Exhibit II
__________________________________________
STOCK PURCHASE AGREEMENT
__________________________________________
Between
POWERTEL, INC.
and
SCANA COMMUNICATIONS, INC.
Dated as of June 22, 1998
13
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
SECTION 1.1 Certain Defined Terms 1
ARTICLE II PURCHASE AND SALE 5
SECTION 2.1 Purchase and Sale of the Shares 5
SECTION 2.2 Purchase Price 5
SECTION 2.3 Closing 6
SECTION 2.4 Closing Deliveries by the Seller 6
SECTION 2.5 Closing Deliveries by the Purchaser 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER 6
SECTION 3.1 Organization, Authority and
Qualification of the Seller 6
SECTION 3.2 Capitalization of the Seller 7
SECTION 3.3 Subsidiaries 7
SECTION 3.4 No Conflict 8
SECTION 3.5 Governmental Consents and Approvals 8
SECTION 3.6 Seller SEC Reports; Financial Statements 9
SECTION 3.7 No Undisclosed Liabilities 9
SECTION 3.8 Conduct in the Ordinary Course; Absence
of Certain Changes, Events and
Conditions 9
SECTION 3.9 Litigation 10
SECTION 3.10 Compliance with Laws 10
SECTION 3.11 Full Disclosure 10
SECTION 3.12 Private Placement 10
SECTION 3.13 FCC Regulations 10
SECTION 3.14 Brokers 10
SECTION 3.15 Delivery of Certain Documents 11
SECTION 3.16 No Consideration for Consent 11
SECTION 3.17 Delivery of Business Plan 11
SECTION 3.18 Licenses 11
SECTION 3.19 Other Licenses and Approvals 12
SECTION 3.20 Tax Matters 12
SECTION 3.21 FCC Change of Control 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 13
SECTION 4.1 Organization and Authority of the
Purchaser 13
SECTION 4.2 No Conflict 13
SECTION 4.3 Governmental Consents and Approvals 13
SECTION 4.4 Litigation 14
SECTION 4.5 Investment Purpose 14
SECTION 4.6 Accredited Investor 14
SECTION 4.7 Brokers 14
14
ARTICLE V ADDITIONAL AGREEMENTS 14
SECTION 5.1 Filing of Certificate of Designations 14
SECTION 5.2 Treatment of Shares as Equity 14
SECTION 5.3 Regulatory and Other Authorizations;
Notices and Consents 14
SECTION 5.4 Notice of Developments 15
SECTION 5.5 Registration Rights 15
SECTION 5.6 Resale Restrictions 15
SECTION 5.7 Registration of Shares 16
SECTION 5.8 Reservation of Common Stock 16
SECTION 5.9 Delivery of Certain Documents 16
SECTION 5.10 Certain Information 16
SECTION 5.11 Conduct of Business of the Seller 17
SECTION 5.12 Use of Funds 17
SECTION 5.13 Further Action 17
ARTICLE VI CONDITIONS TO CLOSING 17
SECTION 6.1 Conditions to Obligations of the Seller 17
SECTION 6.2 Conditions to Obligations of the
Purchaser 18
ARTICLE VII INDEMNIFICATION 20
SECTION 7.1 Survival of Representations and
Warranties 20
SECTION 7.2 Indemnification 21
SECTION 7.3 Limits on Indemnification 22
ARTICLE VIII TERMINATION AND WAIVER 23
SECTION 8.1 Termination 23
SECTION 8.2 Effect of Termination 23
SECTION 8.3 Waiver 23
ARTICLE IX GENERAL PROVISIONS 24
SECTION 9.1 Expenses 24
SECTION 9.2 Notices 24
SECTION 9.3 Public Announcements 25
SECTION 9.4 Headings 25
SECTION 9.5 Severability 25
SECTION 9.6 Entire Agreement 26
SECTION 9.7 Assignment 26
SECTION 9.8 No Third Party Beneficiaries 26
SECTION 9.9 Amendment 26
SECTION 9.10 Governing Law 26
SECTION 9.11 Counterparts 26
SECTION 9.12 Specific Performance 26
15
EXHIBITS
6.1(e) Form of Opinion of Purchaser's Legal Counsel
6.2(e) Form of Opinion of Seller's Legal Counsel
ANNEXES
Annex I I-3
Annex II II-3
16
This STOCK PURCHASE AGREEMENT, dated as of June 22, 1998, is
entered into between POWERTEL, INC., a Delaware corporation (the
"Seller"), and SCANA COMMUNICATIONS, INC., a South Carolina
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller wishes to issue and to sell to the
Purchaser, and the Purchaser wishes to purchase from the Seller,
50,000 shares (the "Shares") of a new series of convertible
preferred stock of the Seller designated Series E 6.5% Cumulative
Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the terms of the Preferred Stock are set forth in
the form of Certificate of Designations attached as Annex I
hereto (the "Certificate of Designations");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the
Purchaser and the Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any
Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified Person.
"Agreement" or "this Agreement" means this Stock Purchase
Agreement, dated as of June 22, 1998, between the Seller and the
Purchaser (including the Exhibits and Annexes hereto and the
Disclosure Schedule) and all amendments hereto made in accordance
with the provisions of Section 9.9.
"Approvals" has the meaning specified in Section 3.5.
17
"Assets" means the properties, assets (including, without
limitation, Licenses) and contract rights used or intended to be
used in the conduct of the Business or otherwise owned, leased or
used by the Seller or any Subsidiary or, with respect to contract
rights, to which the Seller or any Subsidiary is a party or is
bound.
"Beneficially Own" with respect to any securities means
having beneficial ownership as determined pursuant to Rule 13d-3
under the Exchange Act, including having beneficial ownership
pursuant to any agreement, arrangement or understanding, whether
or not in writing.
"Business" means the business of the Seller and the
Subsidiaries as currently conducted and, as contemplated by the
Seller on the date hereof and on the Closing Date, to be
conducted.
"Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
"Certificate of Designations" has the meaning specified in
the recitals to this Agreement.
"Closing" has the meaning specified in Section 2.3.
"Closing Date" has the meaning specified in Section 2.3.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, par value $0.01 per
share, of the Seller.
"Communications Act" means the Federal Communications Act of
1934, as amended.
"Control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between
or among two or more Persons, means the possession, directly or
indirectly or as trustee or executor, of the power to direct or
cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities
having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
18
"Disclosed by Seller" with respect to information concerning
any event, fact or circumstance, includes information contained
in the Seller's SEC Reports, annual and other reports furnished
by Seller to its stockholders as a group, and press releases of
the Seller disseminated to (i) the Dow Xxxxx News Service or
(ii) the National Association of Securities Dealers, Inc.
Automated Quotation System or other national securities exchange
("Press Releases"), as well as information disclosed directly to
the Purchaser by the Seller in this Agreement, the 1997 Financial
Statements, the 1998 Financial Statements or in writing and
attached hereto or delivered pursuant to Section 6.2. If the
Purchaser has a representative on the Seller's Board of
Directors, "Disclosed by Seller" shall also mean written
information and materials which are or have been disclosed or
distributed during the term of service of such representative to
the Seller's Board of Directors or any committee thereof on which
such representative serves or written evidence (such as minutes,
resolutions and written consents) of the meetings of the Board of
Directors or any committee thereof on which such representative
serves which are distributed during the term of service of such
representative.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this
Agreement.
"Encumbrance" means any security interest, pledge, mortgage,
lien, charge, encumbrance, adverse claim, preferential
arrangement or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer, receipt
of income or other exercise of any attributes of ownership.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended.
"Executive Officer" has the meaning set forth in Rule 405 of
Regulation C adopted by the Commission under the Securities Act
without regard to whether any party to this Agreement is a
registrant as used in Rule 405.
"FCC" means the United States Federal Communications
Commission.
"FCC Licenses" means all licenses granted by the FCC to the
Seller for and related to the provision of personal
communications services and cellular services in connection with
the Seller's Business.
19
"Governmental Authority" means any United States federal,
state or local or any foreign government, regulatory or
administrative authority, or any governmental agency, department,
board or commission, or any court, tribunal, or judicial,
arbitral or investigative body or other governmental tribunal.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered
by or with any Governmental Authority.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
"Knowledge" of a party with respect to such party's
representation or warranty concerning any event, fact or
circumstance means the current actual knowledge of that party's
Executive Officers of information which, after reasonable
consideration by such Executive Officers, would be recognized by
reasonable persons of similar experience in such positions as
relevant to the representation or warranty qualified by the words
"to the knowledge" of a party, "known to" a party or a similar
phrase. Knowledge does not include information not within such
current actual knowledge that might be revealed if the party's
files were searched or if any other investigation were made.
"Law" means any United States federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, order,
other requirement or rule of law, including, without limitation,
any requirement or rule of law of the FCC.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including,
without limitation, those arising under any Law, Action or
Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"Licenses" means all FCC Licenses and all other licenses,
permits (including construction permits), consents, approvals and
other authority issued by any Governmental Authority in
connection with the legal and proper operation of the Seller's
Business.
"Loss" has the meaning specified in Section 7.2(a).
20
"Material Adverse Effect" means any circumstance, change in
or effect on the Business, the Seller or any Subsidiary that,
individually or in the aggregate with any other circumstances,
changes in, or effects on, the Business, the Seller or any
Subsidiary: (a) is, or would reasonably be expected to be,
materially adverse to the Business, operations, Assets or
Liabilities, prospects, results of operations or financial
condition of the Seller and the Subsidiaries, taken as a whole;
or (b) would reasonably be expected to materially adversely
affect the ability of the Seller and the Subsidiaries to operate
or conduct the Business.
"1997 Financial Statements" means the audited annual
consolidated financial statements of the Company and the notes
and schedules thereto for the year ended December 31, 1997.
"1998 Financial Statements" has the meaning specified in
Section 3.2(b).
"Person" means any individual, partnership, limited
liability company, firm, corporation, association, trust, joint
venture, unincorporated organization or other entity, as well as
any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
"Preferred Stock" has the meaning specified in the recitals
to this Agreement.
"Purchase Price" has the meaning specified in Section 2.2.
"Purchaser" has the meaning specified in the preamble to
this Agreement.
"Reference Balance Sheet Date" means March 31, 1998.
"Related Agreements" has the meaning specified in Section
3.15.
"Sale" means any sale, assignment, transfer, distribution or
other disposition of shares of Common Stock or of a participation
therein, whether voluntarily or by operation of law.
"SEC Reports" has the meaning specified in Section 3.6(a).
"Securities Act" means the United States Securities Act of
1933, as amended.
"Seller" has the meaning specified in the preamble to this
Agreement.
21
"Series F Stock Purchase Agreement" means that certain Stock
Purchase Agreement of even date herewith between the Seller and
ITC Wireless, Inc., as purchaser thereunder, with respect to the
sale and purchase of 50,000 shares of the Seller's Series F 6.5%
Cumulative Convertible Preferred Stock.
"Shares" has the meaning specified in the recitals to this
Agreement.
"Subsidiaries" means any and all corporations, partnerships,
limited liability companies, joint ventures, associations and
other entities controlled by the Seller directly or indirectly
through one or more intermediaries.
"Tax" or "taxes" means any and all taxes, fees, levies,
assessments, duties, tariffs, imposts, and other charges of any
kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed
by any government or taxing authority, including, without
limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth;
taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains, taxes; license,
registration and documentation fees; and customs duties, tariffs,
and similar charges.
"Third Party Claims" has the meaning specified in Section
7.2(b).
"U.S. GAAP" means United States generally accepted
accounting principles and practices as in effect from time to
time and applied consistently throughout the periods involved.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of the Shares. Upon the
terms and subject to the conditions of this Agreement, at the
Closing, the Seller shall sell to the Purchaser, and the
Purchaser shall purchase from the Seller, the Shares.
SECTION 2.2 Purchase Price. The aggregate purchase price
for the Shares shall be $75,000,000.00 (the "Purchase Price"),
representing a purchase price of $1,500.00 per Share.
22
SECTION 2.3 Closing. Upon the terms and subject to the
conditions of this Agreement, the issuance, sale and purchase of
the Shares contemplated by this Agreement shall take place at a
closing (the "Closing") to be held at 10:00 A.M. local time on a
date and at a location mutually agreed to by the parties upon the
satisfaction or waiver of all conditions to the obligations of
the parties set forth in Article VI, or at such other place or at
such other time or on such other date as the Seller and the
Purchaser may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date").
SECTION 2.4 Closing Deliveries by the Seller. At the
Closing, the Seller shall deliver or cause to be delivered to the
Purchaser a receipt for the Purchase Price, stock certificates
evidencing the Shares duly registered in the name of the
Purchaser, in a form reasonably satisfactory to the Purchaser,
and the opinions, certificates and other documents required to be
delivered pursuant to Section 6.2.
SECTION 2.5 Closing Deliveries by the Purchaser. At the
Closing, the Purchaser shall deliver to the Seller the Purchase
Price in immediately available funds together with the opinions,
certificates and other documents required to be delivered
pursuant to Section 6.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, the Seller hereby represents and warrants to the
Purchaser as follows:
SECTION 3.1 Organization, Authority and Qualification of
the Seller. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all necessary power and authority to enter into
this Agreement, to carry out its obligations hereunder, to
consummate the transactions contemplated hereby and to conduct
its Business, except where the failure to be in good standing
would not have a Material Adverse Effect. The Seller is duly
licensed or qualified to do Business and is in good standing in
each jurisdiction in which the properties owned or leased by it
or the operation of its Business makes such licensing or
qualification necessary, except as would not have a Material
Adverse Effect. The execution and delivery of this Agreement by
the Seller, the performance by the Seller of its obligations
23
hereunder and the consummation by the Seller of the transactions
contemplated hereby, including, without limitation, the issuance
of the Preferred Stock in accordance with the terms of this
Agreement and the Certificate of Designations, have been duly
authorized by all requisite action on the part of the Seller.
This Agreement has been duly executed and delivered by the
Seller, and (assuming due authorization, execution and delivery
by the Purchaser) this Agreement constitutes a legal, valid and
binding obligation of the Seller enforceable against the Seller
in accordance with its terms.
SECTION 3.2 Capitalization of the Seller. (a) The
authorized capital stock of the Seller consists of 100,000,000
shares of Common Stock and 1,000,000 shares of preferred stock,
par value $0.01 per share. As of the date hereof, (i) 26,948,955
shares of Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable, and (ii)
300,000 shares of preferred stock (not including the Preferred
Stock) are issued and outstanding, all of which are validly
issued, fully paid and nonassessable. None of the issued and
outstanding shares of Common Stock or preferred stock was issued
in violation of any preemptive rights. All issuances of such
issued and outstanding shares when made were registered or exempt
from registration under the Securities Act, except where the
failure of such issuances to be registered or exempt from
registration would not, individually or in the aggregate, have a
Material Adverse Effect. Except as disclosed in the SEC Reports
and in Schedule 3.2 of the Disclosure Schedule, there are no
options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character to which
the Seller is a party relating to the issuance or sale of capital
stock of the Seller or obligating the Seller to issue or sell any
shares of capital stock of, or any other equity interest in, the
Seller or its Subsidiaries. Except as disclosed in Schedule 3.2
of the Disclosure Schedule, there are no outstanding contractual
obligations of the Seller to repurchase, redeem or otherwise
acquire any shares of Common Stock or shares of capital stock of
its Subsidiaries. Upon issuance of the Shares to the Purchaser
at the Closing and payment therefor pursuant to this Agreement
and the Certificate of Designations, the Shares will be validly
issued, fully paid and nonassessable and free of preemptive
rights. By the Closing Date, the shares of Common Stock issuable
upon conversion of the Shares will be duly authorized and
reserved for issuance upon such conversion and, upon issuance of
such shares in accordance with the Certificate of Designations,
will be validly issued, fully paid and nonassessable and free of
preemptive rights. Upon consummation of the transactions
contemplated by this Agreement, including the issuance of the
Shares, registration of the Shares in the name of the Purchaser
24
in the stock records of the Seller and delivery of the Shares,
the Purchaser will own the Shares free and clear of all
Encumbrances, other than Encumbrances resulting from any action,
or failure to take action, by the Purchaser. All shares of
Common Stock issued as dividends with respect to the Shares will
be validly issued, fully paid and nonassessable and free of
preemptive rights. Upon the due declaration and issuance of a
dividend payable in Common Stock with respect to the Shares, the
registration of such shares of Common Stock in the name of the
Purchaser in the stock records of the Seller and delivery of such
shares of Common Stock, the Purchaser will own all such shares of
Common Stock free and clear of all Encumbrances, other than
Encumbrances resulting from any action, or failure to take any
action, by the Purchaser.
(b) The outstanding indebtedness of Seller as of March
31, 1998 is accurately reflected (subject to normal and recurring
adjustments and other revisions which were not and are not known
or reasonably expected to be material in amount) in the Seller's
balance sheet at March 31, 1998 contained in the Seller's
unaudited quarterly consolidated financial statements and the
notes and schedules thereto for the quarter ended March 31, 1998
(the "1998 Financial Statements").
SECTION 3.3 Subsidiaries. Each Subsidiary: (i) is duly
organized and validly existing under the laws of its jurisdiction
of organization; (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated
or leased by such Subsidiary and to carry on its business as it
has been and is currently conducted by such Subsidiary; and (iii)
is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or
leased by it or the operation of its business makes such
licensing or qualification necessary or desirable, except where
the failure to be so duly licensed or qualified would not have a
Material Adverse Effect. Each Subsidiary is wholly owned,
directly or indirectly, by the Seller.
SECTION 3.4 No Conflict. Assuming that all Approvals
described in Section 3.5 have been obtained, that approval of the
Certificate of Designations and the issuance of the Shares has
been obtained from the holders of the Seller's Series A, Series
B, Series C and Series D Preferred Stock and that all filings and
notifications listed in Schedule 3.5 of the Disclosure Schedule
have been made, the execution, delivery and performance of this
Agreement by the Seller, and the issuance of the Shares and the
performance of the Seller's obligations in accordance with the
Certificate of Designations, do not and will not: (i) violate,
conflict with or result in the breach of any provision of the
25
certificate of incorporation or by-laws (or similar
organizational documents) of the Seller or any Subsidiary as in
effect on the date hereof or on the Closing Date; (ii) conflict
with or violate (or cause an event which could have a Material
Adverse Effect as a result of) any Law or Governmental Order as
in effect on the date hereof or on the Closing Date applicable to
the Seller, any Subsidiary or any of their respective assets,
properties or businesses; or (iii) conflict with, result in any
breach of, constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on
any of the Shares or on any of the assets or properties of the
Seller or any Subsidiary pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement as in effect on the
date hereof or on the Closing Date to which the Seller or any
Subsidiary is a party or by which any of the Shares or any of
such assets or properties is bound or affected.
SECTION 3.5 Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the
Seller and the performance of the Seller's obligations in
accordance with the Certificate of Designations do not and will
not require any consent, approval, authorization or other order
of, action by, filing with or notification to any Governmental
Authority on the part of the Seller pursuant to Laws as they are
in effect on the Closing Date (collectively, the "Approvals"),
except: (i) as described in Schedule 3.5 of the Disclosure
Schedule; (ii) pursuant to the notification requirements of the
HSR Act; (iii) the filing with the Secretary of State of the
State of Delaware of the Certificate of Designations contemplated
by Section 5.1; and (iv) any filings required to effect any
registration pursuant to Section 5.5. Subject to the exceptions
set forth in clauses (i), (ii) and (iv) above, the Seller will
obtain all such Approvals on or before the Closing Date.
SECTION 3.6 Seller SEC Reports; Financial Statements.
(a) The Seller has filed all forms, reports and
documents required to be filed by it with the Commission, and has
heretofore made available to the Purchaser, in the form filed
with the Commission (excluding any exhibits thereto), (i) its
Annual Report on Form 10-K for the fiscal years ended December
31, 1995, 1996 and 1997, (ii) its Quarterly Report on Form 10-Q
for the period ended March 31, 1998 and (iii) all proxy
statements relating to the Seller's meetings of stockholders
(whether annual or special) held since December 31, 1995
(collectively, the "SEC Reports").
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(b) Except as set forth in Schedule 3.6 of the
Disclosure Schedule, the SEC Reports and any other forms, reports
and other documents filed by the Seller with the Commission as of
the date of this Agreement (i) were prepared in all material
respects in accordance with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (ii) did not at the time they were
filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) The financial statements (including, in each case,
any notes thereto) contained in the SEC Reports were prepared in
accordance with U.S. GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in
the notes thereto), and each fairly presented the financial
position, results of operations and cash flows of the Seller and
its consolidated subsidiaries as at the respective dates thereof
and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not known or reasonably
expected, individually or in the aggregate, to be material in
amount).
(d) Since March 31, 1998 there has not been any
change, occurrence or circumstance affecting the Business,
results of operations or financial condition of the Seller or any
Subsidiary that has had, individually or in the aggregate, a
Material Adverse Effect, other than changes, occurrences and
circumstances referred to in any subsequently filed SEC Reports
or otherwise Disclosed by Seller.
SECTION 3.7 No Undisclosed Liabilities. There are no
Liabilities of the Seller or any Subsidiary, other than
Liabilities (i) disclosed in Schedule 3.7 of the Disclosure
Schedule, (ii) reflected in the SEC Reports, the 1997 Financial
Statements, the 1998 Financial Statements or otherwise Disclosed
by Seller, (iii) not required to be reflected in a consolidated
balance sheet of the Seller and its Subsidiaries or in the notes
thereto prepared in accordance with U.S. GAAP or (iv) incurred
since the Reference Balance Sheet Date in the ordinary course of
business and which do not have a Material Adverse Effect.
27
SECTION 3.8 Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions. Since the Reference
Balance Sheet Date, except as Disclosed by Seller in any
subsequently filed SEC Reports or Press Releases, as reflected in
the 1997 Financial Statements, the 1998 Financial Statements or
as contemplated by this Agreement, the Business of the Seller and
the Subsidiaries has been conducted in the ordinary course, and
the Seller has not suffered any Material Adverse Effect.
SECTION 3.9 Litigation. Except as set forth in the SEC
Reports, as reflected in the 1997 Financial Statements or the
1998 Financial Statements, as disclosed in Schedule 3.9 of the
Disclosure Schedule or otherwise Disclosed by Seller, there are
no Actions by or against the Seller or any Subsidiary (or by or
against any Affiliate thereof and relating to the Business, the
Seller or any Subsidiary), or affecting the Business or any of
the Assets, pending before any Governmental Authority (or, to the
knowledge of the Seller, threatened to be brought by or before
any Governmental Authority) that has, has had or could reasonably
be expected to have a Material Adverse Effect or could reasonably
be expected to affect the legality, validity or enforceability of
this Agreement or the consummation of the transactions
contemplated hereby. None of the Seller, the Subsidiaries nor
any of the Assets is subject to any Governmental Order (nor, to
the knowledge of the Seller, are there any such Governmental
Orders threatened to be imposed by any Governmental Authority)
which has, has had or could have a Material Adverse Effect.
SECTION 3.10 Compliance with Laws. The Seller and the
Subsidiaries have each conducted and continue to conduct the
Business in all material respects in accordance with all Laws and
Governmental Orders applicable to the Seller or any Subsidiary or
any of the Assets or the Business, and neither the Seller nor any
Subsidiary is in material violation of any such Law or
Governmental Order.
SECTION 3.11 Full Disclosure. The Seller is not aware of
any facts pertaining to the Seller, any Subsidiary or the
Business which could reasonably be expected to have a Material
Adverse Effect and which have not been disclosed in this
Agreement, the Disclosure Schedule or the SEC Reports or
otherwise Disclosed by Seller.
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SECTION 3.12 Private Placement. Assuming the accuracy of
the representations and warranties of the Purchaser contained in
Sections 4.5 and 4.6, the offer and sale of the Shares to the
Purchaser pursuant to this Agreement are, and the issuance of
Common Stock (i) upon conversion of the Shares and (ii) as
dividends with respect to the Shares will be, exempt from
registration under the Securities Act as in effect on the Closing
Date.
SECTION 3.13 FCC Regulations. After giving effect to the
issuance of the Shares to the Purchaser, the ownership of capital
stock of the Seller by aliens or their representatives or by a
foreign government or representative thereof or by any
corporation organized under the laws of a foreign country does
not exceed the limitations set forth in the rules and regulations
of the FCC.
SECTION 3.14 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
the Seller.
SECTION 3.15 Delivery of Certain Documents. The Seller has
delivered (or will deliver pursuant to Section 5.9) to the
Purchaser a true and complete copy of: (i) the 1997 Financial
Statements, the 1998 Financial Statements and the Certificate of
Designations; and (ii) all agreements set forth on Schedule 3.15
of the Disclosure Schedule (including all appendices, schedules,
exhibits and other attachments thereto), including, without
limitation, the Series F Stock Purchase Agreement (collectively,
the "Related Agreements"). Assuming due execution and delivery
thereof by all parties thereto, each of the Related Agreements to
which the Seller is a party creates a legally binding obligation
of each party thereto, enforceable against such parties in
accordance with the respective terms and conditions thereof,
except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory
and other laws regarding fraudulent conveyances, fraudulent
transfers and preferential transfers), and (ii) as may be limited
by the exercise of judicial discretion and the application of
principles of equity including, without limitation, requirements
of good faith, fair dealing, conscionability and materiality
(regardless of whether such agreements are considered in a
proceeding in equity or at law).
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SECTION 3.16 No Consideration for Consent. No Person has
received or will receive any consideration of any kind for or in
connection with the granting of any consent by such Person to the
sale and issuance of the Preferred Stock or of the Seller's
Series F 6.5% Cumulative Convertible Preferred Stock.
SECTION 3.17 Delivery of Business Plan. The Seller has
delivered (or will deliver pursuant to Section 5.9) to the
Purchaser a true and complete copy of the Seller's business plan
and such plan is, on and as of the date hereof, the current
business plan of the Seller. The historical factual information
contained in such business plan is correct in all material
respects, does not, when read together with the SEC Reports, omit
to state any material fact necessary to make the statements
therein not misleading and fairly reflects the Seller's
projections as of the date hereof.
SECTION 3.18 Licenses. Except to the extent it would not
have a Material Adverse Effect: (i) all FCC Licenses are in full
force and effect and have been duly issued in the name of, or
validly assigned to, the Seller or one of its Subsidiaries and no
default or breach exists thereunder; (ii) no event has occurred
with respect to the FCC Licenses that permits, or after giving
notice, lapse of time or both would permit, revocation or
termination of such FCC Licenses or would result in any material
impairment of the rights of the holder thereof; and (iii) all FCC
Licenses are in effect for the usual FCC License terms and are
unimpaired by any condition or other restriction imposed by the
FCC or other Governmental Authority (other than restrictions and
conditions generally applicable to licenses of the same or
similar type or class).
Except to the extent it would not have a Material Adverse
Effect: (i) all applications necessary for renewal or extension
of the FCC Licenses have been timely filed in accordance with the
requirements of the FCC or other Governmental Authority issuing
such FCC Licenses; (ii) the Seller has not been informed that any
of the FCC Licenses will not be renewed in the ordinary course;
and (iii) no allegations, complaints, charges, investigations,
renewal or revocation hearings, or other proceedings have been
threatened or initiated in any forum, nor has any Governmental
Authority (including, but not limited to, the FCC) proposed,
announced, used, or adopted any amendment, modification, or
change to any law or regulation, with respect to or impacting
upon such FCC Licenses.
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Except to the extent that it would not have a Material
Adverse Effect, each of the Seller and its Subsidiaries: (i) is
in compliance with the provisions of the Communications Act as
implemented, interpreted and applied by the FCC; (ii) is in
compliance with FCC requirements immediately following the
Closing; (iii) has duly and timely filed all reports and other
filings which are required to be filed by it under the
Communications Act or any other applicable law, rule or
regulation of any Governmental Authority; and (iv) is in
compliance with all such laws, rules and regulations, the
noncompliance with which would have a Material Adverse Effect on
the continuation of any License held by the Seller or any of its
Subsidiaries. Except to the extent it would not have a Material
Adverse Effect, all information provided by or on behalf of
Seller or any Subsidiary in any filing with the FCC was, at the
time of filing, true, complete and correct in all material
respects when made, and the FCC has been notified of any
substantial or significant changes in such information as may be
required in accordance with applicable laws, rules and
regulations.
SECTION 3.19 Other Licenses and Approvals. Except to the
extent it would not have a Material Adverse Effect, each of the
Seller and its Subsidiaries has or has the right to use all
Licenses and Approvals that are necessary for the Seller and its
Subsidiaries to carry on the Business as currently conducted.
SECTION 3.20 Tax Matters. Except to the extent it would
not have a Material Adverse Effect: (i) each of Seller and its
Subsidiaries has filed all federal, state, local and other tax
returns which are required to be filed by it within the period
required for such filings and any extensions granted therefor and
within the period that the same may be filed without interest or
penalties; (ii) each such Person has paid, or made adequate
provision for the payment of, all taxes (if any), including any
interest and penalties thereon, which have or may become due and
payable pursuant to any of the said returns or pursuant to any
matters raised by audits or for other reasons known to it; and
(iii) each such Person has made adequate provision for all
current taxes. Except as disclosed in Schedule 3.20 of the
Disclosure Schedule, no audit by any Governmental Authority of
the federal, state, local or other tax returns, forms or
information statements of the Seller or any of its Subsidiaries
with respect to such taxes is currently in progress or overtly
threatened.
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SECTION 3.21 FCC Change of Control. Based upon the
Seller's knowledge of the ownership of its stock as of the
Closing Date, no assignment or transfer of control for purposes
of the rules and regulations of the FCC will occur by reason of
the sale of the Shares and the Series F 6.5% Cumulative
Convertible Preferred Stock; provided, however, that no
representation or warranty is made as to the effect of the
issuance of dividends or other distributions with respect to the
Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement,
the Purchaser hereby represents and warrants to the Seller as
follows:
SECTION 4.1 Organization and Authority of the Purchaser.
The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of South
Carolina and has all necessary corporate power and authority to
enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Purchaser, the
performance by the Purchaser of its obligations hereunder and the
consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all requisite action on the
part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization,
execution and delivery by the Seller) this Agreement constitutes
a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
SECTION 4.2 No Conflict. Except as disclosed by the
Purchaser to the Seller in writing prior to Closing, assuming
compliance with the notification requirements of the HSR Act and
the making and obtaining of all filings, notifications, consents,
approvals, authorizations and other actions referred to in
Section 4.3, except as may result from any facts or circumstances
relating solely to the Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will
not as of the Closing Date: (i) violate, conflict with or result
in the breach of any provision of the articles of incorporation
or by-laws of the Purchaser; (ii) conflict with or violate any
Law or Governmental Order applicable to the Purchaser; or (iii)
conflict with, or result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, require any consent that has
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not been obtained under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of the Purchaser pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or
arrangement to which the Purchaser is a party or by which any of
such assets or properties are bound or affected, which in any
such case would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this
Agreement.
SECTION 4.3 Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the
Purchaser do not and will not require any Approvals on the part
of the Purchaser except pursuant to the notification requirements
of the HSR Act and the filing requirements of Sections 13 and
16(a) of the Exchange Act. The Purchaser shall obtain or comply
with such Approval requirements in a timely manner.
SECTION 4.4 Litigation. There are no Actions by or against
the Purchaser, pending before any Governmental Authority (or, to
the knowledge of the Purchaser, threatened to be brought by or
before any Governmental Authority) that could reasonably be
expected to affect the legality, validity or enforceability of
this Agreement or the consummation of the transactions
contemplated hereby. The Purchaser is not subject to any
Governmental Order (nor, to the knowledge of the Purchaser, are
there any such Governmental Orders threatened to be imposed by
any Governmental Authority), which could reasonably be expected
to materially adversely affect the legality, validity or
enforceability of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.5 Investment Purpose. The Purchaser is acquiring
the Shares and, if any of the Common Stock to be issued upon
conversion of the Shares or as dividends with respect to the
Shares is, when acquired, not subject to immediate resale under
Rule 144 promulgated pursuant to the Securities Act or is not to
be resold solely pursuant to a registration statement to be filed
and declared effective pursuant to the Securities Act, the
Purchaser will acquire such shares of Common Stock for the
Purchaser's own account solely for the purpose of investment and
not with a view to, or for offer or sale in connection with, any
distribution thereof.
SECTION 4.6 Accredited Investor. The Purchaser is an
"accredited investor" within the meaning of Rule 501 under the
Securities Act.
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SECTION 4.7 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Filing of Certificate of Designations. The
Seller covenants and agrees that at or prior to the Closing, the
Seller will file the Certificate of Designations with the
Secretary of State of the State of Delaware in accordance with
the Delaware General Corporation Law.
SECTION 5.2 Treatment of Shares as Equity. The Seller
covenants and agrees that it will treat the Shares as equity, and
not as debt, for accounting and tax purposes and further
covenants and agrees that it will not take any action or position
that is inconsistent with such treatment.
SECTION 5.3 Regulatory and Other Authorizations; Notices
and Consents.
(a) The Seller and the Purchaser shall use all
reasonable efforts to obtain all Approvals of all Governmental
Authorities that may be or become necessary for each of them to
obtain for their execution and delivery of, and the performance
of their respective obligations pursuant to, this Agreement.
Each party hereto agrees to make an appropriate filing pursuant
to the HSR Act, if required, with respect to the conversion of
the Shares and any shares of Common Stock issued as dividends
with respect thereto at such times as the Purchaser may request
and to supply as promptly as practicable to the appropriate
Governmental Authorities any additional information and
documentary material that may be requested pursuant to the HSR
Act.
(b) The Seller shall or shall cause the Subsidiaries
to give promptly such notices to third parties and use its or
their reasonable efforts to obtain such third party consents as
are necessary in connection with the transactions contemplated by
this Agreement.
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(c) The Purchaser shall cooperate and use all
reasonable efforts to assist the Seller in giving such notices
and obtaining such consents; provided, however, that the
Purchaser shall have no obligation to give any guarantee or other
consideration of any nature in connection with any such notice or
consent or to consent to any change in the terms of any agreement
or arrangement which the Purchaser in its sole and absolute
discretion may deem adverse to the interests of the Purchaser.
SECTION 5.4 Notice of Developments.
(a) Prior to the Closing, the Seller shall promptly
notify the Purchaser in writing of (i) all events, circumstances,
facts and occurrences arising subsequent to the date of this
Agreement which could reasonably be expected to result in any
breach of a representation or warranty or covenant of the Seller
in this Agreement or which could reasonably be expected to have
the effect of making any representation or warranty of the Seller
in this Agreement untrue or incorrect and (ii) all other
developments material to the Seller and the Subsidiaries, taken
as a whole, affecting the Assets, Liabilities, business,
financial condition, operations, results of operations or
prospects of the Seller, any Subsidiary or the Business.
(b) Prior to the Closing, the Purchaser shall promptly
notify the Seller in writing of all events, circumstances, facts
and occurrences arising subsequent to the date of this Agreement
which could reasonably be expected to result in any breach of a
representation or warranty or covenant of the Purchaser in this
Agreement or which could reasonably be expected to have the
effect of making any representation or warranty of the Purchaser
in this Agreement untrue or incorrect.
SECTION 5.5 Registration Rights. Effective at the
Closing, the Purchaser and the Seller shall each have the rights
and obligations set forth in Annex II, which is incorporated by
reference herein.
SECTION 5.6 Resale Restrictions.
(a) The Purchaser acknowledges that the Shares, the
shares of Common Stock into which the Shares are convertible and
all shares of Common Stock that are to be issued as dividends
with respect to the Shares have not been registered under the
Securities Act or any state securities law, and the Purchaser
hereby agrees not to offer, sell or otherwise transfer, pledge or
hypothecate such shares unless and until registered under the
35
Securities Act and any applicable state securities law or unless
such offer, sale, transfer, pledge or hypothecation is exempt
from registration or is otherwise in compliance with the
Securities Act and such laws.
(b) During the period ending one year after the
Closing Date, the Purchaser shall not, without the prior written
consent of the Seller which shall not be unreasonably withheld,
(i) offer, pledge, sell or otherwise transfer or dispose of,
directly or indirectly, any Shares or any shares of Common Stock
into which any of such Shares may be converted, or (ii) enter
into any swap or similar agreement that transfers, in whole or in
part, any of the economic consequences of ownership of such
Shares or any shares of Common Stock into which such Shares may
be converted, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Shares or such
other securities, in cash or otherwise, other than a pledge,
grant of security interest or other encumbrance effected in a
bona fide transaction with an unrelated and unaffiliated pledgee;
provided, however, that the Purchaser may at any time enter into
any such transaction described in clause (i) or (ii) above with
an Affiliate of the Purchaser without the prior written consent
of the Seller.
SECTION 5.7 Registration of Shares. The Seller shall,
upon issuance of the Shares and prior to the delivery of stock
certificates evidencing the Shares pursuant to Section 2.4,
register the Shares in the name of the Purchaser in the stock
records of the Seller.
SECTION 5.8 Reservation of Common Stock. The Seller agrees
that as of the Closing Date the Seller will reserve and will
thereafter keep reserved for issuance out of the authorized but
unissued shares of the Common Stock such number of shares of
Common Stock into which the outstanding shares of the Preferred
Stock are from time to time convertible.
SECTION 5.9 Delivery of Certain Documents. The Seller
shall deliver to the Purchaser true and correct copies of this
Agreement and the Related Agreements, all exhibits, schedules,
annexes and agreements related hereto as soon as practicable
following the execution and delivery hereof by the parties
hereto.
SECTION 5.10 Certain Information. For a period commencing
on the date of this Agreement and ending not earlier than two
years from the date that the Preferred Stock first becomes
convertible into Common Stock, for so long as the Seller is
subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, the Seller shall file all reports and other
36
information required to be filed by Section 13 or 15(d) under the
Exchange Act, as the case may be, as shall be necessary in order
that the conditions to the availability of Rule 144 under the
Securities Act, as such Rule may be amended, in connection with
any Sale of shares of Common Stock by the Purchaser shall be met.
For so long as the Seller is required to file reports and other
information pursuant to Section 13 or 15(d) of the Exchange Act
and this Section 5.10, unless the Purchaser no longer holds any
Shares or shares of Common Stock issued upon conversion of the
Shares, the Seller shall provide the Purchaser with a paper copy
of each such report and other information within a reasonable
period of time following the filing of such report or other
information with the Commission.
SECTION 5.11 Conduct of Business of the Seller. Prior to
the Closing, the Seller agrees (except to the extent that the
Purchaser shall otherwise consent in writing) as follows:
(a) Dividends; Changes in Stock. The Seller shall not
take or permit to be taken any action that would result in an
adjustment to the Conversion Price (as defined in the Certificate
of Designations) pursuant to Section (7)(d) of the Certificate of
Designations if the Shares were issued and outstanding at the
time of such action.
(b) Certain Matters. The Seller shall not take or
permit to be taken any action in respect of which holders of
Shares would be entitled to vote pursuant to Section (9) of the
Certificate of Designations if the Shares were outstanding at the
time of such action.
SECTION 5.12 Use of Funds. The Seller shall use the
proceeds from the sale of the Preferred Stock and the Seller's
Series F 6.5% Cumulative Convertible Preferred Stock by December
31, 1999 solely for the buildout of existing personal
communications services (PCS) markets for which Licenses have
been issued to Powertel or its Subsidiaries.
SECTION 5.13 Further Action. Each of the parties hereto
shall use all reasonable efforts to take, or cause to be taken,
all appropriate action, do or cause to be done all things
necessary, proper or advisable under applicable Law, and execute
and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Obligations of the Seller. The
obligations of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the
satisfaction (or waiver by the Seller, at its sole discretion),
at or prior to the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this
Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material
respects as of the Closing, with the same force and effect as if
made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true
and correct in all material respects as of such date (provided,
however, that if any portion of any representation or warranty is
already qualified by materiality, for purposes of determining
whether this Section 6.1(a) has been satisfied with respect to
such portion of such representation or warranty, such portion of
such representation or warranty as so qualified must be true and
correct in all respects), and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser
at or before the Closing shall have been complied with in all
material respects, and the Seller shall have received a
certificate from the Purchaser to such effect signed by a duly
authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have
been commenced by or before any Governmental Authority against
either the Seller or the Purchaser seeking to restrain or
materially and adversely alter the transactions contemplated by
this Agreement which, in the reasonable, good faith determination
of the Seller, is likely to render it impossible or unlawful to
consummate such transactions; provided, however, that the
provisions of this Section 6.1(b) shall not apply if the Seller
has directly or indirectly solicited or encouraged any such
Action;
(c) Resolutions of the Purchaser. The Seller shall
have received a true and complete copy, certified by the
Secretary or an Assistant Secretary of the Purchaser, of the
resolutions duly and validly adopted by the Board of Directors of
the Purchaser evidencing its authorization, if required by law,
of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
38
(d) Incumbency Certificate of the Purchaser. The
Seller shall have received a certificate of the Secretary or an
Assistant Secretary of the Purchaser certifying the names and
signatures of the officers of the Purchaser authorized to sign
this Agreement and the other documents to be delivered hereunder;
(e) Legal Opinion. The Seller shall have received
from XxXxxx Law Firm, P.A., counsel to the Purchaser, a legal
opinion, addressed to the Seller and dated the Closing Date, the
form and substance of which shall be substantially as set forth
in Exhibit 6.1(e) attached hereto;
(f) Consents and Approvals. The Seller shall have
received (or received evidence of), each in form and substance
reasonably satisfactory to the Seller, all Approvals and all
third party consents necessary or desirable for the consummation
of the transactions contemplated by this Agreement; and
Closing of Series F Transaction. Closing of the transaction
contemplated by the Series F Stock Purchase Agreement shall have
occurred or shall occur simultaneously with the Closing.
SECTION 6.2 Conditions to Obligations of the Purchaser.
The obligations of the Purchaser shall be subject to the
satisfaction (or waiver by the Purchaser, at its sole
discretion), at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Seller contained in this
Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material
respects as of the Closing with the same force and effect as if
made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true
and correct as of such date (provided, however, that if any
portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section
6.2(a) has been satisfied with respect to such portion of such
representation or warranty, such portion of such representation
or warranty as so qualified must be true and correct in all
respects), and the covenants and agreements contained in this
Agreement to be complied with by the Seller at or before the
Closing shall have been complied with in all material respects,
and the Purchaser shall have received a certificate of the Seller
to such effect signed by a duly authorized officer thereof;
39
(b) No Proceeding or Litigation. No Action shall have
been commenced by or before any Governmental Authority against
either the Seller or the Purchaser, seeking to restrain or
materially and adversely alter the transactions contemplated by
this Agreement which, in the reasonable, good faith determination
of the Purchaser, is likely to render it impossible or unlawful
to consummate such transactions or which could have a Material
Adverse Effect; provided, however, that the provisions of this
Section 6.2(b) shall not apply if the Purchaser has directly or
indirectly solicited or encouraged any such Action;
(c) Resolutions of the Seller. The Purchaser shall
have received a true and complete copy, certified by the
Secretary or an Assistant Secretary of the Seller, of the
resolutions duly and validly adopted by the Board of Directors of
the Seller and, to the extent that such authorization is
necessary, the stockholders of the Seller evidencing their
authorization of the execution and delivery of this Agreement,
the issuance and terms of the Shares including, without
limitation, the convertibility thereof into shares of Common
Stock, and the consummation of the transactions contemplated
hereby;
(d) Incumbency Certificate of the Seller. The
Purchaser shall have received a certificate of the Secretary or
an Assistant Secretary of the Seller certifying the names and
signatures of the officers of the Seller authorized to sign this
Agreement and the other documents to be delivered hereunder;
(e) Legal Opinion. The Purchaser shall have received
from Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P., counsel to the
Seller, a legal opinion, addressed to the Purchaser and dated the
Closing Date, the form and substance of which shall be
substantially as set forth in Exhibit 6.2(e) attached hereto;
(f) Consents and Approvals. The Purchaser shall have
received (or received evidence of), each in form and substance
reasonably satisfactory to the Purchaser, all Approvals and all
third party consents necessary or desirable for the consummation
of the transactions contemplated by this Agreement which the
Seller has the obligation to obtain;
(g) Organizational Documents. The Purchaser shall
have received a copy of (i) the certificate of incorporation, as
amended, of the Seller, certified by the Secretary of State of
the State of Delaware, as of a date not earlier than five
Business Days prior to the Closing Date and accompanied by a
certificate of the Secretary or an Assistant Secretary of the
Seller, dated as of the Closing Date, stating that no amendments
40
have been made to such certificate of incorporation since such
date, (ii) the by-laws of the Seller, certified by the Secretary
or an Assistant Secretary of the Seller and (iii) a true and
correct copy of the Certificate of Designations and evidence of
the filing thereof;
(h) Good Standing. The Purchaser shall have received
a good standing certificate for the Seller from the Secretary of
State of the State of Delaware, dated as of a date not earlier
than five Business Days prior to the Closing Date and accompanied
by a bring-down certificate signed by the Secretary or an
Assistant Secretary of the Seller dated within one day prior to
the Closing Date;
(i) No Material Adverse Effect. No event or events
shall have occurred which, individually or in the aggregate,
have, or could have, a Material Adverse Effect; and Closing of
Series F Transaction. Closing of the transaction contemplated by
the Series F Stock Purchase Agreement shall have occurred or
shall occur simultaneously with the Closing.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations and Warranties.
(a) The representations and warranties of the Seller
to the Purchaser contained in this Agreement shall survive the
Closing until the later of the second anniversary of the Closing
Date or the conversion of all Shares into Common Stock. Neither
the period of survival nor the liability of the Seller with
respect to the Seller's representations and warranties shall be
reduced by any investigation made at any time by or on behalf of
the Purchaser. If written notice of a claim has been given prior
to the expiration of the applicable representations and
warranties by the Purchaser to the Seller, then the relevant
representations and warranties shall survive as to such claim,
until such claim has been finally resolved.
(b) The representations and warranties of the
Purchaser to the Seller contained in this Agreement shall survive
the Closing until the later of the second anniversary of the
Closing Date or the conversion of all Shares into Common Stock.
Neither the period of survival nor the liability of the Purchaser
with respect to the Purchaser's representations and warranties
shall be reduced by any investigation made at any time by or on
behalf of the Seller. If written notice of a claim has been
41
given prior to the expiration of the applicable representations
and warranties by the Seller to the Purchaser, then the relevant
representations and warranties shall survive as to such claim,
until such claim has been finally resolved.
SECTION 7.2 Indemnification.
(a)(i) The Purchaser, its successors and assigns, and
the stockholders, officers, directors, employees, Affiliates and
agents of the Purchaser and its successors and assigns shall be
indemnified and held harmless by the Seller for any and all
Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without
limitation, any Action brought or otherwise initiated by any of
them) (hereinafter a "Loss"), arising out of or resulting from:
(A) the breach of any representation or warranty
made by the Seller contained in this Agreement; or
(B) the breach of any covenant or agreement by
the Seller contained in this Agreement.
(ii) The Seller, its successors and assigns,
and the stockholders, officers, directors, employees, Affiliates
and agents of the Seller and its successors and assigns shall be
indemnified and held harmless by the Purchaser for any and all
Losses actually suffered or incurred by them, arising out of or
resulting from:
(A) the breach of any representation or warranty
made by the Purchaser in this Agreement; or
(B) the breach of any covenant or agreement by
the Purchaser contained in this Agreement. To the extent that
the Seller's or the Purchaser's undertakings set forth in this
Section 7.2 may be unenforceable, the Seller or the Purchaser, as
the case may be, shall contribute the maximum amount that it is
permitted to contribute under applicable law to the payment and
satisfaction of all Losses incurred by the Purchaser or the
Seller, as the case may be.
(b) An indemnified party shall give the party from
which indemnification is sought notice of any matter which an
indemnified party has determined has given or could give rise to
a right of indemnification under this Agreement, within 60 days
of such determination, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to
42
the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises; provided, however, that
the failure to provide such notice shall not release the
indemnifying party from any of its obligations under this Article
VII except to the extent the indemnifying party is materially
prejudiced by such failure and shall not relieve the indemnifying
party from any other obligation or Liability that it may have to
any indemnified party otherwise than under this Article VII. The
obligations and Liabilities of an indemnifying party under this
Article VII with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for
in this Article VII ("Third Party Claims") shall be governed by
and contingent upon the following additional terms and
conditions: If an indemnified party shall receive notice of any
Third Party Claim, the indemnified party shall give the
indemnifying party notice of such Third Party Claim within 30
days of the receipt by the indemnified party of such notice;
provided, however, that the failure to provide such notice shall
not release the indemnifying party from any of its obligations
under this Article VII except to the extent the indemnifying
party is materially prejudiced by such failure and shall not
relieve the indemnifying party from any other obligation or
Liability that it may have to any indemnified party otherwise
than under this Article VII. If the indemnifying party
acknowledges in writing its obligation to indemnify the
indemnified party hereunder against any Losses that may result
from such Third Party Claim, then the indemnifying party shall be
entitled to assume and control the defense of such Third Party
Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the indemnified party
within five days of the receipt of such notice from the
indemnified party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make
it inappropriate in the judgment of the indemnified party, in its
sole and absolute discretion, for the same counsel to represent
both the indemnified party and the indemnifying party, then the
indemnified party shall be entitled to retain its own counsel, in
each jurisdiction for which the indemnified party determines
counsel is required, at the expense of the indemnifying party.
In the event the indemnifying party exercises the right to
undertake any such defense against any such Third Party Claim as
provided above, the indemnified party shall cooperate with the
indemnifying party in such defense and make available to the
indemnifying party, at the indemnifying party's expense, all
witnesses, pertinent records, materials and information in the
indemnified party's possession or under the indemnified party's
control relating thereto as is reasonably required by the
indemnifying party. Similarly, in the event the indemnified
party is, directly or indirectly, conducting the defense against
43
any such Third Party Claim, the indemnifying party shall
cooperate with the indemnified party in such defense and make
available to the indemnified party, at the indemnifying party's
expense, all such witnesses, pertinent records, materials and
information in the indemnifying party's possession or under the
indemnifying party's control relating thereto as is reasonably
required by the indemnified party. No such Third Party Claim may
be settled by the indemnifying party or the indemnified party
without the prior written consent of the other.
SECTION 7.3 Limits on Indemnification. Notwithstanding
anything to the contrary contained in this Agreement, the maximum
amount of indemnifiable Losses which may be recovered from an
indemnifying party arising out of or resulting from the causes
enumerated in Section 7.2 shall be an amount equal to the
Purchase Price. The provisions of this Article VII shall survive
the Closing and any termination of this Agreement.
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated
as follows:
(a) by the Purchaser if, between the date hereof and
the time scheduled for the Closing: (i) an event or condition
occurs that has resulted in a Material Adverse Effect; (ii) any
representation or warranty of the Seller contained in this
Agreement shall not have been true and correct in all material
respects when made or as of the Closing Date; (iii) the Seller
shall not have complied in all material respects with any
covenant or agreement to be complied with by it and contained in
this Agreement; or (iv) the Seller or any Subsidiary makes a
general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Seller or any
Subsidiary seeking to adjudicate any of them a bankrupt or
insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its
debts under any Law relating to bankruptcy, insolvency or
reorganization; or
(b) by the Seller if, between the date hereof and the
time scheduled for the Closing: (i) any representation or
warranty of the Purchaser contained in this Agreement shall not
have been true and correct in all material respects when made;
(ii) the Purchaser shall not have complied in all material
respects with any covenant or agreement to be complied with by it
and contained in this Agreement; or (iii) the Purchaser makes a
general assignment for the benefit of creditors, or any
44
proceeding shall be instituted by or against the Purchaser
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of its debts under
any Law relating to bankruptcy, insolvency or reorganization; or
(c) by either the Seller or the Purchaser if the
Closing shall not have occurred on or prior to June 30, 1998; or
(d) by either the Purchaser or the Seller in the event
that any Governmental Authority shall have issued an order,
decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall
have become final and nonappealable; or
(e) by the mutual written consent of the Seller and
the Purchaser.
SECTION 8.2 Effect of Termination. In the event of
termination of this Agreement as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no
liability on the part of either party hereto except that nothing
herein shall relieve either party from liability for any breach
of this Agreement occurring prior to termination.
SECTION 8.3 Waiver. Either party to this Agreement may:
(i) extend the time for the performance of any of the obligations
or other acts of the other party; (ii) waive any inaccuracies in
the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant
hereto; or (iii) waive compliance with any of the agreements or
conditions of the other party contained herein. Any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party to be bound thereby.
Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or
condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
of such rights.
45
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Expenses. If the Closing occurs, upon
presentation to the Seller of a reasonably detailed invoice, the
Seller shall reimburse the Purchaser for up to $100,000 in costs
and expenses, including, without limitation, fees and
disbursements of counsel, actually incurred by the Purchaser in
connection with this Agreement and the transactions contemplated
hereby. Except as otherwise specified in this Agreement
(including in the preceding sentence of this Section 9.1), all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
costs and expenses, whether or not the Closing shall have
occurred.
SECTION 9.2 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by courier
service, by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 9.2):
(a) if to the Seller:
Powertel, Inc.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx IV, Esq.
46
(b) if to the Purchaser:
SCANA Communications, Inc.
c/o SCANA Corporation
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy (which shall not constitute notice) to:
SCANA Communications, Inc.
c/o SCANA Corporation
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: X. Xxxxxx Xxxxxx XX, Esq.
SECTION 9.3 Public Announcements. No party to this
Agreement shall make, or cause to be made, any press release or
public announcement or otherwise communicate with any news media
in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of the other party
(which shall not be unreasonably withheld or delayed), and the
parties shall cooperate as to the timing and contents of any such
press release or public announcement; provided, however, that
with respect to any disclosure required by law or by a listing
agreement with the National Association of Securities Dealers,
Inc. Automated Quotation System National Market System or any
national securities exchange to which the Purchaser or the Seller
is a party, the party required to make such disclosure shall use
its best efforts to consult with the other party as to the timing
and contents of such disclosure and to obtain such consent prior
to the time such disclosure is required to be made.
SECTION 9.4 Headings. The descriptive headings contained
in this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
SECTION 9.5 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good
47
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest
extent possible.
SECTION 9.6 Entire Agreement. This Agreement constitutes
the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between the Seller and the
Purchaser with respect to the subject matter hereof.
SECTION 9.7 Assignment. This Agreement may not be assigned
by operation of Law or otherwise without the express written
consent of the Seller and the Purchaser (which consent may be
granted or withheld in the sole discretion of the Seller or the
Purchaser); provided, however, that the Purchaser may, without
the consent of the Seller, assign this Agreement to SCANA
Corporation or to a subsidiary controlled by SCANA Corporation,
but no such assignment shall relieve the Purchaser of any of its
obligations under this Agreement; and provided further, however,
that the rights granted pursuant to Annex II may be transferred
in accordance with Annex II.
SECTION 9.8 No Third Party Beneficiaries. Except for the
provisions of Article VII relating to indemnified parties, this
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their successors and permitted assigns,
and nothing herein, express or implied, is intended to or shall
confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
SECTION 9.9 Amendment. This Agreement may not be amended
or modified, except: (i) by an instrument in writing signed by,
or on behalf of, the Seller and the Purchaser; or (ii) by a
waiver in accordance with Section 8.3.
SECTION 9.10 Governing Law. This Agreement shall be
governed by the laws of the State of New York without reference
to the principles or rules governing conflicts of laws.
SECTION 9.11 Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
48
SECTION 9.12 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the term hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed as of the date first written above
by their respective officers thereunto duly authorized.
POWERTEL, INC.
By: s/Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
SCANA COMMUNICATIONS, INC.
By: s/Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Treasurer
49
ANNEX I
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE
PARTICIPATING OR OTHER RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES E 6.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
POWERTEL, INC.
________________________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
________________________________
POWERTEL, INC., a Delaware corporation (the "Corporation"),
does hereby certify that the following resolutions were duly
adopted by the Board of Directors of the Corporation pursuant to
authority conferred upon the Board of Directors by Article FOURTH
of the Certificate of Incorporation of the Corporation, which
authorizes the issuance of up to 1,000,000 shares of preferred
stock, by consent of the Board of Directors dated June 15, 1998:
RESOLVED, that the issue of a series of preferred stock,
$0.01 par value, of the Corporation is hereby authorized and the
designations, powers, preferences and relative, participating or
other rights, and qualifications, limitations or restrictions
thereof, in addition to those set forth in the Certificate of
Incorporation of the Corporation, are hereby fixed as follows:
Section (1) Number of Shares and Designation. 50,000 shares
of the preferred stock, $0.01 par value, of the Corporation are
hereby constituted as a series of the preferred stock designated
as Series E 6.5% Cumulative Convertible Preferred Stock (the
"Series E Preferred Stock"). Without the consent of the then
current holders of shares of Series E Preferred Stock as provided
for herein, the number of shares of Series E Preferred Stock may
not be increased and may not be decreased below the number of
then currently outstanding shares of Series E Preferred Stock.
Section (2) Definitions. For purposes of the Series E
Preferred Stock, the following terms shall have the meanings
indicated:
50
"Base Shares" shall have the meaning set forth in
paragraph (a) of Section (3).
"Board of Directors" shall mean the Board of Directors
of the Corporation or any committee authorized by such Board of
Directors to perform any of its responsibilities with respect to
the Series E Preferred Stock.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
"Common Stock" shall mean the Common Stock of the
Corporation, par value $0.01 per share.
"Conversion Price" shall mean the conversion price per
share of Common Stock into which the Series E Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section (7). The initial Conversion Price shall be $22.01
(equivalent to the rate of approximately 68.15 shares of Common
Stock for each share of Series E Preferred Stock).
"Current Market Price" shall mean, as of a particular
date, the average of the closing high bid and low asked prices
per share of Common Stock in the over-the-counter market, as
reported by the Nasdaq Stock Market or such other system then in
use, or such other exchange or inter-dealer quotation system on
which the Common Stock is principally traded or authorized to be
quoted.
"Dividend Junior Stock" shall have the meaning set
forth in paragraph (d) of Section (3).
"Dividend Parity Stock" shall have the meaning set
forth in paragraph (c) of Section (3).
"Dividend Payment Date" shall have the meaning set
forth in paragraph (a) of Section (3).
"Dividend Period" shall have the meaning set forth in
paragraph (a) of Section (3).
"Dividend Value" shall have the meaning set forth in
paragraph (a) of Section (3).
"Excess Dividend Amount" shall have the meaning set
forth in paragraph (e) of Section 3.
51
"Initial Convertibility Date" shall mean the fifth
anniversary of the Issue Date.
"Initial Market Price" shall mean $17.75 per share, and
shall be proportionately adjusted for any: (i) dividend or
distribution made on the Common Stock in shares of Common Stock;
(ii) subdivision of the Common Stock into a greater number of
shares; (iii) combination of the Common Stock into a smaller
number of shares; or (iv) issuance of shares of capital stock by
reclassification of the Common Stock.
"Issue Date" shall mean the first date on which shares
of Series E Preferred Stock are issued.
"Liquidation Preference" shall have the meaning set
forth in paragraph (a) of Section (4).
"Mandatory Redemption Date" shall have the meaning set
forth in paragraph (b) of Section (5).
"Mandatory Redemption Price" shall have the meaning set
forth in paragraph (b) of Section (5).
"Minimum Price" shall have the meaning set forth in
paragraph (d)(ii) of Section (7).
"Nasdaq Stock Market" shall mean the National Market
System of the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Optional Redemption Date" shall have the meaning set
forth in paragraph (a) of Section (5).
"Optional Redemption Price" shall have the meaning set
forth in paragraph (a) of Section (5).
"Person" shall mean any individual, firm, partnership,
joint venture, corporation, limited liability company,
association or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Redemption Date" shall have the meaning set forth in
paragraph (c) of Section (5).
"Redemption Notice" shall have the meaning set forth in
paragraph (c) of Section (5).
"Redemption Price" shall have the meaning set forth in
paragraph (c) of Section (5).
52
"Securities" shall have the meaning set forth in
paragraph (d)(iii) of Section (7).
"Series A Preferred Stock" shall mean the series of
preferred stock, $0.01 par value, of the Corporation designated
as Series A Convertible Preferred Stock.
"Series B Preferred Stock" shall mean the series of
preferred stock, $0.01 par value, of the Corporation designated
as Series B Convertible Preferred Stock.
"Series C Preferred Stock" shall mean the series of
preferred stock, $0.01 par value, of the Corporation designated
as Series C Convertible Preferred Stock.
"Series D Preferred Stock" shall mean the series of
preferred stock, $0.01 par value, of the Corporation designated
as Series D Convertible Preferred Stock.
"Series F Preferred Stock" shall mean the series of
preferred stock, $0.01 par value, of the Corporation designated
as Series F 6.5% Cumulative Convertible Preferred Stock.
"Series F Certificate of Designations" shall mean the
Certificate of the Designations, Powers, Preferences and Relative
Participating or Other Rights, and the Qualifications,
Limitations or Restrictions Thereof, of Series F 6.5% Cumulative
Convertible Preferred Stock ($0.01 Par Value) of Powertel, Inc.,
as filed with the Secretary of State of the State of Delaware, as
such may be amended from time to time.
"Specified Indentures" shall mean the following: (i)
the Indenture dated June 10, 1997 governing the 11 1/8% Senior
Notes Due 2007 of the Corporation; (ii) the Indenture dated April
19, 1996 governing the 12% Senior Discount Notes Due May 2006 of
the Corporation; and (iii) the Indenture dated February 7, 1996
governing the 12% Senior Discount Notes Due February 2006 of the
Corporation.
"Subsidiaries" shall mean any and all corporations,
partnerships, limited liability companies, joint ventures,
associations and other entities controlled by the Corporation
directly or indirectly through one or more intermediaries.
"Trading Day" means a day on which the Nasdaq Stock
Market, or such other exchange or inter-dealer quotation system
on which the Common Stock is principally traded or authorized to
be quoted, is open for the transaction of business.
53
"Transaction" shall have the meaning set forth in
paragraph (e) of Section (7).
"Transfer Agent" means such agent or agents of the
Corporation as may be designated by the Board of Directors as the
transfer agent for the Series E Preferred Stock.
Section (3) Dividends.
(a) Holders of the outstanding shares of Series E
Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally
available therefor, dividends on each share of the Series E
Preferred Stock, calculated and payable quarterly (each such
quarterly period being hereinafter called a "Dividend Period"),
at a rate per annum equal to 6.5% of the Liquidation Preference
of such share; provided, however, that without first obtaining
stockholder approval pursuant to the rules of the Nasdaq Stock
Market, or, in lieu thereof, if allowed by the Nasdaq Stock
Market, otherwise delivering notice to stockholders, the
aggregate number of shares of Common Stock that are issued as
dividends pursuant to this Section (3) at a price below the
Initial Market Price shall not exceed 20% of the number of shares
of Common Stock that are issued and outstanding as of the Issue
Date (the "Base Shares"). If the aggregate number of shares of
Common Stock that have been issued as dividends on the Series E
Preferred Stock pursuant to this Section (3) at a price below the
Initial Market Price exceeds at any time 5% of the Base Shares,
the Corporation agrees, for the benefit of the holders of the
Series E Preferred Stock, to seek (if not previously obtained)
approval at the next annual meeting of the Corporation's
stockholders of the issuance of any future dividends payable in
Common Stock pursuant to this paragraph (a) of this Section (3)
which may exceed 20% of the Base Shares.
All dividends on shares of the Series E Preferred
Stock, to the extent accrued, shall be cumulative, whether or not
earned or declared, on a daily basis from the last date through
which dividends have been paid or, if no dividends have been
paid, from the date upon which each such share of Series E
Preferred Stock was initially issued, and shall be payable
quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (each a "Dividend Payment Date"),
commencing on September 15, 1998, to holders of record on the
Business Day immediately preceding the relevant Dividend Payment
Date. Such dividends shall accrue whether or not they have been
declared and whether or not there are net profits, surplus or
other funds of the Corporation legally available for the payment
of dividends.
54
Dividends on the Series E Preferred Stock shall be, at
the option of the Corporation, payable (i) in cash or (ii)
through the issuance of a number of fully paid and nonassessable
shares (rounded up or down to the nearest whole number) of Common
Stock equal to the amount of the dividend owed divided by the
Dividend Value of the Common Stock; provided, however, that the
Corporation shall not pay any dividends on the Series E Preferred
Stock in cash prior to the date that all obligations under each
of the Specified Indentures shall have been satisfied in full
unless all restrictions set forth in the Specified Indentures
with respect to the payment of such cash dividends have been
waived or otherwise satisfied in accordance with the terms of
such Specified Indentures; and provided further, however, that
dividends with respect to a Dividend Payment Date that are not
paid in cash within 90 days of such Dividend Payment Date shall
thereafter be payable solely in shares of Common Stock on the
basis of the Dividend Value with respect to such Dividend Payment
Date, as set forth in this Section (3), and shall no longer be
payable in cash.
The "Dividend Value" of the Common Stock with respect
to a Dividend Payment Date means the product of (x) 95% and (y)
the average of the last sales price for the Common Stock as
reported by the Nasdaq Stock Market, or the principal securities
exchange or other securities market on which the Common Stock is
then being traded, for the five Trading Days immediately
preceding such Dividend Payment Date.
(b) All dividends paid with respect to shares of the
Series E Preferred Stock pursuant to paragraph (a) of this
Section (3) shall be paid pro rata to the holders entitled
thereto.
(c) No dividend whatsoever shall be declared or paid
upon, or any funds or shares of Common Stock set apart for the
payment of dividends upon, any outstanding share of the Series E
Preferred Stock with respect to any Dividend Period unless all
dividends for all preceding Dividend Periods have been declared
and paid (or declared and a sufficient sum or number of shares of
Common Stock set apart for the payment of such dividend) upon all
outstanding shares of Series E Preferred Stock. No dividend will
be declared or paid upon any stock that ranks on a parity with
the Series E Preferred Stock with respect to dividends (the
"Dividend Parity Stock"), and no shares of Dividend Parity Stock
shall be redeemed, purchased or otherwise acquired by the
Corporation for consideration through a sinking fund or
otherwise, unless (A) all accrued and unpaid dividends have been
paid on the Series E Preferred Stock for all prior Dividend
Periods and (B) sufficient funds or shares of Common Stock have
55
been paid or set apart for the payment of the dividend for the
Dividend Period for which a dividend is next payable on the
Series E Preferred Stock. Notwithstanding the provisions of this
paragraph (c), if accrued dividends on the Series E Preferred
Stock for all prior Dividend Periods have not been paid in full
and sufficient funds or shares of Common Stock have not been paid
or set apart for the payment of the dividend for the Dividend
Period for which a dividend is next payable on the Series E
Preferred Stock, the Corporation may declare a dividend on the
Series E Preferred Stock and any Dividend Parity Stock for any
Dividend Period if such dividend will be declared ratably in
proportion to accrued and unpaid dividends on the Series E
Preferred Stock and such Dividend Parity Stock.
(d) The Corporation will not (i) declare, pay or set
apart funds or shares of Common Stock for the payment of any
dividend or other distribution with respect to any stock that
ranks junior to the Series E Preferred Stock with respect to
dividends ("Dividend Junior Stock") or (ii) redeem, purchase or
otherwise acquire for consideration any Dividend Junior Stock
through a sinking fund or otherwise, unless (A) all accrued and
unpaid dividends with respect to the Series E Preferred Stock at
the time of such event have been paid or funds or shares of
Common Stock have been set apart for payment of such dividends
and (B) sufficient funds or shares of Common Stock have been paid
or set apart for the payment of the dividend for the Dividend
Period for which a dividend is next payable on the Series E
Preferred Stock. Notwithstanding anything in this Certificate of
Designations to the contrary, the Corporation may repurchase,
redeem or otherwise acquire Dividend Junior Stock in exchange for
Dividend Junior Stock and Dividend Parity Stock in exchange for
Dividend Parity Stock or Dividend Junior Stock.
(e) So long as any shares of the Series E Preferred
Stock are outstanding, if dividends in excess of the quarterly
dividend amount set forth in paragraph (a) of Section (3) (such
excess being the "Excess Dividend Amount") shall be declared or
paid or set apart for payment in any Dividend Period on any
Dividend Junior Stock or Dividend Parity Stock, dividends equal
to the Excess Dividend Amount shall be contemporaneously declared
and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Series E Preferred Stock with
such payment with respect to each share of Series E Preferred
Stock being equal to the distributions that would be made in
respect of the aggregate of: (i) the number of shares of Common
Stock into which such share of Series E Preferred Stock is then
convertible; and (ii) the number of shares of Common Stock that
the Corporation would be required to issue as of such date in
payment of all dividends that, pursuant to paragraph (a) of
Section (3), have accrued but remain unpaid as of such date.
56
(f) Dividends on the Series E Preferred Stock on
account of arrears for any past Dividend Period and dividends on
the Series E Preferred Stock in connection with any optional
redemption may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on
the Business Day immediately prior to the payment thereof, as may
be fixed by the Board of Directors.
(g) Dividends payable on the Series E Preferred Stock
for any period other than a Dividend Period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
If a Dividend Payment Date is not a Business Day, payment of
dividends shall be made on the next succeeding Business Day and
dividends accruing for the intervening period shall be paid on
the next succeeding Dividend Payment Date.
Section (4) Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set
apart for the holders of Common Stock or any other series or
class or classes of stock of the Corporation ranking junior to
the Series E Preferred Stock upon liquidation, dissolution or
winding up, the holders of the shares of Series E Preferred Stock
shall be entitled to receive $1,500.00 per share (the
"Liquidation Preference"); thereafter, such holders shall be
entitled, with respect to their Series E Preferred Stock and all
dividends accrued and unpaid thereon to the date of final
distribution to such holders, to share on an as if converted to
Common Stock basis with the holders of the shares of Common Stock
as provided in paragraph (b) of this Section (4). If, upon any
liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock and any other shares of stock ranking, as to liquidation,
dissolution or winding up, on a parity with the Series E
Preferred Stock, shall be insufficient to pay in full the
liquidation preferences of all of such series and liquidating
payments in respect thereof, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and any such other stock ratably
in accordance with the respective amounts which would be payable
with respect to the liquidation preferences of such shares of
Series A Preferred Stock, Series B Preferred Stock, Series C
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Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and any such other stock if all
liquidation preferences payable thereon were paid in full. For
the purposes of this Section (4), (i) a consolidation or merger
of the Corporation with one or more entities, (ii) a sale or
transfer of all or substantially all of the Corporation's assets
or (iii) a statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary;
provided, however, that any subsequent distribution, liquidation,
dissolution or winding up of the Corporation shall remain subject
to this Section (4).
(b) Subject to the rights of the holders of shares of
any series or class or classes of stock ranking on a parity with
or prior to Series E Preferred Stock, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall
have been made in full to the holders of Series E Preferred
Stock, as provided in paragraph (a) of this Section (4), holders
of shares of Series E Preferred Stock shall be entitled to share
ratably with holders of shares of Common Stock and any other
class or series entitled to participate with the Common Stock in
the event of liquidation, dissolution or winding up, in any and
all assets remaining to be paid or distributed, such that
distributions shall be made in respect of each share of Series E
Preferred Stock in an amount equal to the distributions made in
respect of the aggregate of: (i) the number of shares of Common
Stock into which such share of Series E Preferred Stock is then
convertible; and (ii) the number of shares of Common Stock that
the Corporation would be required to issue as of such date in
payment of all dividends that, pursuant to paragraph (a) of
Section (3), have accrued but remain unpaid as of such date.
Section (5) Redemption.
(a) Series E Preferred Stock may not be redeemed by
the Corporation prior to the Initial Convertibility Date. After
the Initial Convertibility Date and subject to the restrictions
set forth in Section (3) hereof, the Corporation, at its option,
may redeem the shares of Series E Preferred Stock, in whole or in
part, at any time or from time to time upon such date or dates as
may be fixed by the Corporation for redemption (each an "Optional
Redemption Date"), for an aggregate redemption price in cash
equal to the Liquidation Preference per share plus an amount per
share equal to the value on a day selected by the Board of
Directors of the Corporation that is within five days of the
Optional Redemption Date of all accrued and unpaid dividends, if
any, to the applicable Optional Redemption Date (the "Optional
Redemption Price"), out of funds legally available therefor,
subject to the notice provisions and provisions for partial
redemption described below; provided, however, that in connection
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with any redemption effected pursuant to this paragraph (a) of
Section (5), the Corporation must redeem the shares of Series A
Preferred Stock, the shares of Series B Preferred Stock, the
shares of Series C Preferred Stock, the shares of Series D
Preferred Stock, the Shares of Series E Preferred Stock and the
shares of Series F Preferred Stock then eligible for redemption
pro rata in proportion to their respective liquidation
preferences.
(b) Each share of Series E Preferred Stock (if not
earlier redeemed or converted) shall be subject to mandatory
redemption in whole (to the extent of lawfully available funds
therefor) on June 1, 2010 (the "Mandatory Redemption Date") at a
redemption price in cash equal to the Liquidation Preference per
share plus the value on a day selected by the Board of Directors
of the Corporation that is within five days of the Mandatory
Redemption Date of an amount per share equal to all accrued and
unpaid dividends thereon, if any, to the Mandatory Redemption
Date (the "Mandatory Redemption Price"). The Corporation shall
take all actions required or permitted by the Delaware General
Corporation Law to permit the redemption described in this
paragraph (b) of Section (5).
(c) In the event of a redemption pursuant to paragraph
(a) or (b) of this Section (5), the Corporation shall give notice
of such redemption (a "Redemption Notice") by first class mail,
postage prepaid, mailed not less than 20 nor more than 60 days
prior to the Optional Redemption Date or the Mandatory Redemption
Date, as the case may be (each a "Redemption Date"), to each
holder of record of the shares of Series E Preferred Stock to be
redeemed, at such holder's address as the same appears on the
stock records of the Corporation, which Redemption Notice shall
be unconditional and irrevocable. Each such Redemption Notice
shall state: (1) the Redemption Date; (2) the number of shares of
each series to be redeemed and, if less than all the shares held
by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (3) the Optional Redemption Price
or the Mandatory Redemption Price, as the case may be (each a
"Redemption Price"); (4) the place or places where certificates
for such shares are to be surrendered for payment of the
Redemption Price; (5) the then current Conversion Price; and (6)
that no default of the Corporation is then existing under any
material loan document, indenture or other borrowing, which
default has a material adverse effect on the Corporation. The
Redemption Notice having been mailed as aforesaid, from and after
the applicable Redemption Date (unless default shall be made by
the Corporation in providing money for the prompt payment of the
applicable Redemption Price), (i) the shares of the Series E
Preferred Stock so called for redemption and not converted prior
to 5:00 p.m. New York time on the Redemption Date shall no longer
59
be deemed to be outstanding, and (ii) all rights of the holders
thereof as stockholders of the Corporation (except the right to
receive from the Corporation the Redemption Price without
interest thereon after the Redemption Date) shall cease. If the
Corporation fails to provide money for the payment of the
Redemption Price within 30 days after the Redemption Date, the
Redemption Price shall accrue interest at the rate of 15% per
annum until paid.
Upon surrender in accordance with a Redemption Notice of the
certificates for the shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and
the Redemption Notice shall so state), such shares shall be
redeemed by the Corporation at the applicable Redemption Price.
If fewer than all the outstanding shares of Series E Preferred
Stock are to be redeemed, the shares of Series E Preferred Stock
to be redeemed shall be selected pro rata (as nearly as may be
possible) by the Corporation from outstanding shares of Series E
Preferred Stock held by each holder thereof and not previously
called for redemption. If fewer than all the shares represented
by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the
holder thereof.
Section (6) Shares to be Retired. All shares of Series E
Preferred Stock purchased or redeemed by the Corporation or
converted shall be retired and canceled and shall be restored to
the status of authorized but unissued shares of preferred stock,
without designation as to series.
Section (7) Conversion. Holders of shares of Series E
Preferred Stock shall have the right to convert all or a portion
of such shares into shares of Common Stock as follows:
(a) Subject to and upon compliance with the provisions
of this Section (7), a holder of shares of Series E Preferred
Stock shall have the right, at his, her or its option, at any
time on or after the Initial Convertibility Date, to convert such
shares, in whole or in part, into the number of fully paid and
nonassessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by
dividing the aggregate Liquidation Preference of such shares by
the Conversion Price and by surrender of such shares so to be
converted by the holder thereof, such surrender to be made in the
manner provided in paragraph (b) of this Section (7); provided,
however, that the right to convert shares called for redemption
pursuant to Section (5) shall terminate at 5:00 p.m. New York
time on the Redemption Date for such redemption, unless the
Corporation shall default in making prompt payment of the amount
payable upon such redemption. Any share of Series E Preferred
60
Stock may be converted, at the request of its holder, in part
into Common Stock. If a part of a share of Series E Preferred
Stock is converted, then the Corporation will convert such share
into the requested shares of Common Stock (subject to paragraph
(c) of this Section (7)) and issue a fractional share of Series E
Preferred Stock evidencing the remaining interest of such holder.
The Corporation shall issue, pay and deliver all accrued and
unpaid dividends with respect to the shares of Series E Preferred
Stock so converted in accordance with paragraph (b) of this
Section (7).
(b) In order to exercise the conversion right, the
holder of each share of Series E Preferred Stock to be converted
shall surrender the certificate representing such share, duly
endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent or, if no Transfer Agent has been
appointed by the Corporation, at the principal office of the
Corporation, accompanied by written notice to the Corporation
that the holder thereof elects to convert its shares of Series E
Preferred Stock or a specified portion thereof. Unless the
shares issuable on conversion are to be issued in the same name
as the name in which such share of Series E Preferred Stock is
registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to
the Corporation, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to
the Corporation demonstrating that such taxes have been paid).
Holders of shares of Series E Preferred Stock at the close
of business on a dividend payment record date shall be entitled
to receive the dividend payable on such shares (except that
holders of shares called for redemption on a Redemption Date
between such record date and the Dividend Payment Date shall not
be entitled to receive such dividend on such Dividend Payment
Date) on the corresponding Dividend Payment Date notwithstanding
the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date.
As promptly as practicable after the surrender of
certificates for shares of Series E Preferred Stock as aforesaid,
the Corporation shall issue, pay and deliver at such office to
such holder, or on his, her or its written order, (i) a
certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section (7), (ii) if less
than the full number of shares of Series E Preferred Stock
evidenced by the surrendered certificates is being converted, a
new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificates less the number
61
of shares being converted, (iii) all accrued and unpaid dividends
with respect to the shares of Series E Preferred Stock so
converted and (iv) any fractional interest in respect of a share
of Common Stock arising upon such conversion shall be settled as
provided in paragraph (c) of this Section (7).
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which
the certificates for shares of Series E Preferred Stock shall
have been surrendered and such notice received by the Corporation
as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby
at such time on such date and such conversion shall be at the
Conversion Price in effect at such time on such date, unless the
stock transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to
have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion
Price in effect on the date upon which such shares shall have
been surrendered and such notice received by the Corporation.
All shares of Common Stock delivered upon conversion of the
Series E Preferred Stock shall upon delivery be duly and validly
issued and fully paid and nonassessable.
(c) No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon
conversion of the Series E Preferred Stock. Instead of any
fractional interest in a share of Common Stock which would
otherwise be deliverable upon the conversion of a share of Series
E Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash (computed to the nearest cent) equal
to such fraction of a share multiplied by the Current Market
Price of one share of Common Stock on the Trading Day immediately
preceding the date of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of
shares of Series E Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time
to time as follows:
(i) In case the Corporation shall after the
Issue Date (A) pay a dividend or make a distribution on its
Common Stock in shares of its Common Stock without making a
corresponding dividend or distribution with respect to its Series
E Preferred Stock, (B) subdivide its outstanding Common Stock
62
into a greater number of shares, (C) combine its outstanding
Common Stock into a smaller number of shares or (D) issue any
shares of capital stock by reclassification of its Common Stock,
the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any share of Series E Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or capital stock of
the Corporation which such holder would have owned or have been
entitled to receive after the happening of any of the events
described above had such share of Series E Preferred Stock been
converted immediately prior to the happening of such event or the
record date therefor, whichever is earlier. An adjustment made
pursuant to this subparagraph (i) shall become effective
immediately after the close of business on the record date in the
case of a dividend or distribution (except as provided in
paragraph (h) below) and shall become effective immediately after
the close of business on the record date in the case of a
subdivision, combination or reclassification.
(ii) In case the Corporation shall issue after
the Issue Date (a) options, warrants or other rights to all
holders of Common Stock entitling them (for a period expiring
within 180 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less
than the lower of the Initial Market Price or the Conversion
Price (the "Minimum Price") at the record date for the
determination of stockholders entitled to receive such options,
warrants or other rights or (b) shares of Common Stock (excluding
shares of Common Stock issued or issuable as dividends with
respect to the Series E Preferred Stock pursuant to paragraph (a)
of Section (3) hereof and Common Stock issued or issuable as
dividends with respect to the Series F Preferred Stock pursuant
to paragraph (a) of Section (3) of the Series F Certificate of
Designations) or securities exercisable for (including options,
warrants or other rights other than those referred to in clause
(a) above and subparagraph (iii) below) or exchangeable or
convertible into shares of Common Stock) at a price per share (or
having an exercise, exchange or conversion price per share) less
than the then current Minimum Price (other than securities issued
in a transaction in which a pro rata share of such securities
have been reserved by the Corporation for distribution to the
holders of Series E Preferred Stock upon conversion), then in
each such case the Conversion Price in effect immediately prior
thereto shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior
to the date of issuance of such options, warrants, other rights
or shares of Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Common Stock) by (II)
a fraction, the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
63
issuance of such options, warrants or other rights or shares of
Common Stock (or securities exercisable for or exchangeable or
convertible into shares of Common Stock) (without giving effect
to any such issuance) and (B), in the case of (a) above, the
number of shares which the aggregate proceeds from the exercise
of such options, warrants or other rights for Common Stock or, in
the case of (b) above, the number of shares which the aggregate
consideration receivable by the Corporation for the total number
of shares of Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Common Stock) so
issued would purchase at the Minimum Price in effect immediately
prior to the date of issuance, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock
outstanding on the date of issuance of such options, warrants or
other rights or shares of Common Stock (or securities exercisable
for or exchangeable or convertible into Common Stock) (without
giving effect to any such issuance) and (B), in the case of
clause (a) above, the number of additional shares of Common Stock
offered for subscription or purchase or, in the case of clause
(b) above, the number of shares of Common Stock so issued or into
which the exercisable, exchangeable or convertible securities may
be exercised, exchanged or converted. Such adjustment shall be
made successively whenever any such options, warrants or other
rights or shares of Common Stock (or securities exercisable for
or exchangeable or convertible into Common Stock) are issued, and
shall become effective immediately after such record date or, in
the case of the issuance of Common Stock, after the date of
issuance thereof (or in the case of securities exercisable for or
exchangeable or convertible into shares of Common Stock, the date
on which holders may first exercise, exchange or convert the same
in accordance with the respective terms thereof). In determining
whether any options, warrants or other rights entitle the holders
of Common Stock to subscribe for or purchase shares of Common
Stock at less than the Minimum Price in effect immediately prior
to the date of such issuance, and in determining the aggregate
offering price of shares of Common Stock (or securities
exercisable for or exchangeable or convertible into shares of
Common Stock), there shall be taken into account any net
consideration received or receivable by the Corporation upon
issuance and upon exercise of such options, warrants or other
rights or upon issuance of shares of Common Stock (or securities
exercisable for or exchangeable or convertible into shares of
Common Stock), the value of such consideration, if other than
cash, to be determined by the Board of Directors in good faith
or, if higher, the aggregate exercise, exchange or conversion
price set forth in such exercisable, exchangeable or convertible
securities. The aggregate consideration received by the
Corporation in connection with the issuance of shares of Common
Stock or of options, warrants or other rights or securities
exercisable for or exchangeable or convertible into shares of
64
Common Stock shall be deemed to be equal to the sum of the
aggregate net offering price of all such securities plus the
minimum aggregate amount, if any, payable upon the exercise of
such options, warrants or other rights and conversion of any such
exercisable, exchangeable or convertible securities into shares
of Common Stock.
(iii) In case the Corporation shall distribute to
all holders of its Common Stock as a class any shares of capital
stock of the Corporation (other than Common Stock) or evidences
of its indebtedness or assets (other than a regular cash dividend
that the Board of Directors determines, in good faith, can be
maintained by the Corporation for at least four consecutive
periods covering not less than one year and that the Board of
Directors intends to maintain for at least four consecutive
periods covering not less than one year, out of profits or
surplus) or options, warrants or other rights to subscribe for or
purchase any of its securities (excluding those referred to in
subparagraph (ii)(a) above) (any of the foregoing being
hereinafter in this subparagraph (iii) called the "Securities"),
then in each such case, unless the Corporation elects to reserve
shares or other units of such Securities for distribution to the
holders of the Series E Preferred Stock upon the conversion of
the shares of Series E Preferred Stock so that any such holder
converting shares of Series E Preferred Stock will receive upon
such conversion, in addition to the shares of the Common Stock to
which such holder is entitled, the amount and kind of such
Securities which such holder would have received if such holder
had, immediately prior to the record date for the distribution of
the Securities, converted his or her shares of Series E Preferred
Stock into Common Stock (such election to be based upon a
determination by the Board of Directors that such reservation
will not materially adversely affect the interests of any holder
of Series E Preferred Stock in any such reserved Securities), the
Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying (I) the Conversion Price in
effect immediately prior to the date of such distribution by (II)
a fraction, the numerator of which shall be the Current Market
Price per share of the Common Stock on the record date mentioned
below less the fair market value (as determined by the Board of
Directors, whose determination shall, if made in good faith, be
conclusive) of the portion of the capital stock or assets or
evidences of indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock, and the
denominator of which shall be the Current Market Price per share
of the Common Stock. Such adjustment shall become effective
immediately, except as provided in paragraph (h) below, after the
record date for the determination of stockholders entitled to
receive such distribution.
65
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this subparagraph (iv) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment; and provided further that
any adjustment shall be required and made in accordance with the
provisions of this Section (7) (other than this subparagraph
(iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
shares of Common Stock. All calculations under this Section (7)
shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest 1/100 of a share (with .005 of a share
being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Corporation
shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required
by this paragraph (d), as it in its discretion shall determine to
be advisable in order that any stock dividends, subdivision of
shares, distribution of options, warrants or other rights to
purchase stock or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Corporation to
its stockholders shall not be taxable.
(v) No adjustment in the Conversion Price shall
be required in the event of any dividend, distribution or
issuance to holders of shares of Common Stock pursuant to
subparagraph (i), (ii) or (iii) above if holders of shares of
Series E Preferred Stock have received the same dividend,
distribution or issuance in accordance with Section (3) hereof.
(e) In case the Corporation shall be a party to any
transaction (including without limitation a merger,
consolidation, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common Stock and
excluding any transaction as to which paragraph (d)(i) of this
Section (7) applies) (each of the foregoing being referred to as
a "Transaction"), in each case as a result of which shares of
Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination
thereof), each share of Series E Preferred Stock which is not
converted into the right to receive stock, securities or other
property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock and other
securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of
shares or fraction thereof of Common Stock into which one share
of Series E Preferred Stock was convertible immediately prior to
such Transaction. The Corporation shall use reasonable efforts
66
to deliver notice of any Transaction to the holders of Series E
Preferred Stock at least 20 days prior to the earlier of the
consummation or the record date therefor; provided however, that
any unintentional failure by the Corporation to deliver such
required notice shall not impair or affect the validity or
provisions of any such Transaction; and provided, further, that
any failure by the Corporation to deliver such required notice
shall toll the time period in which the holders of Series E
Preferred Stock may convert their shares as aforementioned until
such notice is delivered by the Corporation. The Corporation
shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph
(e) and it shall not consent or agree to the occurrence of any
Transaction until the Corporation has entered into an agreement
with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series E Preferred Stock which
will contain provisions enabling the holders of the Series E
Preferred Stock which remains outstanding after such Transaction
to convert into the consideration received by holders of Common
Stock at the Conversion Price immediately after such Transaction.
The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend
(or any other distribution) on the Common Stock (other than a
regular cash dividend that the Board of Directors determines can
be maintained by the Corporation for at least four consecutive
periods covering at least one year and that the Board of
Directors intends to maintain for at least four consecutive
periods covering at least one year out of profits or surplus); or
(ii) the Corporation shall authorize the granting
to the holders of the Common Stock of rights or warrants to
subscribe for or purchase any shares of any class or any options,
warrants or other rights; or
(iii) there shall be any reclassification of the
Common Stock (other than an event to which paragraph (d)(i) of
this Section (7) applies) or any consolidation or merger to which
the Corporation is a party and for which approval of any
stockholders of the Corporation is required, or the sale or
transfer of all or substantially all of the assets of the
Corporation, then the Corporation shall cause to be filed with
the Transfer Agent and shall cause to be mailed to the holders of
shares of the Series E Preferred Stock at their addresses as
shown on the stock records of the Corporation, as promptly as
possible, but at least 15 days prior to the applicable date
specified in clauses (A) and (B) below, a notice stating (A) the
67
date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is
not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or rights
or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, sale or transfer is
expected, that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification,
consolidation, merger, sale or transfer. Failure to give such
notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section (7).
(g) Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted
Conversion Price, the calculation of such adjusted Conversion
Price and the date on which such adjustment becomes effective and
shall promptly mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series E
Preferred Stock at his, her or its last address as shown on the
stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section
(7) provides that an adjustment shall become effective
immediately after a record date for an event, the Corporation may
defer until the occurrence of such event (A) issuing to the
holder of any share of Series E Preferred Stock converted after
such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above
the Common Stock issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any
amount in cash in lieu of any fraction pursuant to paragraph (c)
of this Section (7).
(i) For purposes of this Section (7), the number of
shares of Common Stock at any time outstanding shall not include
any shares of Common Stock then owned or held by or for the
account of the Corporation.
(j) If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one
paragraph of this Section (7), only one adjustment shall be made
and such adjustment shall be the amount of adjustment which has
the highest absolute value.
68
(k) In case the Corporation shall take any action
affecting the Common Stock other than action described in this
Section (7), which in the opinion of the Board of Directors would
materially adversely affect the conversion rights of the holders
of the shares of Series E Preferred Stock, the Conversion Price
for the Series E Preferred Stock may be adjusted, to the extent
permitted by law, in such manner, if any, and at such time, as
the Board of Directors may determine to be equitable in the
circumstances.
(l) The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares of
Common Stock or its issued shares of Common Stock held in its
treasury, or both, for the purpose of effecting conversion of the
Series E Preferred Stock, the full number of shares of Common
Stock deliverable upon the conversion of all outstanding shares
of Series E Preferred Stock not theretofore converted. For
purposes of this paragraph (1), the number of shares of Common
Stock which shall be deliverable upon the conversion of all
outstanding shares of Series E Preferred Stock shall be computed
as if at the time of computation all such outstanding shares were
held by a single holder.
(m) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock deliverable upon conversion of the
Series E Preferred Stock, the Corporation shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(n) The Corporation shall use all reasonable efforts
to list the shares of Common Stock required to be delivered upon
conversion of the Series E Preferred Stock and all shares of
Common Stock issued as dividends with respect to the Shares,
prior to such issuance and delivery, on the Nasdaq Stock Market
or such other exchange or interdealer quotation system on which
the Common Stock is principally traded or authorized to be
quoted.
(o) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the
Series E Preferred Stock or upon the payment of dividends with
respect to the Shares, the Corporation shall use all reasonable
efforts to comply with all federal and state laws and regulations
thereunder requiring the registration of such securities with, or
69
any approval of or consent to the delivery thereof by, any
governmental authority, and any such conversion or delivery shall
be subject to any applicable requirements of law or regulation.
(p) The Corporation shall pay any and all documentary
stamp or similar issue or transfer taxes or fees payable in
respect of the issue or delivery of shares of Common Stock on
conversion of the Series E Preferred Stock or upon the payment of
dividends with respect to the Shares pursuant hereto imposed by
any Governmental Authority (including, without limitation, any
fee in respect of an HSR Act filing); provided, however, that the
Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of
the holder of the Series E Preferred Stock to be converted and no
such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the
amount of any such tax or has established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
Section (8) Ranking. Any class or series of stock of the
Corporation shall be deemed to rank:
(i) prior to the Series E Preferred Stock, as
to dividends or as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class shall be
entitled to the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Series E Preferred
Stock;
(ii) on a parity with the Series E Preferred
Stock, (A) as to dividends, if such stock is Series F Preferred
Stock or if the holders of such class of stock and the Series E
Preferred Stock shall be entitled to the receipt of dividends in
proportion to their respective amounts of declared and unpaid
dividends per share, without preference or priority one over the
other, or (B) as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the redemption or
liquidation prices per share thereof be different from those of
the Series E Preferred Stock, if such stock shall be Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series F Preferred Stock or if
the holders of such class of stock and the Series E Preferred
Stock shall be entitled to the receipt of amounts distributable
upon liquidation, dissolution or winding up in proportion to
their respective amounts of liquidation prices, without
preference or priority one over the other; and
70
(iii) junior to the Series E Preferred Stock,
(A) as to dividends payable pursuant to paragraph (a) of Section
(3) hereof, if such stock is Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Common Stock, or as to all dividends, if holders of
Series E Preferred Stock shall be entitled to the receipt of all
dividends in preference or priority to the holders of shares of
such stock, or (B) as to distribution of assets upon liquidation,
dissolution or winding up, if such stock shall be Common Stock or
if the holders of Series E Preferred Stock shall be entitled to
receipt of amounts distributable upon liquidation, dissolution or
winding up in preference or priority to the holders of shares of
such stock.
Section (9) Voting.
(a) Except as herein provided or as otherwise from
time to time required by law, holders of Series E Preferred Stock
shall have no voting rights.
(b) So long as any shares of the Series E Preferred
Stock remain outstanding, the consent of the holders of at least
two-thirds of the shares of Series E Preferred Stock outstanding
at the time given in person or by proxy, either in writing or at
any special or annual meeting, shall be necessary to permit,
effect or validate any one or more of the following:
(i) the authorization, creation or issuance, or
any increase in the authorized or issued amount, of any class or
series of stock ranking prior to (or convertible, exercisable or
exchangeable into any class or series of stock ranking prior to)
Series E Preferred Stock as to dividends or the distribution of
assets upon liquidation, dissolution or winding up;
(ii) the increase in the authorized or issued
amount of Series E Preferred Stock; or
(iii) the amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the provisions
of the Certificate of Incorporation of the Corporation (including
any of the provisions hereof) which would affect any right,
preference or voting power of Series E Preferred Stock or of the
holders thereof, provided, however, that any increase in the
amount of authorized preferred stock or the creation and issuance
of other series of preferred stock, or any increase in the amount
of authorized shares of such series or of any other series of
preferred stock, in each case ranking on a parity with or junior
to the Series E Preferred Stock with respect to the payment of
dividends and the distribution of assets upon liquidation,
71
dissolution or winding up, shall not be deemed to affect such
rights, preferences or voting powers.
The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of Series E Preferred Stock shall have been redeemed or
sufficient funds shall have been deposited in trust to effect
such redemption, scheduled to be consummated within 30 days after
such time.
Section (10) Record Holders. The Corporation and the
Transfer Agent may deem and treat the record holder of any shares
of Series E Preferred Stock as the true and lawful owner thereof
for all purposes, and neither the Corporation nor the Transfer
Agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be made under the seal of the Corporation and
signed by [ ], its [
], and attested by [
] its [ ], this [ ] day of [
], 1998.
POWERTEL, INC.
By
(Corporate Seal)
Attest:
By
72
ANNEX II
Registration Rights
(a) The Purchaser or any party to whom the rights granted
pursuant to this Annex II are transferred pursuant to paragraph
(i) of this Annex II shall have the right at any time following
the second anniversary of the Closing to make three requests of
the Seller in writing for registration under the Securities Act
of shares of Common Stock into which Shares have been converted
or are to be converted prior to the closing of the offering
pursuant to such registration and/or shares of Common Stock that
have been issued with respect to the Shares (the "Securities"):
with respect to the first such request to register under the
Securities Act at least $20 million in market value of Securities
Beneficially Owned by the Purchaser (the shares subject to such
request and any other request hereunder being referred to as the
"Subject Stock"), and with each subsequent such request being at
least 6 months following the completion of the prior offering
pursuant to a registration statement with respect to the Subject
Stock which was effective until the earlier of the completion of
such offering or three months. The Seller shall use all
reasonable efforts to cause the Subject Stock to be registered
under the Securities Act as soon as reasonably practicable after
receipt of a request so as to permit promptly the sale thereof,
and in connection therewith, the Seller shall prepare and file,
on such appropriate form as the Seller in its discretion shall
determine, a registration statement under the Securities Act to
effect such registration. The Seller shall use all reasonable
efforts to list all Subject Stock covered by such registration
statement on any national securities exchange on which the Common
Stock is then listed or to list such Subject Stock on the
National Association of Securities Dealers, Inc. Automated
Quotation System or National Market System. The Purchaser hereby
undertakes to provide all such information and materials and take
all such action as may be required in order to permit the Seller
to comply with all applicable requirements of the Commission and
to obtain any desired acceleration of the effective date of such
registration statement. Any registration statement filed at the
Purchaser's request hereunder will not count as a requested
registration unless effectiveness is maintained until the earlier
of completion of the offering or three months. Notwithstanding
the foregoing, the Seller (i) shall not be obligated to cause any
special audit to be undertaken in connection with any such
registration (provided that this provision shall not relieve the
Seller of its obligation to obtain any required consents with
respect to financial statements in prior periods) and (ii) shall
be entitled to postpone for a reasonable period (not to exceed 90
days) of time the filing of any registration statement otherwise
73
required to be prepared and filed by the Seller if the Seller is,
at such time, either (A) conducting, or proposing to file with
the Commission within 90 days a registration statement with
respect to, an underwritten public offering for the account of
the Seller of equity securities (or securities convertible into
equity securities) or is subject to a contractual obligation not
to engage in a public offering and is advised in writing by its
managing underwriter or underwriters (with a copy to the
Purchaser) that such offering would in its or their opinion be
adversely affected by the registration so requested or (B)
subject to an existing contractual obligation to its underwriters
not to engage in a public offering. Notwithstanding any other
provision of this Annex II, the Seller may postpone action under
this Annex II for as long as it reasonably deems necessary (but
no longer than 90 days) if the Seller determines, in its
reasonable discretion, that effecting the registration at such
time might (i) adversely affect a pending or contemplated
financing, acquisition, disposition of assets or stock, merger or
other significant transaction, or (ii) require the Seller to make
public disclosure of information the public disclosure of which
at such time the Seller in good faith believes could have a
significant adverse effect upon the Seller.
No securities may be registered on a registration statement
requested by the Purchaser pursuant to the first paragraph of
paragraph (a) of this Annex II without the Purchaser's express
written consent, unless the amount of such securities is subject
to reduction prior to any reduction in the number of securities
originally requested by the Purchaser in the event the lead
underwriter of the related offering believes that the success of
such offering would be materially and adversely affected by
inclusion of all the securities requested to be included therein.
At any time after the Closing, if the Seller proposes to
file a registration statement under the Securities Act with
respect to an offering of its equity securities (i) for its own
account (other than a registration statement on Form S-4 or S-8
or any substitute form that may be adopted by the Commission) or
(ii) for the account of any holders of its securities (including
pursuant to a demand registration), then the Seller shall give
written notice of such proposed filing to the Purchaser as soon
as practicable (but in any event not less than 5 Business Days
before the anticipated filing date), and such notice shall offer
the Purchaser the opportunity to register such number of shares
of Securities as the Purchaser requests. If the Purchaser wishes
to register securities of the same class or series as the Seller
or such holder, such registration shall be on the same terms and
conditions as the registration of the Seller's or such holders'
securities (a "Piggyback Registration"). Notwithstanding
anything contained herein, if the lead underwriter of an offering
74
involving a Piggyback Registration delivers a written opinion to
the Seller that the success of such offering would be materially
and adversely affected by inclusion of all the securities
requested to be included, then the number of securities to be
registered by the Purchaser shall be reduced prior to any
reduction in the number of securities to be registered pursuant
to clauses (i) and (ii) of the first sentence of this paragraph;
provided, however, that the Seller must provide prompt written
notice of such written opinion to the Purchaser. The Purchaser
shall have the right at any time to convert its request for a
Piggyback Registration into a requested registration pursuant to
the first paragraph of paragraph (a) of this Annex II.
(b) In connection with any offering of shares of Subject
Stock registered pursuant to this Annex II, the Seller (i) shall
furnish to the Purchaser such number of copies of any prospectus
(including any preliminary prospectus) as it may reasonably
request in order to effect the offering and sale of the Subject
Stock to be offered and sold, but only while the Seller shall be
required under the provisions hereof to cause the registration
statement to remain current and (ii) take such action as shall be
necessary to qualify the shares covered by such registration
statement under such "blue sky" or other state securities laws
for offer and sale as the Purchaser shall reasonably request;
provided, however, that the Seller shall not be obligated to
qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it shall not then be qualified or to
file any general consent to service of process in any
jurisdiction in which such a consent has not been previously
filed. If applicable, the Seller and the Purchaser shall enter
into an underwriting agreement with a managing underwriter or
underwriters selected by the Purchaser (reasonably satisfactory
to the Seller) containing representations, warranties,
indemnities and agreements then customarily included by an issuer
in underwriting agreements with respect to secondary
distributions; provided, however, that such underwriter or
underwriters shall agree to use their best efforts to ensure that
the offering results in a distribution of the Subject Stock sold
in accordance with the terms of this Agreement. In connection
with any offering of Subject Stock registered pursuant to this
Annex II, the Seller shall (x) furnish to the underwriter, at the
Seller's expense, unlegended certificates representing ownership
of the Subject Stock being sold in such denominations as
reasonably requested and (y) instruct any transfer agent and
registrar of the Subject Stock to release any stop transfer
orders with respect to such Subject Stock. If Purchaser enters
into an underwriting agreement with respect to the Subject Stock,
Purchaser's representations, warranties and indemnities contained
therein shall be made severally rather than jointly with the
75
Company or any other selling stockholder and shall be limited to
(i) Purchaser's ownership of the Subject Stock, (ii) Purchaser's
authority to enter into the underwriting agreement and related
matters, (iii) any information provided by Purchaser for
inclusion in the registration statement, and (iv) such other
matters as are at the time of such underwriting customarily
included in underwriting agreements with the Managing Underwriter
relating to sales of common stock by a selling stockholder where
the failure by the Purchaser to make such representations,
warranties or indemnities causes the Managing Underwriter to
refuse to conduct or complete the offering. In the event an
offering of Subject Stock fails to close due to the Purchaser's
unwillingness, inability or other failure to comply with clause
(iv) of the immediately preceding sentence, then Purchaser agrees
that the Seller shall be deemed to have satisfied all of its
obligations to conduct the related offering of such Subject
Stock, shall be excused from any failure of any obligation of
Seller with respect thereto and shall not be liable for the
failure of such offering of such Subject Stock to close. Upon
any registration becoming effective pursuant to this Annex II,
the Seller shall use all reasonable efforts to keep such
registration statement current for such period as shall be
required for the disposition of all of said Subject Stock;
provided, however, that such period need not exceed three months.
(c) The Purchaser shall pay all underwriting discounts and
commissions related to shares of Subject Stock being sold by the
Purchaser and the fees and disbursements of counsel and other
advisors to the Purchaser. All other fees and expenses in
connection with the first requested registration pursuant to the
first paragraph of paragraph (a) of this Annex II, including,
without limitation, all registration and filing fees, all fees
and expenses of complying with securities or "blue sky" laws,
fees and disbursements of the Seller's counsel and accountants
(including the expenses of "cold comfort" letters required by or
incident to such performance and compliance) and any fees and
disbursements of underwriters customarily paid by issuers in
secondary offerings, shall be paid by the Seller, and all such
other fees and expenses in connection with the second and third
requested registrations pursuant to this Annex II shall be borne
equally by the Purchaser and the Seller; provided, however, that
in the event the Purchaser fails to convert Shares into Common
Stock prior to any such offering, such that such offering is not
able to be completed, the Purchaser shall pay all such other fees
and expenses.
(d) In the case of any offering registered pursuant to this
Annex II, the Seller agrees to indemnify and hold the Purchaser,
each underwriter of Securities under such registration and each
person who controls any of the foregoing within the meaning of
76
Section 15 of the Securities Act and the directors and officers
of the Purchaser, harmless against any and all losses, claims,
damages, liabilities or action to which they or any of them may
become subject under the Securities Act or any other statute or
common law or otherwise, and to reimburse them for any legal or
other expenses reasonably incurred by them in connection with
investigating any claims and defending any actions, insofar as
any such losses, claims, damages, liabilities or actions shall
arise out of or shall be based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such Subject
Stock, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus (as amended or supplemented if the Seller
shall have filed with the Commission any amendment thereof or
supplement thereto), if used prior to the effective date of such
registration statement, or contained in the prospectus (as
amended or supplemented if the Seller shall have filed with the
Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided, however, that the indemnification agreement contained
in this paragraph (d) shall not apply to such losses, claims,
damages, liabilities or actions which shall arise from the sale
of Subject Stock by the Purchaser if such losses, claims,
damages, liabilities or actions shall arise out of or shall be
based upon any such untrue statement or alleged untrue statement,
or any such omission or alleged omission, (x) made in reliance
upon and in conformity with information furnished in writing to
the Seller by the Purchaser or any such underwriter specifically
for use in connection with the preparation of the registration
statement or any preliminary prospectus or prospectus contained
in the registration statement or any such amendment thereof or
supplement thereto or (y) made in any preliminary prospectus, and
the prospectus contained in the registration statement in the
form filed by the Seller with the Commission pursuant to Rule
424(b) under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not
have been sent or given to such person at or prior to the
confirmation of such sale to him.
(e) In the case of each offering registered pursuant to
this Annex II, the Purchaser and each underwriter participating
therein shall agree, in the same manner and to the same extent as
set forth in paragraph (d) of this Annex II, severally to
indemnify and hold harmless the Seller and each person, if any,
77
who controls the Seller within the meaning of Section 15 of the
Securities Act, and the directors and officers of the Seller, and
in the case of each such underwriter, the Purchaser, each person,
if any, who controls the Purchaser within the meaning of the
Securities Act and the directors, officers and partners of the
Purchaser, with respect to any statement in or omission from such
registration statement or any preliminary prospectus (as amended
or as supplemented, if amended or supplemented as aforesaid) or
prospectus contained in such registration statement (as amended
or as supplemented, if amended or supplemented as aforesaid), if
such statement or omission shall have been made in reliance upon
and in conformity with information furnished in writing to the
Seller by the Purchaser or such underwriter specifically for use
in connection with the preparation of such registration statement
or any preliminary prospectus or prospectus contained in such
registration statement or any such amendment thereof or
supplement thereto.
(f) Each party indemnified under paragraph (d) or (e) of
this Annex II shall, promptly after receipt of notice of the
commencement of any action against such indemnified party in
respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the commencement thereof. The
omission of any indemnified party to so notify an indemnifying
party of any such action shall not relieve the indemnifying party
from any liability in respect of such action which it may have to
such indemnified party on account of the indemnity agreement
contained in paragraph (d) or (e) of this Annex II, unless the
indemnifying party was prejudiced by such omission, and in no
event shall relieve the indemnifying party from any other
liability which it may have to such indemnified party. In case
any such action shall be brought against any indemnified party
and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may desire, jointly with any
other indemnifying party similarly notified, to assume the
defense thereof, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under paragraph (d) or (e) of this Annex II for
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other
than reasonable costs of investigation; provided, however, that
if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the judgment of the
indemnified party, in its sole and absolute discretion, for the
same counsel to represent both the indemnified party and the
indemnifying party, then the indemnified party shall be entitled
to retain its own counsel, in each jurisdiction for which the
78
indemnified party determines counsel is required, at the expense
of the indemnifying party. No such third party claim may be
settled by the indemnifying party or the indemnified party
without the prior written consent of the other, which consent
shall not be unreasonably withheld.
(g) If the indemnification provided for under paragraph (d)
or (e) shall for any reason be held by a court to be unavailable
to an indemnified party under paragraph (d) or (e) hereof in
respect of any loss, claim, damage or liability, or any action in
respect thereof, then, in lieu of the amount paid or payable
under paragraph (d) or (e) hereof, the indemnified party and the
indemnifying party under paragraph (d) or (e) hereof shall
contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably
incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
Seller and the prospective seller of Securities covered by the
registration statement which resulted in such loss, claim, damage
or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law,
in such proportion as shall be appropriate to reflect the
relative benefits received by the Seller and such prospective
seller from the offering of the securities covered by such
registration statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In
addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not
be unreasonably withheld.
(h) Notwithstanding anything to the contrary contained in
this Agreement, the maximum amount of indemnifiable losses which
may be recovered from an indemnifying party arising out of or
resulting from the causes enumerated in paragraph (d) or (e)
shall be an amount equal to the Purchase Price.
(i) All, but not less than all, of the rights and
obligations granted under this Annex II to cause the Seller to
register Securities may be assigned, transferred or otherwise
conveyed, in whole but not in part, by the Purchaser to (i) any
Affiliate of the Purchaser, or (ii) to any transferee other than
an Affiliate of the Purchaser who acquires at least 500,000
shares of Securities, provided that in either circumstance the
79
Purchaser gives the Seller written notice (at the time of, or
within a reasonable time after, such transfer) stating the name
and address of such Affiliate or other transferee, and such
Affiliate or other transferee provides its agreement, in a form
reasonably satisfactory to the Seller, to be bound by the
provisions of this Annex II.
Capitalized terms not defined in this Annex II shall have the
meanings set forth in the Agreement.
Any successor to Seller (whether by merger, consolidation, sale
of assets, assignment or otherwise) shall expressly assume in
writing the Seller's obligations hereunder.
(l) Notwithstanding the foregoing, to the extent that the
provisions of indemnification and contribution contained in an
underwriting agreement entered into in connection with any
underwritten public offering are in conflict with the foregoing
provisions, the provisions set forth in the underwriting
agreement shall control.
80
