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HIGHWAYMASTER COMMUNICATIONS, INC.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
DATED AS OF
SEPTEMBER 27, 1996
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TABLE OF CONTENTS
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
Page
Section 1. Definitions................................................. 2
Section 2. The Recapitalization; Amendment of Certificate of
Incorporation............................................... 6
Section 3. Transfer of Securities...................................... 7
Section 4. Registration Rights......................................... 10
Section 5. Governance.................................................. 28
Section 6. Miscellaneous............................................... 35
ii
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), dated
as of September 27, 1996, amends and restates in its entirety that Stockholders'
Agreement, dated as of February 4, 1994 (the "Original Agreement"), by and among
HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware corporation (previously named HM
HOLDING CORPORATION) (the "Company"), and the other Persons (as hereinafter
defined) identified in Appendix A hereto, as the Original Agreement has been
amended by the amendments and addenda set forth in Appendix B hereto, adds an
additional party hereto, Southwestern ▇▇▇▇ Wireless Holdings, Inc., a Delaware
corporation ("SBW") and provides that the Persons identified in Appendix C
hereto shall no longer be parties hereto.
RECITALS:
A. Simultaneously with the execution hereof, SBW is acquiring certain
shares of Series D Preferred Stock (as hereinafter defined) of the Company
pursuant to the Purchase Agreement dated as of the date hereof, by and between
the Company and SBW (the "Purchase Agreement") and agreeing to provide certain
services to the Company pursuant to a separate technical services agreement.
B. Certain of the parties hereto have effected, or agreed to effect,
the Recapitalization reflected in Sections 2(a), (b) and (c) hereof.
C. Pursuant to Section 7(h) of the Original Agreement with respect to
the terms hereof generally and Section 4(k) of the Original Agreement with
respect to the registration rights provisions, holders of a sufficient number of
Shares (as hereinafter defined) have executed this Agreement thereby amending
and restating the Original Agreement, as amended to date, in its entirety as set
forth herein, for the purpose of regulating certain aspects of the Stockholders'
relationships with regard to each other and the Company.
D. Immediately after the execution hereof, the Stockholders (as
hereinafter defined) will consist of (i) Carlyle HighwayMaster Investors, L.P.,
Carlyle HighwayMaster Investors II, L.P., ▇.▇. ▇▇▇▇ Investments Limited, TC
Group, L.L.C., ▇▇▇▇ ▇. Ein, Chase Manhattan Investment Holdings, Inc. and
Archery Partners (the "Carlyle Entities"), (ii) Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P. and Clipper Capital Associates, L.P. (the
"Clipper Entities"), (iii) ▇▇▇▇ ▇▇▇▇▇ International
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Investment Corporation, The ▇▇▇▇ ▇▇▇▇▇ Investment Corporation and The ▇▇▇▇ ▇▇▇▇▇
Development Corporation (the "▇▇▇▇ ▇▇▇▇▇ Companies"), (iv) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and (v) SBW.
E. Simultaneously with the execution hereof, the Company is issuing to
SBW a warrant certificate for warrants (the "Warrants") for 5,000,000 shares of
Common Stock (as hereinafter defined) in consideration for SBW entering into the
transactions contemplated by the Purchase Agreement and the other Transaction
Documents (as hereinafter defined).
AGREEMENT:
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the Company and
Stockholders agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following meanings:
"Affiliate" of any specified person or entity means any person or
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such person or entity.
"Anti-takeover Provision" shall have the meaning set forth in Section
5(g) hereto.
"Beneficially Own" (and correlative terms) means, with respect to any
shares of Common Stock or other securities, to be entitled, directly or
indirectly through one or more intermediaries, to all material incidents of
ownership with respect to such securities, including, but not limited to, (i)
the right to vote such securities (in the case of voting securities), (ii)
subject to any transfer restrictions, the right to dispose of such securities
and to receive any proceeds realized from the disposition thereof and (iii) the
right to receive any dividends and other distributions with respect to such
securities.
"By-Word Stockholder" means each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Carlyle Entities" shall have the meaning set forth in the Recitals
hereto.
2
"Carlyle Stockholder" means each of the Carlyle Entities and any
Permitted Assign (as hereinafter defined) who acquires shares of Common Stock
directly or indirectly from a Carlyle Stockholder and who executes a
supplemental agreement as contemplated in Section 6(b) hereof, in his, her or
its capacity as a holder of Common Stock.
"Class B Common Stock" means the new class of Company Common Stock,
par value $0.01 per share, to be authorized as contemplated in Section 2(e)
hereof, the terms of which are set forth on Exhibit B to the Purchase Agreement.
"Clipper Entities" shall have the meaning set forth in the Recitals
hereto.
"Clipper Stockholder" means each of the Clipper Entities.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company and any other capital stock of the Company into which such Common
Stock is reclassified or reconstituted.
"Company Common Stock" means the Common Stock and the Class B Common
Stock.
"Demand Registration" shall have the meaning set forth in Section 4(b)
hereof.
"Director" means a member of the Board of Directors of the Company.
"▇▇▇▇ ▇▇▇▇▇ Companies" shall have the meaning set forth in the
Recitals hereto.
"▇▇▇▇ ▇▇▇▇▇ Stockholder" means each of the ▇▇▇▇ ▇▇▇▇▇ Companies and
any Permitted Assign who acquires shares of Common Stock directly or indirectly
from an ▇▇▇▇ ▇▇▇▇▇ Company and who executes a supplemental agreement as
contemplated in Section 6(b) hereof and, solely for purposes of Section 4
hereof, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, in each case in his, her or its
capacity as a holder of Common Stock.
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"Excluded Options" means options, warrants, rights or obligations to
acquire Common Stock issued by any Person other than the Company.
"Excluded Related Party" means, with respect to any Stockholder, a
Related Party of such Stockholder which either (i) is a natural person or (ii)
is not an Affiliate of such Stockholder.
"Exempt Transfer" shall mean the meaning set forth in Section 3(d)
hereof.
"Existing Line of Business" shall have the meaning set forth in
Section 5(g) hereof.
"Incentive Stock Option Plan" means the HM Holding Corporation 1994
Incentive Stock Option Plan, as adopted by the Company's Board of Directors and
as amended from time to time, providing for the grant to certain management
employees of the Company and its Subsidiaries of options to purchase shares of
Common Stock.
"Majority in Interest" means, with respect to any specified group of
Stockholders, Stockholders included in such group which hold more than fifty
percent (50%) of the aggregate shares of Common Stock held collectively by such
group of Stockholders on a Fully Diluted Basis (as hereinafter defined).
"On a Fully Diluted Basis" with respect to the Company's Common Stock
means on a basis that takes into account the number of shares of Common Stock
which are issued and outstanding plus the number of shares of Common Stock
issuable upon conversion of any outstanding Series D Preferred Stock and, once
authorized and issued, Class B Common Stock or pursuant to outstanding options,
warrants, rights or obligations to purchase or subscribe for shares of Common
Stock or securities of the Company which are exchangeable or exercisable into
shares of Common Stock as of the applicable date of determination, other than
the Warrants, Excluded Options and employee stock options.
"Permitted Assign" shall have the meaning set forth in Section 6(b)
hereof.
"Person" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or department, agency or political subdivision thereof.
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"Piggyback Registration" shall have the meaning set forth in Section
4(a) hereof.
"Public Transferee" means any subsequent holder of Common Stock who
acquires Shares from a Stockholder pursuant to an effective registration
statement under the Securities Act (as hereinafter defined) or pursuant to Rule
144 promulgated thereunder.
"Recapitalization Agreement" means the Recapitalization Agreement,
dated as of the date hereof, among the Company, certain ▇▇▇▇ ▇▇▇▇▇ Stockholders,
Carlyle Stockholders and Clipper Stockholders, a copy of which is attached as
Exhibit A hereto.
"Recapitalization Shares" shall have the meaning set forth in Section
4(c) hereof.
"Regulatory Relief" means that SBC Communications, Inc. or its
Affiliates, in their sole judgment, have obtained all necessary federal and
state regulatory approvals to provide landline, interLATA long-distance service
pursuant to the Communications Act of 1934, as amended by The Telecommunications
Act of 1996.
"Related Party" with respect to any Stockholder means: (A) an
Affiliate of such Stockholder; (B) a trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, or owners, or persons holding
a controlling interest of which consist of such Stockholder and/or its
Affiliates; (C) with respect to any Stockholder who is an individual, such
Stockholder's spouse, siblings, children or parents; (D) with respect to any
Stockholder which is a partnership, such Stockholders' partners as of the date
hereof; and (E) with respect to any Stockholder which is a corporation, such
Stockholder's stockholders as of the date hereof.
"SBW Stockholder" means SBW and any Affiliate of SBW who acquires
Shares from SBW and who executes a supplemental agreement as contemplated in
Section 6(b) hereof.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
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"Series D Preferred Stock" means the Series D Participating
Convertible Preferred Stock, par value $.01 per share, of the Company, the
Certificate of Designation for which is set forth in Exhibit A to the Purchase
Agreement.
"Shares" means (i) any shares of the capital stock of the Company and
(ii) any securities convertible into, and any rights, options or warrants
exchangeable or
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exercisable for, any of the shares of the capital stock of the Company, in
either case, at any time outstanding.
"Stockholders" means the By-Word Stockholders, the Carlyle
Stockholders, the Clipper Stockholders, the ▇▇▇▇ ▇▇▇▇▇ Stockholders and the SBW
Stockholders.
"Subsidiary" of any specified person or entity means a corporation or
other entity of which a majority of the voting power of the equity securities or
other equity interests is owned, directly or indirectly, by such specified
person or entity or any Subsidiary of such specified person or entity.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
"Transfer" shall have the meaning set forth in Section 3(a) hereof.
"Warrants" shall have the meaning set forth in the Recitals hereto.
Section 2. The Recapitalization; Amendment of Certificate of
Incorporation.
(a) ▇▇▇▇ ▇▇▇▇▇ Companies.
(1) $10 Million Investment. Simultaneously with the execution
hereof, ▇▇▇▇ ▇▇▇▇▇ International Investment Corporation and one of its
affiliates are investing $10.0 million in cash in the Company in
exchange for 800,000 shares of Common Stock, as provided in the
Recapitalization Agreement.
(2) Series B Preferred Stock. Simultaneously with the execution
hereof, the Series B Preferred Stock owned by The ▇▇▇▇ ▇▇▇▇▇
Development Corporation and certain of its affiliates and by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is being exchanged for 864,000 shares of
Common Stock, as provided in the Recapitalization Agreement.
(b) Carlyle and Clipper Entities. Simultaneously with the execution
hereof, the promissory notes in the aggregate principal amount of approximately
$12.7 million held by certain Carlyle Stockholders and the Clipper Stockholders
together with accrued and unpaid interest in the amount of approximately
$63,000,
7
which were issued by the Company pursuant to the Note Exchange and Amendments
Agreement, dated as of May 26, 1995, are being converted into shares of Common
Stock at a price of $12.50 per share, as provided in the Recapitalization
Agreement.
(c) Termination of Subscription Agreement. Simultaneously with the
execution hereof, the Company, certain Carlyle Stockholders and the Clipper
Stockholders are terminating certain provisions of the Subscription Agreement,
dated as of February 4, 1994, as provided in the Recapitalization Agreement.
(d) Bylaws. Simultaneously with the execution hereof, the Company has
amended the Bylaws as set forth as Exhibit B hereto.
(e) Amendment of Certificate of Incorporation. The Stockholders listed
on Appendix D have granted written consents and irrevocable proxies to SBW
covering the shares of Common Stock owned by them with respect to the amendment
of the Certificate of Incorporation as set forth on Exhibit B to the Purchase
Agreement and the issuance of the Common Stock pursuant to the exercise of the
Warrants, and SBW has delivered to the Company written consents covering such
shares, and immediately following the issuance of the Series D Preferred Stock,
will deliver to the Company a written consent covering such shares, each
approving such amendment. On the twentieth day following the mailing of an
information statement to the Company's stockholders in compliance with
Regulation 14C promulgated under the Securities Exchange Act of 1934, the
Company will cause the Certificate of Amendment to be filed with the Secretary
of State of the State of Delaware.
Section 3. Transfer of Securities
(a) General Prohibition on Transfer. None of the
Stockholders shall sell, assign, transfer, pledge, encumber
or in any way dispose of ("Transfer") any Shares unless (i)
such Stockholder shall have delivered to the Company an
opinion of counsel to such Stockholder, in form and
substance reasonably satisfactory to the Company, to the
effect that such Transfer is exempt from the registration
requirements of the Securities Act or (ii) the registration
requirements of the Securities Act have been complied with
in connection with such Transfer, provided, however, that
the Company shall be entitled in its sole discretion to
waive the requirement that an opinion of counsel be
delivered pursuant to this Section 3(a) if it determines
that a Transfer is in accordance with applicable law.
8
(b) Transfer by First Refusal Stockholders. None of the
Carlyle Stockholders, the ▇▇▇▇ ▇▇▇▇▇ Stockholders (other
than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇), ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively the "First
Refusal Stockholders") shall Transfer any Shares unless (i)
such First Refusal Stockholder has complied with the
provisions of this Section 3(c) to the extent applicable to
such Transfer and (ii) the transferee (if other than a
Public Transferee or an Excluded Related Party) has agreed
to become a party to, and be bound by the terms of, Section
3 of this Agreement pursuant to a supplemental agreement
hereto in form and substance reasonably satisfactory to the
Company and SBW, executed by such transferee (provided,
however, that the requirement set forth in this clause (ii)
shall not apply to any transferee (other than a Permitted
Assign or a transferee pursuant to Section 3(d) who is not
an Excluded Related Party) acquiring Shares from a Seller
(as hereinafter defined) after the earlier of (A) the date
of Regulatory Relief and (B) September 27, 1997 pursuant to
a sale effected by such Seller in compliance with the
provisions of subsection (c) below). Notwithstanding the
foregoing, no First Refusal Stockholder shall be required to
execute a supplemental agreement.
(c) Right of First Refusal.
(i) If any First Refusal Stockholder (a "Seller")
receives a bona fide offer, which the Seller desires to
accept ("Offer") to purchase any or all of the Shares (the
"Transfer Stock") then owned by such Seller from any person
(an "Offeror"), such Seller shall notify SBW in writing of
the terms of such Offer, which notice shall identify the
Offeror, the price offered, and all the other material terms
and conditions of such Offer. In addition, if a Seller
wishes to sell to the public pursuant to a registration
statement under the Securities Act or pursuant to Rule 144
promulgated thereunder (a "Public Sale"), the Seller shall
notify SBW in writing of the proposed terms of the Public
Sale, which Public Sale shall also constitute an Offer for
the purposes hereof. The Seller shall provide a written
notice (the "Notice") of an Offer to SBW promptly, but in no
event later than five (5) business days following the
determination by the Seller that it desires to accept an
Offer which does not relate to a Public Sale. The Notice
shall contain an irrevocable offer to sell the Transfer
Stock to SBW at a price equal to the price and upon
substantially the same terms as the terms contained in such
Offer; provided, however, that (A) if such
9
Offer shall relate to a proposed Public Sale, the Notice
shall offer to sell the Transfer Stock at a price determined
by the Seller (which in the case of a registered public
offering shall not be higher than the price the Seller in
good faith believes can be obtained in such offering),
minus, in the case of a registered public offering pursuant
to a firm commitment underwriting, customary underwriting
commissions, and (B) if the terms of the Offer entitle the
Offeror to purchase the Transfer Stock for securities of
such Offeror (the "Offered Securities") or other property,
SBW shall be entitled to purchase the Transfer Stock for an
amount of cash equal to the fair market value of the Offered
Securities or such other property. SBW shall have the
irrevocable right and option (the "Right of First Refusal"),
to accept such irrevocable offer as to all Shares as to
which the Offer is made (except in the event of a Public
Sale pursuant to Rule 144, in which event SBW may accept as
to any number of Shares) by providing the Seller with an
irrevocable written notice of acceptance within fifteen (15)
business days, or, in the case of a Public Sale pursuant to
Rule 144, five (5) business days, after the date the Notice
is received (the "Notice Period"). The closing of the
purchases of the Transfer Stock by SBW shall take place at
the principal office of SBW no later than the fifth (5th)
business day after the acceptance by SBW. At such closing,
SBW shall deliver a certified check or checks or wire
transfer in the appropriate amount to the Seller against
delivery of certificates representing the Transfer Stock so
purchased, duly endorsed in blank by the person or persons
in whose name a stock certificate is registered or
accompanied by a duly executed assignment separate from the
certificate with the signatures thereon guaranteed by a
commercial bank or trust company. If SBW does not elect to
purchase the Transfer Stock during the Notice Period or if
SBW fails or refuses for any reason (including, but not
limited to, the existence of any requirement that SBW obtain
any required regulatory approval) to complete the closing of
the purchase of any Transfer Stock upon the day specified
above, the Seller shall have ninety (90) days from the end
of the Notice Period (the "Sales Period") in which to
Transfer all of the Transfer Stock pursuant to the Offer to
the Offeror or in a Public Sale, it being understood that
(A) in a registered public offering the sales price may be
greater than or less than the Offer price and (B) in any
other transaction the sales price and other terms of the
Transfer may be more favorable to the Seller than those set
forth in the Notice. In addition, Seller may not knowingly
make a Public Sale to any purchaser which Seller knows to
own in
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excess of 5% of the Common Stock, provided that this
restriction shall not create any duty of inquiry on the part
of the Seller. Promptly after any sale pursuant to this
Section 3(c), the Seller shall notify SBW of the
consummation thereof and shall furnish such evidence of the
completion (including time of completion) of such sale and
of the terms thereof as SBW may reasonably request. If, at
the termination of the Sales Period, the Seller has not
completed the sale of the Transfer Stock to the Offeror or
in a Public Sale, all of the restrictions on Transfer
contained in this Section 3(c) shall again be in effect with
respect to all such Seller's Transfer Stock.
(d) Exempt Transfer. The following transactions shall
constitute "Exempt Transfers" for the purpose of Section 3
and shall be exempt from the requirements of subsection (c),
but not subsections (a) and (b): (i) a Transfer of Shares by
a First Refusal Stockholder to SBW, (ii) a Transfer by a
Stockholder of Shares by will or intestate succession to
such Stockholder's executors, administrators, testamentary
trustees, legatees or beneficiaries, (iii) a Transfer of
Shares by a Stockholder to any Related Party of such
Stockholder and (iv) a Transfer of Shares (A) by any Carlyle
Stockholder to any other Carlyle Stockholder or to any
Clipper Stockholder, (B) by any ▇▇▇▇ ▇▇▇▇▇ Stockholder to
any other ▇▇▇▇ ▇▇▇▇▇ Stockholder or (C) by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to any By-Word
Stockholder, or (vi) a Transfer of Shares that has been
approved in writing by SBW as an Exempt Transfer.
(e) Restrictions on SBW. No SBW Stockholder shall Transfer
any Series D Preferred Stock or Class B Common Stock except
to an Affiliate of SBW.
Section 4. Registration Rights.
(a) Piggyback Registration Rights.
(1) Right to Piggyback. Subject to the last sentence of this
subsection (1), whenever the Company proposes to register
any shares of Common Stock (or securities convertible into
or exchangeable for, or options, warrants or other rights to
acquire, Common Stock) with the Securities and Exchange
Commission (the "Commission") under the Securities Act
(other than (A) registrations on Form S-4 or Form S-8
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and (B) the registration of the Recapitalization Shares (as
hereinafter defined) pursuant to subsection (c) below) and
the registration form to be used may be used for the
registration of the Registrable Securities (as defined in
subsection (k) below) (a "Piggyback Registration"), the
Company will give written notice to all Stockholders, at
least thirty-five (35) days prior to the anticipated filing
date, of its intention to effect such a registration, which
notice will specify the proposed offering price, the kind
and number of securities proposed to be registered, the
distribution arrangements and such other information that at
the time would be appropriate to include in such notice, and
will, subject to subsection (a)(2) below, include in such
Piggyback Registration all Registrable Securities with
respect to which the Company has received written requests
for inclusion therein within fifteen (15) business days
after the effectiveness of the Company's notice. Except as
may otherwise be provided in this Agreement, Registrable
Securities with respect to which such request for
registration has been timely received will be registered by
the Company and offered to the public in a Piggyback
Registration pursuant to this Section 4 on terms and
conditions at least as favorable as those applicable to the
registration of shares of Common Stock (or securities
convertible into or exchangeable or exercisable for Common
Stock) to be sold by the Company and by any other person
selling under such Piggyback Registration.
(2) Priority on Piggyback Registrations. If the managing
underwriter or underwriters, if any, advise the holders of
Registrable Securities in writing that in its or their
reasonable opinion or, in the case of a Piggyback
Registration not being underwritten, the Company shall
reasonably determine (and notify the holders of Registrable
Securities of such determination), after consultation with
an investment banker of nationally recognized standing, that
the number or kind of securities proposed to be sold in such
registration (including Registrable Securities to be
included pursuant to subsection (a)(1) above) will
materially adversely affect the success of such offering
(including, without limitation, a material impact on the
selling price), the Company will include in such
registration the number of securities, if any, which, in the
opinion of such underwriter or underwriters, or the Company,
as the case may be, can be sold, without having a material
adverse effect on the success of such offering, as follows:
(i) first, the shares the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included
in such registration by SBW, the Carlyle
12
Stockholders, the Clipper Stockholders and the ▇▇▇▇ ▇▇▇▇▇
Stockholders, pro rata among such requesting Stockholders on
the basis of their respective holdings of Common Stock on a
Fully Diluted Basis, and (iii) third, the Registrable
Securities requested to be included in such registration by
the By-Word Stockholders, pro rata among such requesting
Stockholders on the basis of their respective holdings of
Common Stock on a Fully Diluted Basis.
(3) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the Company (by action of the
Board of Directors) will select a managing underwriter or
underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized
standing and reasonably acceptable to the holders of a
majority of the Registrable Securities included therein.
(b) Demand Registration Rights.
(1) Right to Demand Registration. Each of (A) the Carlyle
Stockholders and the Clipper Stockholders as a group; (B)
the ▇▇▇▇ ▇▇▇▇▇ Stockholders as a group and (C) SBW (each
referred to herein as a "Demanding Group") shall have the
right on the number of occasions set forth in subsection
(b)(2) to make a written request of the Company for
registration with the Commission, under and in accordance
with the provisions of the Securities Act, of all or part of
their Registrable Securities (a "Demand Registration");
provided, that (x) the Company shall not effect a Demand
Registration unless such Demand Registration has been
requested by persons holding at least a majority of the
Registrable Securities held by the Demanding Group on the
date of such written request and unless the number of Shares
to be sold in such Demand Registration by the Demanding
Group is at least 1,000,000 shares of Common Stock, (y) if
the Board of Directors determines in the exercise of its
reasonable judgment that, due to a pending or contemplated
acquisition or disposition, to effect such Demand
Registration at such time would have a material adverse
effect on the Company, the Company may defer such Demand
Registration for a single period not to exceed one hundred
eighty (180) days (but if the Company elects to defer any
Demand Registration pursuant to the terms of this sentence,
no Demand Registration shall be deemed to have occurred for
purposes of this Agreement) and (z) the Company shall be
obligated to effect only the number of Demand Registrations
set forth
13
in subsection 4(b)(2) below. Within ten (10) days after
receipt of the request for a Demand Registration, the
Company will send written notice (the "Notice") of such
registration request and its intention to comply therewith
to all Stockholders who are holders of Registrable
Securities and, subject to subsection (3) below, the Company
will include in such registration all Registrable Securities
of such Stockholders with respect to which the Company has
received written requests for inclusion therein within
twenty (20) business days after the effectiveness of the
Notice. All requests made pursuant to this subsection (b)(1)
will specify the aggregate number of Registrable Securities
requested to be registered and will also specify the
intended methods of disposition thereof.
(2) Number of Demand Registrations. Each Demanding Group
shall be entitled to two (2) Demand Registrations, and the
expenses of each (including the fees and expenses of a total
of one counsel for the Demanding Group in accordance with
subsection (f)(2) below) shall be borne by the Company. A
Demand Registration shall not be counted as a Demand
Registration hereunder until such Demand Registration has
been declared effective by the Commission and maintained
continuously effective for a period of at least three months
or such shorter period when all Registrable Securities
included therein have been sold in accordance with such
Demand Registration.
If the Company elects to issue and sell and ultimately sells
any equity securities pursuant to any Registration Statement
filed in connection with a Demand Registration, then such
Registration shall be deemed not to be a Demand Registration
for purposes of determining the number of Demand
Registrations granted by this Agreement.
(3) Priority on Demand Registrations. If in any Demand
Registration the managing underwriter or underwriters
thereof (or in the case of a Demand Registration not being
underwritten, the holders of a majority of the Registrable
Securities held by the Demanding Group after consultation
with an investment banker of nationally recognized
standing), advise the Company in writing that in its or
their reasonable opinion the number of securities proposed
to be sold in such Demand Registration exceeds the number
that can be sold in such offering without having a material
adverse effect on the success of the offering (including,
without limitation, an impact on the selling price), the
14
Company will include in such registration only the number of
securities that, in the reasonable opinion of such
underwriter or underwriters (or such holders of Registrable
Securities held by the Demanding Group, as the case may be)
can be sold without having a material adverse effect on the
success of the offering, as follows: (i) first, the
Registrable Securities requested to be included in such
Demand Registration by the Demanding Group, pro rata, among
such Stockholders on the basis of their respective holdings
of Common Stock on a Fully Diluted Basis, (ii) second, the
Registrable Securities requested to be included in such
Demand Registration by the ▇▇▇▇ ▇▇▇▇▇ Stockholders and SBW
(if the Demanding Group is the Carlyle Stockholders and the
Clipper Stockholders), or the Carlyle Stockholders and the
Clipper Stockholders, as a group, and SBW (if the Demanding
Group is the ▇▇▇▇ ▇▇▇▇▇ Stockholders), or the Carlyle
Stockholders and the Clipper Stockholders, as a group, and
the ▇▇▇▇ ▇▇▇▇▇ Stockholders (if the Demanding Group is SBW),
in all such cases pro rata among such Stockholders on the
basis of their respective holdings of Common Stock on a
Fully Diluted Basis, (iii) third, shares to be issued and
sold by the Company and requested to be included in such
Demand Registration, and (iv) fourth, the Registrable
Securities requested to be included in such Demand
Registration by the By-Word Stockholders, pro rata among
such requesting Stockholders on the basis of their
respective holdings of Common Stock on a Fully Diluted
Basis.
(4) Selection of Underwriters. If a Demand Registration is
an underwritten offering, the holders of a majority of the
Registrable Securities to be included in such Demand
Registration held by members of the Demanding Group that
initiated such Demand Registration will select a managing
underwriter or underwriters of recognized national standing
to administer the offering, which managing underwriter or
underwriters shall be reasonably acceptable to the Company.
(c) Registration of Recapitalization Shares. Within a reasonable
period prior to each Registration Date (as hereinafter defined), the Company
shall prepare and file with the Commission a registration statement on an
appropriate form in order to register the Recapitalization Shares under the
Securities Act for sale in one or more privately negotiated transactions or in
open market transactions effected on any stock exchange on which the Common
Stock is then listed, or if not so listed, on any automated quotation system to
which the Common Stock is then admitted to trading; provided, however, that if
the Board of Directors determines in the exercise
15
of its reasonable judgment that, due to a pending or contemplated acquisition
or disposition, to effect such registration at such time would have a material
adverse effect on the Company, the Company may defer such registration for a
single period not to exceed ninety (90) days. The Company shall use its
reasonable best efforts to have each such registration statement declared
effective by the Commission as promptly as reasonably practicable after the
filing thereof with the Commission; provided, however, that (i) no sales of
Recapitalization Shares shall be effected pursuant to any such registration
statement prior to March 31, 1997 and (ii) sales of an aggregate of no more
than one-half of the total number of Recapitalization Shares shall be effected
pursuant to any such registration statement prior to September 27, 1997, such
dates being referred to as the "Registration Dates". In addition, the Company
shall use its reasonable best efforts to keep such registration statement
effective for a period of at least three months after the applicable
Registration Date. As used herein, the term "Recapitalization Shares" shall
mean the shares of Common Stock issued pursuant to the Recapitalization
Agreement to ▇▇▇▇ ▇▇▇▇▇ International Investment Corporation as described in
Section 2(a)(1) hereof and to certain Carlyle Stockholders and Clipper
Stockholders as described in Section 2(b) hereof.
(d) Registration Procedures. With respect to any Piggyback
Registration or Demand Registration and (except as expressly provided in
subsection (c) above) the registration to be effected pursuant to subsection (c)
above (generically, a "Registration"), the Company will, subject to subsections
4(a)(2) and 4(b)(3), as expeditiously as practicable:
(1) prepare and file with the Commission, within 60 days
after mailing the applicable Notice, a registration
statement or registration statements (the "Registration
Statement") relating to the applicable Registration on any
appropriate form under the Securities Act, which form shall
be available for the sale of the Registrable Securities in
accordance with the intended method or methods of
distribution thereof; provided that the Company will include
in any Registration Statement on a form other than Form S-1
all information that the holders of the Registrable
Securities so to be registered shall reasonably request and
shall include all financial statements required by the
Commission to be filed therewith, cooperate and assist in
any filings required to be made with the National
Association of Securities Dealers, Inc. ("NASD") or any
securities exchange on which the Common Stock may then be
listed, and use its reasonable best efforts to cause such
Registration Statement to become effective promptly;
provided, further, that before filing a Registration
Statement or
16
prospectus related thereto (a "Prospectus") or any
amendments or supplements thereto, the Company will furnish
to the holders of the Registrable Securities covered by such
Registration Statement and the underwriters, if any, copies
of all such documents proposed to be filed, which documents
will be subject to the reasonable review of such holders and
underwriters and their respective counsel, and the Company
will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which
the holders of a majority of the Registrable Securities
covered by such Registration Statement, the Demanding Group,
if a Demand Registration, or the underwriters, if any, shall
reasonably object;
(2) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep each Registration Statement
effective for the applicable period, or such shorter period
which will terminate when all Registrable Securities covered
by such Registration Statement have been sold; cause each
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with
the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or
supplement to the Prospectus, provided, that the Company
shall not be deemed to have used its reasonable best efforts
to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that
would result in selling holders of the Registrable
Securities covered thereby not being able to sell such
Registrable Securities during that period unless such action
is required under applicable law, and provided, further that
the foregoing shall not apply to actions taken by the
Company in good faith and for valid business reasons,
including without limitation the acquisition or divestiture
of assets, so long as the Company promptly thereafter
complies with the requirements of subsection (11) of this
subsection (d), if applicable;
(3) notify the selling holders of Registrable Securities
and the managing underwriters, if any, promptly, and (if
requested by any such person or entity) confirm such advice
in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment
17
has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has
become effective, (B) of any request by the Commission for
amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company
contemplated by subsection (14) below cease to be true and
correct, (E) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, (F) of any other correspondence
from the Commission with respect to the Registration and (G)
of the happening of any event which makes any statement made
in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue in any
material respect or which requires the making of any changes
in the Registration Statement, the Prospectus or any
document incorporated therein by reference in order to make
the statements therein not materially misleading;
(4) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
(5) if requested by the managing underwriter or
underwriters or a holder of Registrable Securities being
sold in connection with an underwritten offering, promptly
incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and
either the holders of a majority of the Registrable
Securities being sold or the Demanding Group, if a Demand
Registration, agree should be included therein relating to
the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold
to such underwriters the purchase price being paid therefor
by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of
the Registrable Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment promptly following notification of
the matters to be
18
incorporated in such Prospectus supplement or post-effective
amendment;
(6) furnish to each selling holder of Registrable
securities and each managing underwriter, without charge, at
least one signed copy of the Registration Statement and any
amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(7) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies
of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such selling
holder of Registrable Securities and underwriters may
reasonably request; the Company consents to the use in
accordance with applicable law of each Prospectus or any
amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any
amendment or supplement thereto;
(8) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and
sale under the securities or "blue sky" laws of such
jurisdictions as any seller or underwriter reasonably
requests in writing, considering the amount of Registrable
Securities proposed to be sold in each such jurisdiction,
and do any and all other acts or things necessary or
reasonably advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company will not
be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of
process in any such jurisdiction where it is not then so
subject;
(9) cooperate in all reasonable respects with the
selling holders of Registrable Securities and the managing
underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable
Securities to be sold and not bearing any
19
restrictive legends and to be in such denominations and
registered in such names as the managing underwriters may
request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(10) use its reasonable best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(11) upon the occurrence of any event contemplated by
subsection (3)(F) above, prepare a supplement or post
effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein not
misleading;
(12) cause all Registrable Securities covered by any
Registration Statement to be listed on each securities
exchange on which similar securities issued by the Company
are then listed, or cause such Registrable Securities to be
authorized for trading on the Nasdaq National Market if any
similar securities issued by the Company are then so
authorized, if requested by the holders of a majority of
such Registrable Securities, the Demanding Group, if a
Demand Registration, or the managing underwriters, if any;
(13) provide a CUSIP number for all Registrable
Securities, not later than the effective date of the
applicable Registration Statement;
(14) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection
therewith in order to expedite or facilitate the disposition
of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and
whether or not the Registration is an underwritten
Registration (A) make such representations and warranties
20
to the holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings; (B) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities being
sold) addressed to each selling holder and the underwriters,
if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters
as may be reasonably requested by such holders and
underwriters; (C) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be
in customary form and covering matters of the type
customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten
offerings; (D) if an underwriting agreement is entered into,
the same shall set forth in full the indemnification
provisions and procedures set forth in subsection (f) below
with respect to all parties to be indemnified pursuant to
said subsection; and (E) the Company shall deliver such
documents and certificates as may be requested by the
holders of a majority of the Registrable Securities being
sold and the managing underwriters, if any, to evidence
compliance with subsection 3(G) of this subsection (d) and
with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent
required thereunder;
(15) make available (at reasonable times and places) for
inspection by a representative of the holders of a majority
of the Registrable Securities, any underwriter participating
in any disposition pursuant to such Registration, and any
attorney or accountant retained by the sellers or
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply
all information reasonably requested by any such
representative, underwriter, attorney or accountant in
connection with such Registration Statement; provided, that
any records, information or documents that are designated by
the company in writing as confidential shall be kept
confidential by such Persons unless disclosure of such
records, information or documents is
21
required by court or administrative order or any regulatory
body having jurisdiction;
(16) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission,
and make generally available to its security holders,
earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than forty-five (45)
days after the end of any twelve (12)-month period (or
ninety (90) days, if such period is a fiscal year) (A)
commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or
best efforts underwritten offering, or (B) if not sold to
underwriters in such an offering, beginning with the first
month of the Company's first fiscal quarter commencing after
the effective date of the Registration Statement, which
statements shall cover said twelve (12)-month periods; and
(17) promptly prior to the filing of any document that is
to be incorporated by reference into any Registration Statement
or Prospectus (after initial filing of the Registration
Statement), provide copies of such document to counsel to
the selling holders of Registrable Securities and to the
managing underwriters, if any, make the Company's
representatives available for discussion of such document
and make such changes in such document prior to the filing
thereof as counsel for such selling holders or underwriters
may reasonably request.
The Company may require each seller of Registrable
Securities as to which any Registration is being effected to
furnish to the Company such information regarding the
proposed distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any
notice from the Company of the happening of any event of the
kind described in subsection (3)(G) of this subsection (d),
such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration
Statement until such holder's receipt of copies of the
supplemented or amended Prospectus as contemplated by
subsection (11) of this subsection (d), or until it is
advised in writing (the "Advice") by the Company that the
use of the Prospectus may be
22
resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in
the Prospectus, and, if so directed by the Company, such
holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then
in such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of
such notice. In the event the Company shall give any such
notice, the time periods referred to in subsection (2) of
this subsection (d) shall be extended by the number of days
during the period from and including the date of the giving
of such notice to and including the date when each seller of
Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented
or amended prospectus contemplated by subsection (11) of
this subsection (d) or the Advice.
(e) Restrictions on Public Sale.
(1) Public Sale by Holders of Registrable Securities. To
the extent not inconsistent with applicable law, each Stockholder,
if requested by the managing underwriter or underwriters for
any Demand Registration or Piggyback Registration, agrees
not to effect any public sale or distribution of Common
Stock (or securities convertible into or exchangeable or
exercisable for Common Stock), including a sale pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act, during the 15 business days prior to, and
during the ninety (90)-day period (or such shorter period as
may be agreed to by such holders) beginning on, the
effective date of the applicable Registration Statement
(except as part of such Registration).
(2) Public Sale by the Company and Others. If requested
by the managing underwriter or underwriters for any
underwritten Demand Registration or Piggyback Registration,
(i) the Company will not effect any public sale or
distribution of Common Stock (or securities convertible into
or exchangeable or exercisable for Common Stock) during the
fifteen (15) business days prior to, and during the ninety
(90)-day period beginning on the effective date of such
Registration and (ii) the Company will cause each holder of
Common Stock (or securities convertible into or exchangeable
or exercisable for Common Stock) purchased from the Company
at any time after the date of this Agreement (other than in
a registered public offering) to agree not to effect any
public sale or distribution of any such securities during
such
23
period described in clause (i) above (except as part of such
Registration, if otherwise permitted).
(3) Other Registrations. If the Company has previously
filed a Registration Statement with respect to Registrable
Securities, and if such previous Registration has not been
withdrawn or abandoned, the Company will not file or cause
to be effected any other registration of any of its Common
Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) under the Securities Act
(except on Form S-8 or any similar successor form), whether
on its own behalf or at the request of any holder or holders
of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), until a
period of at least three (3) months has elapsed from the
effective date of such previous Registration; provided, that
if the holders of fifty percent (50%) or more of the
aggregate number of Registrable Securities included in such
previous Registration shall agree in writing, such period
may be shortened to a period specified by such holders.
(f) Registration Expenses.
(1) All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company,
including, without limitation, all registration and filing
fees, the fees and expenses of the counsel and accountants
for the Company (including the expenses of any "cold
comfort" letters and special audits required by or incident
to the performance of such persons), all other costs and
expenses of the Company incident to the preparation,
printing and filing under the Securities Act of the
Registration Statement (and all amendments and supplements
thereto) and furnishing copies thereof and of the Prospectus
included therein, the costs and expenses incurred by the
Company in connection with the qualification of the
Registrable Securities under the state securities or "blue
sky" laws of various jurisdictions, the costs and expenses
associated with filings required to be made with the NASD
(including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may
be required by the rules and regulations of the NASD), the
costs and expenses of listing the Registrable Securities for
trading on a securities exchange or authorizing them for
trading on NASDAQ and all other costs and expenses incurred
by the Company in connection with any
24
Registration hereunder; provided, that, except as otherwise
provided in subsection (2) below, each Stockholder shall
bear the costs and expenses of any underwriters'
commissions, brokerage fees or transfer taxes relating to
the Registrable Securities sold by such Stockholders and the
fees and expenses of any counsel, accountants or other
representative retained by Stockholder.
(2) Notwithstanding the foregoing and except as provided
below, in connection with each Registration hereunder, the
Company will reimburse the Stockholders who are holders of
Registrable Securities being registered in any Registration
hereunder for (i) the reasonable fees and disbursements of
not more than one counsel, which counsel shall be chosen (x)
by the holders of a majority of the Registrable Securities
to be included therein that are held by the Demanding Group,
in the case of a Demand Registration and (y) otherwise, by
the holders of a majority of all Registrable Securities to
be included therein, and (ii) the reasonable out-of-pocket
expenses (including travel costs) of the holders of
Registrable Securities in connection with such Registration.
(g) Indemnification.
(1) Indemnification by the Company. The Company agrees
to indemnify, to the full extent permitted by law, each
Stockholder, its officers, directors, partners and agents
and each person who controls such Stockholder (within the
meaning of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), against all
losses, claims, damages, liabilities and expenses caused by
any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or
preliminary Prospectus or any omission or alleged omission
to state therein a material fact necessary to make the
statements therein (in the case of a Prospectus or any
preliminary Prospectus, in light of the circumstances under
which they were made) not misleading, except insofar as the
same are caused by or contained in any information with
respect to such Stockholder furnished in writing to the
Company by such Stockholder in its capacity as a selling
Stockholder expressly for use therein. The Company will also
indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in
the distribution, their officers and directors and each
person who controls such persons
25
(within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification
of the holders of Registrable Securities; provided, however,
if pursuant to an underwritten public offering of
Registrable Securities, the Company and any underwriters
enter into an underwriting or purchase agreement relating to
such offering that contains provisions relating to
indemnification and contribution between the Company and
such underwriters, such provisions shall be deemed to govern
indemnification and contribution as between the Company and
such underwriters.
(2) Indemnification by Holders of Registrable Securities.
In connection with any Registration in which a Stockholder is
participating, each such Stockholder will furnish to the
Company in writing such information with respect to such
Stockholder as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and
agrees to indemnify, to the full extent permitted by law,
the Company, the directors and officers of the Company
signing the Registration Statement and each person who
controls the Company (within the meaning of the Securities
Act and the Exchange Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue
statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to
make the statements in the Registration Statement or
Prospectus or preliminary Prospectus (in the case of the
Prospectus or any preliminary Prospectus, in light of the
circumstances under which they were made) not misleading, to
the extent, but only to the extent, that such untrue
statement or omission is contained in any information with
respect to such Stockholder so furnished in writing by such
Stockholder in its capacity as a selling Stockholder
specifically for inclusion therein. In no event shall the
liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the
net proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals
participating in the distribution, to the same extent as
provided above with respect to information with respect to
such persons or entities so furnished in writing by such
persons or
26
entities or their representatives specifically for inclusion
in any Prospectus or Registration Statement.
(3) Conduct of Indemnification Proceedings. Any person or
entity entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party after the
receipt by the indemnified party of a written notice of the
commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which
such indemnified party will claim indemnification or
contribution pursuant to this Agreement; provided, however,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of
its obligations under the preceding subparagraphs (1) and
(2), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice and (ii)
unless in such indemnified party's reasonable judgment a
conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party.
Whether or not such defense is assumed by the indemnifying
party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment
or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An
indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel in any one
jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel or counsels.
(4) Contribution. If for any reason the indemnification
provided for in the preceding subparagraphs (1) and (2) is
unavailable to an indemnified party as contemplated by the
preceding clauses (1) and (2), then the indemnifying party
in lieu of indemnification shall contribute to the amount
paid or payable by the indemnified party as a
27
result of such loss, claim, damage, liability or expense in
such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations, provided that no
Stockholder shall be required to contribute in an amount
greater than the difference between the net proceeds
received by such Stockholder with respect to the sale of any
Shares and all amounts already contributed by such
Stockholder with respect to such claims, including amounts
paid for any legal or other fees or expenses incurred by
such Stockholder.
(h) Rule 144. The Company agrees that at all times after it has filed
a registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities of the Company, it will file in a
timely manner all reports required to be filed by it pursuant to the Securities
Act and the Exchange Act and will take such further action as any holder of
Registrable Securities may reasonably request in order that such holder may
effect sales of Common Stock pursuant to Rule 144. At any reasonable time and
upon request of any Stockholder, the Company will furnish such Stockholder and
others with such information as may be necessary to enable the Stockholder to
effect sales of Common Stock pursuant to Rule 144 under the Securities Act and
will deliver to such Stockholder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, the Company may
deregister any class of its equity securities under Section 12 of the Exchange
Act or suspend its duty to file reports with respect to any class of its
securities pursuant to Section 15(d) of the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act and the rules and regulations thereunder.
(i) Participation in Underwritten Registrations. No Stockholder may
participate in any underwritten Registration hereunder unless such Stockholder
(i) agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to select
the underwriter pursuant to subsections 4(a)(3) and (4)(b)(4) above, and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, underwriting agreements and other documents customarily required
under the terms of such underwriting arrangements.
(j) Other Registration Rights. The Company will not grant to any
person (including the Stockholders) any demand or piggyback registration rights
with respect to the Common Stock of the Company (or securities convertible into
or
28
exchangeable or exercisable for Common Stock) other than piggyback registration
rights that are not inconsistent with the terms of this Section 4. To the extent
that the Company grants to any person registration rights with respect to any
securities of the Company having provisions more favorable to the holders
thereof than the provisions contained in this Agreement, the Company will confer
comparable rights to the holders of Registrable Securities under this Agreement.
Except as provided herein, the Company will not grant any registration rights
that would permit any person or entity the right to piggyback on any Demand
Registration.
(k) Definition of Registrable Securities. "Registrable Securities"
means the shares of Common Stock now owned or hereafter acquired by any
Stockholder, but with respect to any share, only until such time as such share
(i) has been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it or (ii) has been sold to
the public pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act and the Legend referred to in Section 6(a) has been removed
from the certificate representing such share (at which time such share shall
cease to be a Registrable Security).
(l) Amendments and Waivers. The provisions of this Section 4,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given unless approved by the Company in writing and the
Company has obtained the written consent of Stockholders holding at least
eighty-five percent (85%) of the then outstanding Registrable Securities
(including for such purposes all securities convertible into or exchangeable for
Registrable Securities, other than the Warrants). Notwithstanding the foregoing,
any amendment, waiver or consent that materially and adversely affects any of
the By-Word Stockholders as a group, the ▇▇▇▇ ▇▇▇▇▇ Stockholders as a group, the
Carlyle Stockholders as a group, the Clipper Stockholders as a group or SBW
differently from the other Stockholders, shall require the prior written
approval of the holders of at least a Majority in Interest of Stockholders who
are then members of the group or the entity so affected.
Section 5. Governance.
(a) Within fifteen days after the execution hereof, the total number
of members of the Board of Directors will be reduced to six, which number shall
be adjusted from time to time in order to give effect to the provisions of
subsection (b) below. The Company and the Stockholders hereby agree to take, at
any time and from time to time, all action necessary (including, without
limitation, voting the shares of Company Common Stock owned or controlled by
such Stockholder, calling special
29
meetings of stockholders, executing and delivering written consents and
requiring designees to resign) to establish the number of total number of
directors as provided herein.
(b) At all times from and after fifteen days after the execution
hereof (except for the addition of a second Independent Director, which shall
occur no later than the date of the next annual meeting of the stockholders of
the Company), the Board of Directors of the Company (the "Board") shall be
composed of Directors to be designated in the manner set forth below. The
Company and each Stockholder hereby agree to take, at any time and from time to
time, all action necessary (including, without limitation, voting the shares of
the Company Common Stock owned or controlled by such Stockholder, calling
special meetings of stockholders and executing, delivering written consents and
requiring designees to resign) to elect Directors as provided herein. Prior to
the receipt of Regulatory Relief, the Board shall be composed of seven (7)
members, of which two (2) Directors shall be persons designated by a Majority in
Interest of the ▇▇▇▇ ▇▇▇▇▇ Stockholders, two (2) Directors shall be persons
designated by a Majority in Interest of the By-Word Stockholders (one of which
shall be the chief executive officer of the Company), one (1) Director shall be
a person designated by a Majority in Interest of the Carlyle Stockholders and
two (2) additional Directors (or, if determined by the Nominating Committee as
hereinafter provided, three (3) additional Directors) shall be persons who are
not employed by the Company or affiliated with any party to this Agreement
("Independent Directors"). SBW shall be entitled to designate one non-director
delegate who shall be entitled to receive notice of, in accordance with the
provisions of Section 11.6 of the Bylaws with respect to Class B Directors, and
to attend all meetings of the Board and to receive all materials received by
Directors, but who shall not be a member of the Board of Directors, shall have
no fiduciary duties to the Company, to the Board or stockholders of the Company
and shall not be entitled to vote at meetings of the Board. Upon the conversion
of the Series D Preferred Stock into Class B Common Stock, the number of
Directors shall be increased by one who shall be a person designated by SBW and
the right to a non-director delegate shall terminate. If SBW and its Affiliates
Beneficially Own 20% or more of the Common Stock (including Common Stock
issuable upon conversion of Series D Preferred Stock or Class B Common Stock or
other convertible securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than shares issuable upon exercise of the
Warrants and Excluded Options) on a Fully Diluted Basis, the number of Directors
shall further be increased by one and the additional Director shall also be a
designee of SBW. For so long as SBW or its Affiliates hold Class B Common Stock,
one or both of SBW's designees will be elected by SBW as the holder of the Class
B Common Stock and will be Class B Directors, with the rights set forth in the
30
terms of such Class B Common Stock and the Bylaws, and which directors will have
the corporate authority to sign a stockholder consent of SBW on behalf of each
of the SBW Stockholders.
All Independent Directors shall be nominated by a committee consisting
of one Director designated by the ▇▇▇▇ ▇▇▇▇▇ Stockholders, one Director
designated by the By-Word Stockholders, one Director designated by the Carlyle
Stockholders and, following receipt of Regulatory Relief, one Director
designated by SBW (the "Nominating Committee"). The Nominating Committee also
shall determine whether to increase the number of Independent Directors to three
(3).
Notwithstanding the foregoing, no Stockholder or group of Stockholders
shall be entitled to designate any Director or have such designee serve on the
Nominating Committee if the percentage of Common Stock (including Common Stock
issuable upon conversion of outstanding securities or upon the exercise of any
outstanding options, warrants, rights or obligations other than the Warrants and
Excluded Options) Beneficially Owned by such Stockholder or group of
Stockholders falls below 5% (or, with respect to the ▇▇▇▇ ▇▇▇▇▇ Stockholders and
By-Word Stockholders, 20% for the right to designate two Directors and 5% for
the right to designate one Director) on a Fully Diluted Basis. If By-Word has
only one designee, it shall be the chief executive officer of the Company if the
chief executive officer is a By-Word Stockholder. Upon the failure of any
Stockholder or group of Stockholders to maintain the required percentage, the
Stockholder or group of Stockholders shall require its designee to resign and
the size of the Board may, in the determination of the Nominating Committee,
either be reduced to eliminate such the resulting vacancy on the Board or remain
the same (in which case, the resulting vacancy on the Board will be filled by a
Director nominated by the Nominating Committee), provided that the Stockholders
agree that if the chief executive officer is not a By-Word designee, in
accordance with the provisions hereof, the chief executive officer shall be
nominated by the Nominating Committee.
(c) Pursuant to Article VII of the Incentive Stock Option Plan, the
Board shall appoint a three-person Compensation Committee to administer the
Incentive Stock Option Plan. Following receipt of Regulatory Relief, a Director
designated by SBW shall serve on the Compensation Committee. The Compensation
Committee shall be comprised of only non-management Directors serving on the
Board. Each Stockholder hereby agrees to take, at any time and from time to
time, all action necessary (including, without limitation, voting the shares of
the Common Stock owned or controlled by such Stockholder, calling special
meetings of stockholders and executing and delivering written consents) to cause
the Board to
31
appoint to the Compensation Committee the number of persons meeting the
requirements of this subsection.
(d) The Stockholders agree that no Director may be removed except at
the request of the holders of a majority of the shares of Common Stock entitled
to appoint such Director in accordance with Section 5(b), and each Stockholder
hereby agrees to take all action necessary (including, without limitation,
voting the shares of Common Stock owned or controlled by such Stockholder,
calling special meetings of stockholders and executing and delivering written
consents) for the purpose of accomplishing the purposes of this Agreement. If a
vacancy on the Board occurs by reason of the death, removal, resignation,
retirement or election not to serve of a designee, the remaining Directors and
the Company shall cause the vacancy thereby created to be filled by a new
designee as soon as possible (the "Replacement Director"), who is designated in
the same manner and by the same persons specified in Section 5(b) as the
Director being replaced had been, and the Company and each Stockholder hereby
agrees to take, at any time and from time to time, all actions necessary to
accomplish the same; provided, however, that if any group fails to designate a
representative in accordance with Section 5(b) above for a period of thirty (30)
consecutive days, then such vacancy shall be filled by the Nominating Committee
until such time as the Replacement Director is designated in accordance with
Section 5(b), at which time the term of the Director not elected in accordance
with Section 5(b) shall expire.
(e) In addition to any compensation to which the members of the Board
may be entitled, the Company shall reimburse each Director for the reasonable
out-of-pocket expenses incurred by such Director (including, without limitation,
reasonable fees and expenses of counsel, accountants, or representatives, if
any) involved with such Director's services as a member of the Company. In
addition, the Company shall obtain and maintain at all times during which this
Agreement remains in effect, at the cost and expense of the Company, director
liability insurance policies covering each member of the Board. Such director
liability insurance policies shall be provided by a reputable nationally
recognized insurance carrier and shall provide coverage in such amounts and on
such terms as may be reasonably acceptable to each member of the Board. Should
SBW so request, the Company will enter into contractual indemnification
arrangements with the Director reasonably satisfactory to SBW.
(f) In addition to any vote or consent of the Board of Directors or
its stockholders required by law or the Certificate of Incorporation, including
the terms of Series D Preferred Stock and the Class B Common Stock, the
affirmative vote of
32
a majority of the entire Board of Directors (not merely a quorum) shall be
necessary for authorizing, effecting or validating the following actions:
(i) the approval of any annual budget or business plan
for the Company or any Subsidiary of the Company or the
deviation by the Company or any such Subsidiary from any
annual budget for the Company or such Subsidiary approved by
the Board of Directors by more than five percent (5%);
(ii) any capital expenditure or expenditures by the
Company or any Subsidiary of the Company which, individually or
in the aggregate, exceeds $1,000,000;
(iii) the hiring or termination by the Company or any
Subsidiary of the Company of any officer or senior
management employee of the Company or such Subsidiary;
(iv) directly or indirectly redeem, purchase or make any
payments with respect to any stock appreciation rights,
phantom stock plans or similar rights or plans;
(v) (A) sell, lease, transfer or otherwise convey, or
permit any Subsidiary to sell, lease, transfer or otherwise
convey, any assets representing five percent (5%) or more of the
consolidated assets of the Company and its Subsidiaries, (B)
consolidate or merge with, or permit any Subsidiary to
consolidate or merge with, any Person, (C) reclassify or
otherwise change, or permit any Subsidiary to reclassify or
otherwise change, any capital stock of the Company or any
Subsidiary or (D) dissolve, liquidate or wind-up the Company
or permit any Subsidiary to dissolve, liquidate or wind up
such Subsidiary.
(vi) except as expressly contemplated by the Purchase
Agreement or the any of the Transaction Documents,
authorize, issue or enter into any agreement providing for
the issuance, or permit any Subsidiary to authorize, issue
or enter into any agreement providing for the issuance
(contingent or otherwise) in excess of an aggregate of
$5,000,000 (A) any notes or debt securities containing
equity features (including, without limitation, any note or
debt securities convertible into or exchangeable for capital
stock or other equity securities, issued in connection with
the issuance of capital stock or other equity
33
securities, or containing profit participation features) or
(B) any capital stock or other equity securities, or any
securities convertible into or exchangeable for any capital
stock or other equity securities, other than issuances
pursuant to the Incentive Stock Option Plan;
(vii) acquire, or permit any Subsidiary to acquire, in one
transaction or a series of related transactions, any capital
stock, other equity interests or assets of any Person for
aggregate consideration in excess of $5,000,000;
(viii) enter into, or permit any Subsidiary to enter into,
any agreement, contract, lease or commitment on the part of
the Company or such Subsidiary involving the payment or
provision of consideration by or to the Company or such
Subsidiary, the fair market value of which exceeds
$1,000,000;
(ix) make any capital expenditure, or permit any Subsidiary
to make any capital expenditure, in excess of $1,000,000;
(x) except as expressly contemplated by the Purchase
Agreement, amend the Certificate of Incorporation, or the
Company's bylaws or file any resolution of the board of
directors with the Secretary of State of the State of
Delaware containing any provisions which would adversely
affect or otherwise impair the rights of the holders of the
Common Stock;
(xi) enter into, or permit any Subsidiary to enter into,
any agreement, transaction, commitment or arrangement with any
of its or any Subsidiary's officers, directors, employees,
stockholders or Affiliates or with any individual related by
blood, marriage or adoption to any such individual or with
any entity in which such Person or individual own, in the
aggregate, a more than 10% beneficial interest, except for
(A) customary employment arrangements and benefit programs
on arms' length terms and (B) agreements, transactions,
commitments or arrangements on arms' length terms and
approved by a majority of the Company's disinterested
directors; or
(xii) enter into, or permit any Subsidiary to enter into,
any agreement to do or effect any of the foregoing.
34
(g) Following the receipt of Regulatory Relief, if SBW does not hold
any Series D Preferred Stock or Class B Common Stock but does own at least 1.6
million shares of Common Stock (including Common Stock issuable upon conversion
of outstanding securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than the Warrants and Excluded Options)
on a Fully Diluted Basis, the approval of SBW shall be required for the
following actions:
(i) the approval of any annual budget or business plan
for the Company or any Subsidiary of the Company or the
deviation by the Company or any such Subsidiary from any
annual budget for the Company or such Subsidiary approved by
the Board of Directors by more than five percent (5%);
(ii) issuance by the Company of any equity securities,
including securities convertible into equity securities
(other than (A) the grant of employee stock options (subject
to the proviso set forth in (D) below), (B) the issuance of
equity securities in accordance with the terms of the
Purchase Agreement or any of the other Transaction
Documents), (C) the issuance of equity securities upon the
exercise or conversion of securities or employee stock
options that are outstanding as of the date hereof or (D)
the issuance of equity securities after giving effect to the
consummation of the transactions contemplated hereby or
employee stock options granted hereafter, provided, however,
that there shall not be outstanding at any time employee
stock options for more than 1.5 million shares of Common
Stock plus the options granted to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ that are outstanding at September
27, 1996) or incurrence of any indebtedness for borrowed
money or evidenced by bonds, notes or debentures, provided
that the Company can incur up to $5 million in indebtedness
in any year without the consent of SBW;
(iii) the hiring or termination by the Company of its chief
executive officer, chief operating officer or chief
financial officer;
(iv) the Company's entering into any lines of business
which is not its Existing Line of Business (as hereinafter
defined) or any joint ventures, partnerships or similar
arrangements;
(v) the Company's exiting its Existing Line of Business (as
hereinafter defined) or disposing of assets (other than
35
telecommunications equipment and other assets sold in the
ordinary course of business) in any year with a value in
excess of $500,000 or which are otherwise material to the
Company's operations;
(vi) the adoption, implementation or acceptance (including
the failure to opt out) of any Anti-Takeover Provision not
in effect as of the date hereof that would be applicable to,
and, in the reasonable determination of SBW, adversely
affect, SBW and its Affiliates; or
(vii) the taking of any corporate action that would reduce
the number of Shares held by SBW and its Affiliates to fewer
than 1.6 million shares of Common Stock such that SBW no
longer has the right to approve any of the actions specified
in this subsection (g).
As used in this subsection (g), the terms set forth below shall have
the following respective meanings;
"Anti-takeover Provision" means (i) any provision of the certificate
of incorporation or bylaws of the Company or any contract, agreement or plan to
which the Company is a party or by which it is bound or any statutory provision
enacted after the date hereof which is applicable to the Company which the
Company may opt out of if the effect of such provision would be to materially
delay, hinder or prevent a change in control of the Company or (ii) a
stockholder rights plan or "poison pill," including the provisions of any
preferred stock or common stock purchase rights issued pursuant thereto;
provided, however, that such term shall not include any customary change of
control provisions contained in employment agreements between the Company and
any of its directors, officers or other employees or in any plans or agreements
relating to stock options or other awards of equity securities made by the
Company to any such persons.
"Existing Line of Business" means a non-facilities based, enhanced
service provider that offers fleet management and/or status or information about
vehicles and/or location capabilities through mobile communications service.
(h) The Board shall hold, during the term of this Agreement, regularly
scheduled, in-person meetings no less frequently than six times per year.
(i) At all times during which this Agreement remains in effect, each
Stockholder hereby agrees to take all action necessary (including, without
limitation, voting the shares of the Company's Common Stock owned or controlled
by such
36
Stockholder, calling special meetings of stockholders and executing and
delivering written consents) to ensure that the By-Laws of the Company provide
that the information listed on Schedule A hereto shall be provided to each
member of the Board of Directors, at the time and in the manner required by the
provisions of Schedule A.
(j) The Company and each Stockholder agrees not to, and to cause its
designees on the Board not to, without the prior approval of SBW, alter, amend,
repeal or replace the Bylaws set forth on Exhibit B hereto or to enact any
Bylaws inconsistent therewith.
(k) For the purpose of this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Investment
Holdings, Inc., Archery Partners and their respective assigns shall not be
considered Carlyle Stockholders.
Section 6. Miscellaneous.
(a) Legend. The certificates representing the capital stock of the
Company held by each of the Stockholders shall bear the following legend
(provided that with respect to SBW and any certificates issued after the date
hereof such legend shall refer to this Agreement):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
COVERING SUCH SECURITIES OR SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY SIMILAR
REQUIREMENTS OF ANY APPLICABLE STATE SECURITIES LAW. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A
STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 4, 1994, A COPY OF WHICH IS
AVAILABLE UPON REQUEST FROM THE SECRETARY OF THE COMPANY."
If any capital stock of the Company becomes eligible for sale pursuant
to Rule 144(k) promulgated under the Securities Act, the Company shall, subject
to applicable law and upon the request of any holder of such capital stock,
remove the legend set forth in this Section 6(a) from the certificates
evidencing the shares of such capital stock held by such holder. In addition,
(i) in connection with any Transfer of
37
shares of any capital stock of the Company pursuant to any public offering
registered under the Securities Act or pursuant to Rule 144 (or any similar rule
or rules then in effect promulgated under the Securities Act) if such rule is
available or (ii) if the holder of any shares of capital stock of the Company
delivers to the Company an opinion of counsel reasonably acceptable to the
Company that no subsequent Transfer of such shares shall require registration
under the Securities Act, the Company shall promptly upon such Transfer deliver
new certificates for such shares which do not bear the legend set forth in this
Section 6(a).
(b) Successors, Assigns and Transferees. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, heirs, legatees, successors and permitted assigns. The
only permitted assigns (each, a "Permitted Assign") are as follows: (i) each of
the Clipper Stockholders shall be entitled to assign any of its rights under
this Agreement to any other Clipper Stockholder; (ii) each of the Carlyle
Stockholders shall be entitled to assign any of its rights under this Agreement
to any other Carlyle Stockholder or any Related Party of a Carlyle Stockholder
(other than an Excluded Related Party); (iii) each of the By-Word Stockholders
shall be entitled to assign any of its rights under this Agreement to any other
By-Word Stockholder; (iv) each of the ▇▇▇▇ ▇▇▇▇▇ Stockholders shall be entitled
to assign any of its rights under this Agreement to any other ▇▇▇▇ ▇▇▇▇▇
Stockholder or any Related Party of an ▇▇▇▇ ▇▇▇▇▇ Stockholder (other than an
Excluded Related Party) and (v) SBW shall be entitled to assign any of its
rights under this Agreement to any of its Affiliates. No party hereto shall be
entitled to assign any of its rights under this Agreement to any Person which is
otherwise a Permitted Assign hereunder unless, concurrently with such
assignment, such party is Transferring all or a portion of the Shares owned by
it to such Person in compliance with the terms and provisions set forth herein
and such Person executes a supplemental agreement hereto in form and substance
reasonably satisfactory to the Company pursuant to which such Person agrees to
become a party to, and be bound by, this Agreement.
(c) Specific Performance, Etc. The Company and each Stockholder, in
addition to being entitled to exercise all rights provided herein, in the
Company's Certificate of Incorporation or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Stockholder agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
38
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal law of the State of Delaware without giving
effect to the conflict of laws provisions thereof.
(e) Interpretation. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
(f) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. SBW agrees to give the Company written notice when Regulatory Relief
has been obtained. Any such notice shall be deemed given when so delivered
personally, sent by facsimile transmission or, if mailed, three (3) business
days after the date of deposit in the United States mail, by certified mail
return receipt requested, as follows:
(i) If to the Company to:
HighwayMaster Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to any of the Carlyle Entitles, to
c/o The Carlyle Group, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Ein
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
39
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to any of the Clipper Entities, to
The Clipper Group, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Weil, Gotshal & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
40
(iv) If to any of the ▇▇▇▇ ▇▇▇▇▇ Companies, to
▇▇▇▇ ▇▇▇▇▇ International
Trident House, Suite 204(a)
Broad Street
Bridgetown, Barbados
West Indies Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(v) If to any of the By-Word Stockholders, to:
HighwayMaster Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
41
(vi) If to Chase Manhattan Investment Holdings, Inc. or Archery
Partners:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
42
(vii) If to Southwestern ▇▇▇▇ Wireless Holdings, Inc.
Southwestern ▇▇▇▇ Wireless Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
SBC Communications, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Attorney, Mergers & Acquisitions
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notice by written notice to the other
parties in accordance with this provision.
(g) Termination. This Agreement will terminate and the Original
Agreement, as in effect on the date prior to the date hereof, will be deemed to
be in effect if the Purchase Agreement is terminated pursuant to Section 2(c)
thereof. Sections 3(b) and (c) hereof shall terminate at that time that SBW and
its Affiliates cease to own at least 1.6 million shares of Common Stock
(including Common Stock issuable upon conversion of outstanding securities or
upon the exercise of any outstanding options, warrants, rights or obligations,
other than the Warrants and Excluded Options).
43
(h) Inspection and Compliance with Law. Copies of this Agreement will
be available for inspection or copying by any Stockholder at the offices of the
Company through the Secretary of the Company.
(i) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this paragraph (h), may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given, except by a written instrument executed by (i) the
Company, (ii) a Majority in Interest of the By-Word Stockholders, (iii) a
Majority in Interest of the Carlyle Stockholders and the Clipper Stockholders
acting as a group, (iv) a Majority in Interest of the ▇▇▇▇ ▇▇▇▇▇ Stockholders
and (v) SBW; provided, however, that amendments of or modification to Section 4
will be subject to the requirements of Section 4(k). No action taken pursuant to
this Agreement, including, without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as waiver of any preceding or
succeeding breach and no failure by any party to exercise any right or privilege
hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder.
(j) Transfer Void. Any Transfer of any security of the Company in
violation of this Agreement shall be null and void and the Company covenants and
agrees that it will not register or otherwise recognize a Transfer (whether for
the purposes of shareholder voting or in connection with the distribution of
dividends or other corporate assets) of any securities which it has reason to
believe was effected in violation of this Agreement.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, by the original parties hereto and any successor in interest, each
of which shall be deemed to be an original and all of which together shall be
deemed to constitute one and the same agreement.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(m) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid,
44
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby.
45
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
SOUTHWESTERN ▇▇▇▇ WIRELESS HOLDINGS,
INC.
By: /s/ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President & CEO
CARLYLE-HIGHWAYMASTER INVESTORS, L.P.
By: TC Group, L.L.C., its General
Partner
By: /s/ M.D. Ein
Name:
Title:
CARLYLE-HIGHWAYMASTER INVESTORS
II, L.P.
By: TC Group, L.L.C., its General
Partner
By: /s/ M.D. Ein
Name:
Title:
46
▇.▇. ▇▇▇▇ INVESTMENTS LIMITED
By:
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
TC GROUP, L.L.C.
By: /s/ M.D. Ein
Name:
Title:
/s/ M.D. Ein
CHASE MANHATTAN INVESTMENT HOLDINGS,
INC.
By:
Name:
Title:
ARCHERY PARTNERS
By:
its General Partner
By:
Name:
Title:
47
CLIPPER CAPITAL ASSOCIATES, L.P.
By: Clipper Capital Associates, Inc.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer & Secretary
CLIPPER/MERCHANT PARTNERS, L.P.
By: Clipper Capital Associates, L.P.
its General Partner
By: Clipper Capital Associates,
Inc.
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer & Secretary
CLIPPER/MERBAN, L.P.
By: Clipper Capital Associates, L.P.
its General Partner
By: Clipper Capital Associates, Inc.
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer & Secretary
▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL INVESTMENT
CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Manager
48
THE ▇▇▇▇ ▇▇▇▇▇ DEVELOPMENT
CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇
Title: Executive Vice President
THE ▇▇▇▇ ▇▇▇▇▇ INVESTMENT
CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇, by ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Attorney-in-Fact
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/Hoddard Dinchlen, Attorney-in-
Fact, for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
49
The undersigned are executing this Agreement solely for the purpose of
evidencing their approval of the amendment and restatement of the Original
Agreement (as amended from time to time) in its entirety as set forth herein, it
being understood that the undersigned shall not be deemed Stockholders for
purposes of this Agreement and shall not have any rights or obligations
hereunder.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
50
APPENDIX A
ORIGINAL PARTIES
Carlyle-HighwayMaster Investors, ▇.▇.
▇▇▇▇▇▇▇-HighwayMaster Investors II, ▇.▇.
▇▇▇▇▇ Manhattan Investment Holdings, Inc.
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
Clipper Capital Associates, L.P.
▇▇▇▇ ▇▇▇▇▇ International Investment Corporation
FU Enterprises Ltd.
By-Word Technologies, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
A-1
APPENDIX B
AMENDMENTS AND ADDENDA
1. Addendum No. 1 to Subscription Agreement and Stockholders Agreement
by and among HM Holding Corporation, Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., ▇.▇. ▇▇▇▇ Investments Limited, TC
Group, L.L.C., Chase Manhattan Investment Holdings, Inc., Clipper/Merban, L.P.,
Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., ▇▇▇▇ ▇▇▇▇▇
International Investment Corporation, FU Enterprises Ltd., By-Word Technologies,
Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
2. Consent of Security Holders of HM Holding Corporation and Second
Amendment to Stockholders' Agreement, dated November, 1994, among HM Holding
Corporation, By-Word Technologies, Inc., the former shareholders of By-Word
Technologies, Inc. listed on Exhibit A, Clipper/Merban, L.P., Clipper Merchant
Partners, L.P., Clipper Capital Associates, L.P., Carlyle-HighwayMaster
Investors, L.P., CarlyleHighwayMaster Investors II, L.P., TC Group, L.L.C., ▇.▇.
▇▇▇▇ Investments Limited, Chase Manhattan Investment Holdings, Inc., ▇▇▇▇ ▇▇▇▇▇
International Investment Corporation, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
3. Joinder Agreement to Stockholders Agreement executed as of January
3, 1995 by ▇▇▇▇ ▇. Ein.
4. Third Amendment to Stockholders Agreement, dated as of April 28,
1995, among HighwayMaster Communications, Inc., Archery Partners, Chase
Manhattan Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., ▇.▇. ▇▇▇▇ Investments Limited, TC
Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper
Capital Associates, L.P., ▇▇▇▇ ▇▇▇▇▇ International Investment Corporation,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
5. Note Exchange and Amendments Agreement, dated as of May 26, 1995,
among HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan
Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., ▇.▇. ▇▇▇▇ Investments Limited, TC
Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper
Capital Associates, L.P., ▇▇▇▇ ▇▇▇▇▇ International Investment Corporation,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
B-1
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. Ein and The
▇▇▇▇ ▇▇▇▇▇ Investment Corporation.
B-2
APPENDIX C
FORMER PARTIES
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
C-1
APPENDIX D
CERTAIN STOCKHOLDERS NUMBER OF SHARES
▇▇▇▇ ▇▇▇▇▇ International Investment Corporation 8,141,706
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 2,029,318
Carlyle-HighwayMaster Investors, L.P. 1,805,727
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 892,015
Clipper/Merban, L.P. 530,930
Clipper/Merchant Partners, L.P. 524,209
▇.▇. ▇▇▇▇ Investments Limited 423,802
T.C. Group, L.L.C. 291,315
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 280,000
Carlyle-HighwayMaster Investors II, L.P. 170,071
D-1