
thereto prepared in accordance with U.S. GAAP or (iv) incurred since the
Reference Balance Sheet Date in the ordinary course of business and which do not
have a Material Adverse Effect.
SECTION 3.8 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions. Since the Reference Balance Sheet Date, except as
Disclosed by Seller in any subsequently filed SEC Reports or Press Releases, as
reflected in the 1997 Financial Statements, the 1998 Financial Statements or as
contemplated by this Agreement, the Business of the Seller and the Subsidiaries
has been conducted in the ordinary course, and the Seller has not suffered any
Material Adverse Effect.
SECTION 3.9 Litigation. Except as set forth in the SEC Reports, as
reflected in the 1997 Financial Statements or the 1998 Financial Statements, as
disclosed in Schedule 3.9 of the Disclosure Schedule or otherwise Disclosed by
Seller, there are no Actions by or against the Seller or any Subsidiary (or by
or against any Affiliate thereof and relating to the Business, the Seller or any
Subsidiary), or affecting the Business or any of the Assets, pending before any
Governmental Authority (or, to the knowledge of the Seller, threatened to be
brought by or before any Governmental Authority) that has, has had or could
reasonably be expected to have a Material Adverse Effect or could reasonably be
expected to affect the legality, validity or enforceability of this Agreement or
the consummation of the transactions contemplated hereby. None of the Seller,
the Subsidiaries nor any of the Assets is subject to any Governmental Order
(nor, to the knowledge of the Seller, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has, has had or
could have a Material Adverse Effect.
SECTION 3.10 Compliance with Laws. The Seller and the Subsidiaries have
each conducted and continue to conduct the Business in all material respects in
accordance with all Laws and Governmental Orders applicable to the Seller or any
Subsidiary or any of the Assets or the Business, and neither the Seller nor any
Subsidiary is in material violation of any such Law or Governmental Order.
SECTION 3.11 Full Disclosure. The Seller is not aware of any facts
pertaining to the Seller, any Subsidiary or the Business which could reasonably
be expected to have a Material Adverse Effect and which have not been disclosed
in this Agreement, the Disclosure Schedule or the SEC Reports or otherwise
Disclosed by Seller.
SECTION 3.12 Private Placement. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Sections 4.5 and
4.6, the offer and sale of the Shares to the Purchaser pursuant to this
Agreement are, and the issuance of Common Stock (i) upon conversion of the
Shares and (ii) as dividends with respect to the Shares will be, exempt from
registration under the Securities Act as in effect on the Closing Date.
SECTION 3.13 FCC Regulations. After giving effect to the issuance of the
Shares to the Purchaser, the ownership of capital stock of the Seller by aliens
or their representatives or by a foreign government or representative thereof or
by any corporation organized under the laws of a foreign country does not exceed
the limitations set forth in the rules and regulations of the FCC.
SECTION 3.14 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller.
SECTION 3.15 Delivery of Certain Documents. The Seller has delivered (or
will deliver pursuant to Section 5.9) to the Purchaser a true and complete copy
of: (i) the 1997 Financial Statements, the 1998 Financial Statements and the
Certificate of Designations; and (ii) all agreements set forth on Schedule 3.15
of the Disclosure Schedule (including all appendices, schedules, exhibits and
other attachments thereto), including, without limitation, the Series E Stock
Purchase Agreement (collectively, the "Related Agreements"). Assuming due
execution and delivery thereof by all parties thereto, each of the Related
Agreements to which the Seller is a party creates a legally binding obligation
of each party thereto, enforceable against such parties in accordance with the
respective terms and conditions thereof, except (i) as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including,
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without limitation, the effect of statutory and other laws regarding fraudulent
conveyances, fraudulent transfers and preferential transfers), and (ii) as may
be limited by the exercise of judicial discretion and the application of
principles of equity including, without limitation, requirements of good faith,
fair dealing, conscionability and materiality (regardless of whether such
agreements are considered in a proceeding in equity or at law).
SECTION 3.16 No Consideration for Consent. No Person has received or will
receive any consideration of any kind for or in connection with the granting of
any consent by such Person to the sale and issuance of the Preferred Stock or of
the Seller's Series E 6.5% Cumulative Convertible Preferred Stock.
SECTION 3.17 Delivery of Business Plan. The Seller has delivered (or will
deliver pursuant to Section 5.9) to the Purchaser a true and complete copy of
the Seller's business plan and such plan is, on and as of the date hereof, the
current business plan of the Seller. The historical factual information
contained in such business plan is correct in all material respects, does not,
when read together with the SEC Reports, omit to state any material fact
necessary to make the statements therein not misleading and fairly reflects the
Seller's projections as of the date hereof.
SECTION 3.18 Licenses. Except to the extent it would not have a Material
Adverse Effect: (i) all FCC Licenses are in full force and effect and have been
duly issued in the name of, or validly assigned to, the Seller or one of its
Subsidiaries and no default or breach exists thereunder; (ii) no event has
occurred with respect to the FCC Licenses that permits, or after giving notice,
lapse of time or both would permit, revocation or termination of such FCC
Licenses or would result in any material impairment of the rights of the holder
thereof; and (iii) all FCC Licenses are in effect for the usual FCC License
terms and are unimpaired by any condition or other restriction imposed by the
FCC or other Governmental Authority (other than restrictions and conditions
generally applicable to licenses of the same or similar type or class).
Except to the extent it would not have a Material Adverse Effect: (i) all
applications necessary for renewal or extension of the FCC Licenses have been
timely filed in accordance with the requirements of the FCC or other
Governmental Authority issuing such FCC Licenses; (ii) the Seller has not been
informed that any of the FCC Licenses will not be renewed in the ordinary
course; and (iii) no allegations, complaints, charges, investigations, renewal
or revocation hearings, or other proceedings have been threatened or initiated
in any forum, nor has any Governmental Authority (including, but not limited to,
the FCC) proposed, announced, used, or adopted any amendment, modification, or
change to any law or regulation, with respect to or impacting upon such FCC
Licenses.
Except to the extent that it would not have a Material Adverse Effect, each
of the Seller and its Subsidiaries: (i) is in compliance with the provisions of
the Communications Act as implemented, interpreted and applied by the FCC; (ii)
is in compliance with FCC requirements immediately following the Closing; (iii)
has duly and timely filed all reports and other filings which are required to be
filed by it under the Communications Act or any other applicable law, rule or
regulation of any Governmental Authority; and (iv) is in compliance with all
such laws, rules and regulations, the noncompliance with which would have a
Material Adverse Effect on the continuation of any License held by the Seller or
any of its Subsidiaries. Except to the extent it would not have a Material
Adverse Effect, all information provided by or on behalf of Seller or any
Subsidiary in any filing with the FCC was, at the time of filing, true, complete
and correct in all material respects when made, and the FCC has been notified of
any substantial or significant changes in such information as may be required in
accordance with applicable laws, rules and regulations.
SECTION 3.19 Other Licenses and Approvals. Except to the extent it would
not have a Material Adverse Effect, each of the Seller and its Subsidiaries has
or has the right to use all Licenses and Approvals that are necessary for the
Seller and its Subsidiaries to carry on the Business as currently conducted.
SECTION 3.20 Tax Matters. Except to the extent it would not have a
Material Adverse Effect: (i) each of Seller and its Subsidiaries has filed all
federal, state, local and other tax returns which are required to be filed by it
within the period required for such filings and any extensions granted therefor
and within the period that the same may be filed without interest or penalties;
(ii) each such Person has paid, or made adequate provision for the payment of,
all taxes (if any), including any interest and penalties thereon, which
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have or may become due and payable pursuant to any of the said returns or
pursuant to any matters raised by audits or for other reasons known to it; and
(iii) each such Person has made adequate provision for all current taxes. Except
as disclosed in Schedule 3.20 of the Disclosure Schedule, no audit by any
Governmental Authority of the federal, state, local or other tax returns, forms
or information statements of the Seller or any of its Subsidiaries with respect
to such taxes is currently in progress or overtly threatened.
SECTION 3.21 FCC Change of Control. Based upon the Seller's knowledge of
the ownership of its stock as of the Closing Date, no assignment or transfer of
control for purposes of the rules and regulations of the FCC will occur by
reason of the sale of the Shares and the Series E 6.5% Cumulative Convertible
Preferred Stock; provided, however, that no representation or warranty is made
as to the effect of the issuance of dividends or other distributions with
respect to the Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller as follows:
SECTION 4.1 Organization and Authority of the Purchaser. The Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Seller) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.
SECTION 4.2 No Conflict. Except as disclosed by the Purchaser to the
Seller in writing prior to Closing, assuming compliance with the notification
requirements of the HSR Act and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.3, except as may result from any facts or circumstances relating
solely to the Seller, the execution, delivery and performance of this Agreement
by the Purchaser do not and will not as of the Closing Date: (i) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation or by-laws of the Purchaser; (ii) conflict with or violate any Law
or Governmental Order applicable to the Purchaser; or (iii) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent that has not been obtained under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation, or cancellation
of, or result in the creation of any Encumbrance on any of the assets or
properties of the Purchaser pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected, which in any such case would
have a material adverse effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement.
SECTION 4.3 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Purchaser do not and will not require
any Approvals on the part of the Purchaser except pursuant to the notification
requirements of the HSR Act and the filing requirements of Sections 13 and 16(a)
of the Exchange Act. The Purchaser shall obtain or comply with such Approval
requirements in a timely manner.
SECTION 4.4 Litigation. There are no Actions by or against the Purchaser,
pending before any Governmental Authority (or, to the knowledge of the
Purchaser, threatened to be brought by or before any Governmental Authority)
that could reasonably be expected to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby. The Purchaser is not subject to any Governmental Order
(nor, to the knowledge of the Purchaser, are there any such Governmental Orders
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threatened to be imposed by any Governmental Authority), which could reasonably
be expected to materially adversely affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 4.5 Investment Purpose. The Purchaser is acquiring the Shares
and, if any of the Common Stock to be issued upon conversion of the Shares or as
dividends with respect to the Shares is, when acquired, not subject to immediate
resale under Rule 144 promulgated pursuant to the Securities Act or is not to be
resold solely pursuant to a registration statement to be filed and declared
effective pursuant to the Securities Act, the Purchaser will acquire such shares
of Common Stock for the Purchaser's own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.
SECTION 4.6 Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities Act.
SECTION 4.7 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Filing of Certificate of Designations. The Seller covenants
and agrees that at or prior to the Closing, the Seller will file the Certificate
of Designations with the Secretary of State of the State of Delaware in
accordance with the Delaware General Corporation Law.
SECTION 5.2 Treatment of Shares as Equity. The Seller covenants and
agrees that it will treat the Shares as equity, and not as debt, for accounting
and tax purposes and further covenants and agrees that it will not take any
action or position that is inconsistent with such treatment.
SECTION 5.3 Regulatory and Other Authorizations; Notices and Consents.
(a) The Seller and the Purchaser shall use all reasonable efforts to obtain
all Approvals of all Governmental Authorities that may be or become necessary
for each of them to obtain for their execution and delivery of, and the
performance of their respective obligations pursuant to, this Agreement. Each
party hereto agrees to make an appropriate filing pursuant to the HSR Act, if
required, with respect to the conversion of the Shares and any shares of Common
Stock issued as dividends with respect thereto at such times as the Purchaser
may request and to supply as promptly as practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act.
(b) The Seller shall or shall cause the Subsidiaries to give promptly such
notices to third parties and use its or their reasonable efforts to obtain such
third party consents as are necessary in connection with the transactions
contemplated by this Agreement.
(c) The Purchaser shall cooperate and use all reasonable efforts to assist
the Seller in giving such notices and obtaining such consents; provided,
however, that the Purchaser shall have no obligation to give any guarantee or
other consideration of any nature in connection with any such notice or consent
or to consent to any change in the terms of any agreement or arrangement which
the Purchaser in its sole and absolute discretion may deem adverse to the
interests of the Purchaser.
SECTION 5.4 Notice of Developments.
(a) Prior to the Closing, the Seller shall promptly notify the Purchaser in
writing of (i) all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could reasonably be expected to
result in any breach of a representation or warranty or covenant of the Seller
in this Agreement or which could reasonably be expected to have the effect of
making any representation or warranty of the Seller in this Agreement untrue or
incorrect and (ii) all other developments material to the Seller and the
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Subsidiaries, taken as a whole, affecting the Assets, Liabilities, business,
financial condition, operations, results of operations or prospects of the
Seller, any Subsidiary or the Business.
(b) Prior to the Closing, the Purchaser shall promptly notify the Seller in
writing of all events, circumstances, facts and occurrences arising subsequent
to the date of this Agreement which could reasonably be expected to result in
any breach of a representation or warranty or covenant of the Purchaser in this
Agreement or which could reasonably be expected to have the effect of making any
representation or warranty of the Purchaser in this Agreement untrue or
incorrect.
SECTION 5.5 Registration Rights. Effective at the Closing, the Purchaser
and the Seller shall each have the rights and obligations set forth in Annex II,
which is incorporated by reference herein.
SECTION 5.6 Resale Restrictions.
(a) The Purchaser acknowledges that the Shares, the shares of Common Stock
into which the Shares are convertible and all shares of Common Stock that are to
be issued as dividends with respect to the Shares have not been registered under
the Securities Act or any state securities law, and the Purchaser hereby agrees
not to offer, sell or otherwise transfer, pledge or hypothecate such shares
unless and until registered under the Securities Act and any applicable state
securities law or unless such offer, sale, transfer, pledge or hypothecation is
exempt from registration or is otherwise in compliance with the Securities Act
and such laws.
(b) During the period ending one year after the Closing Date, the Purchaser
shall not, without the prior written consent of the Seller which shall not be
unreasonably withheld, (i) offer, pledge, sell or otherwise transfer or dispose
of, directly or indirectly, any Shares or any shares of Common Stock into which
any of such Shares may be converted, or (ii) enter into any swap or similar
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of such Shares or any shares of Common Stock into which such Shares
may be converted, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Shares or such other securities, in cash
or otherwise, other than a pledge, grant of security interest or other
encumbrance effected in a bona fide transaction with an unrelated and
unaffiliated pledgee; provided, however, that the Purchaser may at any time
enter into any such transaction described in clause (i) or (ii) above with an
Affiliate of the Purchaser without the prior written consent of the Seller.
SECTION 5.7 Registration of Shares. The Seller shall, upon issuance of
the Shares and prior to the delivery of stock certificates evidencing the Shares
pursuant to Section 2.4, register the Shares in the name of the Purchaser in the
stock records of the Seller.
SECTION 5.8 Reservation of Common Stock. The Seller agrees that as of the
Closing Date the Seller will reserve and will thereafter keep reserved for
issuance out of the authorized but unissued shares of the Common Stock such
number of shares of Common Stock into which the outstanding shares of the
Preferred Stock are from time to time convertible.
SECTION 5.9 Delivery of Certain Documents. The Seller shall deliver to
the Purchaser true and correct copies of this Agreement and the Related
Agreements, all exhibits, schedules, annexes and agreements related hereto as
soon as practicable following the execution and delivery hereof by the parties
hereto.
SECTION 5.10 Certain Information. For a period commencing on the date of
this Agreement and ending not earlier than two years from the date that the
Preferred Stock first becomes convertible into Common Stock, for so long as the
Seller is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Seller shall file all reports and other information required
to be filed by Section 13 or 15(d) under the Exchange Act, as the case may be,
as shall be necessary in order that the conditions to the availability of Rule
144 under the Securities Act, as such Rule may be amended, in connection with
any Sale of shares of Common Stock by the Purchaser shall be met. For so long as
the Seller is required to file reports and other information pursuant to Section
13 or 15(d) of the Exchange Act and this Section 5.10, unless the Purchaser no
longer holds any Shares or shares of Common Stock issued upon conversion of the
Shares, the Seller shall provide the Purchaser with a paper copy of each such
report and other information within a reasonable period of time following the
filing of such report or other information with the Commission.
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SECTION 5.11 Conduct of Business of the Seller. Prior to the Closing, the
Seller agrees (except to the extent that the Purchaser shall otherwise consent
in writing) as follows:
(a) Dividends; Changes in Stock. The Seller shall not take or permit
to be taken any action that would result in an adjustment to the Conversion
Price (as defined in the Certificate of Designations) pursuant to Section
(7)(d) of the Certificate of Designations if the Shares were issued and
outstanding at the time of such action.
(b) Certain Matters. The Seller shall not take or permit to be taken
any action in respect of which holders of Shares would be entitled to vote
pursuant to Section (9) of the Certificate of Designations if the Shares
were outstanding at the time of such action.
SECTION 5.12 Use of Funds. The Seller shall use the proceeds from the
sale of the Preferred Stock and the Seller's Series E 6.5% Cumulative
Convertible Preferred Stock by December 31, 1999 solely for the buildout of
existing personal communications services (PCS) markets for which Licenses have
been issued to Powertel or its Subsidiaries.
SECTION 5.13 Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Obligations of the Seller. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction (or waiver by the Seller, at its sole
discretion), at or prior to the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Purchaser contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true and correct
in all material respects as of such date (provided, however, that if any
portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 6.1(a) has
been satisfied with respect to such portion of such representation or
warranty, such portion of such representation or warranty as so qualified
must be true and correct in all respects), and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or
before the Closing shall have been complied with in all material respects,
and the Seller shall have received a certificate from the Purchaser to such
effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Seller, is likely to render it impossible or
unlawful to consummate such transactions; provided, however, that the
provisions of this Section 6.1(b) shall not apply if the Seller has
directly or indirectly solicited or encouraged any such Action;
(c) Resolutions of the Purchaser. The Seller shall have received a
true and complete copy, certified by the Secretary or an Assistant
Secretary of the Purchaser, of the resolutions duly and validly adopted by
the Board of Directors of the Purchaser evidencing its authorization, if
required by law, of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
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(d) Incumbency Certificate of the Purchaser. The Seller shall have
received a certificate of the Secretary or an Assistant Secretary of the
Purchaser certifying the names and signatures of the officers of the
Purchaser authorized to sign this Agreement and the other documents to be
delivered hereunder;
(e) Legal Opinion. The Seller shall have received from counsel to the
Purchaser a legal opinion, addressed to the Seller and dated the Closing
Date, the form and substance of which shall be substantially as set forth
in Exhibit 6.1(e) attached hereto;
(f) Consents and Approvals. The Seller shall have received (or
received evidence of), each in form and substance reasonably satisfactory
to the Seller, all Approvals and all third party consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement; and
(g) Closing of Series E Transaction. Closing of the transaction
contemplated by the Series E Stock Purchase Agreement shall have occurred
or shall occur simultaneously with the Closing.
SECTION 6.2 Conditions to Obligations of the Purchaser. The obligations
of the Purchaser shall be subject to the satisfaction (or waiver by the
Purchaser, at its sole discretion), at or prior to the Closing, of each of the
following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Seller contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true and correct
as of such date (provided, however, that if any portion of any
representation or warranty is already qualified by materiality, for
purposes of determining whether this Section 6.2(a) has been satisfied with
respect to such portion of such representation or warranty, such portion of
such representation or warranty as so qualified must be true and correct in
all respects), and the covenants and agreements contained in this Agreement
to be complied with by the Seller at or before the Closing shall have been
complied with in all material respects, and the Purchaser shall have
received a certificate of the Seller to such effect signed by a duly
authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Purchaser, is likely to render it impossible or
unlawful to consummate such transactions or which could have a Material
Adverse Effect; provided, however, that the provisions of this Section
6.2(b) shall not apply if the Purchaser has directly or indirectly
solicited or encouraged any such Action;
(c) Resolutions of the Seller. The Purchaser shall have received a
true and complete copy, certified by the Secretary or an Assistant
Secretary of the Seller, of the resolutions duly and validly adopted by the
Board of Directors of the Seller and, to the extent that such authorization
is necessary, the stockholders of the Seller evidencing their authorization
of the execution and delivery of this Agreement, the issuance and terms of
the Shares including, without limitation, the convertibility thereof into
shares of Common Stock, and the consummation of the transactions
contemplated hereby;
(d) Incumbency Certificate of the Seller. The Purchaser shall have
received a certificate of the Secretary or an Assistant Secretary of the
Seller certifying the names and signatures of the officers of the Seller
authorized to sign this Agreement and the other documents to be delivered
hereunder;
(e) Legal Opinion. The Purchaser shall have received from Nelson
Mullins Riley & Scarborough, L.L.P., counsel to the Seller, a legal
opinion, addressed to the Purchaser and dated the Closing Date, the form
and substance of which shall be substantially as set forth in Exhibit
6.2(e) attached hereto;
(f) Consents and Approvals. The Purchaser shall have received (or
received evidence of), each in form and substance reasonably satisfactory
to the Purchaser, all Approvals and all third party consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement which the Seller has the obligation to obtain;
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(g) Financing. The Purchaser shall have obtained a commitment from a
lender acceptable to the Purchaser to enable the Purchaser to borrow such
funds as are necessary to pay the Purchase Price in cash on the Closing
Date, and such commitment shall be in effect and all conditions thereto
satisfied on the Closing Date;
(h) Organizational Documents. The Purchaser shall have received a
copy of the certificate of incorporation and by-laws of the Seller,
certified by the Secretary or an Assistant Secretary of the Seller, and a
true and correct copy of the Certificate of Designations and evidence of
the filing thereof;
(i) Good Standing. The Purchaser shall have received a good standing
certificate for the Seller from the Secretary of State of the State of
Delaware, dated as of a date not earlier than five Business Days prior to
the Closing Date and accompanied by a bring-down certificate signed by the
Secretary or an Assistant Secretary of the Seller dated within one day
prior to the Closing Date;
(j) No Material Adverse Effect. No event or events shall have
occurred which, individually or in the aggregate, have, or could have, a
Material Adverse Effect; and
(k) Closing of Series E Transaction. Closing of the transaction
contemplated by the Series E Stock Purchase Agreement shall have occurred
or shall occur simultaneously with the Closing.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations and Warranties.
(a) The representations and warranties of the Seller to the Purchaser
contained in this Agreement shall survive the Closing until the later of the
second anniversary of the Closing Date or the conversion of all Shares into
Common Stock. Neither the period of survival nor the liability of the Seller
with respect to the Seller's representations and warranties shall be reduced by
any investigation made at any time by or on behalf of the Purchaser. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties by the Purchaser to the Seller, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
(b) The representations and warranties of the Purchaser to the Seller
contained in this Agreement shall survive the Closing until the later of the
second anniversary of the Closing Date or the conversion of all Shares into
Common Stock. Neither the period of survival nor the liability of the Purchaser
with respect to the Purchaser's representations and warranties shall be reduced
by any investigation made at any time by or on behalf of the Seller. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties by the Seller to the Purchaser, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
SECTION 7.2 Indemnification.
(a)(i) The Purchaser, its successors and assigns, and the stockholders,
officers, directors, employees, Affiliates and agents of the Purchaser and its
successors and assigns shall be indemnified and held harmless by the Seller for
any and all Liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
(A) the breach of any representation or warranty made by the Seller
contained in this Agreement; or
(B) the breach of any covenant or agreement by the Seller contained in
this Agreement.
(ii) The Seller, its successors and assigns, and the stockholders,
officers, directors, employees, Affiliates and agents of the Seller and its
successors and assigns shall be indemnified and held harmless by the Purchaser
for any and all Losses actually suffered or incurred by them, arising out of or
resulting from:
(A) the breach of any representation or warranty made by the Purchaser
in this Agreement; or
(B) the breach of any covenant or agreement by the Purchaser contained
in this Agreement.
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To the extent that the Seller's or the Purchaser's undertakings set forth in
this Section 7.2 may be unenforceable, the Seller or the Purchaser, as the case
may be, shall contribute the maximum amount that it is permitted to contribute
under applicable law to the payment and satisfaction of all Losses incurred by
the Purchaser or the Seller, as the case may be.
(b) An indemnified party shall give the party from which indemnification is
sought notice of any matter which an indemnified party has determined has given
or could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article
VII except to the extent the indemnifying party is materially prejudiced by such
failure and shall not relieve the indemnifying party from any other obligation
or Liability that it may have to any indemnified party otherwise than under this
Article VII. The obligations and Liabilities of an indemnifying party under this
Article VII with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VII ("Third
Party Claims") shall be governed by and contingent upon the following additional
terms and conditions: If an indemnified party shall receive notice of any Third
Party Claim, the indemnified party shall give the indemnifying party notice of
such Third Party Claim within 30 days of the receipt by the indemnified party of
such notice; provided, however, that the failure to provide such notice shall
not release the indemnifying party from any of its obligations under this
Article VII except to the extent the indemnifying party is materially prejudiced
by such failure and shall not relieve the indemnifying party from any other
obligation or Liability that it may have to any indemnified party otherwise than
under this Article VII. If the indemnifying party acknowledges in writing its
obligation to indemnify the indemnified party hereunder against any Losses that
may result from such Third Party Claim, then the indemnifying party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the indemnified party within five days of the receipt of such notice
from the indemnified party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the indemnified party, in its sole and absolute
discretion, for the same counsel to represent both the indemnified party and the
indemnifying party, then the indemnified party shall be entitled to retain its
own counsel, in each jurisdiction for which the indemnified party determines
counsel is required, at the expense of the indemnifying party. In the event the
indemnifying party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the indemnified party shall cooperate
with the indemnifying party in such defense and make available to the
indemnifying party, at the indemnifying party's expense, all witnesses,
pertinent records, materials and information in the indemnified party's
possession or under the indemnified party's control relating thereto as is
reasonably required by the indemnifying party. Similarly, in the event the
indemnified party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the indemnifying party shall cooperate with the
indemnified party in such defense and make available to the indemnified party,
at the indemnifying party's expense, all such witnesses, pertinent records,
materials and information in the indemnifying party's possession or under the
indemnifying party's control relating thereto as is reasonably required by the
indemnified party. No such Third Party Claim may be settled by the indemnifying
party or the indemnified party without the prior written consent of the other.
SECTION 7.3 Limits on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement, the maximum amount of indemnifiable Losses
which may be recovered from an indemnifying party arising out of or resulting
from the causes enumerated in Section 7.2 shall be an amount equal to the
Purchase Price. The provisions of this Article VII shall survive the Closing and
any termination of this Agreement.
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ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated as follows:
(a) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has
resulted in a Material Adverse Effect; (ii) any representation or warranty
of the Seller contained in this Agreement shall not have been true and
correct in all material respects when made or as of the Closing Date; (iii)
the Seller shall not have complied in all material respects with any
covenant or agreement to be complied with by it and contained in this
Agreement; or (iv) the Seller or any Subsidiary makes a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against the Seller or any Subsidiary seeking to adjudicate any of them a
bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition
of its debts under any Law relating to bankruptcy, insolvency or
reorganization; or
(b) by the Seller if, between the date hereof and the time scheduled
for the Closing: (i) any representation or warranty of the Purchaser
contained in this Agreement shall not have been true and correct in all
material respects when made; (ii) the Purchaser shall not have complied in
all material respects with any covenant or agreement to be complied with by
it and contained in this Agreement; or (iii) the Purchaser makes a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against the Purchaser seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any Law relating to bankruptcy, insolvency or reorganization; or
(c) by either the Seller or the Purchaser if the Closing shall not
have occurred on or prior to June 30, 1998; or
(d) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable; or
(e) by the mutual written consent of the Seller and the Purchaser.
SECTION 8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability on the part of either party hereto except that
nothing herein shall relieve either party from liability for any breach of this
Agreement occurring prior to termination.
SECTION 8.3 Waiver. Either party to this Agreement may: (i) extend the
time for the performance of any of the obligations or other acts of the other
party; (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto; or (iii) waive compliance with any of the agreements or
conditions of the other party contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Expenses. If the Closing occurs, upon presentation to the
Seller of reasonably detailed invoices, the Seller shall reimburse the Purchaser
for (i) up to $100,000 in costs and expenses, including, without limitation,
fees and disbursements of counsel, actually incurred by the Purchaser in
connection with
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this Agreement and the transactions contemplated hereby (but excluding all
amounts subject to reimbursement pursuant to clause (ii) of this Section 9.1),
and (ii) up to $100,000 in costs and expenses actually required to be paid by
the Purchaser to a lender to reimburse such lender for reasonable out-of-pocket
costs and expenses actually incurred by such lender (including, without
limitation, the reasonable fees and expenses for counsel to such lender) in
connection with a loan of all or substantially all of the Purchase Price to the
Purchaser on or prior to the date of this Agreement. Except as otherwise
specified in this Agreement (including in the preceding sentence of this Section
9.1), all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.2):
(a) if to the Seller:
Powertel, Inc.
1233 O.G. Skinner Drive
West Point, Georgia 31833
Telecopy: (706) 645-9523
Attention: Jill F. Dorsey, Esq.
with a copy (which shall not constitute notice) to:
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street
Suite 1400
Atlanta, Georgia 30309
Telecopy: (404) 817-6050
Attention: James Walker IV, Esq.
(b) if to the Purchaser:
ITC Wireless, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
Telecopy: (706) 643-5067
Attention: Campbell B. Lanier, III
with a copy (which shall not constitute notice) to:
ITC Wireless, Inc.
4717 Dolphin Lane
Alexandria, Virginia 22309
Telecopy: (703) 619-9720
Attention: Kimberley E. Thompson
SECTION 9.3 Public Announcements. No party to this Agreement shall make,
or cause to be made, any press release or public announcement or otherwise
communicate with any news media in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the other party (which
shall not be unreasonably withheld or delayed), and the parties shall cooperate
as to the timing and contents of any such press release or public announcement;
provided, however, that with respect to any disclosure required by law or by a
listing agreement with the National Association of Securities Dealers, Inc.
Automated Quotation System National Market System or any national securities
exchange to which the Purchaser or the Seller is a party, the party required to
make such disclosure shall use its best efforts to consult
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with the other party as to the timing and contents of such disclosure and to
obtain such consent prior to the time such disclosure is required to be made.
SECTION 9.4 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 9.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the Seller and the Purchaser with respect to the subject matter hereof.
SECTION 9.7 Assignment. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of the Seller and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Seller or the Purchaser); provided, however, that the Purchaser may, without
the consent of the Seller, assign this Agreement to an entity that is an
Affiliate of the Purchaser, but no such assignment shall relieve the Purchaser
of any of its obligations under this Agreement; and provided further, however,
that the rights granted pursuant to Annex II may be transferred in accordance
with Annex II.
SECTION 9.8 No Third Party Beneficiaries. Except for the provisions of
Article VII relating to indemnified parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their successors
and permitted assigns, and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.9 Amendment. This Agreement may not be amended or modified,
except: (i) by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser; or (ii) by a waiver in accordance with Section 8.3.
SECTION 9.10 Governing Law. This Agreement shall be governed by the laws
of the State of New York without reference to the principles or rules governing
conflicts of laws.
SECTION 9.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the term hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
POWERTEL, INC.
By: /s/ ALLEN E. SMITH
------------------------------------
Name: Allen E. Smith
Title: President and Chief Executive
Officer
ITC WIRELESS, INC.
By: /s/ KIMBERLEY E. THOMPSON
------------------------------------
Name: Kimberley E. Thompson
Title: Senior Vice President,
General Counsel and Secretary
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ANNEX I
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE PARTICIPATING
OR OTHER RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES F 6.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
POWERTEL, INC.
---------------------------------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
---------------------------------------------
POWERTEL, INC., a Delaware corporation (the "Corporation"), does hereby
certify that the following resolutions were duly adopted by the Board of
Directors of the Corporation pursuant to authority conferred upon the Board of
Directors by Article FOURTH of the Certificate of Incorporation of the
Corporation, which authorizes the issuance of up to 1,000,000 shares of
preferred stock, by consent of the Board of Directors dated June 15, 1998:
RESOLVED, that the issue of a series of preferred stock, $0.01 par value,
of the Corporation is hereby authorized and the designations, powers,
preferences and relative, participating or other rights, and qualifications,
limitations or restrictions thereof, in addition to those set forth in the
Certificate of Incorporation of the Corporation, are hereby fixed as follows:
Section (1) Number of Shares and Designation. 50,000 shares of the
preferred stock, $0.01 par value, of the Corporation are hereby constituted as a
series of the preferred stock designated as Series F 6.5% Cumulative Convertible
Preferred Stock (the "Series F Preferred Stock"). Without the consent of the
then current holders of shares of Series F Preferred Stock as provided for
herein, the number of shares of Series F Preferred Stock may not be increased
and may not be decreased below the number of then currently outstanding shares
of Series F Preferred Stock.
Section (2) Definitions. For purposes of the Series F Preferred Stock,
the following terms shall have the meanings indicated:
"Base Shares" shall have the meaning set forth in paragraph (a) of
Section (3).
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series F Preferred
Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock of the Corporation, par
value $0.01 per share.
"Conversion Price" shall mean the conversion price per share of Common
Stock into which the Series F Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to Section (7). The initial
Conversion Price shall be $22.01 (equivalent to the rate of approximately
68.15 shares of Common Stock for each share of Series F Preferred Stock).
"Current Market Price" shall mean, as of a particular date, the
average of the closing high bid and low asked prices per share of Common
Stock in the over-the-counter market, as reported by the Nasdaq Stock
Market or such other system then in use, or such other exchange or
inter-dealer quotation system on which the Common Stock is principally
traded or authorized to be quoted.
"Dividend Junior Stock" shall have the meaning set forth in paragraph
(d) of Section (3).
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"Dividend Parity Stock" shall have the meaning set forth in paragraph
(c) of Section (3).
"Dividend Payment Date" shall have the meaning set forth in paragraph
(a) of Section (3).
"Dividend Period" shall have the meaning set forth in paragraph (a) of
Section (3).
"Dividend Value" shall have the meaning set forth in paragraph (a) of
Section (3).
"Excess Dividend Amount" shall have the meaning set forth in paragraph
(e) of Section 3.
"Initial Convertibility Date" shall mean the fifth anniversary of the
Issue Date.
"Initial Market Price" shall mean $17.75 per share, and shall be
proportionately adjusted for any: (i) dividend or distribution made on the
Common Stock in shares of Common Stock; (ii) subdivision of the Common
Stock into a greater number of shares; (iii) combination of the Common
Stock into a smaller number of shares; or (iv) issuance of shares of
capital stock by reclassification of the Common Stock.
"Issue Date" shall mean the first date on which shares of Series F
Preferred Stock are issued.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section (4).
"Mandatory Redemption Date" shall have the meaning set forth in
paragraph (b) of Section (5).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (b) of Section (5).
"Minimum Price" shall have the meaning set forth in paragraph (d)(ii)
of Section (7).
"Nasdaq Stock Market" shall mean the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation
System.
"Optional Redemption Date" shall have the meaning set forth in
paragraph (a) of Section (5).
"Optional Redemption Price" shall have the meaning set forth in
paragraph (a) of Section (5).
"Person" shall mean any individual, firm, partnership, joint venture,
corporation, limited liability company, association or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Redemption Date" shall have the meaning set forth in paragraph (c) of
Section (5).
"Redemption Notice" shall have the meaning set forth in paragraph (c)
of Section (5).
"Redemption Price" shall have the meaning set forth in paragraph (c)
of Section (5).
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section (7).
"Series A Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series A Convertible
Preferred Stock.
"Series B Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series B Convertible
Preferred Stock.
"Series C Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series C Convertible
Preferred Stock.
"Series D Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series D Convertible
Preferred Stock.
"Series E Preferred Stock" shall mean the series of preferred stock,
$0.01 par value, of the Corporation designated as Series E 6.5% Cumulative
Convertible Preferred Stock.
"Series E Certificate of Designations" shall mean the Certificate of
the Designations, Powers, Preferences and Relative Participating or Other
Rights, and the Qualifications, Limitations or Restrictions Thereof, of
Series E 6.5% Cumulative Convertible Preferred Stock ($0.01 Par Value) of
Powertel,
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Inc., as filed with the Secretary of State of the State of Delaware, as
such may be amended from time to time.
"Specified Indentures" shall mean the following: (i) the Indenture
dated June 10, 1997 governing the 11 1/8% Senior Notes Due 2007 of the
Corporation; (ii) the Indenture dated April 19, 1996 governing the 12%
Senior Discount Notes Due May 2006 of the Corporation; and (iii) the
Indenture dated February 7, 1996 governing the 12% Senior Discount Notes
Due February 2006 of the Corporation.
"Subsidiaries" shall mean any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other
entities controlled by the Corporation directly or indirectly through one
or more intermediaries.
"Trading Day" means a day on which the Nasdaq Stock Market, or such
other exchange or inter-dealer quotation system on which the Common Stock
is principally traded or authorized to be quoted, is open for the
transaction of business.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section (7).
"Transfer Agent" means such agent or agents of the Corporation as may
be designated by the Board of Directors as the transfer agent for the
Series F Preferred Stock.
Section (3) Dividends.
(a) Holders of the outstanding shares of Series F Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, dividends on each share of the Series F
Preferred Stock, calculated and payable quarterly (each such quarterly period
being hereinafter called a "Dividend Period"), at a rate per annum equal to 6.5%
of the Liquidation Preference of such share; provided, however, that without
first obtaining stockholder approval pursuant to the rules of the Nasdaq Stock
Market, or, in lieu thereof, if allowed by the Nasdaq Stock Market, otherwise
delivering notice to stockholders, the aggregate number of shares of Common
Stock that are issued as dividends pursuant to this Section (3) at a price below
the Initial Market Price shall not exceed 20% of the number of shares of Common
Stock that are issued and outstanding as of the Issue Date (the "Base Shares").
If the aggregate number of shares of Common Stock that have been issued as
dividends on the Series F Preferred Stock pursuant to this Section (3) at a
price below the Initial Market Price exceeds at any time 5% of the Base Shares,
the Corporation agrees, for the benefit of the holders of the Series F Preferred
Stock, to seek (if not previously obtained) approval at the next annual meeting
of the Corporation's stockholders of the issuance of any future dividends
payable in Common Stock pursuant to this paragraph (a) of this Section (3) which
may exceed 20% of the Base Shares.
All dividends on shares of the Series F Preferred Stock, to the extent
accrued, shall be cumulative, whether or not earned or declared, on a daily
basis from the last date through which dividends have been paid or, if no
dividends have been paid, from the date upon which each such share of Series F
Preferred Stock was initially issued, and shall be payable quarterly in arrears
on March 15, June 15, September 15 and December 15 of each year (each a
"Dividend Payment Date"), commencing on September 15, 1998, to holders of record
on the Business Day immediately preceding the relevant Dividend Payment Date.
Such dividends shall accrue whether or not they have been declared and whether
or not there are net profits, surplus or other funds of the Corporation legally
available for the payment of dividends.
Dividends on the Series F Preferred Stock shall be, at the option of the
Corporation, payable (i) in cash or (ii) through the issuance of a number of
fully paid and nonassessable shares (rounded up or down to the nearest whole
number) of Common Stock equal to the amount of the dividend owed divided by the
Dividend Value of the Common Stock; provided, however, that the Corporation
shall not pay any dividends on the Series F Preferred Stock in cash prior to the
date that all obligations under each of the Specified Indentures shall have been
satisfied in full unless all restrictions set forth in the Specified Indentures
with respect to the payment of such cash dividends have been waived or otherwise
satisfied in accordance with the terms of such Specified Indentures; and
provided further, however, that dividends with respect to a Dividend Payment
Date that are not paid in cash within 90 days of such Dividend Payment Date
shall thereafter be payable solely in
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shares of Common Stock on the basis of the Dividend Value with respect to such
Dividend Payment Date, as set forth in this Section (3), and shall no longer be
payable in cash.
The "Dividend Value" of the Common Stock with respect to a Dividend Payment
Date means the product of (x) 95% and (y) the average of the last sales price
for the Common Stock as reported by the Nasdaq Stock Market, or the principal
securities exchange or other securities market on which the Common Stock is then
being traded, for the five Trading Days immediately preceding such Dividend
Payment Date.
(b) All dividends paid with respect to shares of the Series F Preferred
Stock pursuant to paragraph (a) of this Section (3) shall be paid pro rata to
the holders entitled thereto.
(c) No dividend whatsoever shall be declared or paid upon, or any funds or
shares of Common Stock set apart for the payment of dividends upon, any
outstanding share of the Series F Preferred Stock with respect to any Dividend
Period unless all dividends for all preceding Dividend Periods have been
declared and paid (or declared and a sufficient sum or number of shares of
Common Stock set apart for the payment of such dividend) upon all outstanding
shares of Series F Preferred Stock. No dividend will be declared or paid upon
any stock that ranks on a parity with the Series F Preferred Stock with respect
to dividends (the "Dividend Parity Stock"), and no shares of Dividend Parity
Stock shall be redeemed, purchased or otherwise acquired by the Corporation for
consideration through a sinking fund or otherwise, unless (A) all accrued and
unpaid dividends have been paid on the Series F Preferred Stock for all prior
Dividend Periods and (B) sufficient funds or shares of Common Stock have been
paid or set apart for the payment of the dividend for the Dividend Period for
which a dividend is next payable on the Series F Preferred Stock.
Notwithstanding the provisions of this paragraph (c), if accrued dividends on
the Series F Preferred Stock for all prior Dividend Periods have not been paid
in full and sufficient funds or shares of Common Stock have not been paid or set
apart for the payment of the dividend for the Dividend Period for which a
dividend is next payable on the Series F Preferred Stock, the Corporation may
declare a dividend on the Series F Preferred Stock and any Dividend Parity Stock
for any Dividend Period if such dividend will be declared ratably in proportion
to accrued and unpaid dividends on the Series F Preferred Stock and such
Dividend Parity Stock.
(d) The Corporation will not (i) declare, pay or set apart funds or shares
of Common Stock for the payment of any dividend or other distribution with
respect to any stock that ranks junior to the Series F Preferred Stock with
respect to dividends ("Dividend Junior Stock") or (ii) redeem, purchase or
otherwise acquire for consideration any Dividend Junior Stock through a sinking
fund or otherwise, unless (A) all accrued and unpaid dividends with respect to
the Series F Preferred Stock at the time of such event have been paid or funds
or shares of Common Stock have been set apart for payment of such dividends and
(B) sufficient funds or shares of Common Stock have been paid or set apart for
the payment of the dividend for the Dividend Period for which a dividend is next
payable on the Series F Preferred Stock. Notwithstanding anything in this
Certificate of Designations to the contrary, the Corporation may repurchase,
redeem or otherwise acquire Dividend Junior Stock in exchange for Dividend
Junior Stock and Dividend Parity Stock in exchange for Dividend Parity Stock or
Dividend Junior Stock.
(e) So long as any shares of the Series F Preferred Stock are outstanding,
if dividends in excess of the quarterly dividend amount set forth in paragraph
(a) of Section (3) (such excess being the "Excess Dividend Amount") shall be
declared or paid or set apart for payment in any Dividend Period on any Dividend
Junior Stock or Dividend Parity Stock, dividends equal to the Excess Dividend
Amount shall be contemporaneously declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series F
Preferred Stock with such payment with respect to each share of Series F
Preferred Stock being equal to the distributions that would be made in respect
of the aggregate of: (i) the number of shares of Common Stock into which such
share of Series F Preferred Stock is then convertible; and (ii) the number of
shares of Common Stock that the Corporation would be required to issue as of
such date in payment of all dividends that, pursuant to paragraph (a) of Section
(3), have accrued but remain unpaid as of such date.
(f) Dividends on the Series F Preferred Stock on account of arrears for any
past Dividend Period and dividends on the Series F Preferred Stock in connection
with any optional redemption may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on the Business Day
immediately prior to the payment thereof, as may be fixed by the Board of
Directors.
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(g) Dividends payable on the Series F Preferred Stock for any period other
than a Dividend Period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. If a Dividend Payment Date is not a Business
Day, payment of dividends shall be made on the next succeeding Business Day and
dividends accruing for the intervening period shall be paid on the next
succeeding Dividend Payment Date.
Section (4) Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Common Stock or any other series or
class or classes of stock of the Corporation ranking junior to the Series F
Preferred Stock upon liquidation, dissolution or winding up, the holders of the
shares of Series F Preferred Stock shall be entitled to receive $1,500.00 per
share (the "Liquidation Preference"); thereafter, such holders shall be
entitled, with respect to their Series F Preferred Stock and all dividends
accrued and unpaid thereon to the date of final distribution to such holders, to
share on an as if converted to Common Stock basis with the holders of the shares
of Common Stock as provided in paragraph (b) of this Section (4). If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and
any other shares of stock ranking, as to liquidation, dissolution or winding up,
on a parity with the Series F Preferred Stock, shall be insufficient to pay in
full the liquidation preferences of all of such series and liquidating payments
in respect thereof, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and any such other stock ratably in
accordance with the respective amounts which would be payable with respect to
the liquidation preferences of such shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and any such other stock if all
liquidation preferences payable thereon were paid in full. For the purposes of
this Section (4), (i) a consolidation or merger of the Corporation with one or
more entities, (ii) a sale or transfer of all or substantially all of the
Corporation's assets or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary; provided,
however, that any subsequent distribution, liquidation, dissolution or winding
up of the Corporation shall remain subject to this Section (4).
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to Series F Preferred
Stock, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of Series F Preferred Stock,
as provided in paragraph (a)of this Section (4), holders of shares of Series F
Preferred Stock shall be entitled to share ratably with holders of shares of
Common Stock and any other class or series entitled to participate with the
Common Stock in the event of liquidation, dissolution or winding up, in any and
all assets remaining to be paid or distributed, such that distributions shall be
made in respect of each share of Series F Preferred Stock in an amount equal to
the distributions made in respect of the aggregate of: (i) the number of shares
of Common Stock into which such share of Series F Preferred Stock is then
convertible; and (ii) the number of shares of Common Stock that the Corporation
would be required to issue as of such date in payment of all dividends that,
pursuant to paragraph (a) of Section (3), have accrued but remain unpaid as of
such date.
Section(5) Redemption.
(a) Series F Preferred Stock may not be redeemed by the Corporation prior
to the Initial Convertibility Date. After the Initial Convertibility Date and
subject to the restrictions set forth in Section (3) hereof, the Corporation, at
its option, may redeem the shares of Series F Preferred Stock, in whole or in
part, at any time or from time to time upon such date or dates as may be fixed
by the Corporation for redemption (each an "Optional Redemption Date"), for an
aggregate redemption price in cash equal to the Liquidation Preference per share
plus an amount per share equal to the value on a day selected by the Board of
Directors of the Corporation that is within five days of the Optional Redemption
Date of all accrued and unpaid dividends, if any, to the applicable Optional
Redemption Date (the "Optional Redemption Price"), out of funds legally
available therefor, subject to the notice provisions and provisions for partial
redemption described below;
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provided, however, that in connection with any redemption effected pursuant to
this paragraph (a) of Section (5), the Corporation must redeem the shares of
Series A Preferred Stock, the shares of Series B Preferred Stock, the shares of
Series C Preferred Stock, the shares of Series D Preferred Stock, the Shares of
Series E Preferred Stock and the shares of Series F Preferred Stock then
eligible for redemption pro rata in proportion to their respective liquidation
preferences.
(b) Each share of Series F Preferred Stock (if not earlier redeemed or
converted) shall be subject to mandatory redemption in whole (to the extent of
lawfully available funds therefor) on June 1, 2010 (the "Mandatory Redemption
Date") at a redemption price in cash equal to the Liquidation Preference per
share plus the value on a day selected by the Board of Directors of the
Corporation that is within five days of the Mandatory Redemption Date of an
amount per share equal to all accrued and unpaid dividends thereon, if any, to
the Mandatory Redemption Date (the "Mandatory Redemption Price"). The
Corporation shall take all actions required or permitted by the Delaware General
Corporation Law to permit the redemption described in this paragraph (b) of
Section (5).
(c) In the event of a redemption pursuant to paragraph (a) or (b) of this
Section (5), the Corporation shall give notice of such redemption (a "Redemption
Notice") by first class mail, postage prepaid, mailed not less than 20 nor more
than 60 days prior to the Optional Redemption Date or the Mandatory Redemption
Date, as the case may be (each a "Redemption Date"), to each holder of record of
the shares of Series F Preferred Stock to be redeemed, at such holder's address
as the same appears on the stock records of the Corporation, which Redemption
Notice shall be unconditional and irrevocable. Each such Redemption Notice shall
state: (1) the Redemption Date; (2) the number of shares of each series to be
redeemed and, if less than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be
(each a "Redemption Price"); (4) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price; (5) the then
current Conversion Price; and (6) that no default of the Corporation is then
existing under any material loan document, indenture or other borrowing, which
default has a material adverse effect on the Corporation. The Redemption Notice
having been mailed as aforesaid, from and after the applicable Redemption Date
(unless default shall be made by the Corporation in providing money for the
prompt payment of the applicable Redemption Price), (i) the shares of the Series
F Preferred Stock so called for redemption and not converted prior to 5:00 p.m.
New York time on the Redemption Date shall no longer be deemed to be
outstanding, and (ii) all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the Redemption
Price without interest thereon after the Redemption Date) shall cease. If the
Corporation fails to provide money for the payment of the Redemption Price
within 30 days after the Redemption Date, the Redemption Price shall accrue
interest at the rate of 15% per annum until paid.
Upon surrender in accordance with a Redemption Notice of the certificates
for the shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the Redemption Notice shall so state), such
shares shall be redeemed by the Corporation at the applicable Redemption Price.
If fewer than all the outstanding shares of Series F Preferred Stock are to be
redeemed, the shares of Series F Preferred Stock to be redeemed shall be
selected pro rata (as nearly as may be possible) by the Corporation from
outstanding shares of Series F Preferred Stock held by each holder thereof and
not previously called for redemption. If fewer than all the shares represented
by any certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
Section(6) Shares to be Retired. All shares of Series F Preferred Stock
purchased or redeemed by the Corporation or converted shall be retired and
canceled and shall be restored to the status of authorized but unissued shares
of preferred stock, without designation as to series.
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Section(7) Conversion. Holders of shares of Series F 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 F Preferred Stock shall have the right,
at his, her or its option, at any time on or after the Initial
Convertibility Date, 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 5:00 p.m. New York time on the Redemption Date for such
redemption, unless the Corporation shall default in making prompt payment
of the amount payable upon such redemption. Any share of Series F Preferred
Stock may be converted, at the request of its holder, in part into Common
Stock. If a part of a share of Series F 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 F Preferred Stock evidencing the remaining interest of such
holder. The Corporation shall issue, pay and deliver all accrued and unpaid
dividends with respect to the shares of Series F Preferred Stock so
converted in accordance with paragraph (b) of this Section (7).
(b) In order to exercise the conversion right, the holder of each
share of Series F Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent or, if no
Transfer Agent has been appointed by the Corporation, at the principal
office of the Corporation, accompanied by written notice to the Corporation
that the holder thereof elects to convert its shares of Series F Preferred
Stock or a specified portion thereof. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
share of Series F Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of shares of Series F Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares (except that holders of shares called for redemption
on a Redemption Date between such record date and the Dividend Payment Date
shall not be entitled to receive such dividend on such Dividend Payment
Date) on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to
such Dividend Payment Date.
As promptly as practicable after the surrender of certificates for
shares of Series F Preferred Stock as aforesaid, the Corporation shall
issue, pay and deliver at such office to such holder, or on his, her or its
written order, (i) a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section (7), (ii) if less than the
full number of shares of Series F Preferred Stock evidenced by the
surrendered certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificates less the number of shares being converted, (iii)
all accrued and unpaid dividends with respect to the shares of Series F
Preferred Stock so converted and (iv) any fractional interest in respect of
a share of Common Stock arising upon such conversion shall be settled as
provided in paragraph (c) of this Section (7).
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series F Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby at such
time on
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such date and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the Corporation
shall be closed on that date, in which event such person or persons shall
be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date upon which such shares shall have been surrendered and such notice
received by the Corporation. All shares of Common Stock delivered upon
conversion of the Series F Preferred Stock shall upon delivery be duly and
validly issued and fully paid and nonassessable.
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series F Preferred
Stock. Instead of any fractional interest in a share of Common Stock which
would otherwise be deliverable upon the conversion of a share of Series F
Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash (computed to the nearest cent) equal to such fraction of a
share multiplied by the Current Market Price of one share of Common Stock
on the Trading Day immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series F Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) In case the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Stock in shares of its
Common Stock without making a corresponding dividend or distribution
with respect to its Series F Preferred Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares, (C) combine
its outstanding Common Stock into a smaller number of shares or (D)
issue any shares of capital stock by reclassification of its Common
Stock, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any share of Series F Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or capital stock of the Corporation
which such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such share
of Series F Preferred Stock been converted immediately prior to the
happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the close of business on the record
date in the case of a dividend or distribution (except as provided in
paragraph (h) below) and shall become effective immediately after the
close of business on the record date in the case of a subdivision,
combination or reclassification.
(ii) In case the Corporation shall issue after the Issue Date (a)
options, warrants or other rights to all holders of Common Stock
entitling them (for a period expiring within 180 days after the record
date mentioned below) to subscribe for or purchase Common Stock at a
price per share less than the lower of the Initial Market Price or the
Conversion Price (the "Minimum Price") at the record date for the
determination of stockholders entitled to receive such options, warrants
or other rights or (b) shares of Common Stock (excluding shares of
Common Stock issued or issuable as dividends with respect to the Series
F Preferred Stock pursuant to paragraph (a) of Section (3) hereof and
Common Stock issued or issuable as dividends with respect to the Series
E Preferred Stock pursuant to paragraph (a) of Section (3) of the Series
E Certificate of Designations) or securities exercisable for (including
options, warrants or other rights other than those referred to in clause
(a) above and subparagraph (iii) below) or exchangeable or convertible
into shares of Common Stock) at a price per share (or having an
exercise, exchange or conversion price per share) less than the then
current Minimum Price (other than securities issued in a transaction in
which a pro rata share of such securities have been reserved by the
Corporation for distribution to the holders of Series F Preferred Stock
upon conversion), then in each such case the Conversion Price in effect
immediately prior thereto shall be adjusted to equal the price
determined by multiplying (I) the Conversion Price in effect immediately
prior to the date of issuance of such options, warrants, other rights or
shares of Common Stock (or securities exercisable for or exchangeable or
convertible into shares of Common Stock) by (II) a fraction, the
numerator of which shall be the sum of (A) the
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number of shares of Common Stock outstanding on the date of issuance of
such options, warrants or other rights or shares of Common Stock (or
securities exercisable for or exchangeable or convertible into shares of
Common Stock) (without giving effect to any such issuance) and (B), in
the case of (a) above, the number of shares which the aggregate proceeds
from the exercise of such options, warrants or other rights for Common
Stock or, in the case of (b) above, the number of shares which the
aggregate consideration receivable by the Corporation for the total
number of shares of Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Common Stock) so issued would
purchase at the Minimum Price in effect immediately prior to the date of
issuance, and the denominator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of issuance of
such options, warrants or other rights or shares of Common Stock (or
securities exercisable for or exchangeable or convertible into Common
Stock) (without giving effect to any such issuance) and (B), in the case
of clause (a) above, the number of additional shares of Common Stock
offered for subscription or purchase or, in the case of clause (b)
above, the number of shares of Common Stock so issued or into which the
exercisable, exchangeable or convertible securities may be exercised,
exchanged or converted. Such adjustment shall be made successively
whenever any such options, warrants or other rights or shares of Common
Stock (or securities exercisable for or exchangeable or convertible into
Common Stock) are issued, and shall become effective immediately after
such record date or, in the case of the issuance of Common Stock, after
the date of issuance thereof (or in the case of securities exercisable
for or exchangeable or convertible into shares of Common Stock, the date
on which holders may first exercise, exchange or convert the same in
accordance with the respective terms thereof). In determining whether
any options, warrants or other rights entitle the holders of Common
Stock to subscribe for or purchase shares of Common Stock at less than
the Minimum Price in effect immediately prior to the date of such
issuance, and in determining the aggregate offering price of shares of
Common Stock (or securities exercisable for or exchangeable or
convertible into shares of Common Stock), there shall be taken into
account any net consideration received or receivable by the Corporation
upon issuance and upon exercise of such options, warrants or other
rights or upon issuance of shares of Common Stock (or securities
exercisable for or exchangeable or convertible into shares of Common
Stock), the value of such consideration, if other than cash, to be
determined by the Board of Directors in good faith or, if higher, the
aggregate exercise, exchange or conversion price set forth in such
exercisable, exchangeable or convertible securities. The aggregate
consideration received by the Corporation in connection with the
issuance of shares of Common Stock or of options, warrants or other
rights or securities exercisable for or exchangeable or convertible into
shares of Common Stock shall be deemed to be equal to the sum of the
aggregate net offering price of all such securities plus the minimum
aggregate amount, if any, payable upon the exercise of such options,
warrants or other rights and conversion of any such exercisable,
exchangeable or convertible securities into shares of Common Stock.
(iii) In case the Corporation shall distribute to all holders of
its Common Stock as a class any shares of capital stock of the
Corporation (other than Common Stock) or evidences of its indebtedness
or assets (other than a regular cash dividend that the Board of
Directors determines, in good faith, can be maintained by the
Corporation for at least four consecutive periods covering not less than
one year and that the Board of Directors intends to maintain for at
least four consecutive periods covering not less than one year, out of
profits or surplus) or options, warrants or other rights to subscribe
for or purchase any of its securities (excluding those referred to in
subparagraph (ii)(a) above) (any of the foregoing being hereinafter in
this subparagraph (iii) called the "Securities"), then in each such
case, unless the Corporation elects to reserve shares or other units of
such Securities for distribution to the holders of the Series F
Preferred Stock upon the conversion of the shares of Series F Preferred
Stock so that any such holder converting shares of Series F Preferred
Stock will receive upon such conversion, in addition to the shares of
the Common Stock to which such holder is entitled, the amount and kind
of such Securities which such holder would have received if such holder
had, immediately prior to the record date for the distribution of the
Securities, converted his or her shares of Series F Preferred Stock into
Common Stock (such
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election to be based upon a determination by the Board of Directors that
such reservation will not materially adversely affect the interests of
any holder of Series F Preferred Stock in any such reserved Securities),
the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying (I) the Conversion Price in effect
immediately prior to the date of such distribution by (II) a fraction,
the numerator of which shall be the Current Market Price per share of
the Common Stock on the record date mentioned below less the fair market
value (as determined by the Board of Directors, whose determination
shall, if made in good faith, be conclusive) of the portion of the
capital stock or assets or evidences of indebtedness so distributed or
of such rights or warrants applicable to one share of Common Stock, and
the denominator of which shall be the Current Market Price per share of
the Common Stock. Such adjustment shall become effective immediately,
except as provided in paragraph (h) below, after the record date for the
determination of stockholders entitled to receive such distribution.
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this subparagraph (iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and
provided further that any adjustment shall be required and made in
accordance with the provisions of this Section (7) (other than this
subparagraph (iv)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of
shares of Common Stock. All calculations under this Section (7) shall be
made to the nearest cent (with $.005 being rounded upward) or to the
nearest 1/100 of a share (with .005 of a share being rounded upward), as
the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of options, warrants or
other rights to purchase stock or securities, or a distribution of other
assets (other than cash dividends) hereafter made by the Corporation to
its stockholders shall not be taxable.
(v) No adjustment in the Conversion Price shall be required in the
event of any dividend, distribution or issuance to holders of shares of
Common Stock pursuant to subparagraph (i), (ii) or (iii) above if
holders of shares of Series F Preferred Stock have received the same
dividend, distribution or issuance in accordance with Section (3)
hereof.
(e) In case the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of the
Common Stock and excluding any transaction as to which paragraph (d)(i) of
this Section (7) applies) (each of the foregoing being referred to as a
"Transaction"), in each case as a result of which shares of Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), each share of Series
F Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares or
fraction thereof of Common Stock into which one share of Series F Preferred
Stock was convertible immediately prior to such Transaction. The
Corporation shall use reasonable efforts to deliver notice of any
Transaction to the holders of Series F Preferred Stock at least 20 days
prior to the earlier of the consummation or the record date therefor;
provided however, that any unintentional failure by the Corporation to
deliver such required notice shall not impair or affect the validity or
provisions of any such Transaction; and provided, further, that any failure
by the Corporation to deliver such required notice shall toll the time
period in which the holders of Series F Preferred Stock may convert their
shares as aforementioned until such notice is delivered by the Corporation.
The Corporation shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this paragraph (e)
and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of
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the holders of the Series F Preferred Stock which will contain provisions
enabling the holders of the Series F Preferred Stock which remains
outstanding after such Transaction to convert into the consideration
received by holders of Common Stock at the Conversion Price immediately
after such Transaction. The provisions of this paragraph (e) shall
similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than a regular cash dividend
that the Board of Directors determines can be maintained by the
Corporation for at least four consecutive periods covering at least one
year and that the Board of Directors intends to maintain for at least
four consecutive periods covering at least one year out of profits or
surplus); or
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any options, warrants or other rights; or
(iii) there shall be any reclassification of the Common Stock
(other than an event to which paragraph (d)(i) of this Section (7)
applies) or any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the Corporation is
required, or the sale or transfer of all or substantially all of the
assets of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and
shall cause to be mailed to the holders of shares of the Series F Preferred
Stock at their addresses as shown on the stock records of the Corporation,
as promptly as possible, but at least 15 days prior to the applicable date
specified in clauses (A) and (B) below, a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation, merger, sale or
transfer is expected, that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale or transfer. Failure to give such notice or any defect therein shall
not affect the legality or validity of the proceedings described in this
Section (7).
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price, the calculation of such
adjusted Conversion Price and the date on which such adjustment becomes
effective and shall promptly mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series F Preferred Stock at
his, her or its last address as shown on the stock records of the
Corporation.
(h) In any case in which paragraph (d) of this Section (7) provides
that an adjustment shall become effective immediately after a record date
for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the holder of any share of Series F Preferred Stock
converted after such record date and before the occurrence of such event
the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any fraction
pursuant to paragraph (c) of this Section (7).
(i) For purposes of this Section (7), the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Corporation.
(j) If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one paragraph of this Section (7),
only one adjustment shall be made and such adjustment shall be the amount
of adjustment which has the highest absolute value.
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(k) In case the Corporation shall take any action affecting the Common
Stock other than action described in this Section (7), which in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of the shares of Series F Preferred Stock, the
Conversion Price for the Series F Preferred Stock may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances.
(l) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversion of the Series F Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
Series F Preferred Stock not theretofore converted. For purposes of this
paragraph (1), the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Series F
Preferred Stock shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
(m) Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value of the shares of Common Stock
deliverable upon conversion of the Series F Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(n) The Corporation shall use all reasonable efforts to list the
shares of Common Stock required to be delivered upon conversion of the
Series F Preferred Stock and all shares of Common Stock issued as dividends
with respect to the Shares, prior to such issuance and delivery, on the
Nasdaq Stock Market or such other exchange or interdealer quotation system
on which the Common Stock is principally traded or authorized to be quoted.
(o) Prior to the delivery of any securities which the Corporation
shall be obligated to deliver upon conversion of the Series F Preferred
Stock or upon the payment of dividends with respect to the Shares, the
Corporation shall use all reasonable efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by,
any governmental authority, and any such conversion or delivery shall be
subject to any applicable requirements of law or regulation.
(p) The Corporation shall pay any and all documentary stamp or similar
issue or transfer taxes or fees payable in respect of the issue or delivery
of shares of Common Stock on conversion of the Series F Preferred Stock or
upon the payment of dividends with respect to the Shares pursuant hereto
imposed by any Governmental Authority (including, without limitation, any
fee in respect of an HSR Act filing); provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the holder of the Series F
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to
the Corporation the amount of any such tax or has established, to the
reasonable satisfaction of the Corporation, that such tax has been paid.
Section (8) Ranking. Any class or series of stock of the Corporation
shall be deemed to rank:
(i) prior to the Series F Preferred Stock, as to dividends or as to
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series F Preferred
Stock;
(ii) on a parity with the Series F Preferred Stock, (A) as to
dividends, if such stock is Series E Preferred Stock or if the holders of
such class of stock and the Series F Preferred Stock shall be entitled to
the receipt of dividends in proportion to their respective amounts of
declared and unpaid dividends per share, without preference or priority one
over the other, or (B) as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the redemption or liquidation
prices per share
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thereof be different from those of the Series F Preferred Stock, if such
stock shall be Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock or if
the holders of such class of stock and the Series F Preferred Stock shall
be entitled to the receipt of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of
liquidation prices, without preference or priority one over the other; and
(iii) junior to the Series F Preferred Stock, (A) as to dividends
payable pursuant to paragraph (a) of Section (3) hereof, if such stock is
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Common Stock, or as to all dividends, if
holders of Series F Preferred Stock shall be entitled to the receipt of all
dividends in preference or priority to the holders of shares of such stock,
or (B) as to distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holders of Series
F Preferred Stock shall be entitled to receipt of amounts distributable
upon liquidation, dissolution or winding up in preference or priority to
the holders of shares of such stock.
Section (9) Voting.
(a) Except as herein provided or as otherwise from time to time required by
law, holders of Series F Preferred Stock shall have no voting rights.
(b) So long as any shares of the Series F Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds of the shares of
Series F Preferred Stock outstanding at the time given in person or by proxy,
either in writing or at any special or annual meeting, shall be necessary to
permit, effect or validate any one or more of the following:
(i) the authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior
to (or convertible, exercisable or exchangeable into any class or series of
stock ranking prior to) Series F Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up;
(ii) the increase in the authorized or issued amount of Series F
Preferred Stock; or
(iii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Certificate of
Incorporation of the Corporation (including any of the provisions hereof)
which would affect any right, preference or voting power of Series F
Preferred Stock or of the holders thereof, provided, however, that any
increase in the amount of authorized preferred stock or the creation and
issuance of other series of preferred stock, or any increase in the amount
of authorized shares of such series or of any other series of preferred
stock, in each case ranking on a parity with or junior to the Series F
Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up, shall
not be deemed to affect such rights, preferences or voting powers.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series F Preferred Stock shall have been
redeemed or sufficient funds shall have been deposited in trust to effect such
redemption, scheduled to be consummated within 30 days after such time.
Section (10) Record Holders. The Corporation and the Transfer Agent may
deem and treat the record holder of any shares of Series F Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to the contrary.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be made
under the seal of the Corporation and signed by [ ], its [ ], and attested by [
] its [ ], this [ ] day of [ ], 1998.
POWERTEL, INC.
By
--------------------------------------
(Corporate Seal)
Attest:
By
-------------------------------------------------------
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ANNEX II
REGISTRATION RIGHTS
(a) The Purchaser or any party to whom the rights granted pursuant to this
Annex II are transferred pursuant to paragraph (i) of this Annex II shall have
the right at any time following the second anniversary of the Closing to make an
aggregate of three requests of the Seller in writing for registration under the
Securities Act of shares of Common Stock into which Shares have been converted
or are to be converted prior to the closing of the offering pursuant to such
registration and/or shares of Common Stock that have been issued with respect to
the Shares (the "Securities"). Any party who loans the Purchase Price (the
"Loan") to the Purchaser in connection with the purchase of the Shares (the
"Lender"), and any transferee of the rights of the Lender set forth in this
Annex II pursuant to paragraph (i) of this Annex II (a "Lender Transferee"),
shall have the right beginning as of the Closing Date to make in writing that
number of registration requests of Seller determined by subtracting the number
of registration requests that have previously been made pursuant to this Section
(a) from three, for registration under the Securities Act with respect to shares
of Common Stock pledged by the Purchaser as of the Closing Date (the "Pledged
Common Stock") to the Lender as security for the Loan, to the extent that (x)
the Lender or a Lender Transferee acquires the Pledged Common Stock pursuant to
the exercise of remedies in connection with the Loan, or is otherwise entitled
to and desires to sell such Pledged Common Stock pursuant to the exercise of
such remedies, and (y) at the time the Pledged Common Stock is acquired or is
entitled and desired to be sold by the Lender or a Lender Transferee pursuant to
the exercise of such remedies, such Pledged Common Stock may not be resold
without restriction pursuant to the Securities Act (including pursuant to Rule
144(k) thereunder), and in such case, the term "Securities" as used in this
Annex II shall be deemed to include the Pledged Common Stock. With respect to
the first such request to register under the Securities Act, at least $20
million in market value of Securities Beneficially Owned by the Purchaser shall
be registered (the shares subject to such request and any other request
hereunder being referred to as the "Subject Stock"), and each subsequent such
request must be at least 6 months following the completion of the prior offering
pursuant to a registration statement with respect to the Subject Stock which was
effective until the earlier of the completion of such offering or three months;
provided, however, that the Purchaser shall not be entitled to exercise, and the
Seller shall be obligated not to recognize the exercise of, the third of such
requests unless and until (i) the Purchaser has repaid all loans of funds used
by the Purchaser to acquire the Shares and provides written evidence to the
Seller from the Purchaser's lender(s) of such repayment or (ii) the Purchaser
provides written evidence to the Seller of the consent of the Purchaser's
lender(s) to the exercise of the Purchaser's third registration request. The
Seller shall use all reasonable efforts to cause the Subject Stock to be
registered under the Securities Act as soon as reasonably practicable after
receipt of a request so as to permit promptly the sale thereof, and in
connection therewith, the Seller shall prepare and file, on such appropriate
form as the Seller in its discretion shall determine, a registration statement
under the Securities Act to effect such registration. The Seller shall use all
reasonable efforts to list all Subject Stock covered by such registration
statement on any national securities exchange on which the Common Stock is then
listed or to list such Subject Stock on the National Association of Securities
Dealers, Inc. Automated Quotation System or National Market System. The
Purchaser hereby undertakes to provide all such information and materials and
take all such action as may be required in order to permit the Seller to comply
with all applicable requirements of the Commission and to obtain any desired
acceleration of the effective date of such registration statement. Any
registration statement filed at the Purchaser's request hereunder will not count
as a requested registration unless effectiveness is maintained until the earlier
of completion of the offering or three months. Notwithstanding the foregoing,
the Seller (i) shall not be obligated to cause any special audit to be
undertaken in connection with any such registration (provided that this
provision shall not relieve the Seller of its obligation to obtain any required
consents with respect to financial statements in prior periods) and (ii) shall
be entitled to postpone for a reasonable period (not to exceed 90 days) of time
the filing of any registration statement otherwise required to be prepared and
filed by the Seller if the Seller is, at such time, either (A) conducting, or
proposing to file with the Commission within 90 days a registration statement
with respect to, an underwritten public offering for the account of the Seller
of equity securities (or securities convertible into equity securities) or is
subject to a contractual obligation not to engage in a public offering and is
advised in writing by its managing underwriter or underwriters (with a copy to
the Purchaser) that such offering would in its or their opinion be adversely
affected by the registration so
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requested or (B) subject to an existing contractual obligation to its
underwriters not to engage in a public offering. Notwithstanding any other
provision of this Annex II, the Seller may postpone action under this Annex II
for as long as it reasonably deems necessary (but no longer than 90 days) if the
Seller determines, in its reasonable discretion, that effecting the registration
at such time might (i) adversely affect a pending or contemplated financing,
acquisition, disposition of assets or stock, merger or other significant
transaction, or (ii) require the Seller to make public disclosure of information
the public disclosure of which at such time the Seller in good faith believes
could have a significant adverse effect upon the Seller.
No securities may be registered on a registration statement requested by
the Purchaser pursuant to the first paragraph of paragraph (a) of this Annex II
without the Purchaser's express written consent, unless the amount of such
securities is subject to reduction prior to any reduction in the number of
securities originally requested by the Purchaser in the event the lead
underwriter of the related offering believes that the success of such offering
would be materially and adversely affected by inclusion of all the securities
requested to be included therein.
At any time after the Closing, if the Seller proposes to file a
registration statement under the Securities Act with respect to an offering of
its equity securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 or any substitute form that may be adopted by the
Commission) or (ii) for the account of any holders of its securities (including
pursuant to a demand registration), then the Seller shall give written notice of
such proposed filing to the Purchaser as soon as practicable (but in any event
not less than 5 Business Days before the anticipated filing date), and such
notice shall offer the Purchaser the opportunity to register such number of
shares of Securities as the Purchaser requests. If the Purchaser wishes to
register securities of the same class or series as the Seller or such holder,
such registration shall be on the same terms and conditions as the registration
of the Seller's or such holders' securities (a "Piggyback Registration").
Notwithstanding anything contained herein, if the lead underwriter of an
offering involving a Piggyback Registration delivers a written opinion to the
Seller that the success of such offering would be materially and adversely
affected by inclusion of all the securities requested to be included, then the
number of securities to be registered by the Purchaser shall be reduced prior to
any reduction in the number of securities to be registered pursuant to clauses
(i) and (ii) of the first sentence of this paragraph; provided, however, that
the Seller must provide prompt written notice of such written opinion to the
Purchaser. The Purchaser shall have the right at any time to convert its request
for a Piggyback Registration into a requested registration pursuant to the first
paragraph of paragraph (a) of this Annex II.
(b) In connection with any offering of shares of Subject Stock registered
pursuant to this Annex II, the Seller (i) shall furnish to the Purchaser such
number of copies of any prospectus (including any preliminary prospectus) as it
may reasonably request in order to effect the offering and sale of the Subject
Stock to be offered and sold, but only while the Seller shall be required under
the provisions hereof to cause the registration statement to remain current and
(ii) take such action as shall be necessary to qualify the shares covered by
such registration statement under such "blue sky" or other state securities laws
for offer and sale as the Purchaser shall reasonably request; provided, however,
that the Seller shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it shall not then be
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed. If
applicable, the Seller and the Purchaser shall enter into an underwriting
agreement with a managing underwriter or underwriters selected by the Purchaser
(reasonably satisfactory to the Seller) containing representations, warranties,
indemnities and agreements then customarily included by an issuer in
underwriting agreements with respect to secondary distributions; provided,
however, that such underwriter or underwriters shall agree to use their best
efforts to ensure that the offering results in a distribution of the Subject
Stock sold in accordance with the terms of this Agreement. In connection with
any offering of Subject Stock registered pursuant to this Annex II, the Seller
shall (x) furnish to the underwriter, at the Seller's expense, unlegended
certificates representing ownership of the Subject Stock being sold in such
denominations as reasonably requested and (y) instruct any transfer agent and
registrar of the Subject Stock to release any stop transfer orders with respect
to such Subject Stock. If Purchaser enters into an underwriting agreement with
respect to the Subject Stock, Purchaser's representations, warranties and
indemnities contained therein shall be made severally rather than jointly with
the Company or any other selling
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stockholder and shall be limited to (i) Purchaser's ownership of the Subject
Stock, (ii) Purchaser's authority to enter into the underwriting agreement and
related matters, (iii) any information provided by Purchaser for inclusion in
the registration statement, and (iv) such other matters as are at the time of
such underwriting customarily included in underwriting agreements with the
Managing Underwriter relating to sales of common stock by a selling stockholder
where the failure by the Purchaser to make such representations, warranties or
indemnities causes the Managing Underwriter to refuse to conduct or complete the
offering. In the event an offering of Subject Stock fails to close due to the
Purchaser's unwillingness, inability or other failure to comply with clause (iv)
of the immediately preceding sentence, then Purchaser agrees that the Seller
shall be deemed to have satisfied all of its obligations to conduct the related
offering of such Subject Stock, shall be excused from any failure of any
obligation of Seller with respect thereto and shall not be liable for the
failure of such offering of such Subject Stock to close. Upon any registration
becoming effective pursuant to this Annex II, the Seller shall use all
reasonable efforts to keep such registration statement current for such period
as shall be required for the disposition of all of said Subject Stock; provided,
however, that such period need not exceed three months.
(c) The Purchaser shall pay all underwriting discounts and commissions
related to shares of Subject Stock being sold by the Purchaser and the fees and
disbursements of counsel and other advisors to the Purchaser. All other fees and
expenses in connection with the first requested registration pursuant to the
first paragraph of paragraph (a) of this Annex II, including, without
limitation, all registration and filing fees, all fees and expenses of complying
with securities or "blue sky" laws, fees and disbursements of the Seller's
counsel and accountants (including the expenses of "cold comfort" letters
required by or incident to such performance and compliance) and any fees and
disbursements of underwriters customarily paid by issuers in secondary
offerings, shall be paid by the Seller, and all such other fees and expenses in
connection with the second and third requested registrations pursuant to this
Annex II shall be borne equally by the Purchaser and the Seller; provided,
however, that in the event the Purchaser fails to convert Shares into Common
Stock prior to any such offering, such that such offering is not able to be
completed, the Purchaser shall pay all such other fees and expenses.
(d) In the case of any offering registered pursuant to this Annex II, the
Seller agrees to indemnify and hold the Purchaser, each underwriter of
Securities under such registration and each person who controls any of the
foregoing within the meaning of Section 15 of the Securities Act and the
directors and officers of the Purchaser, harmless against any and all losses,
claims, damages, liabilities or action to which they or any of them may become
subject under the Securities Act or any other statute or common law or
otherwise, and to reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or actions
shall arise out of or shall be based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement
relating to the sale of such Subject Stock, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus (as amended or
supplemented if the Seller shall have filed with the Commission any amendment
thereof or supplement thereto), if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented if the Seller shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the indemnification agreement contained in this paragraph (d)
shall not apply to such losses, claims, damages, liabilities or actions which
shall arise from the sale of Subject Stock by the Purchaser if such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, (x) made in reliance upon and in conformity with
information furnished in writing to the Seller by the Purchaser or any such
underwriter specifically for use in connection with the preparation of the
registration statement or any preliminary prospectus or prospectus contained in
the registration statement or any such amendment thereof or supplement thereto
or (y) made in any preliminary prospectus, and the prospectus contained in the
registration statement in the form filed by the Seller with the Commission
pursuant to Rule 424(b) under the
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Securities Act shall have corrected such statement or omission and a copy of
such prospectus shall not have been sent or given to such person at or prior to
the confirmation of such sale to him.
(e) In the case of each offering registered pursuant to this Annex II, the
Purchaser and each underwriter participating therein shall agree, in the same
manner and to the same extent as set forth in paragraph (d) of this Annex II,
severally to indemnify and hold harmless the Seller and each person, if any, who
controls the Seller within the meaning of Section 15 of the Securities Act, and
the directors and officers of the Seller, and in the case of each such
underwriter, the Purchaser, each person, if any, who controls the Purchaser
within the meaning of the Securities Act and the directors, officers and
partners of the Purchaser, with respect to any statement in or omission from
such registration statement or any preliminary prospectus (as amended or as
supplemented, if amended or supplemented as aforesaid) or prospectus contained
in such registration statement (as amended or as supplemented, if amended or
supplemented as aforesaid), if such statement or omission shall have been made
in reliance upon and in conformity with information furnished in writing to the
Seller by the Purchaser or such underwriter specifically for use in connection
with the preparation of such registration statement or any preliminary
prospectus or prospectus contained in such registration statement or any such
amendment thereof or supplement thereto.
(f) Each party indemnified under paragraph (d) or (e) of this Annex II
shall, promptly after receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The omission of any indemnified party to so notify an indemnifying party of any
such action shall not relieve the indemnifying party from any liability in
respect of such action which it may have to such indemnified party on account of
the indemnity agreement contained in paragraph (d) or (e) of this Annex II,
unless the indemnifying party was prejudiced by such omission, and in no event
shall relieve the indemnifying party from any other liability which it may have
to such indemnified party. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may desire, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under paragraph (d) or (e) of this Annex II for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation; provided,
however, that if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the judgment of the indemnified
party, in its sole and absolute discretion, for the same counsel to represent
both the indemnified party and the indemnifying party, then the indemnified
party shall be entitled to retain its own counsel, in each jurisdiction for
which the indemnified party determines counsel is required, at the expense of
the indemnifying party. No such third party claim may be settled by the
indemnifying party or the indemnified party without the prior written consent of
the other, which consent shall not be unreasonably withheld.
(g) If the indemnification provided for under paragraph (d) or (e) shall
for any reason be held by a court to be unavailable to an indemnified party
under paragraph (d) or (e) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under paragraph (d) or (e) hereof, the indemnified party and the
indemnifying party under paragraph (d) or (e) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Seller
and the prospective seller of Securities covered by the registration statement
which resulted in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as shall
be appropriate to reflect the relative benefits received by the Seller and such
prospective seller from the offering of the securities covered by such
registration statement. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. In addition, no Person shall be obligated to contribute
hereunder any
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amounts in payment for any settlement of any action or claim effected without
such Person's consent, which consent shall not be unreasonably withheld.
(h) Notwithstanding anything to the contrary contained in this Agreement,
the maximum amount of indemnifiable losses which may be recovered from an
indemnifying party arising out of or resulting from the causes enumerated in
paragraph (d) or (e) shall be an amount equal to the Purchase Price.
(i) All, but not less than all, of the rights and obligations granted under
this Annex II to cause the Seller to register Securities may be assigned,
transferred or otherwise conveyed, in whole but not in part, by the Purchaser to
(i) any Affiliate of the Purchaser, or (ii) to any transferee other than an
Affiliate of the Purchaser who acquires at least 500,000 shares of Securities,
provided that in either circumstance the Purchaser gives the Seller written
notice (at the time of, or within a reasonable time after, such transfer)
stating the name and address of such Affiliate or other transferee, and such
Affiliate or other transferee provides its agreement, in a form reasonably
satisfactory to the Seller, to be bound by the provisions of this Annex II. The
rights and corresponding obligations granted under this Annex II also may be
assigned, transferred or otherwise conveyed, in whole or in part, from time to
time: (i) by the Purchaser to the Lender or a party that is serving as
collateral agent or that has otherwise been appointed an agent in connection
with the Loan (the "Agent"); (ii) by the Lender to the Agent or to a single
transferee (or to a single party acting as agent for multiple transferees) of
all or a portion of the Loan; or (iii) by the Lender, the Agent or a transferee
of the Lender pursuant to clause (ii) above to the Purchaser with respect to any
Securities that are released from a lien imposed in connection with the Loan.
(j) Capitalized terms not defined in this Annex II shall have the meanings
set forth in the Agreement.
(k) Any successor to Seller (whether by merger, consolidation, sale of
assets, assignment or otherwise) shall expressly assume in writing the Seller's
obligations hereunder.
(l) Notwithstanding the foregoing, to the extent that the provisions of
indemnification and contribution contained in an underwriting agreement entered
into in connection with any underwritten public offering are in conflict with
the foregoing provisions, the provisions set forth in the underwriting agreement
shall control.
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APPENDIX C
POWERTEL, INC.
AMENDED AND RESTATED 1991 STOCK OPTION PLAN
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
1. PURPOSE............................................................ C-3
2. ADMINISTRATION..................................................... C-3
2.1. Board....................................................... C-3
2.2. Committee................................................... C-3
2.3. No Liability................................................ C-3
3. STOCK.............................................................. C-3
4. ELIGIBILITY........................................................ C-4
5. EFFECTIVE DATE AND TERM OF THE PLAN................................ C-4
5.1. Effective Date.............................................. C-4
5.2. Term........................................................ C-4
6. GRANT OF OPTIONS................................................... C-4
7. LIMITATION ON INCENTIVE STOCK OPTIONS.............................. C-4
8. OPTION AGREEMENTS.................................................. C-4
9. OPTION PRICE....................................................... C-5
10. TERM AND EXERCISE OF OPTIONS....................................... C-5
10.1. Term........................................................ C-5
10.2. Option Period and Limitations on Exercise................... C-5
10.3. Method of Exercise.......................................... C-6
11. TRANSFERABILITY OF OPTIONS......................................... C-6
12. TERMINATION OF EMPLOYMENT.......................................... C-6
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY......................... C-7
13.1. Death....................................................... C-7
13.2. Disability.................................................. C-7
14. USE OF PROCEEDS.................................................... C-7
15. SECURITIES ACT OF 1933............................................. C-7
16. SECURITIES EXCHANGE ACT OF 1934: RULE 16C-3........................ C-8
16.1. General..................................................... C-8
16.2. Stock Option Committee...................................... C-8
16.3. Action by the Board......................................... C-8
16.4. Additional Restriction on Transfer of Stock................. C-8
16.5. Additional Requirement of Stockholders' Approval............ C-8
17. AMENDMENT AND TERMINATION OF THE PLAN.............................. C-9
18. EFFECT OF CHANGES IN CAPITALIZATION................................ C-9
18.1. Changes in Stock............................................ C-9
18.2. Reorganization With Corporation Surviving................... C-9
18.3. Other Reorganizations; Sale of Assets/Stock................. C-9
18.4. Adjustments................................................. C-10
18.5. No Limitations on Corporation............................... C-10
19. DISCLAIMER OF RIGHTS............................................... C-10
20. NONEXCLUSIVITY OF THE PLAN......................................... C-10
</TABLE>
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POWERTEL, INC.
AMENDED AND RESTATED 1991 STOCK OPTION PLAN
Powertel, 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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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 5,000,000 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 shall
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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.
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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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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
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federal or state securities laws or regulations. Specifically in connection with
the Securities Act of 1933, as 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 16C-3
16.1. GENERAL
The Plan is intended to comply )with Rule 16C-3 ("Rule 16C-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 16C-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
16C-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 16C-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 16C-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
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written consent in accordance with applicable state law and the articles of
incorporation and by-laws of the 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 16C-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 16C-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
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of the combined voting power of all classes of stock of the Corporation, the
Plan and all Options outstanding hereunder shall terminate, except to the extent
provision is made in writing in connection with such transaction for the
continuation of the 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 exercise
prices, in 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.
C-10
<PAGE> 124
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OF
POWERTEL, INC.
TO BE HELD ON MAY 20, 1999
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 or either of them as true and lawful agents and proxies of
the undersigned with full power of substitution in each, to represent and vote,
as indicated below, all of the shares of common stock of Powertel, Inc.
("Powertel") that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of Powertel to be held on May 20, 1999 at The Cotton
Duck, 6101 20th Avenue, Valley, Alabama 36854 at 10:00 a.m. local time, and at
any adjournment thereof, upon the matters described in the accompanying Notice
of Annual Meeting of Stockholders and Proxy Statement for the Annual Meeting of
Stockholders, 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 for the Annual Meeting of Stockholders as
follows, and otherwise in their discretion upon such other business as may
properly come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4. 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
FOR PROPOSALS 1, 2, 3 AND 4.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
SEE REVERSE
SIDE
<PAGE> 125
[X]
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. PROPOSAL to ratify the issuance of the 2. PROPOSAL to approve the amendment to
Series E Preferred and the Series F the 1991 Stock Option Plan to increase
Preferred and approve all the shares of the number of shares of common stock
common stock issuable upon conversion reserved for issuance thereunder from
of, or as dividends on, the Preferred 3,000,000 shares to 5,000,000 shares.
Stock.
FOR WITHHELD FOR AGAINST ABSTAIN
3. ELECTION NOMINEES DONALD W. BURTON 4. PROPOSAL to ratify the appointment of
OF MAURICE P. O'CONNOR Arthur Andersen LLP as independent public
DIRECTORS: accountants of the Company for the
year ending December 31, 1999.
(INSTRUCTION: To withhold authority to vote for any individual 5. IN THEIR DISCRETION, to act upon such other
nominee(s), write that nominee's name(s) in the space provided below.) business as may properly come before the meeting
------------------------------------------------------------------ or any adjournment thereof.
</TABLE>
SIGNATURE(S)
- ------------------------------------------------- DATE --------------- , 1999
NOTE: Please sign exactly as name or names appear hereon. Where more than one
owner is shown on a stock certificate, each owner should sign. Persons
signing in a fiduciary or representative capacity must give full title. If
a corporation, please sign in full corporate name by authorized officer.
If a partnership, please sign in partnership name by authorized person.
