Metro PCS 2007 Annual Report Download - page 126

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2007, 2006 and 2005
F-27
$46.7 million, net of transaction costs of approximately $3.3 million. The Series E Preferred Stock and the Series D
Preferred Stock ranked equally with respect to dividends, conversion rights and liquidation preferences. Dividends
on the Series E Preferred Stock accrued at an annual rate of 6% of the liquidation value of $100 per share. Dividends
of $0.9 million, $3.0 million and $1.0 million were accrued for the years ended December 31, 2007, 2006 and 2005,
respectively, and were included in the Series E Preferred Stock balance.
Each share of Series E Preferred Stock was to be converted into common stock of MetroPCS upon (i) the
completion of a Qualifying Public Offering, (as defined in the Second Amended and Restated Stockholders
Agreement), (ii) the common stock trading (or, in the case of a merger or consolidation of MetroPCS with another
company, other than as a sale or change of control of MetroPCS, the shares received in such merger or consolidation
having traded immediately prior to such merger or consolidation) on a national securities exchange for a period of
30 consecutive trading days above a price implying a market valuation of the Series D Preferred Stock over twice
the Series D Preferred Stock initial purchase price, or (iii) the date specified by the holders of two-thirds of the
Series E Preferred Stock. The Series E Preferred Stock was convertible into common stock at $9.00 per share, which
per share amount was subject to adjustment in accordance with the terms of the Second Amended and Restated
Articles of Incorporation of MetroPCS. On April 24, 2007, MetroPCS consummated the Offering and all
outstanding shares of Series E Preferred Stock, including accrued but unpaid dividends, were converted into
6,105,324 shares of common stock.
13. Capitalization:
Warrants
From inception through February 1998, MetroPCS, Inc. issued various warrants to purchase common stock in
conjunction with sales of stock and in exchange for consulting services, which were converted into warrants in
MetroPCS in July 2004. As of December 31, 2006, there were no remaining warrants outstanding.
During the year ended December 31, 2006, 526,950 warrants, with an exercise price of $0.0009 per warrant, were
exercised for 526,950 shares of common stock.
Common Stock Issued to Directors
Non-employee members of MetroPCS’ Board of Directors receive compensation for serving on the Board of
Directors, pursuant to MetroPCS’ Non-Employee Director Remuneration Plan. As of December 31, 2007, the
annual retainer provided under the Non-Employee Director Remuneration Plan may be paid in cash, common stock,
or a combination of cash and common stock at the election of each director. During the years ended December 31,
2007 and 2006, non-employee members of the Board of Directors were issued 31,230 and 49,725 shares of common
stock, respectively, as payment of their annual retainer.
Stockholder Rights Plan
On March 27, 2007, in connection with the Offering, the Company adopted a Stockholder Rights Plan. Under the
Stockholder Rights Plan, each share of the Company’ s common stock includes one right to purchase one one-
thousandth of a share of series A junior participating preferred stock. The rights will separate from the common
stock and become exercisable (1) ten calendar days after public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% of the Company’ s
outstanding common stock or (2) ten business days following the start of a tender offer or exchange offer that would
result in a person’ s acquiring beneficial ownership of 15% or more of the Company’ s outstanding common stock. A
beneficial owner holding 15% or more of MetroPCS’ common stock is referred to as an “acquiring person” under
the Stockholder Rights Plan.