EXHIBIT 4.8
PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT
Satellink Communications, Inc.
This Preferred Stock and Warrant Purchase Agreement (this "Agreement") is made
between Satellink Communications, Inc., a Georgia corporation (the "Seller"),
and the undersigned prospective purchaser (the "Purchaser") who is purchasing
hereby shares of the Seller's Series D Redeemable Preferred Stock (referred to
herein at the "Series D Preferred Stock" or "Series D Shares"), together with
warrants (the "Warrants") to purchase shares of the Seller's Class A Common
Stock and/or Series B Preferred Stock. This Agreement is being entered into in
accordance with and subject to the terms and conditions described in this
Agreement.
In consideration of the premises and the mutual representations, warranties,
covenants and promises contained herein and other good and valuable
consideration, the parties hereto agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings indicated.
"Additional Securities" is defined in Section 2.08(b)(iv).
"Affiliate" of any Person (which shall include an individual, a
partnership, a limited liability company, a corporation, a trust, a joint
venture, an incorporated organization or a government or any department or
agency thereof) means any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such Person.
For purposes of this definition, a Person shall be deemed to control
another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting
power for the selection of directors of such Person or (ii) direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or
otherwise. In addition, as to Purchaser, "Affiliate" shall include any
partnership a majority of the partners of which are officers, directors,
employees or Affiliates of Purchaser, and as to the Seller, "Affiliate"
shall not include Purchaser or any Affiliate of Purchaser which is a holder
of any Securities of the Seller.
"Appraised Value" shall mean the value determined in accordance with the
following procedures. For a period of thirty (30) days after the date of a
Valuation Event (the "Negotiation Period"), each party to this Agreement
agrees to negotiate in good faith to reach agreement upon the Appraised
Value of the securities or property at issue, as of the date of the
Valuation Event, which will be the fair market value of such securities or
property, without premium for control or discount for minority interests,
illiquidity, or restrictions on transfer. In the event that the parties are
unable to agree upon the Appraised Value of such securities or other
property by the end of the Negotiation Period, then the Appraised Value of
such securities or property will be determined for purposes
of this Agreement by an Appraiser. An "Appraiser" shall be a
recognized appraisal or investment firm with experience in making
determinations of value of the type required to be made under this
definition. If the Holders and the Company cannot agree on an Appraiser
within thirty (30) days after the end of the Negotiation Period, the
Company, on the one hand, and the Holders, on the other hand, shall each
select an Appraiser within forty (40) days after the end of the Negotiation
Period and those two Appraisers shall select within fifty (50) days after
the end of the Negotiation Period an independent Appraiser to determine the
fair market value of such securities or property, without premium for
control or discount for minority interests. Such independent Appraiser
shall be directed to determine fair market value of such securities or
property as soon as practicable, but in no event later than thirty (30)
days from the date of its selection. The determination by an Appraiser of
the fair market value will be conclusive and binding on all parties to this
Agreement. Appraised Value of each share of Common Stock at a time when
(i) the Company is not a reporting company under the Exchange Act and (ii)
the Common Stock is not traded in the organized securities markets, will,
in all cases, be calculated by determining the Appraised Value of the
entire Company taken as a whole (plus the exercise price of all options,
warrants and other rights to acquire Capital Stock of the Company having an
exercise price per share less than the Fair Market Value of such Capital
Stock) and dividing that value by the sum of (x) the number of shares of
Common Stock then outstanding plus (y) the number of shares of Common Stock
Equivalents, without premium for control or discount for minority
interests, illiquidity, or restrictions on transfer. The costs of the
Appraiser or Appraisers will be borne by the Company. In no event will the
Appraised Value of the Common Stock or Other Securities be less than the
per share consideration received or receivable with respect to the Common
Stock or securities or property of the same class as the Other Securities,
as the case may be, in connection with a pending transaction involving a
sale, merger, recapitalization, reorganization, consolidation, share
exchange, dissolution of the Company, sale or transfer of all or a majority
of its assets or revenue or income generating capacity, or similar
transaction. The prevailing market prices for any security or property
will not be dispositive of the Appraised Value thereof.
"Articles" shall mean the Articles of Incorporation, as amended, of the
Seller.
"Book Value" shall mean with respect to shares of Common Stock an amount
equal to the quotient determined by dividing (a) the sum of (x) the total
consolidated assets of the Seller shown on the most recent regularly
prepared consolidated balance sheet of the Seller prior to the date of the
Valuation Event in question minus (y) the total consolidated liabilities of
the Company as shown on the most recent regularly prepared consolidated
balance sheet of the Company prior to the date of the Valuation Event by
(b) the aggregate number of shares of Common Stock and Common Stock
Equivalents as of the date of the Valuation Event.
"Capital Stock" shall mean as to any Person, its common stock and any other
capital stock of such Person authorized from time to time, and any other
shares, options, interests, participations, or other equivalents (however
designated) of or in such Person, whether voting or nonvoting, including,
without limitation, common stock, options, warrants, preferred stock
(including the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, and Series D Preferred Stock), phantom stock, stock
appreciation rights, convertible notes or debentures, stock purchase
rights, and all
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agreements, instruments, documents, and securities convertible,
exercisable, or exchangeable, in whole or in part, into any one or more of
the foregoing.
"Closing" means the date, time and place of the purchase and sale of the
Series D Shares and the issuance of Warrant No. ___.
"Closing Date" shall mean April 3, 1998.
"Common Stock" shall mean the Class A Common Stock, $.01 par value, of the
Seller.
"Common Stock Equivalent" shall mean any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common
Stock.
"Commission" shall mean the Securities and Exchange Commission and any
successor federal agency having similar powers.
"Equity" of the Seller means the total shareholders' equity of the Seller,
determined in accordance with generally accepted accounting principles. The
amount of Equity of the Seller represented by any Series D Shares shall be
determined by subtracting from total Equity of the Seller the aggregate
amount distributable as a preference upon dissolution of the Seller to the
holders of any then outstanding shares of any class or series of preferred
stock (other than the Series D Shares), dividing the balance obtained by
the number of shares of Common Stock then outstanding or issuable upon
conversion of any convertible preferred stock then outstanding, and
multiplying that per share amount by the aggregate number of such Series D
Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exercise Price" shall mean the price per share specified in Section 2.04
as adjusted from time to time pursuant to the provisions of this Agreement.
"Fair Market Value" shall mean (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other
property, the fair market value of such securities or property as
determined in good faith by disinterested members of the Board of Directors
of the Seller at the time it authorizes the transaction (a "Valuation
Event") requiring a determination of Fair Market Value under this
Agreement; provided, however, that, at the election of the Holders or if
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there are no disinterested members of the Board of Directors of the Seller,
the Fair Market Value of such securities and other property will be the
Appraised Value.
"Holders" shall mean the Purchaser, and all other Persons holding
Registrable Securities so long as such Purchasers or other Person holds
Registrable Securities, except that none of the Seller or any Affiliate of
the Seller will at any time be a Holder. Unless otherwise provided in this
Agreement, in each instance that the Purchaser is required to request or
consent to or otherwise approve an action, such Purchaser will be deemed to
have requested or consented to or otherwise approved such action if the
Holders of a majority-
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in-interest of the Registrable Securities initially issued to the
Purchaser on the date hereof so request, consent or otherwise approve.
"Indebtedness" shall mean, collectively but without duplication, (a) all
indebtedness, obligations or other liabilities for borrowed money or
evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, that would, in accordance with GAAP, be classified as
long-term debt, together with the current maturities thereof, (b) all
indebtedness outstanding under any revolving credit, line of credit or
similar agreement providing for borrowings (any extensions or renewals
thereof), notwithstanding that any such indebtedness is created within one
year of the expiration of such agreement, and (c) the principal component
of Capital Lease Obligations (as defined in the Loan Agreement), in each
case calculated on a consolidated basis for the Seller and its Subsidiaries
in accordance with GAAP.
"Initial Holders" shall mean the Purchaser and any Affiliate of the
Purchaser to which any of the Warrants or any part of or interest in the
Warrants is assigned.
"Issuable Warrant Shares" shall mean shares of Common Stock or Other
Securities issuable on exercise of the Warrants.
"Issued Warrant Shares" shall mean shares of Common Stock or Other
Securities issued on exercise of the Warrants.
"New Securities" shall mean any Capital Stock other than Warrant Shares and
the Permitted Stock.
"Non-Attributable Stock" means shares of Common Stock or Series B Preferred
Stock which have been previously sold, or were issued pursuant to the
exercise of Warrants which were previously sold, either (a) in a widely
dispersed public offering; (b) in a private placement in which no
purchaser, individually or in concert with others, acquired Warrants,
Common Stock, Series B Preferred Stock or any combination thereof,
representing (upon conversion, in the case of any convertible preferred
stock, and upon exercise for Common Stock, in the case of any warrants)
more than 2% of the outstanding Common Stock; (c) in compliance with Rule
144 (or any rule which is a successor thereto) of the Securities Act or (d)
into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0% of the shares
outstanding of the Seller in any six month period.
"Operating Cash Flow" shall mean, for any period for which the same is
computed, the sum of (i) the Seller's and its Subsidiaries' consolidated
net income (loss) for such period, plus (ii) the Seller's and its
Subsidiaries' interest expense for such period, plus (iii) the Seller's and
its Subsidiaries' depreciation and amortization for financial reporting
purposes for such period, plus (iv) the Seller's and its Subsidiaries'
income tax expense for such period, computed in each case on a consolidated
basis in accordance with generally accepted accounting principles.
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"Other Securities" shall mean any stock, other securities, property, or
other property or rights (other than Common Stock) that the Holders become
entitled to receive upon exercise of the Warrants, including, but not
limited to, the Series B Preferred Stock.
"Permitted Stock" shall mean (a) Warrant Shares, and shares of the Seller's
Capital Stock issuable upon exercise thereof; (b) Capital Stock of the
Seller issued as a dividend on shares of the Seller's Capital Stock or as a
result of a stock split with respect thereto; (c) Capital Stock of the
Seller issued upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock or the Series C Preferred Stock; (d) options and warrants
outstanding (or that the Seller's Board of Directors has approved for
issuance to specific employees) as of the date hereof to purchase the
Seller's Capital Stock, and shares of the Seller's Capital Stock issuable
upon exercise thereof; and (e) up to 157,617 shares of the Seller's Class A
Common Stock issued to employees of the Seller pursuant to options issued
under the Seller's 1997 Long-Term Incentive Plan and having an exercise
price per share at least equal to the Fair Market Value per share.
"Person" this term shall be interpreted broadly to include any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, company, institution, entity,
party, or government (whether national, federal, state, county, city,
municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body, or department of any of the
foregoing).
"Put Option" is defined in Section 5.01.
"Put Option Closing" is defined in Section 5.05.
"Put Option Period" is defined in Section 5.01.
"Put Price" is defined in Section 5.02.
"Put Shares" shall mean the Warrant Shares plus any other shares of Capital
Stock owned from time to time by a Purchaser which were issued in respect
of the Warrant Shares.
"Qualified Public Offering" shall mean an underwritten public offering
covering the offering and sale of Common Stock of the Seller in which the
aggregate gross proceeds to the Seller equals or exceeds $15,000,000.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" shall mean (a) the Issuable Warrant Shares and (b)
the Issued Warrant Shares.
"Regulated Holder" means any Holder subject to the various provisions of
(a) the Bank Holding Company Act of 1956, as amended, (b) Regulation Y of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 225),
or (c) any law, rule or regulation that is successor to either of the
foregoing.
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"Schedule of Exceptions" is defined in Section 3.01.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Series A Preferred Stock" shall mean the Series A Convertible Preferred
Stock $.01 par value, of the Seller having the rights, restrictions,
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privileges and preferences of the series of preferred stock designated as
"Series A Preferred Stock" set forth in the Articles.
"Series B Preferred Stock" shall mean the Series B Convertible Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
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privileges and preferences of the series of preferred stock designated as
"Series B Preferred Stock" set forth in the Articles.
"Series C Preferred Stock" shall mean the Series C Convertible Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
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privileges and preferences of the series of preferred stock designated as
"Series C Preferred Stock" set forth in the Articles.
"Series D Preferred Stock" shall mean the Series D Redeemable Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
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privileges and preferences of the series of preferred stock designated as
"Series D Preferred Stock" set forth in the Articles.
"Subsidiary" shall mean each Person of which or in which the Company or its
other Subsidiaries own directly or indirectly fifty percent (50%) or more
of (i) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board
of directors or equivalent body of such Person, if it is a corporation or
similar person; (ii) the capital interest or profits interest of such
Person, if it is a partnership, joint venture, or similar entity; or (iii)
the beneficial interest of such Person, if it is a trust, association, or
other unincorporated organization.
"Valuation Amount" shall mean, as of any date, the greater of (x) zero or
(y) an amount equal to Operating Cash Flow for the most recently ended
twelve months preceding the date of determination multiplied by six (6),
less the principal amount of Indebtedness of the Company on such date of
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determination, plus the aggregate amount of cash and/or cash equivalents
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held by the Company on such date of determination.
"Valuation Event" is defined in the definition of Fair Market Value.
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"Warrant No. ___" as referred to in Section 2.01(a)(i), dated as of _____
__, 1998, issued to ___________ and all Warrants issued upon the
transfer or division of, or in substitution for, such Warrant No. ___.
"Warrant Shares" shall mean the Issued Warrant Shares and the Issuable
Warrant Shares.
"Warrants" shall mean Warrant No. ___ exercisable for the purchase of
_______ shares of Common Stock or Series B Preferred Stock (subject to
adjustment pursuant to Section 2.08).
Article II
The Warrants and the Series D Shares
2.01 The Warrants and the Series D Shares.
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(a) The Purchaser agrees to purchase from the Sellers at the purchase
price set forth below, and the Seller hereby agrees to issue to the
Purchaser, all in accordance with the terms and conditions of this
Agreement.
(i) _____ shares of Series D Preferred Stock at a purchase price
of ________ or $1,000.00 per share, having the rights, restrictions,
privileges and preferences set forth in the Designation of Terms of
Series D Redeemable Preferred Stock attached hereto as Exhibit A; and
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(ii) Warrant No.___ (relating to the Series D Preferred Stock),
in substantially the form attached to this Agreement as Exhibit B and
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incorporated in this Agreement by reference, to purchase, at a
purchase price of $6.00 per share, the number of shares of Common
Stock or Series B Preferred Stock set forth on the signature page of
this Agreement for such Warrant No. ___.
The Seller shall, on or before the Closing Date, duly authorize the Series
D Preferred Stock being purchased and sold pursuant to the terms of this
Agreement. On the Closing Date, the Seller will deliver to the Purchaser
(1) a certificate evidencing and representing the shares of Series D
Preferred Stock to be issued to such Purchaser and (2) one or more
certificates representing the Warrants, which certificate or certificates
shall be issued in such Purchaser's name or in the name of its designee.
(b) Payment for the Series D Shares will be made by wire transfer in accordance
with the following instructions:
ABA#: First Union National Bank, ABA routing # 000000000
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ACCOUNT #: for credit to account # 208-0000-508-368
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NAME: Wachovia Bank--Satellink Paging, LLC Operating Account
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2.02 Legend. The Seller will deliver to the appropriate Purchaser on the
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Closing Date one or more certificates representing Warrant No. ___ purchased by
the Purchasers, in such denominations as such Purchasers request. Additionally,
the Seller will deliver to the appropriate Holder on the Additional Warrant
Issue Date one or more certificates representing the Additional Warrants, in
such denominations as such Holder requests. Such certificates will be issued in
the Purchaser's name or, subject to compliance with transfer and registration
requirements under applicable federal and state securities laws, in the name or
names of its designee or designees. It is understood and agreed that the
certificates evidencing the Warrants will bear the following legends:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED,
SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE
STATE SECURITIES LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT DATED AS OF APRIL 3, 1998, BY AND AMONG SATELLINK COMMUNICATION
INC. (THE "COMPANY"), AND THE OTHER PARTIES LISTED ON THE SIGNATURE PAGES
TO SUCH AGREEMENT (AS SUCH AGREEMENT MAY BE SUPPLEMENTED, MODIFIED,
AMENDED, OR RESTATED FROM TIME TO TIME, THE "AGREEMENT"). COPIES OF THE
AGREEMENT ARE AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY."
"THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
It is further understood and agreed that the certificates evidencing the Series
D Preferred Stock issued under this Agreement will bear substantially the same
as the following legends:
"THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR
FOR SALE IN CONNECTION WITH THE DISTRIBUTION HEREOF. THESE SHARES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER
OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS."
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"THESE SHARES ARE SUBJECT TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT DATED AS OF APRIL 3, 1998, BY AND AMONG
SATELLINK COMMUNICATIONS, INC. (THE "COMPANY"), AND THE OTHER PARTIES
LISTED ON THE SIGNATURE PAGES TO SUCH AGREEMENT (AS SUCH AGREEMENT MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). COPIES OF THE AGREEMENT ARE AVAILABLE AT THE EXECUTIVE
OFFICES OF THE COMPANY."
"THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
2.03 Exercise Price. The Exercise Price per share will be $6.00 for each
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share of Common Stock and/or Series B Preferred Stock covered by the Warrants.
2.04 Exercise of Warrants.
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(a) The Warrants may be exercised at any time on or after the Closing
Date until the tenth (10th) anniversary of the Closing Date on any day
that is a Business Day, for all of the number of Issuable Warrant Shares
purchasable upon its exercise. In order to exercise its Warrant, the
Holder will deliver to the Seller at the address designated by the Seller
pursuant to Section 8.05, (i) a written notice of such Holder's election to
exercise its Warrant, (ii) payment of the Exercise Price, in an amount
equal to the aggregate purchase price for all Issuable Warrant Shares, and
(iii) the Warrant. Such notice will be substantially in the form of the
Subscription Form appearing at the end of the Warrants. Upon receipt of
such notice, the Seller will, as promptly as practicable, and in any event
within ten (10) business days, execute, or cause to be executed, and
deliver to such Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock and Other Securities
issuable upon such exercise, as provided in this Agreement. The stock
certificate or certificates so delivered will be in such denominations as
may be specified in such notice and will be registered in the name of such
Holder, or, subject to compliance with transfer and registration
requirements under applicable federal and state securities laws, such other
name as designated in such notice. A Warrant will be deemed to have been
exercised, such certificate or certificates will be deemed to have been
issued, and such Holder or any other Person so designated or named in such
notice will be deemed to have become a holder of record of such shares for
all purposes, as of the date that such notice, together with payment of the
Exercise Price and the Warrant is received by the Seller.
(b) Payment of the Exercise Price will be made, at the option of the
Holder, by (i) company or individual check, certified or official check,
(ii) cancellation of any debt owed by the Seller to the Holder, or (iii)
cancellation of Warrant Shares, valued at Fair Market Value. If the Holder
surrenders a combination of cash or cancellation of any debt owed by the
Seller to the Holder or Warrants, the Holder will specify the respective
number of shares of Common Stock and/or Series B Preferred Stock to be
purchased with
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each form of consideration, and the foregoing provisions will be applied to
each form of consideration with the same effect as if the Warrant were
being separately exercised with respect to each form of consideration;
provided, however,that a Holder may designate that any cash to be remitted
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to a Holder in payment of debt be applied, together with other monies, to
the exercise of the portion of the Warrant being exercised for cash.
(c) Any holder that is a Regulated Holder shall not have the right to
have issued to it upon exercise Common Stock which, when aggregated with
all other shares of Common Stock (other than shares of Non-Attributable
Stock) currently or previously held by or currently issuable without
restriction to such Regulated Holder, will exceed 4.99% of the then
outstanding Common Stock unless such Regulated Holder certifies that such
Warrants have previously been transferred either (i) in a widely dispersed
public offering of the Warrants, or (ii) in a private placement in which no
purchaser, individually or in concert with others, would have acquired more
than 2% of the outstanding Common Stock if the Warrants so transferred had
been exercised for Common Stock, or (iii) in compliance with Rule 144 (or
any rule which is a successor thereto) of the Securities Act, or (iv) into
the secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0% of the shares outstanding of
the Seller in any six month period. In the event that a Regulated Holder
and/or one or more Affiliates attempt to exercise Warrants for Common Stock
simultaneously and, if permitted, such exercises would cause the 4.99%
limitation to be exceeded, then the Seller shall notify such Regulated
Holders who had attempted to exercise Warrants for Common Stock and each
such Regulated Holder shall be entitled to exercise for Common Stock only
such number of Warrants as shall equal the product of (i) the number of
Warrants such Regulated Holder sought to exercise for Common Stock times
(ii) a fraction, the numerator of which is the maximum number of Warrants
which may be exercised for Common Stock without exceeding the 4.99%
limitation and the denominator of which is the maximum number of Warrants
sought to be exercised for Common Stock by such Regulated Holders.
(d) Notwithstanding the foregoing provisions of this Section 2.04, in
no event shall any Warrant be exercisable by any Regulated Holder and/or an
Affiliate for shares of Common Stock or Series B Preferred Stock which,
when aggregated with all other Capital Stock of the Seller (other than
shares of Non-Attributable Stock) currently held or previously held by or
currently issuable without restriction to such Regulated Holder, would,
upon issuance, represent in excess of 24.99% of the Equity of the Seller
unless such shares, when issued, would constitute Non-Attributable Stock.
2.05 Taxes. The issuance of any Common Stock or Other Securities upon the
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exercise of any of the Warrants will be made without charge to any Holder for
any tax, other than income taxes assessed on such Holder, in respect of such
issuance.
2.06 Register. The Seller will, at all times while any of the Warrants or
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Series D Shares remain outstanding, keep and maintain at its principal office a
register in which the registration, transfer, and exchange of the Warrants and
Series D Shares will be provided for. The Seller will not at any time except
upon the dissolution, liquidation, or winding up of the Seller, close such
register so as to result in preventing or delaying the exercise or transfer, as
the case may be, of any of the Warrants or Series D Shares.
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2.07 Transfer and Exchange. The Warrants, all options and rights under
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the Warrants, and the Series D Shares are transferable, in whole or in part, in
person or by duly authorized attorney, on the books of the Seller upon surrender
of the Warrants or the Series D Shares, as the case may be, at the principal
offices of the Seller, together with the form of transfer authorization attached
to the Warrants duly executed or by endorsement of the certificates representing
the Series D Shares; provided, however, that such transfers of the Warrants and
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Series D Shares will be made only to Persons that the transferor in good faith
believes to be an "accredited investor" as such term is defined in Regulation D
under the Securities Act. Absent any such transfer, the Seller may deem and
treat the registered Holders of the Warrants or the Series D Shares, as the case
may be, at any time as the absolute owners of the Warrants or the Series D
Shares, as the case may be, for all purposes and will not be affected by any
notice to the contrary. If any of the Warrants or Series D Shares are
transferred in part the Seller will, at the time of surrender of such Warrant or
Series D Shares, as the case may be, issue to the transferee a Warrant or a
certificate for Series D Shares, as the case may be, covering the number of
shares transferred and to the transferor a Warrant or a certificate for Series D
Shares, as the case may be, covering the number of shares not transferred.
2.08 Adjustments to Number of Shares Purchasable.
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(a) Unless and until the Series D Shares are redeemed by the Seller
and the redemption price is paid in full (pursuant to the terms and
conditions set forth in the Designation of Terms attached hereto at Exhibit
A), the number of shares of Common Stock issuable upon exercise of the
Warrants shall automatically increase as follows:
(i) If the Series D Shares issued to Purchaser have not been
redeemed on or before June 30, 1998, the number of shares of Common
Stock issuable upon exercise of the Warrants shall be increased by
multiplying the number of shares theretofore issuable thereunder by
one hundred fifty percent (150%), and the product derived thereby
shall thereafter be the number of shares issuable upon exercise of
the Warrants, without any adjustment in the per share exercise price
of the Warrants.
(ii) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 1998, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred thirty three and one-third percent
(133 1/3%), and the product derived thereby shall thereafter be the
number of shares issuable upon exercise of the Warrants, without any
adjustment in the per share exercise price of the Warrants.
(iii) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 1999, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred twenty five percent (125%), and the product
derived thereby shall thereafter be the number of shares issuable
upon exercise of the Warrants, without any adjustment in the per
share exercise price of the Warrants.
11
(iv) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 2000, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred twenty percent (120%), and the product
derived thereby shall thereafter be the number of shares issuable
upon exercise of the Warrants, without any adjustment in the per
share exercise price of the Warrants.
(b) The Warrants will be exercisable for the number of shares of
Common Stock and/or Series B Preferred Stock in such manner that, following
the complete and full exercise of the Warrants of each Holder, the amount
of Common Stock and/or Series B Preferred Stock issued to all Holders will
equal the aggregate number of shares of Common Stock and/or Series B
Preferred Stock set forth in Warrant No. ___, as adjusted, to the extent
necessary, to give effect to the following events:
(i) In case at any time or from time to time, the holders of
any class of Common Stock or Common Stock Equivalent have received,
or (on or after the record date fixed for the determination of
shareholders eligible to receive) have become entitled to receive,
without payment therefor:
(A) consideration (other than cash) by way of dividend or
distribution; or
(B) consideration (including cash) by way of spin-off,
split-up, reclassification (including any reclassification in
connection with a consolidation or merger in which the Seller is
the surviving corporation), recapitalization, combination of
shares into a smaller number of shares, or similar corporate
restructuring;
other than additional shares of Common Stock issued as a stock
dividend or in a stock-split (adjustments in respect of which are
provided for in Sections 2.08(b)(ii) and (iii)), then, and in each
such case, the Holders, on the exercise of Warrants, will be entitled
to receive for each share of Common Stock issuable under the Warrants
as of the record date fixed for such distribution, the greatest per
share amount of consideration received by any holder of any class of
Common Stock or Common Stock Equivalent or to which such Holder is
entitled. All such consideration receivable upon exercise of such
Warrant with respect to such a distribution will be deemed to be
outstanding and owned by such Holder for purposes of determining the
amount of consideration to which such Holder is entitled upon
exercise of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock dividend
or distribution, reverse stock split, or other subdivision of the
Common Stock, then the number of shares of Common Stock to be
received by the Holder of the Warrant and the Exercise Price, subject
to the limitations set forth in this Agreement, will be
proportionately adjusted.
12
(iii) In case of any reclassification or change of outstanding
shares of any class of Common Stock or Common Stock Equivalent (other
than a change in par value, or from par value to no par value, or from
no par value to par value), or in the case of any consolidation of the
Seller with, or merger or share exchange of the Seller with or into,
another Person, or in case of any sale of all or a majority of the
property, assets, business, income or revenue generating capacity, or
goodwill of the Seller, the Seller, or such successor or other Person,
as the case may be, will provide that the Holder of this Warrant will
thereafter be entitled to receive the highest per share kind and
amount of consideration received or receivable (including cash) upon
such reclassification, change, consolidation, merger, share exchange,
or sale by any holder of any class of Common Stock or Common Stock
Equivalent that this Warrant entitles the Holder to receive
immediately prior to such reclassification, change, consolidation,
merger, share exchange, or sale (as adjusted pursuant to Section
2.08(b)(i) and otherwise in this Agreement). Any such successor
Person, which thereafter will be deemed to be the Seller for purposes
of the Warrants, will provide for adjustments that are as nearly
equivalent as may be possible to the adjustments provided for by this
Section 2.08.
(iv) If at any time the Seller issues or sells any shares of
any Common Stock or any Common Stock Equivalent (excluding any
Permitted Stock) at a per unit or share consideration (which
consideration will include the price paid upon issuance plus the
minimum amount of any exercise, conversion, or similar payment made
upon exercise or conversion of any Common Stock Equivalent) less than
the Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or Common
Stock Equivalent is issued or sold (the "Additional Securities"),
then:
(A) the Exercise Price will be reduced (but not increased)
to the lower of the prices calculated by:
(I) dividing (x) an amount equal to the sum of (1)
the number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such issuance or
sale multiplied by the then existing Exercise Price plus
(2) the aggregate consideration, if any, received by the
Seller upon such issuance or sale, by (y) the total number
of shares of Common Stock outstanding immediately after
such issuance or sale on a fully diluted basis; and
(II) multiplying the then existing Exercise Price by a
fraction, the numerator of which is (x) the sum of (1) the
number of shares of Common Stock outstanding on a fully
diluted basis immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of Common
Stock immediately prior to such issuance or sale, plus (2)
the aggregate consideration received by the Seller upon
such issuance or sale, (y) divided by the total number of
shares of Common Stock outstanding on a fully diluted
basis immediately after such issuance or sale, and the
denominator
13
of which is the Fair Market Value per share of Common
Stock immediately prior to such issuance or sale (for
purposes of this subsection (II), the date as of which the
Fair Market Value per share of Common Stock will be
computed will be the earlier of the date upon which the
Seller will (aa) enters into a firm contract for the
issuance of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock or Series B
Preferred Stock for which any of the Warrants may be exercised at
the Exercise Price resulting from the adjustment described in
subsection (A) above will be equal to the product of the number
of shares of Common Stock or Series B Preferred Stock purchasable
under such Warrants immediately prior to such adjustment
multiplied by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting from such
adjustment.
(v) In case any event occurs as to which the preceding Sections
2.08(b)(i) through (iv) are not strictly applicable, but as to which
the failure to make any adjustment would not fairly protect the
purchase rights represented by the Warrants in accordance with the
essential intent and principles of this Agreement, then, in each such
case, the Holders may appoint an independent investment bank or firm
of independent public accountants, which will give its opinion as to
the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Agreement, necessary to
preserve the purchase rights represented by the Warrants. Upon
receipt of such opinion, the Seller will promptly deliver a copy of
such opinion to the Holders and will make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants will be borne equally by the Holders
and the Seller.
(c) The Seller will not by any action including, without limitation,
amending, or permitting the amendment of, the charter documents, bylaws, or
similar instruments of the Seller or through any reorganization,
reclassification, transfer of assets, consolidation, merger, share
exchange, dissolution, issue or sale of securities, or any other similar
voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement or the Warrants, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect
the rights of the Holders against impairment or dilution. Without limiting
the generality of the foregoing, the Seller will (i) take all such action
as may be necessary or appropriate in order that the Seller may validly and
legally issue fully paid and nonassessable shares of Common Stock and Other
Securities, free and clear of all liens, encumbrances, equities, and
claims; (ii) use its best efforts to obtain all such authorizations,
exemptions, or consents from any public regulatory body having jurisdiction
as may be necessary to enable the Seller to perform its obligations under
the Warrants; and (iii) will take any action necessary to cause the par
value per share of the Seller's Common Stock or Series B Preferred Stock to
be less than or equal to the Exercise Price of the Warrants. Without
limiting the generality of the foregoing, the
14
Seller represents and warrants that the board of directors of the Seller
has determined the Exercise Price to be adequate and the issuance of the
Warrants to be in the best interests of the Seller.
(d) Any calculation under this Section 2.08 will be made to the
nearest one ten-thousandth of a share and the number of Issuable Warrant
Shares resulting from such calculation will be rounded up to the next whole
share of Common Stock or Other Securities comprising Issuable Warrant
Shares.
(e) At any time prior to the redemption of all issued and outstanding
Series D Shares, the Seller will not, and will not permit any Subsidiary
to, issue any Capital Stock other than Common Stock and Common Stock
Equivalents.
2.09 Lost, Stolen, Mutilated, or Destroyed Instruments. If any of the
-------------------------------------------------
Warrants or certificates for Series D Shares are lost, stolen, mutilated, or
destroyed and if the Seller receives a lost security affidavit containing an
indemnification from the Holder of such Warrant or Series D Shares and
containing such other terms and providing for such bonding as may be reasonably
requested by the Seller, the Seller will issue a new Warrant or certificate for
Series D Shares, as the case may be, of like denomination, tenor, and date as
the Warrant or certificate for Series D Shares, as the case may be, so lost,
stolen, mutilated, or destroyed. Any such new Warrant or certificate for Series
D Shares, as the case may be, will constitute an original obligation of the
Seller, whether or not the allegedly lost, stolen, mutilated, or destroyed
Warrant or certificate for Series D Shares, as the case may be, is at any time
enforceable by any Person.
2.10 Mandatory Redemption and Mandatory Exchange.
-------------------------------------------
(a) (i) Subject to the limitations hereinafter set forth, (A) if the
Seller takes any action with respect to its Capital Stock (including
without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares)
which would cause the Capital Stock currently or previously held by
or currently issuable without restriction to any Regulated Holder
and/or its Affiliates (not including Non-Attributable Stock) to
exceed 24.99% of the Equity of the Seller, then prior to or
simultaneously with such action, the Seller shall purchase from such
Regulated Holder and/or its Affiliates such number of Warrants,
Warrant Shares or other shares of Capital Stock as will reduce the
shares of Capital Stock currently or previously held by or currently
issuable without restriction to such Regulated Holder and its
Affiliates (not including Non-Attributable Stock) to 24.99% of the
Equity of the Seller (any such mandatory purchase being herein called
a "Mandatory Redemption"). The price to be paid to the Holder upon a
Mandatory Redemption shall be an amount equal to the Valuation Amount
at the date of the event causing such Mandatory Redemption occurs
(the "Trigger Date"), multiplied by a fraction the denominator of
which is the number of issued and outstanding shares of Common Stock
of the Seller at the Trigger Date, calculated on a fully diluted
basis in accordance with generally accepted accounting principles,
and the numerator of which is (Y) the aggregate number of shares of
Common Stock of the Seller (i) comprising the Warrant Shares to be
purchased by the Seller, and/or (ii) issuable upon exercise of the
Warrants to be purchased by the Seller, (iii) issuable upon
conversion of the
15
Series B Preferred Stock comprising the Warrant Shares to be
purchased by the Seller; and/or (iv) issuable upon conversion of the
Series B Preferred Stock issuable upon exercise of the Warrants to be
purchased by the Seller (assuming Series B Preferred Stock, rather
than Common Stock, is then issuable under such Warrants), and/or (v)
comprising any other shares of Capital Stock of the Seller then held
or previously held by Purchaser or its Affiliates (excluding Non-
Attributable Stock) (the "Redemption Price").
(ii) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall take place on
the thirtieth (30th) day following the Trigger Date, unless another
date is mutually agreed upon by the Seller and the selling Holder
(the "Redemption Closing Date"). The Redemption Prices for all such
purchases and sales shall be paid by the Seller issuing to the
selling Holder in immediately available funds against delivery of
certificates representing the Warrants and/or Warrant Shares to be
purchased, duly endorsed for transfer to the Seller.
(b) The Redemption Prices for all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall be determined and
calculated in accordance with subsection 2.10(a) by the Seller's regularly
engaged independent accountants. The Seller shall cause such accountants to
deliver to the Seller and the selling holder, not later than 15 days prior
to the completion of each purchase and sale under subsection 2.10(a), a
written statement, signed by such accountants, setting forth in reasonable
detail the respective purchase price and the calculation thereof and
stating that such calculation was based on the books and records of the
Seller and was made and delivered pursuant to this Section 2.10.
(c) If the Seller takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any combination
of shares or reverse stock split and elimination of fractional shares)
which would cause the Common Stock currently or previously held by or
currently issuable without restriction to a Regulated Holder and its
Affiliates (other than shares of Non-Attributable Stock) to exceed 4.99% of
the aggregate number of issued and outstanding shares of Common Stock,
prior to or simultaneously with such action, the Seller shall exchange such
portion of Common Stock for Series B Preferred Stock as will reduce the
shares of Common Stock currently or previously held by or currently
issuable without restriction to such Regulated Holder and its Affiliates
(not including "Non-Attributable Stock") to 4.99% of the aggregate number
of issued and outstanding shares of Common Stock (a "Mandatory Exchange").
Article III
Representations and Warranties
3.01 Representations and Warranties of the Seller. Subject to and except
--------------------------------------------
as disclosed in the Schedule of Exceptions attached hereto as Schedule I (the
----------
"Schedule of Exceptions"), the Seller represents and warrants to each Purchaser
that:
16
(a) The Seller is a corporation duly organized and existing and in
good standing under the laws of its state of incorporation and is qualified
or licensed to do business in all other countries, states, and
jurisdictions the laws of which require it to be so qualified or licensed,
except where the failure to be so qualified or licensed would not have a
material adverse effect on Seller's business, financial condition or
results of operations. Except for Satellink Paging, LLC, Direct Link, LLC,
NationsLink, LLC and NationsLink, L.P., the Seller has no Subsidiaries or
debt or equity investment in any Person. Giving effect to the transactions
contemplated herein, the Purchaser owns beneficially and of record the
number of shares in the aggregate of the issued and outstanding capital
stock or stock equivalents of the Seller on a fully converted and diluted
basis as of the Closing Date set forth under the signature of such
Purchaser on this Agreement, all being free and clear of all liens, claims
and encumbrances other than any lien, claim or encumbrance arising from any
action of such Purchaser. Other than Purchaser, and, except for any other
stock issuable under any employee or director stock plan or issuable upon
exercise of options granted to Xxxxxx X. Xxxxxxxx or principals of the
Breckenridge Group, which constitutes Permitted Stock, no Person has any
rights, whether granted by the Seller or any other Person, to acquire any
portion of the equity interest of the Seller or the assets of the Seller.
(b) The Seller has, and at all times that this Agreement is in force
will have, the right and power, and is duly authorized, to enter into,
execute, deliver, and perform this Agreement, the Series D Shares and the
Warrants, and the officers of Seller executing and delivering this
Agreement, the Series D Shares and the Warrants are duly authorized to do
so. This Agreement, the Series D Shares and the Warrants have been duly
and validly executed, issued, and delivered and constitute the legal,
valid, and binding obligations of Seller, enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditor's rights generally or general principles of equity (whether
applied in an action at law or in equity).
(c) The execution, delivery, and performance of this Agreement and the
Warrants will not, by the lapse of time, the giving of notice, or
otherwise, constitute a violation of any applicable provision contained in
the charter, bylaws, or organizational documents of the Seller or contained
in any material agreement, instrument, or document to which the Seller is
bound.
(d) As of the Closing Date, the authorized capital of the Seller
consists of:
(i) Class A Common Stock. 50,000,000 shares of Class A Common
--------------------
Stock (the "Common Stock"), of which 2,349,521.430 are issued and
outstanding upon the Closing. The Seller has reserved 705,900 shares
of Class A Common Stock for issuance upon conversion of the Series A
Preferred Stock and the Series C Convertible Preferred Stock into
Class A Common Stock;
(ii) Class B Common Stock. 20,000 shares of Common Stock (the
--------------------
"Class B Common Stock"), none of which are issued and outstanding as
of the Closing;
17
(iii) Series A Convertible Preferred Stock. 7,500 shares of
------------------------------------
Series A Convertible Preferred Stock, of which 7,360 are issued and
outstanding as of the Closing. Each share of Series A Convertible
Preferred Stock is convertible into shares of Common Stock on the
terms and conditions contained in the Seller's Articles;
(iv) Series B Convertible Preferred Stock. 30,000 shares of
------------------------------------
Series B Convertible Preferred Stock, none of which are issued and
outstanding as of the Closing. Each share of Series B Convertible
Preferred Stock is convertible into shares of Common Stock on the
terms and conditions contained in the Seller's Articles;
(v) Series C Convertible Preferred Stock. 3,500 shares of
------------------------------------
Series C Convertible Preferred Stock, 3,500 shares of which are issued
and outstanding as of the Closing. Each share of Series C Convertible
Preferred Stock is convertible into shares of Common Stock or Series B
Convertible Preferred Stock on the terms and conditions contained in
the Seller's Articles; and
(vi) Series D Redeemable Preferred Stock. 4,500 shares of
-----------------------------------
Series D Redeemable Preferred Stock, 4,500 of which are issued and
outstanding as of the Closing.
(e) Except for (i) the conversion rights of the holders of the Series
A Preferred Stock and Series C Preferred Stock, as set forth in the
Articles of Incorporation, (ii) options to purchase up to 112,383 shares of
Class A Common Stock granted to employees of Seller pursuant to Seller's
1997 Long-Term Incentive Plan, and (iii) options to purchase up to 65,000
shares of Class A Common Stock granted to the principals of The
Breckenridge Group, there are no outstanding warrants, options, conversion
privileges, preemptive rights or other rights or agreements to purchase or
otherwise acquire or issue any equity securities of the Seller. The Series
D Shares and the shares of Common Stock or Series B Preferred Stock
issuable upon exercise of the Warrants, when issued, sold and delivered in
accordance with the terms of and for the consideration expressed in this
Agreement, shall be duly and validly issued, fully-paid and non-assessable.
The Common Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock have been offered,
issued, sold, and delivered by the Seller free from preemptive rights,
rights of first refusal, antidilution rights, cumulative voting rights or
similar rights (except as otherwise provided in this Agreement, in the
powers, designations, rights and preferences contained in the Articles of
Incorporation or upon the waiver of such rights) and in compliance with
applicable federal and state securities laws. Except pursuant to this
Agreement and the Articles and except for the Permitted Stock the Seller is
not obligated to issue or sell any Capital Stock. The Seller is not, nor
will it be, a party to, or otherwise bound by, any agreement obligating it
to register any of its Capital Stock. There is no agreement, arrangement,
or understanding involving the Seller modifying, restricting, or in any way
affecting the rights of any security holder to vote securities of the
Seller, except for (i) that certain Stockholders' Agreement, dated August
1, 1988, and (ii) that certain Letter Agreement, dated November, 1995, by
and between the Seller and Xxxxxxx Investment Corporation.
18
(f) Except for the liens, pledges and security interests granted in
connection with the Third Amended and Restated Loan and Security Agreement,
dated as of June 27, 1997, the Seller has good, indefeasible, merchantable,
and marketable title to, and ownership of, all of its material assets
necessary for the conduct of its business free and clear of all liens,
pledges, security interests, claims.
(g) Subject to the accuracy of each of the Purchaser's representations
in Section 3.02 of this Agreement, the offer, sale and issuance of the
Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act, Section 5 of the Georgia Securities Act of
1973, as amended (O.C.G.A. Section 10-5-5) (the "Georgia Act"), and the
securities acts and laws of any other applicable jurisdictions.
(h) The Seller has delivered to the Purchaser unaudited financial
statements of the Seller at December 31, 1997, (the "Financial
Statements"). The Financial Statements are complete and correct in all
material respects, subject (in the case of the unaudited statements) to
normal year-end adjustments, and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. The Financial Statements accurately set
out, describe and fairly present the financial condition and operating
results of the Seller as of the dates, and for the periods, indicated
therein, subject (in the case of the unaudited statements) to normal year-
end audit adjustments.
(i) Since December 31, 1997, there has not been:
(A) except for the transactions contemplated by that certain
Merger Agreement, dated January 27, 1998, by and among the Seller,
Premier Paging, Inc. ("Premier"), Premier Paging of New Orleans, Inc.
("Premier New Orleans") and the shareholders of each of Premier and
Premier New Orleans (the "Premier Agreement"), any change in the
assets, liabilities, financial condition or operating results of the
Seller from that reflected in the Financial Statements, except changes
in the ordinary course of business that have not been, in the
aggregate, materially adverse;
(B) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the
Seller (as such business is presently conducted and as it is currently
proposed to be conducted);
(C) any amendments or changes in the Articles of Incorporation or
Bylaws of the Seller, except for the Amendment to the Articles of
Incorporation filed with the Georgia Secretary of State on March 31,
1998;
(D) any waiver or compromise by the Seller of a valuable right or
of a material debt owed to the Seller;
(E) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Seller, except in the
ordinary course of business
19
and that is not material to the assets, properties, financial
condition, operating results or business of the Seller (as such
business is presently conducted and as it is currently proposed to be
conducted);
(F) any change or amendment to a material contract or arrangement
by which the Seller or any of its assets or properties is bound or
subject;
(G) except for the regular cash dividends declared and paid on
January 31, February 28, and March 31, 1998 to holders of the Seller's
Series C Preferred Stock in the amount of $8.333 per any declaration
or payment of any dividend or other distribution of the assets of the
Seller;
(H) any increase in or modification of the compensation or
benefits payable by the Seller to any of their directors or employees,
except in the ordinary course of business consistent with past
practice;
(I) any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement
(including, but not limited to, the granting of stock options,
restricted stock awards or stock appreciation rights) made to, for or
with any employee of the Seller, except in the ordinary course of
business consistent with past practice;
(J) except for the issuance of a Subordinate Promissory Note in
connection with the consummation of the transactions contemplated by
the Premier Agreement, any incurrence, assumption or guarantee by the
Seller of any debt for borrowed money; issuance or sale of any
securities convertible into or exchangeable for debt securities of the
Seller; or issuance or sale of options or other rights to acquire from
the Seller, directly or indirectly, debt securities of the Seller, or
any securities convertible into or exchangeable for any such debt
securities;
(K) any making of any loan, advance or capital contribution to
any person other than travel loans or advances made in the ordinary
course of business; or
(L) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Seller.
(j) The Seller is not in material default under any contract,
agreement, instrument, license, or commitment that is material to the
Seller (collectively, the "Material Agreements"), and the Seller is not
aware of any material default by another party, either pending or
threatened, with respect to the Material Agreements. All the Material
Agreements are valid and binding obligations of the Seller, in full force
and effect in all material respects. The Seller does not intend to cancel,
withdraw, modify or amend any such Material Agreement and neither has been
notified that any other party to any such Material Agreement intends to
cancel, withdraw, modify or amend such Material Agreement. The Seller is
not a party to or bound by any material contract
20
agreement or instrument, or subject to any restriction under its
certificate of incorporation or bylaws, that adversely affects its business
as presently conducted or as currently proposed to be conducted, its
properties or its financial condition.
(k) The Seller has no material liability or obligation, absolute or
contingent (individually or in the aggregate), that is not disclosed in the
Financial Statements, except (i) as contemplated under the Premier Merger
Agreement, or (ii) obligations and liabilities incurred after the date of
the Financial Statements in the ordinary course of business that are not
individually or in the aggregate material. The Seller after reasonable
investigation has no knowledge of any basis for any other claim against or
liability or obligation of the Seller.
(l) Set forth on the Schedule of Exceptions is a list of (a) all the
material obligations of the Seller to its officers, directors, shareholders
and employees, including any member of their immediate families (other than
normal accrued wages and benefits and travel expense vouchers) and (b) all
the obligations of the officers, directors, shareholders and employees of
the Seller, including any member of their immediate families (other than
expense advances made in the ordinary course of business) to the Seller,
which schedule is complete and correct in all material respects as of the
date of this Agreement.
(m) Neither the Seller nor any of its Subsidiaries has any collective
bargaining agreements with any of its employees and to the best of the
Seller's knowledge there is no labor-union-organizing activity pending or
threatened with respect to the Seller or its Subsidiaries.
(n) The Seller is not in violation of (i) any provisions of its
Articles or its bylaws as amended and in effect on and as of the Closing,
or (ii) any provisions of any instrument or contract to which it is a party
or any judgment, decree or order by which it is bound or any statute, rule
or regulation applicable to it except, in the case of this clause
(ii), where such violation would not have a material adverse effect on the
Seller's business, financial condition or results of operations. The
execution, delivery and performance of this Agreement and the issuance and
sale of the Series D Shares and Warrants pursuant hereto and the Issuable
Warrant Shares pursuant to the exercise of the Warrants, will not result in
any such violation or be in conflict with or constitute a default under any
such provisions or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any properties or assets of the Seller.
(o) To the best of the Seller's knowledge, there is no action,
proceeding or investigation pending or currently threatened against the
Seller before any court or administrative agency (or any basis therefor
known to the Seller) which, if decided adversely to the Seller, could
reasonably be expected to have a material adverse effect on the Seller's
business, financial condition or results of operation. The foregoing
includes, without limiting its generality, actions pending or threatened
(or any basis therefor known to the Seller) involving the prior employment
of any of the Seller's employees or their use in connection with the
Seller's business of any information or techniques allegedly proprietary to
any of their former employers. There is no action, proceeding or
investigation by the Seller currently pending or that the Seller intends to
initiate.
21
(p) To the best of the Seller's knowledge, the Seller has sufficient
title and ownership of or is licensed under all patents, trademarks,
service marks, trade names, copyrights, and all registrations and
applications for registration of any of the foregoing, and all trade
secrets, information, inventions, computer programs owned or licensed by
the Seller, documentation, proprietary rights and processes (collectively,
"Intellectual Property") necessary for its business as now conducted
without any conflict with or without infringement of the rights of others.
There are no outstanding material options, licenses or agreements relating
to the foregoing nor is the Seller bound by or a party to any material
options, licenses or agreements with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or
entity. The Seller has not received any communications alleging that it
has violated or, by conducting its businesses as currently proposed, would
violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or entity.
(q) To the best of the Seller's knowledge, the Seller has not done
anything to compromise the secrecy, confidentiality or value of any of its
trade secrets, know-how, inventions, prototypes, designs, processes or
technical data required to conduct its business as now conducted or as
proposed to be conducted. The Seller has taken in the past and will take in
the future reasonable security measures to protect the secrecy,
confidentiality and value of all its trade secrets, know-how, inventions,
prototypes, designs, processes, and technical data important to the conduct
of its business.
(r) The Seller has accurately prepared and timely filed all United
States income tax returns and all state and municipal tax returns that are
required to be filed by it and has paid or made provision for the payment
of all taxes that have become due pursuant to such returns. No deficiency
assessment or proposed adjustment of the Seller's United States income tax
or state or municipal taxes is pending and the Seller has no knowledge of
any liability as of the date hereof for any tax for which there is not an
adequate reserve reflected in the Financial Statements.
(s) The Seller has fire, casualty and liability insurance policies
customary for the type and scope of its properties and business.
(t) All consents, approvals, orders or authorizations of, or
registrations, qualifications, designations, declarations or filings with
any federal or state governmental authority on the part of the Seller
required in connection with the valid execution and delivery of this
Agreement, the offer, sale or issuance of the Series D Shares, the
Warrants, or the consummation of any other transaction contemplated hereby
have been obtained, or will be obtained prior to the Closing, except for
notices required to be filed with certain state and federal securities
commissions after the Closing, which notices will be filed on a timely
basis.
(u) The Seller (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchaser
harmless of and from any liability for any commission or compensation in
the nature of a finder's fee to any broker or other
22
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the Seller or any of its
employees or representatives is responsible.
(v) None of the documents, instruments, or other information furnished
to the Purchaser by the Seller contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make any
statements made therein not misleading. No representation, warranty, or
statement made by the Seller in this Agreement or in any applicable
document, certificate, exhibit or schedule attached hereto or thereto or
delivered in connection herewith or therewith, contains or, at the Closing
Date, will contain any untrue statement of a material fact, or, at the
Closing Date, omits or will omit to state a material fact necessary to make
any statements made herein or therein not misleading. There is no fact
that materially and adversely affects the condition (financial or
otherwise), results of operations, business, properties, or prospects of
the Seller or any of its Subsidiaries that has not been disclosed in the
documents provided to the Purchaser.
(w) If the Seller fails or refuses to comply with or otherwise
breaches the agreements or representations contained in this Agreement in
any material respect and does not correct such failure or breach within 60
days after written notice of such failure or breach is delivered to the
Seller, then in addition to all other remedies available to the Purchasers,
the Purchasers holding a majority of the Series D Shares may demand, in
writing, that the Seller repurchase all Series D Shares acquired by the
Purchaser at a price equal to the liquidation price plus accrued dividends.
3.02 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller:
(a) Unless such Purchaser is a natural person, it is a corporation,
limited partnership or limited liability company, as the case may be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) It has the right and power and is duly authorized to enter into,
execute, deliver, and perform this Agreement, and its officers, managers or
agents executing and delivering this Agreement are duly authorized to do
so. This Agreement has been duly and validly executed, issued, and
delivered and constitutes the legal, valid, and binding obligation of such
Purchaser, enforceable in accordance with their respective terms.
(c) It (i) is an "accredited investor," as that term is defined in
Regulation D under the Securities Act; (ii) has such knowledge, skill, and
experience in business and financial matters, based on actual
participation, that it is capable of evaluating the merits and risks of an
investment in the Seller and the suitability thereof as an investment for
each Purchaser; (iii) has received and reviewed all such financial and
other information and records of the Seller as it considered necessary or
appropriate in deciding whether to purchase the Series D Shares and the
Warrants and any securities issuable upon exercise of the Warrants, and the
Seller has made available to it the opportunity to ask questions of, and to
receive answers and to obtain additional information from, representatives
of the Seller; (iv) all such additional information has been provided to
and reviewed by it; and (v) it has the ability to bear the economic risks
of losing its entire investment in the
23
Series D Shares and the Warrants and any securities issuable upon exercise
of the Warrants.
(d) Except as otherwise contemplated by this Agreement, each Purchaser
is acquiring its Series D Shares, its Warrants and any securities issuable
upon exercise of the Warrants for investment for its own account and not
with a view to any distribution thereof in violation of applicable
securities laws.
(e) It agrees that the certificates representing its Series D Shares,
its Warrants, and any Issued Warrant Shares will bear the legends
referenced in this Agreement, and such Series D Shares, Warrants or
Issuable Warrant Shares, as the case may be, will not be offered, sold, or
transferred in the absence of registration or exemption under applicable
securities laws.
(f) It has no current contract, undertaking, agreement, arrangement or
understanding with any Person to sell, transfer, grant any participation
in, or otherwise distribute any of the Series D Shares, the Warrants or the
Issuable Warrant Shares to any Person.
Article IV
Covenants of the Seller
4.01. Financial Statements. The Seller will keep books of account and
--------------------
prepare financial statements and, except as such time as the Seller is subject
to the periodic reporting requirements of the Securities Exchange Act of 1934,
as amended, will cause to be furnished to each Purchaser and each other Holder
(all of the foregoing and following to be kept and prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis):
(a) As soon as available, but in any event within 90 days after the end
of each fiscal year of the Seller, either (A) a copy of the Seller's Annual
Report on Form 10-K (or any successor form) and any documents incorporated
by reference into such form for the prior fiscal year, as filed with the
Commission under the Exchange Act, or (B) a copy of the consolidated
balance sheet of the Seller and its consolidated Subsidiaries as at the end
of such year and the related consolidated statement of income and retained
earnings and of cash flow for such year, setting forth in each case in
comparative form the figures for the previous year certified by Xxxxxx
Xxxxxxxx & Co., L.L.C. or by another firm of nationally recognized
independent certified public accountants, and the consolidated balance
sheet of the Seller and its consolidated Subsidiaries as at the end of such
fiscal year, showing inter-company eliminations, and the related
consolidating statements of income and retained earnings and changes in
financial position of the Seller and its consolidated Subsidiaries for such
year, showing inter-company eliminations, setting forth in each case in
comparative form the figures for the previous fiscal year, certified by
Xxxxxx Xxxxxxxx & Co., L.L.C. or by another firm of nationally recognized
independent certified public accountants.
(b) As soon as available but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of
the Seller, either (A) a copy of the Seller's Quarterly Report on Form 10-Q
(or any successor form) for the preceding fiscal
24
quarter, as filed with the Commission under the Exchange Act, or (B) the
unaudited consolidated balance sheet of the Seller and its consolidated
Subsidiaries as at the end of each such quarter and the related unaudited
consolidated statements of income and retained earnings and of cash flow of
the Seller and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through such date setting forth in each case in
comparative form the figures for the same period of the previous fiscal
year, certified by the chief financial or accounting officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
(c) Promptly after the sending or filing thereof, as the case may be,
copies of any reports, certificates, budgets, definitive proxy statements
or financial statements which Seller sends to its shareholders and copies
of any regular periodic and special reports or registration statements
which Seller files with the Commission (or any governmental agency
substituted therefor), including, but not limited to, any report or
registration statement which Seller files with any national securities
exchange.
(d) If such holder is a Regulated Holder, such financial statements
and other information as such Regulated Holder may from time to time
reasonably request for the purpose of assessing the Seller's financial
condition for purposes of complying with applicable laws or regulations.
(e) All such financial statements to be prepared in reasonable detail
and in accordance with generally accepted accounting principles applied
consistently throughout the periods reflected therein (except as approved
by such accountants and officer and disclosed therein).
4.02 Inspection. The Seller will permit any representative designated by
----------
a Holder or Holders collectively holding at least 500 shares of Series D
Preferred Stock to (a) visit and inspect any of the properties of the Seller;
(b) examine the corporate and financial records of Seller and make copies
thereof or extracts therefrom; and (c) discuss the affairs, finances, and
accounts of the Seller with the directors, officers, key employees, and
independent accountants of the Seller. The inspections, examinations and
discussions provided for in the preceding sentence shall be conducted during
normal business hours, shall be reasonable in scope and shall not disrupt or
adversely affect any aspect of the operations of the Seller.
4.03 Notice.
------
(a) In the event of (i) any setting by the Seller of a record date
with respect to the holders of any class of Capital Stock for the purpose
of determining which of such holders are entitled to dividends, repurchases
of securities or other distributions, or any right to subscribe for,
purchase or otherwise acquire any shares of Capital Stock or other property
or to receive any other right; or (ii) any capital reorganization of the
Seller, or reclassification or recapitalization of the Capital Stock or any
transfer of all or a majority of the assets, business, or revenue or income
generating capacity of the Seller, or consolidation, merger, share
exchange, reorganization, or similar transaction involving the Seller; or
(iii) any voluntary or involuntary dissolution, liquidation, or winding up
of the Seller; or (iv) any proposed issue or grant by the Seller of any
Capital Stock, or any right or option to subscribe for, purchase, or
otherwise acquire any Capital Stock (other
25
than the issue of Issuable Warrant Shares upon exercise of the Warrants or
pursuant to the Seller's 1997 Long-Term Incentive Plan), then, in each such
event, the Seller will deliver or cause to be delivered to the Holders a
notice specifying, as the case may be, (A) the date on which any such
record is to be set for the purpose of such dividend, distribution, or
right, and stating the amount and character of such dividend, distribution,
or right; (B) the date as of which the holders of record will be entitled
to vote on any reorganization, reclassification, recapitalization,
transfer, consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding-up; (c) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, conveyance, dissolution, liquidation, or winding-up is to take
place and the time, if any is to be fixed, as of which the holders of
record of any class of Capital Stock will be entitled to exchange their
shares of Capital Stock for securities or other property deliverable upon
such event; and (D) the amount and character of any Capital Stock property,
or rights proposed to be issued or granted, the consideration to be
received therefor, and, in the case of rights or options, the exercise
price thereof, and the date of such proposed issue or grant and the Persons
or class of Persons to whom such proposed issue or grant will be offered or
made. Any such notice will be deposited in the United States mail, postage
prepaid, at least thirty (30) days prior to the date therein specified, and
notwithstanding anything in this Agreement or the Warrants to the contrary
the Holders may exercise the Warrants within thirty (30) days from the
mailing of such notice. The Seller shall, promptly on request of a Holder,
provide such other information as the Holders may reasonably request.
(b) If there is any adjustment as provided above in Article II
(other than as provided in Section 2.08(a)), or if any Other Securities
become issuable in lieu of shares of such Common Stock upon exercise of the
Warrants, the Seller will immediately cause written notice thereof to be
sent to each Holder, which notice will be accompanied by a certificate of
the independent public accountants of the Seller setting forth in
reasonable detail the basis for the Holders' becoming entitled to receive
such Other Securities, the facts requiring any such adjustment in the
number of shares receivable after such adjustment, or the kind and amount
of any Other Securities so purchasable upon the exercise of the Warrants,
as the case may be. At the request of any Holder and upon surrender of the
Warrant of such Holder, the Seller will reissue such Warrant of such Holder
in a form conforming to such adjustments.
4.05 Warrant Rights. The Seller covenants and agrees that during the
--------------
term of this Agreement and so long as any of the Warrants are outstanding, (a)
the Seller will at all times have authorized and reserved a sufficient number of
shares of Common Stock and Series B Preferred Stock, to provide for the exercise
in full of the rights represented by the Warrants; (b) the Seller will not
increase or permit to be increased the par value per share or stated capital of
the Issuable Warrant Shares or the consideration receivable upon issuance of its
Issuable Warrant Shares; and (c) in the event that the exercise of the Warrants
would require the payment by the Holder of consideration for the Common Stock or
Series B Preferred Stock receivable upon such exercise of less than the par or
stated value of such Issuable Warrant Shares, subject to any required
shareholder approval, the Seller will promptly take such action as may be
necessary to change the par or stated value of such Issuable Warrant Shares to
an amount less than or equal to such consideration.
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4.06 Redemption of Series D Shares. The Series D Shares are subject to
-----------------------------
redemption as provided in the Designation of Terms of Series D Redeemable
Preferred Stock attached hereto as Exhibit A.
Article V
Put Option
5.01 Grant of Option. In the event that Seller has not completed a
---------------
Qualified Public Offering prior to the Put Option Period (as defined below),
each Purchaser shall have an option to sell to the Seller, and the Seller is
obligated to purchase from each Purchaser under such option (the "Put Option"),
all (or such portion as is designated by any such Purchaser pursuant to Section
5.03 below) of the Put Shares. The Put Option will be effective at any time
after the five-year anniversary of the Closing Date or at any earlier time or
times after the occurrence of one of the following events (the "Put Option
Period"):
(a) A merger, consolidation, share exchange, or similar transaction
involving the Seller, as a result of which stockholders of the Seller
immediately prior to such acquisition possess a minority of the voting
power of the acquiring entity immediately following such acquisition, or
sale in one or more related transactions of all or a substantial portion of
the assets, business, or revenue or income generating operations of the
Seller or any substantial change in the type of business conducted by the
Seller; or
(b) After any failure of the Seller in any material respect to
perform or comply with any of its obligations hereunder; provided, however,
-------- -------
that the Put Option Period will continue with respect to such default or
other failure, even after the same has been cured, if notice of exercise of
the Put Option by such Purchaser is provided pursuant to this Article V
during the continuance of such default or such other failure, as the case
may be.
5.02 Put Price. In the event that any Purchaser exercises the Put Option,
---------
the price (the "Put Price") to be paid to each such Purchaser pursuant to this
Agreement will be cash in the sum of the amount determined by (1) multiplying
the higher of (a) the Book Value or (b) the Fair Market Value per share of
Warrant Shares as of the end of the month immediately preceding the date notice
is given of the exercise of the Put Option pursuant to Section 5.03 times the
number of shares of Warrant Shares for which the Put Option is being exercised
by such Purchaser and (2) subtracting an amount equal to (a) the Exercise Price
multiplied by (b) the number of Issuable Warrant Shares.
5.03 Exercise of Put Option. The Put Option may be exercised during the
----------------------
Put Option Period with respect to all or any portion of the Put Shares. Such
option shall be exercised by such Purchaser giving notice to the Seller and each
other Purchaser during the Put Option Period of the Purchaser's election to
exercise the Put Option, and the date of the Put Option Closing, which will be
not less than fifteen (15) nor more than ninety (90) days after the date of such
notice. The Seller will provide each Purchaser desiring to exercise its Put
Option the name and address of each other Purchaser. Notwithstanding the
foregoing, if a Purchaser receives such notice of another Purchaser's exercise
of such other Purchaser's Put Option, the Purchaser receiving such notice may
elect to exercise its Put Option and designate a Put Option Closing simultaneous
and pari passu with that of such other Purchaser.
27
5.04 Certain Remedies. In the event that the Seller defaults in its
----------------
obligation to purchase all or any portion of the Put Shares upon exercise of the
Put Option, in addition to any other rights or remedies of each Purchaser, the
unpaid portion of the Put Price will bear interest at the lesser of (a) eighteen
percent (18%) per annum, compounded monthly, or (b) the highest rate permitted
by applicable law. The Seller will, upon the request of any Purchaser, execute
and deliver to such Purchaser a promissory note in form and substance
satisfactory to such Purchaser evidencing such obligation.
5.05 Put Option Closing. The closing for the purchase and sale of all or
------------------
such portion of the Put Shares as to which the Purchaser has notified the Seller
of its intention to exercise the Put Option, will take place at the office of
the Seller on the date specified in such notice of exercise (a "Put Option
Closing"). At any Put Option Closing, to the extent applicable, the Purchaser of
the Put Shares will deliver the certificate or certificates evidencing the Put
Shares being purchased, duly endorsed in blank. In consideration therefor, the
Seller will deliver to the Purchaser the Put Price, which will be payable in
cash.
Article VI
Registration Rights
6.01 Registration Rights.
-------------------
(a) If, at any time after the date hereof, the Seller proposes
to register any of its securities under the Securities Act (except pursuant
to a registration statement filed on Form S-8 or Form S-4 or such other
form as shall be prescribed under the Act for substantially similar
purposes), it will at each such time give written notice (which notice
shall state the intended method of disposition thereof by the prospective
sellers) to all holders of outstanding Registrable Securities of its
intention to do so and the proposed minimum offering price per Registrable
Securities and upon the written request of any holder thereof given within
10 days after the Seller's giving of such notice, the Seller will use its
reasonable best efforts to effect the registration of the Registrable
Securities which it shall have been so requested to register by including
the same in such registration statement all to the extent required to
permit the sale or other disposition thereof in accordance with the
intended method of sale or other disposition given in each such request. If
the registration of which the Seller gives notice pursuant to this
subsection (c) is for an underwritten public offering, only Registrable
Securities which are to be included in the underwriting may be included in
such registration, and the Seller shall have the right to designate the
managing underwriter(s) in any such underwritten public offering; provided
that (i) the Seller shall use its commercially reasonable efforts to cause
the managing underwriter(s) to include the Registrable Securities requested
to be included in the registration in the underwriting; (ii) if the
managing underwriter(s) advises the holders of the Registrable Securities
and all other Persons seeking to include securities of the Seller held by
them in such registration statement ("Other Security Holders") in writing
that the total amount of securities which they and the Seller intend to
include in such offering is sufficiently large to materially and adversely
affect the success of such offering, the amount of securities to be offered
shall be reduced pro rata among the holders of the Registrable Securities
and all Other Security Holders (based upon the amount of securities each
such Person, other than the Seller, sought to include in the offering) to
the extent necessary to
28
reduce the total amount of securities to be included in the offering to the
amount recommended by such managing underwriter(s) (which amount may be
zero, if so recommended by such managing underwriter(s) [Priority vis-a-vis
other stockholders with registration rights to be discussed]. Any
registration statement filed pursuant to this subsection (c) may be
withdrawn at any time at the discretion of the Seller.
(b) If a registration under subsection (a) shall be in connection
with an underwritten public offering, each holder of Registrable Securities
shall be deemed to have agreed by acquisition of such Registrable
Securities not to effect any sale or distribution, including any sale
pursuant to Rule 144 or Rule 144A, of any Registrable Securities, and not
to effect any such sale or distribution of any other equity security of the
Seller or of any security convertible into or exchangeable or exercisable
for any equity security of the Seller (other than as part of such
underwritten public offering) within seven days before or 180 days after
the effective date of such registration statement (and the Seller hereby
also so agrees and agrees to cause each holder of any equity security, or
of any security convertible into or exchangeable or exercisable for any
equity security, of the Seller purchased from the Seller at any time other
than in a public offering, so to agree).
(c) As a condition to the inclusion of a holder's Registrable
Securities in any registration statements, each such holder of Registrable
Securities requesting registration thereof will furnish to the Seller such
information with respect to such holder as is required to be disclosed in
the registration statement (and the prospectus included therein) by the
applicable rules, regulations and guidelines of the Commission. Failure of
a holder to furnish such information or agreement shall not affect the
obligation of the Seller under this Section 6.01 to the remaining holders
who furnish such information.
(d) If and whenever the Seller is required under this Section 6.01
to use its commercially reasonable efforts to effect the registration of
Registrable Securities under the Securities Act, the Seller shall:
(i) as expeditiously as possible and subject to the limitations
set forth in subsection (a), prepare and file with the Commission a
registration statement on the appropriate form with respect to such
Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as practicable
after such filing;
(ii) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering
such Registrable Securities and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and usable for resale for a period necessary to complete the
distribution of such securities, but in no event in excess of 24
months plus any period during which the holders of Registrable
Securities are obligated to refrain from selling because the Seller is
required to amend or supplement the prospectus under subsection
(d)(iv), and to comply with the provisions of the Securities Act with
respect to the
29
disposition of all Registrable Securities covered by such registration
statement during such period in accordance with the intended method of
disposition of the sellers set forth therein;
(iii) as expeditiously as possible, furnish to each seller of
such Registrable Securities registered, or to be registered under the
Securities Act, and to each underwriter, if any, of such Registrable
Securities such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act,
and such other documents as such seller or underwriter may reasonably
request in order to facilitate the public sale or other disposition of
such Registrable Securities
(iv) as expeditiously as possible, notify each seller of such
Registrable Securities if, at any time when a prospectus relating to
such Registrable Securities, is required to be delivered under the
Securities Act, any event shall have occurred as a result of which the
prospectus then in use with respect to such Registrable Securities
would include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or for any other reason it shall be
necessary to amend or supplement such prospectus in order to comply
with the Securities Act and prepare and furnish to all sellers as
promptly as possible, and in any event within ninety (90) days of such
notice, a reasonable number of copies of a supplement to or an
amendment of such prospectus which will correct such statement or
omission or effect such compliance;
(v) as expeditiously as possible, use its reasonable best
efforts to register or qualify such Registrable Securities under such
other securities or blue sky laws of such jurisdictions as such seller
shall reasonably request and do any and all other acts and things
which may be reasonably necessary to enable such seller to consummate
the public sale or other disposition in each such jurisdiction of the
Registrable Securities owned by such seller and included in such
registration statement, provided that the Seller shall not be required
to consent to the general service of process or to qualify to do
business in any jurisdiction where it is not then qualified;
(vi) use its reasonable best efforts to keep the holders of such
Registrable Securities informed of the Seller's best estimate of the
earliest date on which such registration statement or any post-
effective amendment or supplement thereto will become effective and
will promptly notify such holders and the managing underwriters, if
any, participating in the distribution pursuant to such registration
statement of the following: (A) when such registration statement or
any post-effective amendment or supplement thereto becomes effective
or is approved; (B) of the issuance by any competent authority of any
stop order suspending the effectiveness or qualification of such
registration statement or the prospectus then in use or the initiation
or threat of any proceeding for that purpose; and (c) of the
suspension of the qualification of any Registrable Securities included
in such registration statement for sale in any jurisdiction;
30
(vii) make available to its security holders, as soon as
practicable, an earnings statement covering a period of at least
twelve months which satisfies the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(viii) cooperate with the sellers of such Registrable Securities
and the underwriters, if any, of such Registrable Securities; give
each seller of such Registrable Securities, and the underwriters, if
any, of such Registrable Securities and their respective counsel and
accountants, such access to its books and records and such
opportunities to discuss the business of the Seller with its officers
and independent public accountants as shall be necessary to enable
them to conduct a reasonable investigation within the meaning of the
Securities Act and, in the event that Registrable Securities are to be
sold in an underwritten offering, enter into an underwriting agreement
containing customary representations and warranties, covenants,
conditions and indemnification provisions, including without
limitation the furnishing to the underwriters of a customary opinion
of independent counsel to the Seller and a customary "comfort" letter
from the Seller's independent public accountants;
(ix) provide a CUSIP number for all Registrable Securities not
later than the effective date of the registration statement;
(x) as to all registrations under subsection (a), pay all
costs and expenses incident to the performance and compliance by the
Seller of this Section 6.01, including without limitation (A) all
registration and filing fees; (B) all printing expenses; (C) all fees
and disbursements of counsel and independent public accountants for
the Seller; (D) all blue sky fees and expenses (including fees and
expenses of counsel in connection with blue sky surveys); (E) all
transfer taxes; (F) the entire expense of any special audits required
by the rules and regulations of the Commission; (G) the cost of
distributing prospectuses in preliminary and final form as well as any
supplements thereto and (H) the fees and expenses of one counsel for
the holders of the Registrable Securities being registered; and
(e) (i) The Seller will indemnify and hold harmless each seller
of Registrable Securities, each director, officer, employee and agent
of each seller, and each other person, if any, who controls such
seller within the meaning of the Securities Act or the Exchange Act
from and against any and all losses, claims, damages, liabilities and
legal and other expenses (including costs of investigation) caused by
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Registrable
Securities were registered under the Securities Act, any prospectus or
preliminary prospectus contained therein or any amendment or
supplement thereto, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to such seller
and furnished to the Seller in writing by such seller expressly for
use therein, and provided that the Seller will not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if
31
any, who controls such underwriter within the meaning of the
Securities Act under the indemnity agreement in this subsection (e)
with respect to any preliminary prospectus or the final prospectus or
the final prospectus as amended or supplemented, as the case may be,
to the extent that any such loss, claim, damage or liability of such
underwriter or controlling Person results from the sale by such
underwriter of Registrable Securities to a Person to whom there was
not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as
then amended or supplemented, whichever is most recent, if the Seller
has previously furnished copies thereof to such underwriter, or from a
sale to a Person in a state where the offering has not been registered
or qualified, if the Seller has notified the seller and any
underwriter involved in such sale of the states where the offering has
been registered or qualified.
(ii) It shall be a condition to the obligation of the Seller
to effect a registration of Registrable Securities under the
Securities Act pursuant hereto that (X) each seller, severally and not
jointly, indemnify and hold harmless the Seller and each person, if
any, who controls the Seller within the meaning of the Securities Act
or the Exchange Act to the same extent as the indemnity from the
Seller in the foregoing paragraph, but only with reference to any
breach by such seller of any agreement between such seller, and the
Seller with respect to the offering and with reference to information
relating to such seller furnished to the Seller in writing by such
seller expressly for use in the registration statement, any prospectus
or preliminary prospectus contained therein or any amendment or
supplement thereto and (Y) each seller, in the event that Registrable
Securities are to be sold in an underwritten offering, enters into an
underwriting agreement containing customary representations and
warranties, covenants, conditions and indemnification provisions.
(iii) In case any claim shall be made or any proceeding
(including any governmental investigation) shall be instituted
involving any indemnified party in respect of which indemnity may be
sought pursuant to this subsection (g), such indemnified party shall
promptly notify the indemnifying party in writing of the same,
provided that failure to notify the indemnifying party shall not
relieve it from any liability it may have to an indemnified party
otherwise than under this subsection (g). The indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party in such proceeding and shall pay the fees and disbursements of
such counsel. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and disbursements of
such counsel shall be at the expense of such indemnified party unless
(A) the indemnifying party shall have failed to retain counsel for the
indemnified party as aforesaid, (B) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel or (C) representation of such indemnified party by the counsel
retained by the indemnifying party would, in the reasonable opinion of
the indemnified party, be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding, provided that the
Seller shall not be liable for the fees and
32
disbursements of more than one additional counsel for all indemnified
parties. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection (e)
is due in accordance with its terms but is for any reason held by a court
to be unavailable on grounds of policy or otherwise, the Seller or the
applicable sellers, as the case may be, shall contribute to the aggregate
losses, claims, damages and liabilities incurred (including legal or other
expenses reasonably incurred in connection with the investigating or
defending of same) by the other and for which such indemnification was
sought. In determining the amount of contribution to which the respective
parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the securities included in the
registration statement (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances;
provided, however, that (i) in no case shall any seller of Registrable
Securities be required to contribute any amount in excess of the total
public offering price of the Registrable Securities sold by him and (ii) 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. For
purposes of this subsection (f), each person who controls any seller of
Registrable Securities or the Seller shall have the same rights to
contribution as such seller or the Seller. Any party entitled to
contribution shall, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
for contribution may be made against the Seller or the seller of
Registrable Securities under this subsection (f), notify the Seller or such
seller, as the case may be, but the omission to so notify the Seller or
such seller, as the case may be, shall not relieve it from any other
obligation it may have hereunder or otherwise.
(g) After the date hereof, the Seller shall not grant to any holder of
securities of the Seller any registration rights which have a priority
greater than or equal to those granted to holders of Registrable Securities
pursuant to this Section 6.01 without the prior written consent of the
holders of at least a majority of the aggregate outstanding Registrable
Securities, voting as a single group.
Article VII
Conditions
The obligations of each Purchaser under this Agreement to purchase Series D
Shares and the Warrants at the Closing are subject to the fulfillment at or
before the Closing of each of the following conditions, any of which may be
waived in writing by such Purchaser:
33
7.01 Representations and Agreements. The representations and
------------------------------
warranties of the Seller contained in this Agreement shall be true, correct and
complete as of the Closing. The Seller shall have performed or fulfilled all
agreements, obligations and conditions contained herein required to be performed
or fulfilled by the Seller at the Closing.
7.02 Due Diligence. The Purchaser shall be satisfied with its due
-------------
diligence investigation of the affairs of the Seller, including, without
limitation, its review of the interim unaudited financial statements of the
Seller at and for the two (2) months ended February 28, 1998. For purposes of
this section, a Purchaser shall be deemed to be satisfied with its due diligence
investigation unless, on or prior to March 31, 1998, such Purchaser gives
written notice to the Seller that such Purchaser is not so satisfied and is
electing not to consummate the transactions contemplated hereby, which notice
shall specify, with reasonable particularity, the basis of such election. No
waiver of rights for breach of representations arises from such due diligence
investigation.
7.03 Proceedings. All corporate and legal proceedings taken by the
-----------
Seller in connection with the transactions contemplated hereby and all documents
and papers relating to such transactions shall be satisfactory to the
Purchasers, in the reasonable exercise of the judgment of the Purchaser.
7.04 Opinion. The Purchasers shall have received a favorable legal
-------
opinion, dated the Closing Date, from counsel to the Seller, substantially in
the form attached as Exhibit C.
7.05 Blue Sky Qualifications. The Seller shall have obtained all
-----------------------
necessary Blue Sky permits and qualifications, or secured exemptions therefrom,
required by any state for the offer and sale of the Series D Shares and the
Warrants.
7.06 Reservation of Common Stock and Series B Preferred Stock. The
--------------------------------------------------------
Purchaser shall have received evidence satisfactory to the Purchaser that the
Seller has reserved a sufficient number of shares of Common Stock and Series B
Preferred Stock for the Purchaser to exercise the Warrants.
7.07 Amendment to Articles of Incorporation. The Articles of
--------------------------------------
Incorporation and any other necessary documents shall be amended to provide for
the Series D Preferred Stock and if necessary to increase the number of
authorized shares of Common Stock and/or Series B Preferred Stock to allow for
issuance of the Common Stock and/or Series B Preferred Stock upon exercise of
the Warrants
7.08 Consent of the holders of the Series A Preferred Stock and Series
-----------------------------------------------------------------
B Preferred Stock. The consent of the holders of the Series A Preferred Stock
-----------------
and Series C Preferred Stock required in order to establish the rank and
priority of the Series D Preferred Stock with respect to such Series A Preferred
Stock and Series C Preferred Stock shall have been obtained.
7.09 Deliveries at Closing. The Seller shall have delivered to the
---------------------
Purchaser on the date of Closing:
(a) An Officer's Certificate dated the Closing Date, stating
that the conditions set forth in Section 7.01 have been satisfied;
34
(b) Copies of the Articles of Incorporation and Bylaws of the
Seller, each certified by an officer of the Seller;
(c) Copies of the resolutions of the Seller's Board of
Directors, authorizing the transactions contemplated hereby; and
(d) Such other documents relating to the transactions
contemplated by this Agreement as such Purchaser or such Purchaser's
counsel may reasonably request.
Article VIII
Miscellaneous
8.01 Use of Pronouns. All pronouns and any variations thereof used
---------------
herein shall be deemed to refer to the masculine, feminine, singular or plural,
as the identity of the person or persons may require.
8.02 Amendments. Neither this Agreement nor any provision hereof
----------
shall be waived, modified, changed, discharged, terminated, revoked or canceled
except by an instrument in writing signed by the party effecting the same
against whom any change, discharge or termination is sought.
8.03 Headings. The headings in this Agreement are for convenience and
--------
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
8.04 Severability. The parties to this Agreement expressly agree that
------------
it is not the intention of any of them to violate any public policy, statutory
or common law rules, regulations, or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation, or decision, the provision, section, sentence, word, clause, or
combination thereof causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision, sentence, word, clause, or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties, unless the inoperative provision would
cause enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
8.05 Notices. Notices required or permitted to be given hereunder
-------
shall be in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed: (i)
if to the Seller, to Satellink Communications, Inc., 0000 Xxxxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, with a copy
(which shall not constitute notice) to Xxxxxx & Bird, One Atlantic Center, 0000
Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx,
Esq., or (ii) if to the Purchaser, to the address for correspondence set forth
on the signature page to this Agreement, or at such other address as may have
been specified by written notice given in accordance with this Section 8.05.
35
8.06 Remedies. Failure of the Seller or the Purchaser to exercise any
--------
right or remedy under this Agreement or any other agreement between the Seller
and the Purchaser, or otherwise, or delay by the Seller or the Purchaser in
exercising such right or remedy, will not operate as a waiver thereof. No
waiver by the Seller or the Purchaser will be effective unless and until it is
in writing and signed by the Seller or the Purchaser, as the case may be.
8.07 Choice of Law. This Agreement shall be enforced, governed and
-------------
construed in all respects in accordance with the laws of the State of Georgia,
as such laws are applied by the Georgia courts to agreements entered into and to
be performed in Georgia by and between residents of Georgia, and shall inure to
the benefit of and be binding upon the Purchaser, the Purchaser's heirs, estate,
legal representatives, successors and assigns and shall inure to the benefit of
and be binding upon the Seller, its successors and assigns. If any provision of
this Stock Purchase Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed modified to conform
with such statute or rule of law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provisions hereof.
8.08 Successors. This Agreement will be binding upon and inure to the
----------
benefit of the parties and their respective successors and assigns; provided,
--------
however, that no sale, assignment or other transfer by any party to this
-------
Agreement of any of its Capital Stock or rights hereunder to another Person will
be valid and effective unless and until the transferee or assignee first agrees
in writing to be bound by the terms and conditions of this Agreement and the
agreements and instruments related hereto, in a form and substance reasonably
satisfactory to the Seller.
8.09 Survival. The representations, warranties and agreements
--------
contained in this Agreement shall survive the execution and delivery of this
Agreement.
8.10 Confidentiality. All nonpublic information disclosed by any of
---------------
the parties hereto to the representatives of the other parties shall be kept
strictly confidential.
8.11 Entire Agreement. The Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto.
8.12 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Telecopy transmission of
signatures shall be deemed originals.
36
SATELLINK COMMUNICATIONS, INC.
SIGNATURE PAGE
The Purchaser hereby purchases for the number of Series D Shares Warrants as set
forth below.
1. Dated: April 3, 1998.
2. Number of Series D Shares purchased:
-------------
3. Number of Warrants purchased:
----------------
4. Aggregate purchase price for number of Series D Shares purchased, at
$1,000.00 per Share: $
------------------
5. Other Securities of Seller held by the Purchaser:
[PURCHASER]
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Address:
------------------------------
--------------------------------------
--------------------------------------
Taxpayer I.D. No.
--------------------
SATELLINK COMMUNICATIONS, INC.
Dated: By:
-------------------- -----------------------------------
Chief Executive Officer
37
EXHIBIT A
Designation of Terms of Series D Redeemable Preferred Stock
DESIGNATION OF TERMS OF
SERIES D REDEEMABLE PREFERRED STOCK
G. SERIES D REDEEMABLE PREFERRED STOCK. The authorized shares of
Preferred Stock of the Corporation shall include a series designated
as Series D Redeemable Preferred Stock (the "Series D Preferred
Stock"). The rights, preferences, privileges and restrictions granted
to and imposed upon the Series D Preferred Stock are:
Section 1. Designation and Rank.
--------- --------------------
The number of shares which shall constitute the Series D Preferred
Stock shall be 4,500 shares, $.01 par value per share. All shares of Series D
Preferred Stock shall rank equally and be identical in all respects. As long as
any shares of the Series D Preferred Stock are issued and outstanding, the
Corporation shall be restricted from issuing additional securities of any kind,
including shares of preferred stock of any class, series or designation, which
rank on a parity with or senior to the Series D Preferred Stock. Issuances of
the Series D Preferred shall be limited to issuances pursuant to the terms of
that certain Preferred Stock and Warrant Purchase Agreement (the "Purchase
Agreement") dated as of March ___, 1998, between the Corporation and each of
the purchasers named therein.
Section 2. Definitions.
--------- -----------
Unless the context otherwise requires, the terms defined in this
Section 2 shall have, for all purposes of this Article V.G., the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
"Business Day" shall mean a day other than a Saturday, a Sunday or any
other day on which banking institutions in Georgia generally are not open for
business.
"Series D Dividend Payment Date" shall mean the last day of each month
during the Series D Dividend Payment Period.
"Series D Dividend Payment Period" shall mean the period from, and
including, the Initial Issue Date to, but not including, the date all the
outstanding shares of Series D Preferred Stock are redeemed and the redemption
price is paid in full.
"Series D Dividend Period" shall mean a monthly dividend period
commencing on the Initial Issue Date and thereafter on the first day of each
month and ending on and including the day preceding the first day of the next
succeeding Series D Dividend Period.
"Series D Dividend Record Date" shall mean the close of business on
the date that is one (1) Business Day prior to any Series D Dividend Payment
Date.
"Initial Issue Date" shall mean the date that shares of Series D
Preferred Stock are first issued by the Corporation.
"Liquidation Preference" shall mean, with respect to each share of
Series D Preferred Stock outstanding, $1,000.00 per share.
"Redemption Date" shall mean with respect to each share of Series D
Preferred Stock the date on which such share is redeemed and the redemption
price for such share is paid in full.
"Series D Preferential Amount" shall mean, with respect to each share
of Series D Preferred Stock outstanding, an amount equal to the Liquidation
Preference plus all accrued and unpaid dividends thereon.
Section 3. Dividends.
--------- ---------
(a) The holders of shares of the Series D Preferred Stock shall be
entitled to receive, when, as and if declared by the board of directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at an annual rate of 8.5% of the Liquidation Preference per share of the Series
D Preferred Stock. Such dividends shall be cumulative from the Initial Issue
Date, whether or not in any Series D Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of such dividends
and whether or not such dividends are declared, and shall be payable monthly,
when, as and if declared by the board of directors of the Corporation on a
Series D Dividend Payment Date. If such Series D Dividend Payment Date shall be
on a day other than a Business Day, then the Series D Dividend Payment Date
shall be on the next succeeding Business Day. Each such dividend shall be
payable in arrears to the holders of record of shares of the Series D Preferred
Stock, as they appear on the stock records of the Corporation at the Series D
Dividend Record Date. Dividends on the Series D Preferred Stock shall accrue
(whether or not declared) on a daily basis from the Initial Issue Date and
accrued dividends for each Series D Dividend Period shall accumulate to the
extent not paid on the Series D Dividend Payment Date first following the
Series D Dividend Period for which they accrue. As used herein, the term
"accrued" with respect to dividends includes both accrued and accumulated
dividends. Accrued and unpaid dividends for any past Series D Dividend Periods
may be declared and paid at any time, without reference to any regular payment
date, to holders of record on the applicable Series D Dividend Record Date, not
exceeding 45 days prior to the payment date thereof, as may be fixed by the
board of directors of the Corporation.
(b) The amount of dividends payable for each full Series D Dividend
Period for the Series D Preferred Stock shall be computed by dividing the
annual dividend rate (8.5%) by twelve (rounded down to the nearest cent). The
amount of dividends payable shall be computed on the basis of a 360-day year of
twelve 30-day months. The initial
2
dividend payment will be calculated based on the number of days elapsed from
the Initial Issue Date until the first Series D Dividend Payment Date. The
final dividend payment will be calculated based on the number of days elapsed
from the most recent Series D Dividend Payment Date until the Redemption Date.
(c) Except as otherwise provided in this Article V, so long as any
shares of the Series D Preferred Stock are outstanding, no other stock of the
Corporation ranking on a parity with or junior to the Series D Preferred Stock
as to dividends or upon liquidation, dissolution or winding up shall be
redeemed, purchased or otherwise acquired for any consideration (except by
conversion into or exchange for shares of the Series C Preferred Stock or other
stock ranking junior to the Series D Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) and no dividends (other than dividends
or distributions paid in shares of or options, warrants or rights to purchase
shares of Class A Common Stock, Class B Preferred Stock or other stock ranking
junior to the Series D Preferred Stock) shall be declared or paid or set apart
for payment, unless in each case (i) the full cumulative dividends, if any,
accrued on all outstanding shares of the Series D Preferred Stock shall have
been paid or set apart for payment for all past Series D Dividend Periods and
(ii) sufficient funds shall have been set apart for the payment of the dividend
for the current Series D Dividend Period with respect to the Series D Preferred
Stock.
Section 4. Voting Rights
--------- -------------
(a) Except as otherwise provided in subsection 4(b) below or as
required by applicable law, prior to redemption as provided herein, the holders
of Series D Preferred Stock shall not be entitled to vote or give a consent to
or on any matters required or permitted to be submitted to the shareholders of
the Corporation for their approval.
(b) So long as any shares of the Series D Preferred Stock remain
outstanding, the consent of the holders of at least sixty-seven percent (67%)
of the shares of the Series D Preferred Stock outstanding at the time given in
person or by proxy either in writing (as permitted by law and the Articles of
Incorporation and Bylaws of the Corporation) 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,
or any security convertible into stock of such class or series,
ranking prior to or on a parity with the Series D Preferred Stock as
to dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Corporation;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Articles
of Incorporation which would adversely affect any right, preference,
privilege or voting power of the Series D Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount
of authorized preferred stock or the
3
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 junior to the
Series D 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 adversely affect such rights, preferences,
privileges or voting powers; or
(iii) any increase in the authorized number or reclassification
of the Series D Preferred Stock.
Section 5. Liquidation.
--------- -----------
The Series D Preferred Stock shall upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, rank pari passu with
---- -----
the Series C Preferred Stock and rank senior and prior to the Class A Common
Stock and any other outstanding class or classes of stock of the Corporation,
including the Corporation's Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock (collectively herein called the "Junior
Securities"), so that holders of shares of Series D Preferred Stock shall be
entitled to be paid before any distribution is made to the holders of the
Junior Securities upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation. The amount payable on each share of Series D
Preferred Stock in the event of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation shall be $1,000.00 per share. If,
upon any such liquidation, dissolution or winding up of the Corporation, its
net assets are insufficient to permit the payment in full of the amounts to
which the holders of all outstanding shares of Series D Preferred Stock and
Series C Preferred Stock are entitled as above provided, the entire net assets
of the Corporation remaining (after full payment is made on any class or
series of stock ranking prior to the Series D Preferred Stock) shall be
distributed among the holders of shares of Series D Preferred Stock in amounts
proportionate to the full preferential amounts to which they and holders of
shares of Series C Preferred Stock and any other preferred shares ranking in
parity with the Series D Preferred Stock are entitled. After such payment shall
have been made in full to the holders of the Series D Preferred Stock and the
Series C Preferred Stock, the holders of the outstanding Series D Preferred
Stock shall be entitled to no further participation in such distribution of the
assets of the Corporation and the remaining assets of the Corporation shall be
divided and distributed among the holders of the other classes of stock then
outstanding according to their respective rights and shares. For the purpose of
this Section 5, the voluntary sale, lease, exchange or transfer, for cash,
shares of stock, securities or other consideration, of all or substantially all
the Corporation's property or assets to, or its consolidation or merger with,
one or more corporations shall not be deemed to be a liquidation, dissolution
or winding up of the Corporation, voluntary or involuntary.
Section 6. Redemption.
--------- ----------
4
(a) The Corporation shall redeem the Series D Preferred Stock upon the
completion of a Qualified Public Offering (as defined below), in whole but not
in part (the "Mandatory Redemption"), out of funds legally available therefor,
subject to the notice provisions of this Section 6 at a redemption price per
share equal to the Series D Preferential Amount. "Qualified Public Offering"
shall mean an underwritten public offering covering the offering and sale of
Common Stock of the Corporation in which the aggregate gross proceeds to the
Corporation equals or exceeds $15,000,000.
(b) At anytime and from time to time after the first anniversary of
the Initial Issue Date, the Corporation may redeem (subject to the legal
availability of funds), in whole or in part, but in any event in increments of
not less than the lesser of (i) $500,000 or (ii) the amount necessary to redeem
all Series D Preferred Stock, at a redemption price per share equal to the
Series D Preferential Amount.
(c) At anytime after the fifth anniversary of the Initial Issue Date,
the holders of shares of Series D Preferred Stock then outstanding shall have
the option of demanding redemption of the Series D Preferred Stock held by such
holders upon the terms and conditions set forth in this subparagraph 6(c). In
the event the holders of twenty (20%) of the Series D Preferred Stock then
outstanding shall demand such redemption, notice of such demand for redemption
(the "Redemption Demand") shall be given to the Corporation by first class
mail, postage prepaid, mailed not less than 40 nor more than 60 days prior to
the redemption date, as specified by such holders in such notice, to the
Corporation at the address provided in Section 7 hereof.
(d) Not less than 5 days prior to the anticipated, date of a Qualified
Public Offering or within 10 days after the receipt of a Redemption Demand, as
the case may be, the Corporation shall give notice (the "Redemption Notice") to
each holder of record of shares to be redeemed at such holder's address as the
same appears on the stock records of the Corporation. Each such Redemption
Notice shall state: (i) the Redemption Date; (ii) the number of shares of
Series D Preferred Stock to be redeemed; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed shall cease to accrue on such Redemption Date. Redemption Notice
having been mailed as aforesaid, from and after the Redemption Date, unless the
Corporation shall be in default in providing money for the payment of the
redemption price (including any accrued and unpaid dividends to (and including)
the date fixed for redemption), (i) dividends on the shares of the Series D
Preferred Stock so called for redemption shall cease to accrue, (ii) said
shares shall be deemed no longer outstanding, and (iii) all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the moneys payable upon redemption without interest
thereon) shall cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall deposit with a bank or trust
company having an office in Atlanta, Georgia, and having a capital and surplus
of at least $50,000,000, funds necessary for such redemption (and so as to be
and continue to be available therefor), with irrevocable instructions and
authority to such bank or trust company that such funds be applied to the
redemption of
5
the shares of Series D Preferred Stock. Any interest accrued on such funds
shall be paid to the Corporation from time to time. Any funds so deposited and
unclaimed at the end of three years from such Redemption Date shall be released
or repaid to the Corporation, after which, subject to any applicable laws
relating to escheat or unclaimed property, the holder or holders of such shares
of Series D Preferred Stock so called for redemption shall look only to the
Corporation for payment of the redemption price. Notwithstanding the foregoing,
a Mandatory Redemption pursuant to Section 6(a) is expressly conditioned upon
the completion of a Qualified Public Offering.
(e) Upon surrender in accordance with said Redemption Notice of the
certificates for any such shares so redeemed, such shares shall be redeemed by
the Corporation at the redemption price aforesaid.
Section 7. Form of Notice.
---------- ---------------
Except as may be otherwise provided for herein, all notices referred
to herein shall be in writing, and all notices hereunder shall be deemed to
have been given upon receipt, in the case of a Redemption Demand given to the
Corporation as contemplated in Section 6 hereof, or, in all other cases, upon
the earlier of receipt of such notice or three Business Days after the mailing
of such notice if sent by registered mail or overnight delivery (unless
first-class mail shall be specifically permitted for such notice) with postage
prepaid, addressed: if to the Corporation, to its offices at 0000 Xxxxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxxx, or if
to any holder of Series D Preferred Stock, to such holder at the address of
such holder as listed in the stock record books of the Corporation (which may
include the records of any transfer agent for the Series D Preferred Stock); or
to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.
6
EXHIBIT B
Warrant Certificate
EXHIBIT B
---------
FORM OF WARRANT
----------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD,
OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE
SECURITIES LAWS.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS OF PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT, DATED AS OF MARCH __, 1998, BY AND AMONG SATELLINK
COMMUNICATIONS, INC. (THE "COMPANY"), AND THE OTHER PARTIES LISTED ON THE
SIGNATURE PAGES TO SUCH AGREEMENTS (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED,
MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE "PURCHASE
AGREEMENT"). COPIES OF THE PURCHASE AGREEMENT ARE AVAILABLE AT THE
EXECUTIVE OFFICES OF THE COMPANY.
[________] shares of
Common Stock and/or Series B Preferred Stock,
par value $.01 per share,
of the Company Warrant No. [__]
WARRANT TO PURCHASE COMMON STOCK
AND/OR SERIES B PREFERRED STOCK
OF SATELLINK COMMUNICATIONS, INC.
This is to certify that, for good and valuable consideration, which is
hereby acknowledged as received, ("Purchaser"), its successors and registered
assigns, is entitled at any time after April 3, 1998 and prior to 12:00
midnight, New York time, on April 3, 2008, to exercise this Warrant to purchase
shares of the Class A Common Stock, par value $.01 per share, or Series B
Convertible Preferred Stock, par value $.01 per share, of Satellink
Communications, Inc., a Georgia corporation (the "Company"), as the same shall
be adjusted from time to time pursuant to the provisions of the Purchase
Agreement at a price per share as specified in the Purchase Agreement and to
exercise the
other rights, powers, and privileges hereinafter provided, all on the terms and
subject to the conditions specified in this Warrant and in the Purchase
Agreement. If the Purchaser is a Regulated Holder (as defined in the Purchase
Agreement), then in no event shall this Warrant be exercisable for shares of
Common Stock and/or Series B Preferred Stock which, when aggregated with all
other capital stock of the Company (other than shares of Non-Attributable Stock)
then held or previously held by or currently issuable without restriction to
Purchaser or its Affiliates would, upon issuance, represent in excess of 24.99%
of the Equity of the Company unless such shares, when issued, would constitute
Non-Attributable Stock.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in the Purchase Agreement, to all
terms and provisions of which the registered holder of this Warrant, by
acceptance of this Warrant, assents. Reference is hereby made to the Purchase
Agreement for a more complete statement of the rights and limitations of rights
of the registered holder of this Warrant and the rights and duties of the
Company under this Warrant. Copies of the Purchase Agreement are on file at the
office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of April 3, 1998.
SATELLINK COMMUNICATIONS, INC.
By:
------------------------------
ATTEST:
-------------------------
Secretary
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for and purchases __________________ shares of Common Stock and/or
__________ shares of Series B Preferred Stock of Satellink Communications, Inc.
purchasable with this Warrant, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock and/or Series B Preferred Stock
hereby purchased (and any securities or other property issuable upon such
exercise) be issued in the name of ________________________ and delivered to
_________________________________, whose address is
___________________________________, and if such shares of Common Stock and/or
Series B Preferred Stock do not include all of the shares of Common Stock and/or
Series B Preferred Stock issuable as provided in this Warrant, then a new
Warrant of like tenor and date for the balance of the shares of Common Stock
and/or Series B Preferred Stock issuable thereunder to be delivered to the
undersigned.
Dated:
---------------,-------------.
------------------------------------------------
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock and/or Series B Preferred Stock set forth below:
Class of Stock No. of Shares Name and Address of Assignee
-------------- ------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney ________________
_______________ to register such transfer on the books of
_______________________ maintained for the purpose, with full power of
substitution in the premises.
Dated:
--------------,---------------.
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
