EXHIBIT 10.8
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STOCKHOLDERS' AGREEMENT
By and Among
Teletrac, Inc.
and
The Stockholders
as defined herein and set forth
on the signature pages hereto
Dated as of December 6, 1996
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
Section 1.1. Construction of Terms...........................................1
Section 1.2. Terms Not Defined...............................................2
Section 1.3. Number of Shares of Stock.......................................2
Section 1.4. Defined Terms...................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES....................................4
Section 2.1. Representations and Warranties of the Stockholders..............4
Section 2.2. Representations and Warranties of the Company...................5
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
AND DRAG-ALONG PROVISION..................................................5
Section 3.1. Restrictions on Transfer........................................5
Section 3.2. Right of Last Refusal...........................................7
Section 3.3. Co-Sale Option..................................................9
Section 3.4. Drag-Along Obligations.........................................12
Section 3.5 Contemporaneous Transfers......................................14
Section 3.6. Prohibited Transfers...........................................14
Section 3.7. Exchange of Voting Securities for Non-Voting Securities for
Bank Holding Company Act Purposes..............................14
ARTICLE IV RIGHTS TO PARTICIPATE IN FUTURE ISSUANCES......................15
ARTICLE V ELECTION OF DIRECTORS.............................................16
Section 5.1. Board Composition..............................................16
Section 5.2. Compensation Committee; Audit Committee........................18
Section 5.3. Removal........................................................18
Section 5.4. Vacancies......................................................19
Section 5.5. Increase in Size of Board......................................19
Section 5.6. Assignment.....................................................19
Section 5.7. No Waiver......................................................19
Section 5.8. Board of Directors of Subsidiary...............................19
Section 5.9. Expenses.......................................................19
Section 5.10. Observer Rights................................................20
ARTICLE VI RESTRICTIONS AND LIMITATIONS.....................................20
(i)
ARTICLE VII MISCELLANEOUS PROVISIONS........................................22
Section 7.1. Survival of Representations and Covenants......................22
Section 7.2. Term...........................................................22
Section 7.3. Legend on Securities...........................................22
Section 7.4. Amendment and Waiver...........................................22
Section 7.5. Notices........................................................23
Section 7.6. Acknowledgment.................................................23
Section 7.7. Headings.......................................................23
Section 7.8. Counterparts...................................................23
Section 7.9. Remedies; Severability.........................................24
Section 7.10. Entire Agreement...............................................24
Section 7.11. Adjustments....................................................24
Section 7.12 Certain Provisions Applicable to SBIC and Bank Stockholders....24
Section 7.13 Participation of Aliens........................................25
Section 7.14. Law Governing..................................................25
Section 7.15. Successors and Assigns.........................................25
Exhibit A - Form of Joinder Agreement
Schedule 1.4 - Amended and Restated Certificate of Incorporation
(ii)
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement is made as of this 6th day of December, 1996
by and among Teletrac, Inc., a Delaware corporation (the "Company"), the
investors identified on APPENDIX A hereto as the initial management investors
(the "Founding Stockholders"), the investors identified on APPENDIX A hereto
that currently hold Common Stock (the "Common Investors"), the investors
identified on APPENDIX A hereto that are acquiring Preferred Stock in connection
with the execution hereof (the "Preferred Investors," and together with the
Common Investors, the "Investors"), and any other stockholder or optionholder
who from time to time becomes party to this Agreement by execution of a Joinder
Agreement in substantially the form attached hereto as EXHIBIT A (the
"Management Stockholders"). The Founding Stockholders, the Investors and any
Management Stockholders are herein referred to collectively as the
"Stockholders" and individually as a "Stockholder."
W I T N E S S E T H
WHEREAS, reference is made to the Stock Purchase Agreement, dated as of the
date hereof, by and among, INTER ALIA, the Company and the Preferred Investors
(the "Purchase Agreement"), pursuant to which the Preferred Investors have
purchased 190,476.19 shares of Series A Redeemable Convertible Participating
Preferred Stock, par value $.01 per share, of the Company, which is convertible
into 190,476.19 shares of the Company's Common Stock (as defined in Section
1.4);
WHEREAS, the effectiveness of this Agreement is a condition to the
consummation of the Purchase Agreement; and
WHEREAS, the parties hereto desire to agree upon the terms upon which their
investment in the capital stock of the Company will be held, transferred and
voted.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I DEFINITIONS
SECTION 1.1. CONSTRUCTION OF TERMS. As used herein, the masculine,
feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.
SECTION 1.2. TERMS NOT DEFINED. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.
SECTION 1.3. NUMBER OF SHARES OF STOCK. Whenever any provision of this
Agreement calls for any calculation based on a number of Shares held by a
Stockholder or Investor, the number of Shares deemed to be held by that
Stockholder or Investor shall be the total number of Shares of Common Stock,
either Class A or Class B, then owned by the Stockholder or Investor, plus the
total number of Shares of Common Stock, either Class A or Class B, issuable upon
conversion of any Preferred Stock or other convertible securities or exercise of
any options, warrants or subscription rights then owned by the Stockholder or
Investor.
SECTION 1.4. DEFINED TERMS. The following capitalized terms, as used in
this Agreement, shall have the meanings set forth below.
"Affiliate" means, with respect to any Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Charter" has the meaning specified in the definition of Preferred Stock
below.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A or Class B Common Stock, par value $.01
per share, of the Company, and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend or stock split or in
exchange for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Conversion Shares" shall mean the shares of Common Stock issued by the
Company upon conversion of the shares of Preferred Stock in accordance with the
Charter.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Offer Notice" has the meaning specified in Section 3.2(a)
"Offeror" has the meaning specified in Section 3.2.
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"Permitted Transferee" has the meaning specified in Section 3.1.
"Person" means an individual, a corporation, an association, a partnership,
an estate, a trust, and any other entity or organization, governmental or
otherwise.
"Preferred Stock" means the Series A Redeemable Convertible Participating
Preferred Stock, par value $.01 per share, of the Company, as issued or to be
issued in accordance with the Purchase Agreement and subject to the terms set
forth in the Amended and Restated Certificate of Incorporation of the Company
substantially in the form attached hereto as SCHEDULE 1.4 (the "Charter"),
together with any other shares issued or issuable with respect thereto
including, without limitation, shares of Diluted Preferred Stock (as defined in
the Purchase Agreement) and any Shares of Common Stock (whether by way of a
stock dividend, stock split or in exchange for or in replacement or upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"Qualified Public Offering" means the first underwritten public offering
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of Common Stock to the public at an initial public
offering price of not less than $354.38 per share (subject to adjustment for
stock splits, stock dividends, recapitalization and the like) and resulting in
gross proceeds of at least $30 million.
"Registration Rights Agreement" means the Amended and Restated Registration
Rights Agreement, dated the date hereof, by and among, INTER ALIA, the Company
and the Stockholders.
"Right of Last Refusal" has the meaning specified in Section 2.3(b).
"Sale of the Company" means the sale of the Company to a non-Affiliate(s)
of the Company or any of the Stockholders pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power to
elect a majority of the Board of Directors (whether by merger, consolidation or
sale or transfer of the Company's capital stock); or (ii) all or substantially
all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Shares" means the shares of Common Stock, Preferred Stock and any other
equity securities now or hereafter issued by the Company, together with any
options thereon and any other shares of stock issued or issuable with respect
thereto (whether by way of a stock dividend, stock split or in exchange for or
upon conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
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"Transaction Offer" has the meaning specified in Section 3.2.
"Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights. "Transferred" means the accomplishment of a Transfer, and "Transferee"
means the recipient or intended recipient of a Transfer.
"Transferring Stockholder" has the meaning specified in Section 3.2.
ARTICLE II REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of
the Stockholders, individually and not jointly, hereby represents, warrants and
covenants to the Company as follows: (a) such Stockholder has full authority
and power and, if an individual, capacity, under its charter, by-laws, governing
partnership agreement or comparable document, as applicable, to enter into this
Agreement; (b) this Agreement constitutes the valid and binding obligation of
such Stockholder; and (c) the execution, delivery and performance by such
Stockholder of this Agreement: (i) does not and will not violate any laws, rules
or regulations of the United States or any state or other jurisdiction
applicable to such Stockholder, or require such Stockholder to obtain any
approval, consent or waiver of, or to make any filing with, any Person that has
not been obtained or made (other than filings or approvals that may have to be
made or obtained in connection with any acquisition or disposition of Shares by
an Investor that is a regulated institutional investor); and (ii) does not and
will not result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of any indenture or loan
or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which such Stockholder is a party or by
which the property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the assets or properties of such Stockholder.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company,
hereby represents, warrants and covenants to the Stockholders as follows: (a)
the Company has full corporate authority and power to enter into this Agreement;
(b) this Agreement constitutes the valid and binding obligation of the Company
enforceable against it in accordance with its terms; and (c) the execution,
delivery and performance by the Company of this Agreement: (i) does not and will
not violate any laws, rules or regulations of the United States or any state or
other jurisdiction applicable to the Company or any of its subsidiaries, or
require the Company or any of its subsidiaries to obtain any approval, consent
or waiver of, or to make any filing with, any
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Person that has not been obtained or made; and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under or
give rise to a right of termination of any indenture or loan or credit agreement
or any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which the Company or any of its subsidiaries is a party
or by which the property of the Company or any of its subsidiaries is bound or
affected, or result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the assets or
properties of the Company or any of its subsidiaries.
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
AND DRAG-ALONG PROVISIONS
SECTION 3.1. RESTRICTIONS ON TRANSFER. No Transfers of any Shares shall
be made except in accordance with all applicable provisions of the Securities
Act and any relevant state securities law. In addition, each Stockholder agrees
that he, she or it will not, without the prior written consent of the holders of
both (i) sixty-six and two-thirds percent (662/3%) of the issued and outstanding
shares of Common Stock and (ii) sixty-six and two-thirds percent (662/3%) of the
issued and outstanding shares of Preferred Stock, Transfer all or any portion of
the Shares now owned or hereafter acquired by it or him, except in connection
with, and strictly in compliance with the conditions of, any of the following:
(a) Transfers effected pursuant to Sections 3.2 and 3.3 and 3.4,
in each case made in accordance with the procedures set forth therein;
(b) Any Transfers by a Stockholder to his or her spouse or
children or to a trust of which he is the settlor and a trustee for the
benefit of his or her spouse or children, PROVIDED that any such trust does
not require or permit distribution of such Shares during the term of this
Agreement, and PROVIDED FURTHER that the Transferee shall have executed and
delivered a Joinder Agreement in the form attached hereto as EXHIBIT A;
(c) Transfers upon the death of any Stockholder to his or her
heirs, executors or administrators or to a trust under his or her will or
Transfers between such Stockholder and his or her guardian or conservator,
PROVIDED that the Transferee shall have executed and delivered a Joinder
Agreement in the form attached hereto as EXHIBIT A;
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(d) Transfers pursuant to a public offering of the Company's
Common Stock registered under the Securities Act effected in accordance
with the terms of the Registration Rights Agreement;
(e) With respect to any of the Investors, a Transfer to any
other Investor or to a partner or Affiliate of such Investor (other than
the Company) or to any other investment fund or other entity for which such
Investor and/or one or more partners thereof, directly or indirectly
through one or more intermediaries, serve as general partner or manager or
in a like capacity, PROVIDED that the Transferee shall have executed and
delivered a Joinder Agreement in the form attached hereto as EXHIBIT A; and
(f) In the event that Toronto Dominion Capital (U.S.A.), Inc.
("Toronto Dominion"), EOS Partners SBIC, L.P. ("EOS") or BancBoston
Ventures Inc. ("BancBoston") reasonably determines that it has a Regulatory
Problem (as defined below), each of Toronto Dominion, EOS and BancBoston
shall have the right to (i) Transfer its Shares to a non-Affiliate of the
Company and the other Stockholders, PROVIDED that the transferee shall have
executed and delivered a Joinder Agreement in the form attached hereto as
EXHIBIT A, or (ii) exchange their Shares for non-voting securities in the
Company with the same economic rights, and the Company shall take all such
actions as are reasonably requested by Toronto Dominion, EOS and BancBoston
in order to (a) effectuate and facilitate any such Transfer or (b) permit
Toronto Dominion, EOS and/or BancBoston, as the case may be, to exchange
for all or any portion of their Shares on a share-for-share basis for
shares of non-voting securities of the Company, which non-voting securities
shall be identical in all respects to the Shares exchanged for it, except
that such exchanged securities shall be non-voting and shall be convertible
into voting securities on such terms as are reasonably requested by Toronto
Dominion, EOS and/or BancBoston, as the case may be, in light of regulatory
considerations then prevailing and do not alter the economic interests of
the parties hereto. For purposes of this Agreement, a "Regulatory Problem"
means any set of facts or circumstances wherein it has been asserted by any
governmental authority, including by the United States Small Business
Administration (the "SBA"), and any successor agency satisfactory to the
Company performing the functions thereof (or, based on written advice of
counsel satisfactory to the Company, Toronto Dominion, EOS and/or
BancBoston reasonably believes that there is a substantial risk of such
assertion), that, pursuant to the Small Business Act of 1958, as amended,
and the regulations issued by the SBA thereunder, codified at Title 13 of
the Code of Federal Regulations, Parts 107 and 121 (the "SBIC
Regulations"), or pursuant to the Bank Holding Company Act, as amended, and
the regulations issued thereunder, Toronto Dominion, EOS or BancBoston, as
applicable, is not entitled to hold all or a portion of the Preferred Stock
or Common Stock held by it.
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Any permitted Transferee described in the preceding clauses (b), (c), (e)
or (f) shall be referred to herein as a "Permitted Transferee." Anything
to the contrary in this Agreement notwithstanding, Permitted Transferees
shall take any Shares so Transferred subject to all provisions of this
Agreement as if such Shares were still held by the Transferring
Stockholder, whether or not they so agree with the Transferring Stockholder
and/or the Company. Without limitation of the foregoing, in connection
with any otherwise permitted transfer of Shares that are restricted shares
subject to any stock restriction or vesting agreement, any Permitted
Transferee of any such Shares shall agree in writing to be bound by the
terms of such stock restriction, vesting or similar agreement, including,
without limitation, any repurchase or similar right contained therein.
SECTION 3.2. RIGHT OF LAST REFUSAL. In the event that any of the
Stockholders, including any of their Permitted Transferees, receives a bona fide
offer to purchase all or any portion of the Shares held by such Stockholder (a
"Transaction Offer") from a non-Affiliate (the "Offeror") in a transaction not
expressly permitted under Section 3.1, such Stockholder (a "Transferring
Stockholder") may, subject to the provisions of Section 3.3 hereof, Transfer
such Shares pursuant to and in accordance with the following provisions of this
Section 3.2:
(a) Such Transferring Stockholder shall cause the Transaction
Offer and all of the terms thereof to be reduced to writing and shall
notify each Preferred Investor of its wish to accept the Transaction Offer
and otherwise comply with the provisions of this Section 3.2 and, if
applicable, Section 3.3 (such notice, the "Offer Notice"). The
Transferring Stockholder's Offer Notice shall constitute an irrevocable
offer to sell such shares to the Preferred Investors on the basis described
below at a purchase price equal to the price contained in, and on the same
terms and conditions of, the Transaction Offer. The notice shall be
accompanied by a true copy of the Transaction Offer (which shall identify
the Offeror and all relevant information in connection therewith).
(b) Each Preferred Investor shall have the right (the "Right of
Last Refusal") to offer to purchase up to that number of Shares covered by
the Transaction Offer as shall be equal to the product obtained by
multiplying (i) the total number of Shares subject to the Transaction Offer
by (ii) a fraction, the numerator of which is the total number of Shares of
Common Stock owned by such Preferred Investor on the date of the Offer
Notice on an as converted basis (including any shares of Common Stock that
may be received upon conversion of the Preferred Stock), and the
denominator of which is the total number of Shares of Common Stock then
held by all Preferred Investors (other than the Transferring Stockholder)
on the date of the Offer Notice on an as converted basis, such that
Preferred Investors shall have the right to accept the Transaction Offer
with respect to all or a portion of the shares covered thereby. (The
number of Shares that
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each Preferred Investor is entitled to purchase under this Section 3.2 shall
be referred to as its "Pro Rata Fraction"). In the event that a Preferred
Investor shall elect to purchase all or a part of the Shares covered by the
Transaction Offer (an "Electing Investor"), such Electing Investor shall
individually communicate in writing such election to purchase to the
Transferring Stockholder within thirty (30) days after receipt of the Offer
Notice (which election notice may specify an amount in excess of such
Electing Investor's Pro Rata Fraction in the event that one or more
Preferred Investor(s) desire not to elect to purchase their Pro Rata
Fraction). Such communication shall be delivered by hand or mailed to such
Transferring Stockholder in accordance with Section 6.5 hereof and shall,
when taken in conjunction with the Transaction Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale
and purchase of the Shares covered thereby to the extent of the number of
Shares, if any, allocated to such Electing Investor in accordance with the
following paragraph. In the event that one or more Preferred Investor(s)
do not elect to purchase their full Pro Rata Fraction, then any Preferred
Investors who do so elect shall have an additional five (5) days from the
date the Preferred Investors are notified of the election by any Preferred
Investors not to purchase their Pro Rata Fraction to offer to purchase, on
a pro rata basis with any other Preferred Investors who so elect, any Pro
Rata Fraction not purchased by a Preferred Investor. In the event that the
price set forth in the Offer Notice is stated in consideration other than
cash or cash equivalents, the Board of Directors of the Company may
determine the fair market value of such consideration, reasonably and in
good faith, and the Electing Investors may, at their option, exercise their
Right of Last Refusal by payment of such fair market value in cash or cash
equivalents.
Upon the expiration of thirty (30) days following receipt of the Offer
Notice by all Preferred Investors, the Transferring Stockholder shall
notify all of the Preferred Investors as to how many of the Shares subject
to the Offer Notice have been subscribed for and, after the expiration of
the five (5) day overallotment period thereafter, the number of Shares to
be purchased by each Electing Investor shall be determined as follows: (x)
there shall first be allocated to each Electing Investor a number of Shares
equal to the lesser of (A) the number of Shares as to which such Electing
Investor accepted the Transaction Offer or (B) such Electing Investor's Pro
Rata Fraction, and (y) the balance, if any, not allocated under clause (x)
above, shall be allocated to those Electing Investors who accepted the
Transaction Offer as to a number of Shares which exceeded their respective
Pro Rata Fractions, in each case on a pro rata basis in proportion to the
amount of such excess. The closing for any purchase of Shares to the
Electing Investors hereunder shall take place within thirty (30) days after
the expiration of the first thirty-day period following the Electing
Investors' receipt of the Offer Notice (and, if applicable, the additional
five (5) day overallotment period) at the place and on the date specified
by a majority-in-interest of the Electing Investors.
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(c) In the event that the Preferred Investors do not elect to
exercise, in the aggregate, the Right of Last Refusal with respect to all
of the Shares proposed to be sold, the Transferring Stockholder may sell
all such Shares proposed to be sold to the Offeror on the terms and
conditions set forth in the Offer Notice, subject to the restrictions set
forth in the last paragraph of Section 3.1 and the further provisions of
Section 3.3. If the Transferring Stockholder's transfer to an Offeror is
not consummated in accordance with the terms of the Transaction Offer
within the later of (i) ninety (90) days after the expiration of the
periods for exercise by the Preferred Stockholders of the Right of Last
Refusal and the Co-Sale Option set forth in Section 3.3 below, if
applicable, and (ii) the satisfaction of all governmental approval or
filing requirements, the Transaction Offer shall be deemed to lapse, and
any Transfers of Shares pursuant to such Transaction Offer shall be deemed
to be in violation of the provisions of this Agreement unless the Preferred
Investors are once again afforded the Right of Last Refusal provided for
herein with respect to such Transaction Offer.
SECTION 3.3. CO-SALE OPTION. In the event that any Transferring
Stockholder receives a Transaction Offer from an Offeror, and the Right of Last
Refusal is not exercised with respect to all of the Shares proposed to be sold,
such Transferring Stockholder may Transfer such Shares only pursuant to and in
accordance with the following provisions of this Section 3.3:
(a) Each of the Investors and the Founding Stockholders, other
than the Transferring Stockholder if it, he or she is also an Investor or
Founding Stockholder, shall have the right, subject to the provisions of
Section 3.3(f) below, to participate in the Transaction Offer on the terms
and conditions herein stated, which right shall be exercisable upon written
notice to the Transferring Stockholder within the later of (i) thirty (30)
days after delivery to it of the Offer Notice and (ii) ten (10) days after
the Transferring Stockholder notifies the Investors and the Founding
Stockholders in writing that the Preferred Investors have not collectively
elected to exercise the Right of Last Refusal with respect to all of the
Shares proposed to be sold (the "Co-Sale Option").
(b) Each of the Investors and the Founding Stockholders, other
than the Transferring Stockholder if it, he or she is also an Investor or
Founding Stockholder (each such Investor and Founding Stockholder, a
"Selling Investor"), shall have the right, subject to the provisions of
Section 3.3(f) below, to sell a portion of its Shares pursuant to the
Transaction Offer which is equal to or less than the product obtained by
multiplying (i) the total number of Shares subject to the Transaction Offer
by (ii) a fraction, the numerator of which is the total number of Shares of
Common Stock owned by such Selling Investor on the date of the Offer Notice
on an as converted basis (including any Shares of Common Stock that may be
received upon conversion of the Preferred Stock), and the denominator of
which is the total number of Shares of Common Stock then held
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by all Investors, Founding Stockholders and the Transferring Stockholder on
the date of the Offer Notice on an as converted basis (including any Shares
of Common Stock that may be received upon conversion of the Preferred
Stock). To the extent one or more Investors and/or Founding Stockholders
elect not to sell, or fail to exercise their right to sell, the full amount
of such Shares which they are entitled to sell pursuant to this Section
3.3, the other Investors' and/or Founding Stockholders' rights to sell
Shares shall be increased proportionately and the other Investors and/or
Founding Stockholders shall have an additional five (5) days from the date
upon which they are notified of such election or failure to exercise in
which to increase the number of Shares to be sold by them hereunder.
(c) Within ten (10) days after the date by which the Investors
and the Founding Stockholders were first required to notify the
Transferring Stockholder of their intent to participate, the Transferring
Stockholder shall notify each Selling Investor of the number of Shares held
by such Selling Investor that will be included in the sale and the date on
which the Transaction Offer will be consummated, which shall be no later
than the later of (i) thirty (30) days after the date by which the Selling
Investors were required to notify the Transferring Stockholder of their
intent to participate and (ii) the satisfaction of any governmental
approval or filing requirements, if any.
(d) Each of the Selling Investors may effect its participation
in any Transaction Offer hereunder by delivery to the Offeror, or to the
Transferring Stockholder for delivery to the Offeror, of one or more
instruments or certificates, properly endorsed for transfer, representing
the Shares it elects to sell therein. At the time of consummation of the
Transaction Offer, the Offeror shall remit directly to each Selling
Investor that portion of the sale proceeds to which each Selling Investor
is entitled by reason of its participation therein (less any adjustments
due to the conversion of any convertible securities or the exercise of any
exercisable securities).
(e) In the event that the Transaction Offer is not consummated
within the period required by subsection (c) hereof or the Offeror fails to
timely remit to each Selling Investor its portion of the sale proceeds, the
Transaction Offer shall be deemed to lapse, and any Transfers of Shares
pursuant to such Transaction Offer shall be deemed to be in violation of
the provisions of this Agreement unless the Transferring Stockholder once
again complies with the provisions of Section 3.2 and this Section 3.3
hereof with respect to such Transaction Offer.
(f) To the extent that any Investor or Founding Stockholder
holds Shares ("Junior Shares") which are junior or inferior in terms of
rights to the Shares subject to purchase under such Transaction Offer
(e.g., the Common Stock is junior to the Preferred
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Stock and the Diluted Convertible Preferred Stock is junior to the
Preferred Stock), the right of such Investor or Founding Stockholder to
participate in a Transaction Offer and to sell a portion of its Shares
pursuant to such Transaction Offer shall be conditioned upon either (i) the
consent of the Offeror to purchase such Junior Shares on the same terms and
conditions (including price) stated in the Transaction Offer or (ii) the
willingness of the Offeror to purchase such Junior Shares on such other
terms and conditions as may be acceptable to such Investor or Founding
Stockholder, as the case may be, provided that in either case such consent
or agreement is obtained within the specified time period set forth in
subsection (c) hereof. Nothing herein shall be construed to impose any
"good faith" or other obligation on the Offeror (or any Transferring
Stockholder or Selling Investor) to grant such consent or negotiate such
agreement.
SECTION 3.4. DRAG-ALONG OBLIGATIONS.
(a) In the event that Investors holding both (i) the applicable
percentage of the issued and outstanding Shares of Common Stock (treating
for such purposes each share of issued and outstanding Preferred Stock as
the number of issued and outstanding Conversion Shares into which such
Preferred Stock may be converted) specified below and (ii) sixty-six and
two-thirds percent (662/3%) of the issued and outstanding Shares of
Preferred Stock determine (A) to sell or otherwise dispose of all or
substantially all of the assets of the Company, or Shares representing a
majority of the Common Stock on a fully-diluted, as converted basis, to any
non-Affiliate(s) of the Company or any of the Investors, or (B) to cause
the Company to merge with or into or consolidate with any non-Affiliate(s)
of the Company or any of the Investors (in each case, the "Buyer") in a
bona fide negotiated transaction (a "Sale"), each of the Stockholders,
including any of their respective Permitted Transferees, shall be obligated
to and shall upon the written request of Investors holding both (x) the
applicable percentage of the issued and outstanding Shares of Common Stock
(treating for such purposes each share of issued and outstanding Preferred
Stock as the number of issued and outstanding Conversion Shares into which
such Preferred Stock may be converted) specified below and (y) sixty-six
and two-thirds percent (662/3%) of the issued and outstanding Shares of
Preferred Stock: (I) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to the Buyer, his, her or its Shares (including
for this purpose all of such Stockholder's Shares that presently or as a
result of any such transaction may be acquired upon the exercise of options
(following the payment of the exercise price therefore)) on substantially
the same terms applicable to the Investors (with appropriate adjustments to
reflect the conversion of convertible securities, the redemption of
redeemable securities and the exercise of exercisable securities as well as
the relative preferences and priorities of the Preferred Stock); and (II)
execute and deliver such instruments of conveyance and transfer and take
such other action, including voting such Shares in favor of any Sale
proposed by the Investors and executing any purchase agreements, merger
agreements,
11
indemnity agreements, escrow agreements or related documents, as the
Investors or the Buyer may reasonably require in order to carry out the
terms and provisions of this Section 3.4.
For purposes of this Section 3.4(a), the applicable percentage of the
Shares of the issued and outstanding Common Stock (treating for such
purposes each share of issued and outstanding Preferred Stock as the number
of issued and outstanding Conversion Shares into which such Preferred Stock
may be converted) shall mean the following percent for the following
periods:
PERIOD PERCENT
Closing Date through December 31, 1996 66.0%
January 1, 1997 through March 31, 1997 64.5%
April 1, 1997 through June 30, 1997 63.0%
July 1, 1997 through September 30, 1997 61.5%
October 1, 1997 through December 31, 1997 60.0%
January 1, 1998 through March 31, 1998 58.5%
April 1, 1998 through June 30, 1998 57.0%
July 1, 1998 through September 30, 1998 55.5%
October 1, 1998 through December 31, 1998 54.0%
January 1, 1999 through March 31, 1999 52.5%
April 1, 1999 and thereafter 51.0%
(b) In the event of a Sale to a Buyer as contemplated in Section
3.4(a) above, each of the Founding Stockholders shall, in the event that
the Investors do not exercise their "drag-along" rights in Section 3.4(a)
above, have the right to require the Investors to include such Founding
Stockholder's Shares in the Sale on the same terms and conditions,
including price and type, as the Investors' Shares, which such right shall
be exercisable by the delivery of written notice to the Company and each of
the Investors at least fifteen (15) days prior to the date proposed for the
closing of the Sale.
(c) Not less than thirty (30) days prior to the date proposed
for the closing of any Sale, the Investors shall give written notice to
each Founding Stockholder, setting forth in reasonable detail the name or
names of the Buyer, the terms and conditions of the Sale, including the
purchase price, and the proposed closing date. In furtherance of the
provisions of this Section 3.4, each of the Founding Stockholders hereby
(i) irrevocably appoints BEDCO (as defined below) as its agent and
attorney-in-fact (the "Agent") (which such appointment shall be deemed
coupled with an interest and irrevocable and have full power of
substitution) to execute all agreements, instruments and
12
certificates and take all actions necessary or desirable to effectuate any
Sale hereunder, and (ii) grants to the Agent a proxy (which shall be deemed
to be coupled with an interest and irrevocable) to vote the Shares held by
such Stockholder and exercise any consent rights applicable thereto in
favor of any Sale hereunder; PROVIDED, HOWEVER, that the Agent shall not
exercise such powers-of-attorney or proxies with respect to any Stockholder
unless such Stockholders are in breach of their obligations under this
Section 3.4.
(d) Each Stockholder participating in the Sale pursuant to the
"drag-along" rights in Section 3.4(a) shall deliver to the Buyer at a
closing to be held at the offices of the Company (or such other place as
the parties agree), one or more certificates, properly endorsed for
transfer, representing all the Shares (including vested options) owned by
such Stockholder, and each such Stockholder shall make such representations
and warranties, and shall enter into such agreements, as are customary and
reasonable in the context of the Sale, including, without limitation,
representations and warranties (and indemnities with respect thereto) that
the Buyer (or interests therein) is receiving good and marketable title to
such Shares (or interests therein), free and clear of all pledges, security
interests or other liens. In addition, the Stockholders shall reasonably
cooperate and consult with each other in order to effect the Sale described
in this Section 3.4, including the determination of the appropriate scope
of, or limitations or exceptions to, representations and warranties to be
made in connection with such Sale and the preparation of disclosure
schedules with respect thereto.
SECTION 3.5 CONTEMPORANEOUS TRANSFERS. If two or more Stockholders
propose concurrent transfers which are subject to this Article III, then the
relevant provisions of Sections 3.2 and 3.3 shall apply separately to each such
proposed transfer.
SECTION 3.6. PROHIBITED TRANSFERS. If any Transfer is made or attempted
contrary to the provisions of this Agreement, such purported Transfer shall be
void AB INITIO; the Company, the Investors and the other Stockholders shall
have, in addition to any other legal or equitable remedies which they may have,
the right to enforce the provisions of this Agreement by actions for specific
performance (to the extent permitted by law); and the Company shall have the
right to refuse to recognize any Transferee as one of its stockholders for any
purpose. Without limitation of the foregoing, each of the Investors and
Stockholders further agrees that the provisions of Section 7.9 shall apply in
the event of any violation or threatened violation of this Agreement.
SECTION 3.7. EXCHANGE OF VOTING SECURITIES FOR NON-VOTING SECURITIES FOR
BANK HOLDING COMPANY ACT PURPOSES.
(a) As long as any Shares of Class B Common Stock are outstanding,
before the Company redeems, purchases or otherwise acquires, directly or
indirectly, or converts
13
or takes any action with respect to the voting rights of, any shares of any
class of its capital stock or any securities convertible into or
exchangeable for any shares of any class of its capital stock (other than
(i) a conversion of Class B Common Stock into Class A Common Stock, (ii) a
conversion of shares of Preferred Stock into shares of Common Stock and
(iii) a conversion of shares of Series A Preferred Stock into shares of
Diluted Convertible Preferred Stock), the Company shall give written notice
of such pending action to each holder of Shares of Class B Common Stock.
Upon the written request of any such holder made within ten (10) days after
its receipt of any such notice, stating that after giving effect to such
action such holder would have a Regulatory Problem, the Company shall defer
taking such action for such period (not to extend beyond thirty (30) days
after such holder's receipt of the Company's original notice) as such
holder reasonably requests to permit it and its Affiliates to reduce the
quantity of the Company's voting securities they own in order to avoid the
Regulatory Problem. For purposes of this Section 3.7 only, a "Regulatory
Problem" (as defined in Section 3.1(f)) shall not include prohibitions
arising under the SBIC Regulations.
(b) At the request of Toronto Dominion or any of its affiliates at
any time (whether in connection with any action by the Company referred to
in subparagraph (a) above or otherwise), the Company shall exchange with
such Investor for such number of shares of Class A Common Stock then held
by such Investor as it designates a like number of Shares of Class B Common
Stock. In the event of any such exchange of Shares of Class B Common Stock
for Shares of Class A Common Stock, the holders of such Shares of Class B
Common Stock shall be entitled to all the rights which such holders had
pursuant to this Agreement, the Stock Purchase Agreement and the
Registration Rights Agreement as holders of Class A Common Stock
(including, without limitation, the right to have such shares treated as
"Class B Common Stock" and as shares that may be converted into
"Registrable Securities," as applicable).
ARTICLE IV RIGHTS TO PARTICIPATE IN FUTURE ISSUANCES
The Company hereby covenants and agrees that it will not sell or issue any
shares of capital stock of the Company, or other securities convertible into or
exchangeable for capital stock of the Company, or options, warrants or rights
carrying any rights to purchase capital stock of the Company (the "Additional
Equity Securities"), other than Excluded Offerings (as defined below), unless
the Company first notifies the Investors of the proposed issuance of Additional
Equity Securities and submits an offer to the Investors identifying the terms of
the proposed sale (including price, number or aggregate principal amount of
securities and all other material terms), and offers to each Investor the
opportunity to purchase its pro rata share of such Additional Equity Securities.
Each Investor's pro rata share of any such Additional Equity Securities shall be
based upon the ratios which the Shares of Common Stock held by such Investor
(determined on
14
an as converted basis after giving effect to the conversion of any Preferred
Stock) bears to all of the Shares of the Company determined on a fully-diluted,
as converted basis. For purposes of this Article IV, "Excluded Offerings" shall
consist of (i) issuances made in connection with an acquisition of a
non-Affiliate of the Company (whether by acquisition of assets or capital stock,
merger or consolidation) or a joint venture or strategic alliance with a
non-Affiliate of the Company, (ii) issuances made to officers, directors,
employees, consultants or agents of the Company pursuant to the Company's 1995
Stock Option Plan, the Company's 1996 Stock Option Plan (together, the "Plans")
or other compensation plans which have been adopted and approved by the
Compensation Committee of the Board of Directors, (iii) Conversion Shares issued
upon the conversion of the Preferred Stock, (iv) capital stock issued upon the
exercise, conversion or exchange of Additional Equity Securities that were
previously sold in compliance with the terms of this Article IV, (v) shares
issued in connection with a duly authorized stock split, stock dividend or
recapitalization, (vi) Diluted Convertible Preferred Stock issued in accordance
with the Charter and (vii) warrants issued to any institutional lender in
connection with any debt financing permitted under the Purchase Agreement.
The Company's offer to the Investors shall be irrevocable and remain open
for a period of thirty (30) days. Each Investor electing to purchase any
Additional Equity Securities shall provide a written notice to the Company
within such period indicating the amount it elects to purchase (which notice may
specify an amount in excess of such Investors pro rata share of the Additional
Equity Securities in the event that other Investors do not elect to purchase
their full pro rata share). Any Additional Equity Securities so offered to the
Investors and which are not purchased pursuant to such offer shall be sold to
the Investors which have elected to purchase in excess of their pro rata share
based upon their relative excess purchase indications and, if any Additional
Equity Securities remain unpurchased, may be sold by the Company to any other
Person on terms and conditions, including price, not more favorable to such
Person than those set forth in such offer within ninety (90) days of the date of
such offer. In the event that the Company has not sold the Additional Equity
Securities within such ninety-day period, the Company shall not thereafter issue
or sell such Additional Equity Securities without first complying with the terms
of this Article IV.
ARTICLE V ELECTION OF DIRECTORS
SECTION 5.1. BOARD COMPOSITION. The number of directors of the Company
shall be as set forth in the By-laws of the Company, and the Stockholders agree
to vote all of their respective shares, and to take such other actions as are
necessary, so as to fix the number of directors at no more than eight (8)
directors initially, subject to increase to nine (9) directors as provided
herein. The Stockholders agree to vote their respective shares as follows:
15
(a) The Preferred Investors shall vote as a class to elect two
directors as follows:
(i) one (1) individual nominated by BancBoston Ventures
Inc. ("BancBoston"), who shall initially be, and is duly elected
hereby, ▇▇▇▇▇ ▇▇▇▇▇▇ (the "BancBoston Nominee"), and hereafter
such individual as shall be designated by BancBoston; and
(ii) one (1) individual nominated by GCC Investments, Inc.
("GCC"), who shall initially be, and is duly elected hereby,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "GCC Nominee"), and hereafter such
individual as shall be designated by GCC.
(b) The Stockholders, including the Preferred Investors, shall vote
together as one class to elect the remaining six (6) of the directors, as
follows:
(i) one (1) individual nominated by the Founding Stockholders,
who shall initially be ▇▇▇▇▇ ▇. Queen;
(ii) one (1) individual nominated by Burr, Egan, Deleage & Co.,
and its Affiliates ("BEDCO"), who shall initially be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
(iii)one (1) individual nominated by EOS Partners, L.P.,
SBIC, who shall initially be ▇▇▇▇ ▇. ▇▇▇▇▇▇;
(iv) one (1) individual nominated by Kingdon Associates, L.P.,
and its Affiliates, who shall initially be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇;
(v) one (1) individual nominated by Associated RT, Inc., who
shall initially be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and
(vi) one (1) individual nominated by the holders of a majority of
the Class A Common Stock issued under the Stock Purchase Agreement
dated November 14, 1995 by and between the Company and the parties
identified therein (the "1995 Stock Purchase Agreement"); provided,
however, that upon receipt by Toronto Dominion or an Affiliate thereof
of its Small Business Investment Company license from the SBA (the
"T-D SBIC"), the holders of a majority of the Shares issued to Toronto
Dominion under the 1995 Stock Purchase Agreement and held by such T-D
SBIC shall have the right to nominate any one individual to
16
be a director in lieu of any person previously designated to fill such
remaining directorship. Notwithstanding any provision herein, Toronto
Dominion shall not have the right to transfer to any third party its
right to nominate a Director under this Section 5.1(b) without the
affirmative vote of a majority of the members of the Board of
Directors (other than any directors nominated by, or representing,
Toronto Dominion), if such transfer is made in connection with a
transfer by Toronto Dominion of its Shares under Section 3.1(f)
hereof.
(c) As soon as the Board of Directors, in its sole discretion, has
identified a director candidate who is not an Affiliate of either the Company or
any of the Stockholders and who has operating experience in the Company's
industry (the "Outside Nominee"), but in any event no later than June 30, 1997,
the Stockholders hereby agree that the Board of Directors shall thereupon be
increased to nine (9) and agree to vote their respective Shares for such
additional Director in favor of the Outside Nominee or such successor or
replacement individual as shall be designated from time to time by a majority of
the other Directors designated hereunder.
SECTION 5.2. COMPENSATION COMMITTEE; AUDIT COMMITTEE. The Company and
each of the Stockholders further agrees to cause the Board of Directors to
appoint and maintain a Compensation Committee of the Board of Directors which
shall have exclusive authority over all compensation and employment matters and
the administration of the Plans; PROVIDED, HOWEVER, that the Compensation
Committee may delegate standing authority to the Chief Executive Officer of the
Company to issue stock options and other compensation to consultants who are not
Affiliates of either the Company or any of the Stockholders on terms set forth
in such delegation. The Compensation Committee shall consist of no more than
three (3) persons, one of whom shall be the BancBoston Nominee. The Company and
each of the Stockholders further agrees to cause the Board of Directors to
appoint and maintain an Audit Committee of the Board of Directors which shall be
charged with, among other matters, reviewing the Company's financial statements
and accounting practices and which shall consist of no more than two (2)
persons, one (1) of which shall be the GCC Nominee and each of whom shall be
non-management members of the Board of Directors. Except as expressly set forth
herein, the Company and each of the Stockholders hereby further agrees to cause
the Board of Directors not to create any other committee thereof and not, except
as set forth above, to delegate any other action or authority to any existing
committee thereof.
SECTION 5.3. REMOVAL. Each Stockholder agrees to vote all of its shares
of the Company's capital stock having voting power (and any other shares over
which she or it exercises voting control) for the removal of any director upon
the request of the stockholder or group designating such director and for the
election to the Board of Directors of a substitute designated by such party in
accordance with the provisions of Section 5.1 hereof.
17
SECTION 5.4. VACANCIES. Each Stockholder agrees to vote all shares of
the Company's capital stock having voting power (and any other shares over which
she or it exercises voting control) in such manner as shall be necessary or
appropriate to ensure that any vacancy on the Board of Directors of the Company
(occurring for any reason) shall be filled only in accordance with the
provisions of this Article V. In addition, if any Investor which is entitled to
nominate a member of the Board of Directors pursuant to the terms of Section 5.1
fails to do so within ninety (90) days after receipt of written notice from the
Company that such directorship becomes vacant, then the holders of a majority of
the issued and outstanding Common Stock (treating for such purposes each share
of issued and outstanding Preferred Stock as the number of issued and
outstanding Conversion Shares into which such Preferred Stock may be converted)
shall nominate such director (a "Replacement Director") and the Replacement
Director shall serve as a member of the Board of Directors until such Investor
exercises its rights under Section 5.1 to nominate a director, in which event
the Replacement Director shall be removed.
SECTION 5.5. INCREASE IN SIZE OF BOARD. Any increase in the size of the
Board of Directors (other than the increase from eight (8) to nine (9)
contemplated by Section 5.1(c) hereof) shall require an amendment to this
Agreement.
SECTION 5.6. ASSIGNMENT. Each Stockholder agrees, as a condition to any
Transfer of its Shares, to cause the Transferee to agree to the provisions of
this Article V, whereupon such Transferee shall be subject to the provisions
hereof as a Preferred Investor or Stockholder, as applicable, in connection with
its ownership of the Shares Transferred for purposes of this Article V.
SECTION 5.7. NO WAIVER. Any failure by any of the parties hereto to
fully exercise their rights to designate one or more directors under this
Article V at any time shall not be construed to waive or limit their rights to
designate such director(s) hereunder at any time thereafter.
SECTION 5.8. BOARD OF DIRECTORS OF SUBSIDIARY. Each of the Stockholders
agrees, with respect to the composition, election, removal and other
considerations with respect to the Board of Directors of the Company's
subsidiary, Teletrac License, Inc., to cause the Company to vote, and the
Company hereby agrees to vote, its shares of capital stock of such subsidiary in
a manner consistent with and identical to the provisions set forth above in this
Article V.
SECTION 5.9. EXPENSES. The Company hereby agrees to reimburse each
member of the Board of Directors for his or her reasonable and documented travel
and other out-of-pocket expenses (to the extent consistent with the Company's
policies related thereto, which do provide for reimbursement of directors'
travel expenses and which have been delivered to the Investors prior to the date
hereof) incurred in connection with matters relating to such director's
attendance
18
at meetings of the Board of Directors or performing such other business on
behalf of the Company.
SECTION 5.10. OBSERVER RIGHTS. For so long as any Investor and its
Affiliates (i) owns at least five percent (5%) of the issued and outstanding
Common Stock of the Company (treating for such purposes each share of issued and
outstanding Preferred Stock as the number of issued and outstanding Conversion
Shares into which such Preferred Stock may be converted) and (ii) does not have
a representative serving on the Board of Directors pursuant to Section 5.1
hereof, such Investor (or an Affiliate thereof) shall be entitled to notice of
and to have one representative (an "Observer") attend, at its own expense,
meetings of the Board of Directors or any of its committees; PROVIDED, HOWEVER,
that any such Observer (a) shall not be entitled to participate in the
discussions, deliberations or voting of the Board of Directors or such
committees and (b) shall be excluded from any meetings or deliberations if the
Board of Directors reasonably determines that the inclusion of such Observer
might compromise or waive the attorney-client privilege for any material matters
discussed therein.
ARTICLE VI RESTRICTIONS AND LIMITATIONS
The Company shall not, without the affirmative vote or written consent of
the holders of a majority of the issued and outstanding shares of Common Stock
and Preferred Stock, voting as a single class on an as converted basis (and, to
the extent expressly provided herein, the affirmative vote or consent of a
greater percentage of holders of Preferred Stock voting separately):
(a) Authorize or issue, or obligate itself to issue, any other equity
security senior to or on a parity with the Preferred Stock as to
liquidation preferences, redemptions or dividend rights or with any special
voting rights (other than with respect to issuances of any Diluted
Convertible Preferred Stock);
(b) Incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any new or additional indebtedness or
liability (except to the extent expressly permitted under the Purchase
Agreement);
(c) Redeem, purchase or otherwise acquire for value (or pay into or
set aside for a sinking fund for such purpose) any shares of Common Stock
or of any other class of capital stock of the Company or any of the
Company's outstanding options, warrants or convertible or exchangeable
securities, except for repurchases of shares of Common Stock at cost by the
Company under employee stock plans and programs approved by the Board of
Directors;
19
(d) Enter into any transaction or agreement with: any officer,
director or shareholder of the Company or any wholly- or partially-owned
subsidiary of the Company, or any entity that controls, is controlled by or
under common control with, the Company, except for any transaction or
agreement on terms no less favorable to the Company than would be available
in a bona fide arm's-length transaction with a non-affiliated person or
entity and which has been approved by the Audit Committee of the Board of
Directors of the Company;
(e) Authorize any merger or consolidation of the Company with or into
any other corporation, partnership or entity (with respect to which less
than a majority of the outstanding voting power of such surviving
corporation is held by stockholders of the Company immediately prior to
such event) or permit the sale of all or any material portion of the
capital stock or assets of the Company (other than sales in the ordinary
course of business and consistent with past practices);
(f) Authorize or permit the reorganization, liquidation, dissolution
or winding up of the Company, without the vote or affirmative written
consent of holders of both a majority of the issued and outstanding shares
of Common Stock and sixty-six and two-thirds percent (662/3%) of the
outstanding shares of Preferred Stock;
(g) Without the vote or affirmative written consent of holders of
eighty percent (80%) of the outstanding shares of Preferred Stock, amend
the charter documents of the Company so as to adversely affect the rights
of the holders of Preferred Stock with respect to dividends, liquidation
preferences or redemption, or, without the vote or affirmative written
consent of holders of at least sixty-six and two-thirds percent (662/3%) of
the outstanding shares of Preferred Stock, amend the charter documents or
by-laws of the Company in any manner that adversely affects any other
preferences, powers, rights or privileges of the Preferred Stock; or
(h) Increase or decrease (other than by conversion as permitted
hereby) the total number of authorized shares of Preferred Stock.
ARTICLE VII MISCELLANEOUS PROVISIONS
SECTION 7.1. SURVIVAL OF REPRESENTATIONS AND COVENANTS. Each of the
parties hereto agrees that each representation, warranty, covenant and agreement
made by each of them in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be deemed
to have been relied upon by the other parties and shall remain operative and in
full force and effect after the date hereof regardless of any investigation.
20
This Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties hereto and their respective successors and
permitted assigns to the extent contemplated herein.
SECTION 7.2. TERM. This Agreement and the provisions herein contained
shall remain in effect until the earlier of: (i) the closing of a Qualified
Public Offering; (ii) the closing of a Public Offering (as defined in Section
4(b) of the terms of the Preferred Stock contained in the Charter); or (iii) a
sale of the Company.
SECTION 7.3. LEGEND ON SECURITIES. The Company, the Preferred Investors
and the Stockholders acknowledge and agree that the following legend shall be
typed on each certificate evidencing any of the securities held at any time by
any of the Stockholders or their Permitted Transferees:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR
THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THESE
SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS OF A CERTAIN STOCKHOLDERS'
AGREEMENT, DATED AS OF DECEMBER __, 1996, INCLUDING CERTAIN RESTRICTIONS ON
TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
SECTION 7.4. AMENDMENT AND WAIVER. Any party may waive any provision
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to any party hereto
at law or in equity or otherwise. This Agreement may be amended with the prior
written consent of the Company and the holders of sixty-six and two-thirds
percent (66 2/3%) of each of the Common Stock and the Preferred Stock; PROVIDED,
HOWEVER, that any amendment which directly, materially and adversely affects any
right specifically granted to a particular Investor or Stockholder in a manner
different than the other Investors or Stockholders shall not be effective unless
such Person has consented to that amendment. All actions by the Company
hereunder shall be taken by or upon the direction of a majority of the directors
designated, from time to time, pursuant to Article V hereof.
21
SECTION 7.5. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the address set forth opposite each party's name on
the signature page hereto (or at such other address for any party as shall be
specified by notice given in accordance with the provisions hereof, provided
that notices of a change of address shall be effective only upon receipt
thereof. Notices delivered personally shall be effective on the day so
delivered, notices sent by registered or certified mail shall be effective three
days after mailing, notices sent by telex shall be effective when answered back,
notices sent by facsimile shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective on the
earlier of the second business day after timely delivery to the courier or the
day of actual delivery by the courier:
SECTION 7.6. ACKNOWLEDGMENT. The Stockholders hereby expressly
acknowledge and consent to the Board of Directors taking any action to sell or
otherwise liquidate the Company in furtherance of its obligations under Section
5(c) of the terms of the Preferred Stock contained in the Charter.
SECTION 7.7. HEADINGS. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
SECTION 7.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which together
shall be deemed to constitute one and the same agreement.
SECTION 7.9. REMEDIES; SEVERABILITY. It is specifically understood and
agreed that any breach of the provisions of this Agreement by any Person subject
hereto will result in irreparable injury to the other parties hereto, that the
remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such
other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by law) and the Company may refuse to
recognize any unauthorized Transferee as one of its stockholders for any
purpose, including, without limitation, for purposes of dividend and voting
rights, until the relevant party or parties have complied with all applicable
provisions of this Agreement.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason,
22
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, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
SECTION 7.10. ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement and other agreements specifically contemplated hereby and
thereby, is intended by the parties as a final expression of their agreement and
intended to be complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Agreement and the Purchase Agreement and the other
agreements contemplated hereby and thereby (including the exhibits hereto and
thereto) supersede all prior agreements and understandings between the parties
with respect to such subject matter. In furtherance of the foregoing, the
Company and the Stockholders expressly agree that the Stockholders' Agreement
dated as of November 14, 1995 by and among the Company and the parties
identified therein is hereby terminated and of no further force and effect.
SECTION 7.11. ADJUSTMENTS. All references to share prices and amounts
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
SECTION 7.12 CERTAIN PROVISIONS APPLICABLE TO SBIC AND BANK STOCKHOLDERS.
Sections 3.1(f) and 3.7 hereof contain certain provisions that are included
herein solely for the benefit of certain Stockholders that are or may become a
small business investment company ("SBIC") subject to the SBA or a bank holding
company or bank holding company subsidiary subject to the Bank Holding Company
Act. A Stockholder may not assert any rights or claims with respect to such
provisions arising at any time after it has ceased to be a SBIC or bank holding
company or bank holding company subsidiary, as appropriate.
SECTION 7.13 PARTICIPATION OF ALIENS. In the event that the Board of
Directors determines, after consultation with legal counsel, that the Company's
capital stock ownership structure (including, without limitation, the percentage
of the Company's capital stock held by or for the account of any Alien or
Aliens, as determined in accordance with applicable rules and policies of the
Federal Communications Commission) violates or otherwise is not in compliance
with Section 310(b) of the Communications Act of 1934, as amended (the
"Communications Act"), each of the parties hereto hereby agrees to cooperate in
good faith, and to use their commercially reasonable, good faith efforts (which
may include seeking waivers of compliance with applicable provisions of the
Communications Act, the exchange or conversion of shares of capital stock held
by any parties hereto that are attributable to Aliens into other securities or
the disposition of such shares of capital stock on such terms as are
commercially reasonable and as may be mutually agreed to by the parties hereto),
to obtain regulatory waivers if available, to
23
negotiate and implement such modifications in the ownership and capital
structure of the Company as may be necessary in order to bring such ownership
and capital structure into full compliance with Section 310(b) of the
Communications Act.
SECTION 7.14. LAW GOVERNING. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware
(without giving effect to any choice or conflicts of law principles the effect
of which would cause the application of the domestic substantive laws of any
other jurisdiction). Each party hereby waives trial by jury in any action
relating to this Agreement.
SECTION 7.15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the successors and assigns hereto and shall inure to the benefit of such
successors and assigns permitted hereunder, provided that any transfer or
assignment shall have complied in all respects with the provisions of Article
III hereof and PROVIDED, FURTHER, that each assignee of a Stockholder's shares
shall, as a condition to such consent to assignment, execute a Joinder Agreement
in the form attached hereto as EXHIBIT A.
24
IN WITNESS WHEREOF, the undersigned have executed this Stockholders'
Agreement as a sealed instrument as of the day and year first written above.
ADDRESS: COMPANY:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ TELETRAC, INC., a Delaware corporation
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President By:___________________________________
Name:
Title:
INVESTORS:
Toronto Dominion Capital TORONTO DOMINION
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇.▇.▇.), INC.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇ By:___________________________________
Name:
Title:
Kingdon Capital Management
Corporation KINGDON ASSOCIATES, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ By: Kingdon Capital Management Corp.,
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ its general partner
By:____________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
25
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS, L.P.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: Kingdon Capital Management Corp.,
its general partner
By:____________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ OFFSHORE NV
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: Kingdon Capital Management Corp.,
its investment advisor
By:____________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
Burr, Egan, Deleage & Co. ALTA SUBORDINATED DEBT
One Embarcadero Center PARTNERS III, L.P.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ By: Alta Subordinated Debt Management
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, L.P.
By:_________________________
General Partner
Burr, Egan, Deleage & Co. ALTA V LIMITED PARTNERSHIP
One Embarcadero Center
Suite 4050 By: Alta V Management Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_________________________
General Partner
26
Burr, Egan, Deleage & Co. CUSTOMS HOUSE PARTNERS
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By:_____________________________
General Partner
Burr, Egan, Deleage & Co. ALTA COMMUNICATIONS VI, L.P.
One Embarcadero Center
Suite 4050 By: Alta Communications VI Management
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Partners, L.P.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_____________________________
General Partner
Burr, Egan, Deleage & Co. ALTA COMM S by S, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ By:_____________________________
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Member
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ EOS PARTNERS SBIC, L.P.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ By: EOS SBIC General, L.P.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
3 Bala Plaza East ASSOCIATED RT, INC.
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:_________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
27
100 Federal Street BANCBOSTON VENTURES INC.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
By:______________________________
Name:
Title:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ VENTURES
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:______________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ WIRELESS, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
Name:
Title:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: Westbury MGP, L.P.,
its general partner
By: ▇.▇. ▇▇▇▇ Co.
By:________________________
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By:_________________________________
Name:
Title:
▇▇▇ ▇.▇. Fifth Avenue HIGH POINT ▇▇▇▇▇▇
Suite 1220 LIMITED PARTNERSHIP
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ By: High Point Management, Inc.,
its general partner
By:_____________________________
Name:
Title:
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇. ▇▇▇▇▇▇
_________________________________
▇. ▇. ▇▇▇▇▇▇
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
FOUNDING STOCKHOLDERS:
c/o Teletrac, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ____________________________________
▇▇▇▇▇ ▇. Queen
29
c/o Teletrac, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Teletrac, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ____________________________________
▇▇▇ ▇▇▇ ▇▇▇▇▇ Mrs. T.N. ▇▇▇▇▇▇▇▇▇▇▇
Kowloon
Hong Kong
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ____________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
c/o Kirkland & ▇▇▇▇▇ K&E PARTNERS II
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:_________________________________
Partner
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, HEWITT,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & KRISTOL
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
By:_________________________________
Partner
30
EXHIBIT A
FORM OF JOINDER AGREEMENT
The undersigned hereby agrees, effective as of the date hereof, to become a
party to that certain Stockholders' Agreement (the "Agreement") dated as of
December __, 1996 by and among Teletrac, Inc. (the "Company") and the parties
named therein and for all purposes of the Agreement, the undersigned shall be
included within the term ["Management Stockholder"], ["Common Investor"],
["Preferred Investor"] and "Stockholder" (each as defined in the Agreement). As
of the date hereof the undersigned makes each of the representations and
warranties set forth in Section 2.1 of the Agreement. The address and facsimile
number to which notices may be sent to the undersigned is as follows:
___________________________________________________________________________
Facsimile No.____________________.
______________________________
[NAME OF UNDERSIGNED]
31
APPENDIX A
STOCKHOLDERS/OPTIONHOLDERS
INITIAL MANAGEMENT INVESTORS INVESTORS IN COMMON STOCK INVESTORS IN PREFERRED STOCK ON OR AFTER 12/___/96
("Founding Stockholders") ("Common Investors") ("Preferred Investors") ("Management Stockholders")
NAME NAME NAME NAME
▇▇▇▇▇ ▇. Queen Toronto Dominion Toronto Dominion
Capital (U.S.A.), Inc. Capital (U.S.A.), Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Kingdon Associates, ▇.▇. ▇▇▇▇▇▇▇ Associates, L.P.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Kingdon Partners ▇.▇. ▇▇▇▇▇▇▇ Partners L.P.
T.N. ▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ Offshore NV ▇. ▇▇▇▇▇▇▇ Offshore NV
▇▇▇▇▇ ▇▇▇▇▇▇▇
Alta Subordinated Debt Alta Subordinated Debt
K&E Partners II Partners III, L.P. Partners III, L.P.
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇ V Limited Partnership Alta V Limited Partnership
▇▇▇▇▇▇▇ & Kristol
Customs House Partners Customs House Partners
EOS Partners SBIC, L.P. Alta Communications VI, L.P.
Associated RT, Inc. Alta Comm S by S, LLC
EOS Partners SBIC, L.P.
Associated RT, Inc.
BancBoston Ventures Inc.
Northwood Ventures
GCC Investments, Inc.
Boston Capital Ventures
Westbury Capital Partners, L.P.
High Point ▇▇▇▇▇▇ Limited Partnership
▇.▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
32