PURCHASE AGREEMENT
BY AND BETWEEN
HIGHWAYMASTER COMMUNICATIONS, INC., AS ISSUER
AND
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.,
AS INVESTOR
SEPTEMBER 27, 1996
TABLE OF CONTENTS
Page
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SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Issuance and Sale of Series D Preferred Stock . . . . . . . . . 9
SECTION 3. Representations and Warranties of Company . . . . . . . . . . .10
(a) Organization; Corporate Power . . . . . . . . . . . . . . . . .10
(b) Capital Stock and Related Matters . . . . . . . . . . . . . . .11
(c) Subsidiaries; Investments . . . . . . . . . . . . . . . . . . .12
(d) Authorization; No Breach. . . . . . . . . . . . . . . . . . . .13
(e) Company Reports; Financial Statements . . . . . . . . . . . . .13
(f) Absence of Undisclosed Liabilities. . . . . . . . . . . . . . .14
(g) No Material Adverse Change. . . . . . . . . . . . . . . . . . .14
(h) Absence of Certain Developments . . . . . . . . . . . . . . . .15
(i) Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(j) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . .17
(k) Contracts and Commitments . . . . . . . . . . . . . . . . . . .19
(l) Intellectual Property Rights. . . . . . . . . . . . . . . . . .21
(m) Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . .22
(n) Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(o) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(p) Employees . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(q) Employee Benefits Matters . . . . . . . . . . . . . . . . . . .24
(r) Compliance with Laws. . . . . . . . . . . . . . . . . . . . . .24
(s) Environmental Matters . . . . . . . . . . . . . . . . . . . . .25
(t) Affiliated Transactions . . . . . . . . . . . . . . . . . . . .25
SECTION 4. Representations and Warranties of the Investor. . . . . . . . .26
(a) Execution; Authorization; No Contravention. . . . . . . . . . .26
(b) Securities Act. . . . . . . . . . . . . . . . . . . . . . . . .26
(c) Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . .27
(a) Inspection Rights . . . . . . . . . . . . . . . . . . . . . . .27
(b) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .27
(c) Compliance with Agreements. . . . . . . . . . . . . . . . . . .28
(d) Debt Offering . . . . . . . . . . . . . . . . . . . . . . . . .28
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(e) Approval by the Company's Stockholders. . . . . . . . . . . . .28
(f) Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(g) Reservation of Common Stock . . . . . . . . . . . . . . . . . .30
(h) Further Assurances. . . . . . . . . . . . . . . . . . . . . . .30
(i) Voice and Data Services Agreement . . . . . . . . . . . . . . .30
(j) Mobile Carrier. . . . . . . . . . . . . . . . . . . . . . . . .30
(k) Technical Services Agreement. . . . . . . . . . . . . . . . . .31
SECTION 6. Survival and Indemnification . . . . . . . . . . . . . . . . . . .31
(a) Survival of Representations, Warranties, Covenants and
Agreements; Knowledge of Breach; Indemnification. . . . . . . .31
(b) Indemnification for Third Party Claims; Method of Asserting
Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 7. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . .33
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(b) Public Disclosure . . . . . . . . . . . . . . . . . . . . . . .34
(c) Successors and Assigns; Assignment. . . . . . . . . . . . . . .34
(d) Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
(e) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . .34
(f) Severability. . . . . . . . . . . . . . . . . . . . . . . . . .35
(g) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .35
(h) Descriptive Headings. . . . . . . . . . . . . . . . . . . . . .35
(i) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .35
(j) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
(k) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . .36
(l) Definition of Knowledge . . . . . . . . . . . . . . . . . . . .36
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PURCHASE AGREEMENT
This Purchase Agreement (the "AGREEMENT") is entered into as of
September 27, 1996 by and between HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware
corporation (the "COMPANY"), and SOUTHWESTERN BELL WIRELESS HOLDINGS, INC., a
Delaware corporation (the "INVESTOR").
RECITALS:
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Company, the Investor and certain other stockholders of the
Company have entered into an Amended and Restated Stockholders' Agreement (the
"STOCKHOLDERS' AGREEMENT");
WHEREAS, simultaneously with the execution and delivery of this
Agreement, certain parties to the Stockholders' Agreement have consummated the
transactions contemplated by subsections (a) and (b) of Section 2 of the
Stockholders' Agreement (the "RECAPITALIZATION TRANSACTIONS");
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Company and the Investor have entered into an agreement set forth
as Exhibit C hereto (the "ESCROW AGREEMENT") relating to the deposit of the
Purchase Price (as defined herein) into escrow (the "ESCROW FUND") with the
Escrow Agent (as defined herein);
WHEREAS, simultaneously with the execution and delivery of this
Agreement, HM Corporation (as hereinafter defined) and the Investor have entered
into a technical services agreement, dated as of the date hereof (the "TECHNICAL
SERVICES AGREEMENT");
WHEREAS, the Company has agreed to cause HM Corporation to enter into
a Voice/Data Agreement (as hereafter defined) with Southwestern Bell
Communications Services, Inc., a Delaware corporation ("SBCS"), upon receipt of
Regulatory Relief (as defined herein), and to cause HM Corporation to perform
its obligations under, the Voice/Data Agreement (as defined herein) pursuant to
Section 5(i) of this Agreement;
WHEREAS, the Company has agreed to cause HM Corporation to procure
cellular services from Southwestern Bell Mobile Systems, a Delaware corporation
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("SBMS"), from and after the date hereof in accordance with Section 5(j) of this
Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Company has granted the Investor the Warrants (as defined herein)
pursuant to the Warrant Certificate (the "WARRANT CERTIFICATE"), dated as of the
date hereof, by and between the Company and the Investor; and
WHEREAS, the Company desires to issue and sell to the Investor, and
the Investor desires to purchase and acquire from the Company the shares of
Series D Preferred Stock (as defined herein).
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 DEFINED TERMS. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"AFFILIATE" means any Person that directly or indirectly, through one
or more intermediaries, has control of or is controlled by, or is under common
control with, the Person specified.
"AFFILIATED GROUP" means any affiliated group as defined in IRC
Section 1504 that has filed a consolidated return for federal income tax
purposes (or any similar group under state, local or foreign law) for a period
during which any of the Company or any of its Subsidiaries was a member of such
group.
"AGREEMENT" shall have the meaning set forth in the first paragraph of
this Agreement.
"ANTITRUST AUTHORIZATION CONDITION" shall have the meaning set forth
in Section 2(b).
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"ANTITRUST DIVISION" shall mean the Antitrust Division of the United
States Department of Justice.
"AUDIT DATE" shall have the meaning set forth in Section 3(e).
"BUSINESS" means all business operations and activities currently
conducted by the Company and its Subsidiaries.
"BY-LAW AMENDMENT" shall have the meaning set forth in Section
3(b)(iii).
"CERTIFICATE OF AMENDMENT" shall have the meaning set forth in Section
3(b)(iii).
"CLASS B COMMON STOCK" means the new class of the Company's common
stock to be created upon the adoption of the Certificate of Amendment, the terms
of which are set forth in Exhibit B hereto.
"COMMON STOCK" means the Common Stock, par value $0.01 per share, of
the Company.
"COMPANY" shall have the meaning set forth in the first paragraph of
this Agreement.
"COMPANY REPORTS" shall have the meaning set forth in Section 3(e).
"DEDUCTIBLE" shall have the meaning set forth in Section 6(a).
"DGCL" means the Delaware General Corporation Law.
"EMPLOYEE" means a current or former employee of the Company or an
ERISA Affiliate thereof.
"ENVIRONMENTAL LAWS" means any federal, state, territorial, provincial
or local law, common law doctrine, rule, order, decree, judgment, injunction,
license, permit or regulation relating to environmental matters, including those
pertaining to land use, air, soil, surface water, ground water (including the
protection, cleanup, removal, remediation or damage thereof), public or employee
health or safety, microwave emissions or any other environmental matter,
together with any other laws (federal, state, territorial, provincial or local)
relating to emissions, discharges, releases or threatened releases of any
pollutant or
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contaminant including, without limitation, medical, chemical, biological,
biohazardous or radioactive waste and materials, into ambient air, land,
surface water, groundwater, personal property or structures, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, discharge or handling of any contaminant,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the
Clean Air Act (42 U.S.C. Section 1251 ET SEQ.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 ET SEQ.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 ET SEQ.), as such laws have been interpreted by
government agencies and as amended, modified or supplemented heretofore and
regulations promulgated thereunder.
"ERISA" shall have the meaning set forth in Section 3(q).
"ERISA AFFILIATE" means any Person that is (or at any relevant time
was) a member of a "controlled group of corporations" with or under "common
control" with the Company as defined in Section 414(b) or (c) of the Code.
"ESCROW AGENT" shall mean Texas Commerce Bank, N.A.
"ESCROW AGREEMENT" shall have the meaning set forth in the Recitals.
"ESCROW FUND" shall have the meaning set forth in the Recitals.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall have the meaning set forth in Section 3(e).
"GOVERNMENTAL CONDITION" shall have the meaning set forth in Section
2(b).
"HAZARDOUS MATERIALS" means those substances which are regulated or
form the basis of liability under any Environmental Laws, including, without
limitation, petroleum products, radon and asbestos.
"HM CORPORATION" shall have the meaning set forth in Section 5(i).
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
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"INDEMNIFIED PARTY" shall have the meaning set forth in Section 6(b).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 6(b).
"INFORMATION STATEMENT" shall have the meaning set forth in Section
5(e).
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof and (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information).
"INVESTOR" shall have the meaning set forth in the first paragraph of
this Agreement.
"IRC" OR "CODE" means the Internal Revenue Code of 1986, as amended,
and any reference to any particular IRC or Code section shall be interpreted to
include any revision of or successor to that section regardless of how numbered
or classified.
"LATEST BALANCE SHEET" shall have the meaning set forth in Section
3(e).
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any filing
or agreement to file a financing statement as debtor under the Uniform
Commercial Code or any similar statute other than to reflect ownership by a
third party of property leased to the Company or any Subsidiaries under a lease
which is not in the nature of a conditional sale or title retention agreement.
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"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
financial condition, operating results, assets or operations of the Company and
its Subsidiaries taken as a whole.
"MATERIAL AGREEMENTS" means those contracts, agreements and leases to
which the Company or any Subsidiary is a party which are required to be listed
on Schedule 3(k) hereto.
"PERMITTED LIENS" means:
(i) tax liens with respect to taxes not yet due and payable or
which are being diligently contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with generally accepted accounting principles, consistently
applied;
(ii) interests or title of a lessor as lessor under any lease
disclosed in writing to the Investor;
(iii) mechanics', materialmen's, contractors', carriers',
warehousemen's or repairmen's liens or encumbrances or any similar lien or
restriction, if the underlying obligations are not overdue for a period of
more than 60 days;
(iv) deposits made in the ordinary course of business to secure
contractual or other obligations of the Company if the underlying
obligations are not overdue for a period of more than 60 days;
(v) easements, rights-of-way, restrictions and other similar
charges and encumbrances on real property not materially interfering with
the conduct of the business of the Company or any of its Subsidiaries or
materially detracting from the value or use and enjoyment of its real
property;
(vi) other liens in existence on the date hereof which are
described in the Schedules to this Agreement; and
(vii) other Liens which do materially interfere with the
operations of the Company and its Subsidiaries or the value and use and
enjoyment of their properties and assets.
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"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.
"PURCHASE PRICE" shall have the meaning set forth in Section 2(a).
"RECAPITALIZATION TRANSACTIONS" shall have the meaning set forth in
the Recitals.
"SBCS" shall have the meaning set forth in the Recitals.
"SBMS" shall have the meaning set forth in the Recitals.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
"SERIES D PREFERRED STOCK" means the Series D Convertible
Participating Preferred Stock, par value $.01 per share, of the Company, having
the rights and preferences set forth in Exhibit A hereto.
"STOCKHOLDERS' AGREEMENT" shall have the meaning set forth in the
Recitals.
"SUBSEQUENT FINANCIAL INFORMATION" shall have the meaning set forth in
Section 3(e).
"SUBSIDIARY" of any specified person or entity means a corporation or
other entity of which the 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.
"TAX RETURN" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
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"TAX" or "TAXES" means federal, state, county, local, foreign or other
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"TECHNICAL SERVICES AGREEMENT" shall have the meaning set forth in the
Recitals.
"TRANSACTION DOCUMENTS" means this Agreement, the Stockholders'
Agreement, the Voice/Data Services Agreement, the Technical Services Agreement,
the Warrant Certificate, the Escrow Agreement, the agreements relating to the
Recapitalization Transactions and each other agreement contemplated by any of
the foregoing.
"WARRANT CERTIFICATE" shall have the meaning set forth in the
Recitals.
"WARRANTS" shall mean the warrants to purchase up to an aggregate of
three million shares of Common Stock at an exercise price of $14 per share and
two million shares of Common Stock at an exercise price of $18 per share,
evidenced by the Warrant Certificate issued to the Investor.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof", "herein",
and "hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States Dollars.
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SECTION 2. ISSUANCE AND SALE OF SERIES D PREFERRED STOCK.
(a) Immediately upon the execution and delivery of this Agreement,
(i) the Company will issue and sell to the Investor 1,000 shares of Series D
Preferred Stock and will deliver to the Investor the certificate(s) for such
shares and (ii) the Investor will purchase such shares from the Company for
consideration consisting of $20,000,000 (the "PURCHASE PRICE") and will pay the
Purchase Price by certified check to the Company, which shall immediately
thereafter endorse over to the Escrow Agent such certified check to be held
pursuant to the terms of the Escrow Agreement. Payment of the Escrow Fund to
the Company or return of the Escrow Fund to Investor shall be made pursuant to
and in accordance with the terms of the Escrow Agreement.
(b) In the event that the Antitrust Authorization Condition (as
hereinafter defined) is satisfied prior to or on December 31, 1996 and a
Governmental Condition (as hereinafter defined) shall not exist at the time the
Antitrust Authorization Condition is satisfied, the Investor shall take all
action required in order to cause the Escrow Agent promptly to deliver the
Escrow Fund to the Company. In the event that the Antitrust Authorization
Condition is not satisfied as of December 31, 1996 (other than as a result of
the failure on the part of the Investor to comply with its obligations under
Section 5(f) hereof) or a Governmental Condition shall exist at such time, the
Investor shall be entitled to elect, by written notice to be delivered to the
Company prior to or on January 31, 1997, whether the Escrow Fund shall be paid
to the Company or returned to the Investor. If the Investor elects to have the
Escrow Fund returned to the Investor, the Company shall take all action required
in order to cause the Escrow Agent promptly to deliver the Escrow Fund to the
Investor. Both parties hereto shall execute the certificate contemplated by
Section 2.1(b) of the Escrow Agreement. As used herein, the term "Antitrust
Authorization Condition" shall mean the condition to the obligation of the
Investor to cause the Escrow Fund to be delivered to the Company to the effect
that the waiting period applicable under the HSR Act to the issuance to the
Investor of shares of Class B Common Stock upon conversion of the shares of
Series D Preferred Stock shall have expired or early termination shall have been
granted with respect thereto. As used herein "Governmental Condition" shall
mean that any governmental or regulatory authority, agency, commission, body,
court or other governmental entity has enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins, or otherwise prohibits consummation of the transactions
contemplated by the Purchase Agreement (collectively, an "ORDER"), or that any
proceeding seeking an Order is pending.
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(c) In the event that the Escrow Fund is released to the Investor
pursuant to subsection (b) above, this Agreement shall thereafter become void
and have no effect, and no party hereto shall have any liability to the other
party hereto or their respective Affiliates, directors, officers or employees by
virtue of the provisions of this Agreement or in connection with the
transactions contemplated hereby, except for the obligations of the parties
hereto contained in Sections 7(a) and 7(b) hereof, and except that nothing
herein will relieve any party from liability for any breach of Section 5(f)
hereof prior to such termination, and except that the Investor shall be
obligated to promptly deliver the shares of Series D Preferred Stock purchased
hereunder and return any dividends received during the period which it held such
shares to the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF COMPANY.
As a material inducement to the Investor to enter into this Agreement
and purchase the Series D Preferred Stock hereunder, the Company hereby
represents and warrants that:
(a) ORGANIZATION; CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in every jurisdiction in which it is
required to be qualified, except where the failure to so qualify has not had and
would not reasonably be expected to have a Material Adverse Effect. The Company
possesses all requisite corporate power and authority and all licenses, permits
and authorizations necessary to own and operate its properties, to carry on the
Business and to enter into, and perform its obligations under the Transaction
Documents (except (i) in the case of licenses, permits and authorizations
necessary for the Company to own and operate its property and carry on the
Business, where the failure to possess such licenses, permits and authorizations
has not had and is not reasonably expected to have a Material Adverse Effect and
(ii) in the case of licenses, permits and authorizations necessary for the
Company to perform its obligations under the Transaction Documents, for the
authorizations and related actions and filings that are described in Section
5(e) and (f) or are required under the Securities Act or state securities or
"blue sky" laws in order for the Company to fulfill its obligations under
Section 5(d) and any other authorizations if the failure to obtain such
authorizations would not reasonably be expected to have a Material Adverse
Effect or prejudice in any material respect the rights of the Investor under any
of the Transaction Documents). Schedule 3(a) hereof sets forth correct and
complete copies of the Company's and its Subsidiaries' charter documents and
bylaws reflecting all amendments made thereto at any time prior to the date of
this Agreement.
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(b) CAPITAL STOCK AND RELATED MATTERS.
(i) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, of which 22,069,871 shares are outstanding as
of the date hereof after giving effect to the Recapitalization Transactions, and
20,000 shares of preferred stock, par value $0.01 per share, of which 1,000
shares have been designated as Series D Preferred Stock, none of which were
outstanding prior to the date hereof. Except as set forth on Schedule 3(b) or
in the written notice to the Investor referred to therein, neither the Company
nor any Subsidiary has outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor does it have outstanding any rights, options or
warrants to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans, nor has it reserved any shares of
capital stock (other than as described in Section 3(b)(iii) hereof or as
contemplated by any of the Transaction Documents) for issuance upon exercise or
conversion of any rights, options or warrants to subscribe for or to purchase
its capital stock or any stock or securities convertible into or exchangeable
for its capital stock. Neither the Company nor any Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except as set forth on Schedule 3(b) hereof. All
of the outstanding shares of the Company's capital stock are, and the shares of
Series D Preferred Stock to be issued hereunder shall be upon such issuance and
receipt by the Company of payment therefor in accordance with Section 2(a), duly
authorized, validly issued, fully paid and nonassessable.
(ii) There are no statutory stockholders preemptive rights or
similar contractual rights to which the Company is subject or, except as set
forth in the Stockholders' Agreement, rights of refusal to which the Company is
subject with respect to the issuance of capital stock of the Company. Except as
set forth on Schedule 3(b) hereto, (A) to its knowledge, the Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock, and (B) the offer, sale and
issuance of the Series D Preferred Stock hereunder do not require registration
under the Securities Act or any applicable state securities laws or "blue sky"
laws, assuming the Investor's representation in Section 4(b) is true in all
respects. There are no agreements to which the Company or, to the knowledge of
the officers of the Company, any holders of the capital stock of the Company is
a party with respect to the voting or transfer of the Company's capital stock
except for the Stockholders' Agreement.
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(iii) The Company has authorized the issuance and sale to the
Investor of the number of shares of Series D Preferred Stock being sold to the
Investor pursuant to Section 2 hereof. The Series D Preferred Stock will have
the terms, rights and preferences set forth in Exhibit A hereto. The Company
has filed with the Office of the Secretary of State of the State of Delaware a
Certificate of Designation in the form set forth in Exhibit A hereto. The board
of directors of the Company has adopted a resolution declaring the advisability
of the amendment to the Company's certificate of incorporation set forth on
Exhibit B hereto (the "CERTIFICATE OF AMENDMENT") and directing that such
amendment be considered by the stockholders of the Company. The board of
directors of the Company has adopted an amendment to the Company's By-laws as
set forth on Exhibit B to the Stockholders' Agreement (the "BY-LAW AMENDMENT").
The board of directors of the Company has reserved 6,600,000 shares of Common
Stock for issuance upon conversion of the Series D Preferred Stock and exercise
of the Warrants.
(iv) According to the Company's share register, the stockholders
listed on Appendix D to the Stockholders' Agreement own the shares of Common
Stock listed on such appendix for which they have granted irrevocable proxies to
the Investor and signed irrevocable written consents authorizing the Certificate
of Amendment and the issuance of Common Stock in connection with the exercise of
any Warrants.
(c) SUBSIDIARIES; INVESTMENTS. Schedule 3(c) hereto correctly sets
forth the name of each Subsidiary, the jurisdiction of its incorporation and the
Persons owning the outstanding capital stock of such Subsidiary. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, possesses all requisite corporate
power and authority and, except as set forth in Schedule 3(c) and with such
other exceptions as have not had and are not reasonably expected to have a
Material Adverse Effect, all licenses, permits and authorizations necessary to
own its properties and to carry on its businesses as now being conducted and,
other than as set forth on Schedule 3(c), is qualified to do business in every
jurisdiction in which it is required to be qualified, except where the failure
to so qualify has not had and is not reasonably expected to have a Material
Adverse Effect. All of the outstanding shares of capital stock of each
Subsidiary are duly authorized, validly issued, fully paid and nonassessable,
and all such shares are owned by the Company or another Subsidiary free and
clear of any Lien and not subject to any option, right or warrant to purchase
any such shares. Except as set forth on Schedule 3(c), no Subsidiary has
outstanding any rights, warrants or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable for
any shares of its capital stock, and neither the Company nor any Subsidiary owns
or holds the right to acquire any shares of stock or any other security or
interest in any other Person.
12
(d) AUTHORIZATION; NO BREACH. The execution, delivery and
performance of the Transaction Documents by the Company have been duly
authorized by the Company. Each of the Transaction Documents has been duly
executed by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. Except as set forth on Schedule 3(d) hereto, the execution
and delivery of the Transaction Documents, and the fulfillment of and compliance
with the respective terms hereof and thereof by the Company and each Subsidiary
that is a party thereto, do not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any Lien upon the Company's or any
Subsidiary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption or
other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency or other Person pursuant to, the
charter or bylaws of the Company or any Subsidiary, or any law, statute, rule,
regulation, order, judgment, decree, agreement or instrument to which the
Company or any Subsidiary is subject, except for (A) any such conflict, breach,
default, Lien or right of modification, termination or acceleration (other than
any of the foregoing arising pursuant to the charter or bylaws of the Company)
which would not reasonably be expected to have a Material Adverse Effect or
prejudice in any material respect the rights of the Investor under any of the
Transaction Documents and (B) the requirement to obtain any authorizations or
take or make any related actions and filings that are described in Section 5(e)
and (f) or are required under the Securities Act or state securities or "blue
sky" laws in order for the Company to fulfill its obligations under Section 5(d)
or to obtain any other authorization, consent, approval, action, notice,
declaration or filing if the failure to do so would not reasonably be expected
to have a Material Adverse Effect or prejudice in any material respect the
rights of the Investor under any of the Transaction Documents.
(e) COMPANY REPORTS; FINANCIAL STATEMENTS. The Company has delivered
or made available to the Investor (i) each registration statement, report, proxy
statement or information statement filed with the SEC since December 31, 1995
(the "AUDIT DATE"), including the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively, the "COMPANY REPORTS") and
(ii) an unaudited balance sheet as of the end of the month for each month
subsequent to the date of the latest Company Report through and including the
month ended July 31, 1996 which included a consolidated balance sheet and the
related consolidated statements of income and of
13
changes in financial position for the month(s) then ended (collectively, the
"SUBSEQUENT FINANCIAL INFORMATION," and the latest of such unaudited
consolidated balance sheets included therein being referred to as the "LATEST
BALANCE SHEET"). As of their respective dates, the Company Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related
notes and schedules) and each of the unaudited balance sheets included in the
Subsequent Financial Information fairly presents in all material respects the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of income and of changes in
financial position included in or incorporated by reference into the Company
Reports and the Subsequent Financial Information (including any related notes
and schedules) fairly presents in all material respects the results of
operations, retained earnings and changes in financial position, as the case
may be, of the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to the absence of notes and
normal year-end audit adjustments), in each case in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved, except as may be noted therein.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 3(f) hereto or any liabilities disclosed on other schedules to this
Agreement, the Company and its Subsidiaries do not have any material obligation
or liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary, whether due or to become
due and regardless of when or whether asserted) other than: (i) liabilities set
forth on the financial statements included in the Company Reports and the
Subsequent Financial Information, (ii) obligations and liabilities incurred
after the date of the Latest Balance Sheet in the ordinary course of business,
(iii) liabilities and obligations under contracts, agreements and instruments
set forth on the Schedule 3(k) hereto (none of which is a liability resulting
from breach of contract, breach of warranty, tort, infringement, claim or
lawsuit), (iv) liabilities and obligations under contracts, agreements and
instruments not required to be set forth on Schedule 3(k) hereto (none of which
is a liability resulting from breach of contract, breach of warranty, tort,
infringement, claim or lawsuit) and (v) other liabilities and obligations
expressly disclosed in the other Schedules to this Agreement.
(g) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Company
Reports or the Subsequent Financial Information or as set forth on Schedule 3(g)
hereto, since the Audit Date, there has been no material adverse change in the
financial condition,
14
operating results, assets, operations, employee relations or customer or
supplier relations of the Company or any of its Subsidiaries.
(h) ABSENCE OF CERTAIN DEVELOPMENTS.
(i) Except as expressly contemplated by the Transaction
Documents or as disclosed in the Company Reports or the Subsequent Financial
Information or as set forth on Schedule 3(h) hereto since the Audit Date,
neither the Company nor any Subsidiary of the Company has:
(A) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities
convertible, exchangeable or exercisable into any capital stock or
other equity securities (other than employee stock options and shares
of Common Stock issued upon the exercise thereof);
(B) borrowed any amount or incurred or become subject to any
liabilities, except liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary
course of business;
(C) discharged or satisfied any material Lien or paid any
material obligation or liability, other than in the ordinary course of
business;
(D) declared or made any payment or distribution of cash or
other property to its stockholders with respect to its capital stock
or other equity securities or purchased or redeemed any shares of its
capital stock or other equity securities (including, without
limitation, any warrants, options or other rights to acquire its
capital stock or other equity securities);
(E) mortgaged or pledged any of its properties or assets or
subjected them to any Lien, except Permitted Liens and Liens which
have been discharged or satisfied prior to the date hereof;
(F) sold, assigned or transferred any material tangible assets,
except in the ordinary course of business;
(G) sold, assigned or transferred any material trademarks,
service marks, trade names, corporate names, copyrights or copyright
registrations, trade secrets or other intangible assets, or disclosed
any proprietary
15
confidential information to any Person (other than any such
disclosure in the ordinary conduct of business operations or which
disclosure was subject to a confidentiality agreement, which in either
case does not have a Material Adverse Effect);
(H) suffered any extraordinary losses, waived any rights of
material value or canceled any material debts or claims, whether or
not in the ordinary course of business or consistent with past
practice;
(I) made capital expenditures or commitments therefor that
aggregate in excess of $100,000, except in accordance with the capital
budget for the current fiscal year furnished to the Investor;
(J) made any loans or advances in excess of $100,000 in the
aggregate to, guarantees for the benefit of, or any investments (other
than temporary cash investments in the ordinary course of business)
in, any Persons;
(K) made any charitable contributions or pledges which in the
aggregate exceed $50,000;
(L) suffered any damage, destruction or casualty loss not
covered by insurance which in the aggregate exceed $40,000;
(M) entered into any other material transaction or agreement
other than in the ordinary course of business;
(N) changed its accounting principles, practices or methods,
except as required by GAAP;
(O) suffered any loss, or threatened loss, of any supplier or
customer or group of related suppliers or customers which is
reasonably expected to have a Material Adverse Effect;
(P) suffered any labor dispute, other than routine matters;
(Q) except for increases or amendments in the ordinary and usual
course of business consistent with past practice or as required by
law, increased the compensation payable or to become payable by the
Company
16
or any Subsidiary to any of its directors, officers or employees or
increased the benefits under, or adoption of, any bonus, insurance,
pension or other employee benefit plan, payment or arrangement, for or
with any such directors, officers or employees (other than pursuant to
the terms of any such plan or arrangement); or
(R) otherwise operated other than in the ordinary course in a
manner that has had or could be reasonably expected to have a Material
Adverse Effect.
(ii) Neither the Company nor its Subsidiaries has at any time
made any payments for political contributions or made any bribes, kickback
payments or other illegal payments. No officer, director, employee or agent of
the Company or any of its Subsidiaries has been or is authorized to make or
receive, and the Company does not know of any such Person making or receiving,
any bribe, kickback or other illegal payment.
(i) ASSETS. Except as set forth on Schedule 3(i) hereto, the Company
and each Subsidiary have good and valid title to, or a valid leasehold interest
in, the properties and assets used by them, located on their premises or
disclosed on the financial statements included in the Company Reports or the
Subsequent Financial Information, free and clear of all Liens, except for
Permitted Liens. Except as described on Schedule 3(i), the Company's and each
Subsidiary's buildings, equipment and other tangible assets are in good
operating condition in all material respects (normal wear and tear excepted).
(j) TAX MATTERS.
(i) Except as set forth in Schedule 3(j) hereto, the Company and
each of its Subsidiaries and each Affiliated Group have timely filed all U.S.
federal income Tax Returns, and all other material Tax Returns, which they are
required to file under applicable laws and regulations; all such filed Tax
Returns are complete and correct in all material respects and have been prepared
in compliance with all applicable laws and regulations; the Company and each of
its Subsidiaries and each Affiliated Group have timely paid all material Taxes
due and owing by them (whether or not such Taxes are required to be shown on a
Tax Return) and have withheld and paid over to the appropriate taxing authority
all Taxes which they are required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party, except where the amounts
that have not been withheld and paid over do not, in the aggregate, exceed
$20,000; neither the Company nor any Subsidiary of the Company nor any
Affiliated Group has waived any statute of limitations with respect to any Taxes
or agreed to any extension of time with
17
respect to any Tax assessment or deficiency; the most recent
consolidated financial statements contained in the Company Reports
reflect an adequate reserve for all material Taxes payable by the
Company and each of its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements; the
accrual for Taxes set forth on the Latest Balance Sheet (excluding any
amount recorded which is attributable solely to timing differences
between book and Tax income) would be adequate to pay all material Tax
liabilities of the Company and its Subsidiaries if their current tax
year-were treated as ending on the Latest Balance Sheet; since the date
of the Latest Balance Sheet, neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes other than in the
ordinary course of business; no foreign, federal, state or local tax
audits or administrative or judicial proceedings are pending or being
conducted with respect to the Company, any of its Subsidiaries or any
Affiliated Group, and no written notice from any foreign, federal, state
or local taxing authority indicating an intent to open or resume an
audit or other review has been received by the Company, any of its
Subsidiaries or any member of an Affiliated Group; and there are no
material unresolved questions or claims of which the Company knows or
has reason to know concerning the Company's or any of its Subsidiaries'
or any Affiliated Group's Tax liability. To the Company's knowledge, no
claim has ever been made by an authority in a jurisdiction where either
the Company, any of its Subsidiaries or any member of an Affiliated
Group does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction.
(ii) Neither the Company nor any of its Subsidiaries has made
an election under IRC Section 341(f). Neither the Company nor any of its
Subsidiaries is liable for the Taxes of another Person that is not a
Subsidiary in a material amount under (A) Treas. Reg. Section 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee or
successor or (C) by contract or indemnity. Neither the Company nor any of
its Subsidiaries is a party to any tax sharing agreement. The Company, each
of its Subsidiaries and each Affiliated Group have adequately disclosed on
their federal income Tax Returns or in a statement attached thereto any
position taken for which substantial authority (within the meaning of IRC
Section 6662(d)(2)(B)(i)) did not exist at the time the return was filed.
Neither the Company, nor any of its Subsidiaries has made any payment, is
obligated to make payment or is a party to an agreement that could obligate
it to make any payment that would constitute a "parachute payment" to a
"disqualified individual" as those terms are defined in IRC Section 280G
(determined without regard to whether such payment is reasonable compensation
for services rendered or to be rendered in the future).
18
(k) CONTRACTS AND COMMITMENTS.
(i) Except as set forth on Schedule 3(k) hereto and except for the
Transaction Documents, neither the Company nor any Subsidiary is a party to or
bound by any written or oral:
(A) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs,
policies or arrangements;
(B) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or
other basis (other than an at-will employment arrangement) providing
annual compensation in excess of $75,000;
(C) any contract relating to loans to officers, directors or
Affiliates; or contract under which the Company or any Subsidiary has
advanced or loaned any other Person amounts in the aggregate exceeding
$50,000, other than down payments and prepayments under the Company's
or such Subsidiary's ordinary course operating agreements;
(D) agreement or indenture relating to borrowed money or other
indebtedness or the mortgaging, pledging or otherwise placing a Lien
(other than a Permitted Lien) on any assets of the Company or its
Subsidiaries;
(E) guarantee of any material obligation;
(F) lease or agreement under which the Company, or any of its
Subsidiaries is lessee of or holds or operates any property, real or
personal, owned by any other party, except for any lease of real or
personal property under which the aggregate annual rental payments do
not exceed $100,000;
(G) lease or agreement under which the Company or any of its
Subsidiaries is lessor of or permits any third party to hold or
operate, any property, real or personal, owned or controlled by the
Company or any
19
Subsidiary, except for leases of real or personal property under which
the aggregate annual rental payments do not exceed $100,000;
(H) contract or group of related contracts with the same party
or group of affiliated parties the performance of which involves the
payment or receipt of consideration in any year in an amount in excess
of $150,000;
(I) assignment, license (other than licenses included as a
standard provision in service agreements or other contracts with
customers of the Company) or indemnification or agreement with respect
to any material Intellectual Property;
(J) warranty agreement with respect to its services rendered or
its products sold or leased, except any agreement entered into in the
ordinary course of business;
(K) agreement under which it has granted any Person any
registration rights (including, without limitation, demand and
piggyback registration rights);
(L) any material sales, distribution or franchise agreement not
entered into in the ordinary course of business;
(M) contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world; or
(N) any other agreement which involves a total consideration in
excess of $250,000 or is otherwise material to its operations and
business prospects, except for any agreement which is terminable by
the Company or any Subsidiary upon less than 60 days' notice without
penalty.
(ii) All of the contracts, agreements and instruments required to
be set forth on Schedule 3(k) are valid and legally binding obligations of the
Company or its Subsidiaries, as the case may be, and, to the knowledge of the
Company, the other parties thereto, enforceable in accordance with their terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Except as set forth on
Schedule 3(k), the Company and each Subsidiary has performed in all material
respects all obligations required to be performed by them under the contracts,
20
agreements and instruments required to be set forth on Schedule 3(k) and are not
in material default under or in material breach of any material contract,
agreement or instrument required to be listed on Schedule 3(k) or in receipt of
any claim of such default or breach; no event has occurred which with the
passage of time or the giving of notice or both would result in a material
default, material breach or event of material noncompliance by the Company or
any of its Subsidiaries under any contract, agreement or instrument required to
be listed on Schedule 3(k); except as previously disclosed in writing to the
Investor or its representatives, neither the Company nor any Subsidiary has any
present expectation or intention of not fully performing all its material
obligations under the contracts, agreements and instruments required to be
listed on Schedule 3(k); neither the Company nor any Subsidiary has knowledge of
any material breach or anticipated material breach by the other parties to any
contract, agreement or instrument required to be listed on Schedule 3(k);
neither the Company nor any Subsidiary has any written notice or other
communication to the effect that any other party to any contract, agreement or
instrument required to be listed on Schedule 3(k) intends to terminate such
contract, agreement or instrument prior to the expiration of the maximum stated
term of such contract, agreement or instrument.
(iii) A true and correct copy of each of the written instruments,
plans, contracts and agreements and an accurate description of each of the oral
arrangements, contracts and agreements which are referred to on Schedule 3(k),
together with all amendments, waivers or other changes thereto has been supplied
or made available to the Investor.
(l) INTELLECTUAL PROPERTY RIGHTS.
(i) Schedule 3(l) hereto contains a complete and accurate list
of all (A) registered Intellectual Property Rights owned or used by the Company
or any Subsidiary, (B) applications for registrations of Intellectual Property
Rights filed by the Company or any Subsidiary, (C) unregistered trade names and
corporate names owned or used by the Company or any Subsidiary, and (D) material
unregistered trademarks and service marks owned or used by the Company or any
Subsidiary, in each case which are material to the financial condition,
operating results, assets or operations of the Company or any of its
Subsidiaries. Schedule 3(l) also contains a complete and accurate list of all
licenses (other than licenses included as a standard provision in service
agreements or other contracts with customers of the Company) granted by the
Company or any of its Subsidiaries to any third party with respect to any
material Intellectual Property Rights and all licenses granted by any third
party to the Company or any of its Subsidiaries with respect to any material
Intellectual Property Rights, in each case, identifying the subject
21
Intellectual Property Rights. Except as set forth on Schedule 3(l), the
Company or one of its Subsidiaries owns all right, title and interest to, or
has the right to use pursuant to a valid license, all Intellectual Property
Rights identified on such schedule. The Company and its Subsidiaries have
taken all actions which in the judgment of the Company's management are
reasonably necessary to maintain and protect the Intellectual Property Rights
which they own, subject to such exceptions as have not had and are not
reasonably expected to have a Material Adverse Effect.
(ii) Except as set forth on Schedule 3(l), (A) there have been no
claims made against the Company or any of its Subsidiaries in writing asserting
the invalidity, misuse or unenforceability of any Intellectual Property Rights
listed on such schedule, (B) neither the Company nor any of its Subsidiaries has
received any notices of any infringement or misappropriation by, or conflict
with, any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company or any of
its Subsidiaries license any rights from a third party), (C) to the Company's
knowledge, the conduct of the Business has not infringed, misappropriated or
conflicted with and does not infringe, misappropriate or conflict with any
Intellectual Property Rights of other Persons, and (D) to the Company's
knowledge, the Intellectual Property Rights owned by or licensed to the Company
or any Subsidiary have not been infringed, misappropriated or conflicted by
other Persons, except in the case of the clause (B), (C) or (D) above for any
infringement, misappropriation or conflict that has not had and is not
reasonably expected to have a Material Adverse Effect. Except as set forth in
Schedule 3(l), the transactions contemplated by the Transaction Documents shall
have no material adverse affect on the Company's or any Subsidiary's right,
title and interest in and to the Intellectual Property Rights listed on such
schedule.
(m) LITIGATION, ETC. Except as set forth on Schedule 3(m) hereto,
there are no actions, suits, proceedings, orders, investigations or claims
pending (other than any such actions, suits, proceedings, orders, investigations
and claims which may be pending but of which neither the Company, its
Subsidiaries nor their respective representatives have received notice) or, to
the Company's knowledge, threatened (or pending and of which neither the
Company, its Subsidiaries nor their respective representatives have received
notice) against the Company or any of its Subsidiaries (or to the Company's
knowledge, pending or threatened against any of the officers or directors of the
Company and its Subsidiaries) at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
which seek to enjoin or prevent the consummation of or otherwise relate
specifically to the transactions contemplated by the Transaction Documents or
which have had or are reasonably expected to have a Material Adverse Effect;
neither the Company nor any of its subsidiaries is subject to any arbitration
22
proceedings under collective bargaining agreements or otherwise or, to the
Company's knowledge, any governmental investigations or inquiries (including,
without limitation, inquiries as to the qualification to hold or receive any
license or permit) which have had or are reasonably expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to
any judgment, order or decree of any court or other governmental agency that
requires or prohibits any conduct on the part of the Company or any of its
Subsidiaries that affects the Business in any material respect.
(n) BROKERAGE. Except as set forth on Schedule 3(n) hereto, there
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by the Transaction Documents
for which the Investor will have any liability or responsibility based on any
arrangement or agreement binding upon the Company or any of its Subsidiaries.
(o) INSURANCE. Schedule 3(o) hereto contains a summary of the amount
and scope of coverage provided under (but not of the exceptions to) each
insurance policy maintained by the Company and its Subsidiaries with respect to
its properties, assets and businesses, and each such policy in full force and
effect. Neither the Company nor any Subsidiary is in default in any material
respect with respect to its obligations under any insurance policy maintained by
it. To the knowledge of the Company, the insurance coverage of the Company and
its Subsidiaries is customary for corporations of similar size engaged in
similar lines of business. Except as set forth on Schedule 3(o), the Company
and its Subsidiaries do not have any self-insurance programs, and the reserves
set forth on the financial statements included in the Company Reports and the
Latest Balance Sheet are adequate to cover all reasonably anticipated
liabilities in respect of such programs.
(p) EMPLOYEES. The Company has not received any oral or written
notice or other assertion that any executive or key employee of the Company or
any Subsidiary or any significant group of employees of the Company or any
Subsidiary has any plans to terminate employment with the Company or any
Subsidiary. The Company and its Subsidiaries have complied in all material
respects with all laws relating to the employment of labor (including, without
limitation, provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes), and
the Company has no knowledge that it or any Subsidiary has any material labor
relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). Except as set forth on Schedule 3(p) hereto, to the Company's
knowledge, none of its or its Subsidiaries' employees is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or
23
proposed business activities of the Company and its Subsidiaries, except for
agreements between the Company and its employees.
(q) EMPLOYEE BENEFITS MATTERS. Except as set forth on Schedule 3(k),
neither the Company nor any of its Subsidiaries has ever maintained, sponsored
or contributed to, or been obligated to contribute to, any employee pension
benefit plan as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and neither the Company nor any of
its Subsidiaries has incurred any liability under any employee pension benefit
plan maintained, sponsored or contributed to by any ERISA Affiliate. All other
employee benefit plans (as defined in Section 3(3) of ERISA) and all benefits
arrangements that have been maintained, sponsored or contributed to by the
Company or any of its Subsidiaries or any ERISA Affiliate have been maintained
in all material respects in compliance with their terms and, both as to form and
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such plans, including but not
limited to ERISA and the Code. Neither the Company nor any of its Subsidiaries
nor any ERISA Affiliate has any present or future obligations to make any
payment to or with respect to any present or former employee of the Company or
its Subsidiaries or any ERISA Affiliate pursuant to any retiree medical or
retiree life benefit plan. Each welfare plan as defined in Section 3(1) of
ERISA has been operated in compliance with the applicable provisions of Part 6
of Title I of ERISA and Sections 162(k) and 4980B of the Code at all times. A
schedule of employee benefit plans is set forth on Schedule 3(k) hereto.
(r) COMPLIANCE WITH LAWS. Neither the Company, nor any of its
Subsidiaries has violated any law or any governmental rule, order or regulation
or requirement which violation through the date hereof has had or would
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary has received notice of any such violation. To the
knowledge of the Company, except as set forth in Schedule 3(r), the operation of
the Business by the Company and its Subsidiaries complies and has complied in
all material respects with the Communications Act of 1934, as amended, and the
rules, orders, regulations and other applicable requirements of the Federal
Communications Commission and the public utility commissions of the states in
which the Business is conducted having jurisdiction over the Company and its
Subsidiaries; provided, however, that no representation or warranty is made
regarding the effect of future pronouncements or rulings by any applicable
governmental body.
24
(s) ENVIRONMENTAL MATTERS.
(i) (A) The property, assets and operations of the Business are
and have been in material compliance with all applicable Environmental Laws;
(B) there are no Hazardous Materials stored or otherwise located in, on or under
any of the property or assets of the Company or its Subsidiaries, except in
compliance with and as would not be expected to result in liability under any
Environmental Law; and (C) there have been no releases or threatened releases of
Hazardous Materials by the Company or its Subsidiaries in, on or under any
property currently or formerly owned or operated by the Company or its
Subsidiaries.
(ii) To the knowledge of the Company, none of the assets or
operations of the Company or its Subsidiaries is the subject of any federal,
state or local investigation evaluating whether (A) any remedial action is
needed to respond to a release or threatened release of any Hazardous Materials
into the environment or (B) any release or threatened release of any Hazardous
Materials into the environment is in contravention of any Environmental Law.
(iii) Neither the Company, nor any of its Subsidiaries has
received any notice or claim, nor are there pending or, to the knowledge of the
Company, threatened lawsuits or proceedings against them, with respect to
violations of or liability under any Environmental Law or in connection with the
presence of or exposure to any Hazardous Materials in the environment or any
release or threatened release of any Hazardous Materials into the environment.
(iv) Neither the Company, nor its Subsidiaries has any present or
contingent liability in connection which the presence either on or off the
property or assets of the Company or its Subsidiaries of any Hazardous Materials
or any release or threatened release of any Hazardous Materials into the
environment, except for any liability which would not have a Material Adverse
Effect.
(t) AFFILIATED TRANSACTIONS. Except as disclosed in the Company
Reports or as set forth on Schedule 3(t) hereto, no officer, director or
Affiliate of the Company or any Subsidiary or, to the knowledge of the Company,
any individual related by blood, marriage or adoption to any such individual or
any entity in which any such Person or individual owns a greater than 10%
beneficial interest in the Company or any Subsidiary, is a party to any
agreement, contract, commitment or transaction with the Company or any
Subsidiary that is material to the Company or such Subsidiary or has any
material interest in any material property used by the Company or any
Subsidiary.
25
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
As a material inducement to the Company to enter into this Agreement
and issue and sell the Series D Preferred Stock hereunder, the Investor hereby
represents and warrants that:
(a) EXECUTION; AUTHORIZATION; NO CONTRAVENTION. The Investor has
duly executed and delivered to the Company each Transaction Document to which it
is a party, and each such Transaction Document constitutes a valid and legally
binding obligation of the Investor, enforceable against the Investor in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
The execution, delivery and performance by the Investor of each Transaction
Document to which it is a party and the consummation of the transactions
contemplated thereby: (a) are within the Investor's corporate power and
authority and have been duly authorized by all necessary corporate action on the
part of the Investor; (b) do not and will not conflict with or contravene the
terms of or require any consent, authorization or approval pursuant to the
Investor's certificate of incorporation or bylaws; (c) do not and will not
violate, conflict with or result in any breach or contravention of or require
any consent, authorization, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency or other Person pursuant to (i) any material agreement, lease or
contract of such Investor, or (ii) any applicable statute or any rule or
regulation of any governmental authority or any order or decree applicable to
such Investor (other than as required by the HSR Act or Section 271 of the
Communications Act of 1934, as amended by the Telecommunications Act of 1996).
(b) SECURITIES ACT. The Investor is acquiring the Series D Preferred
Stock solely for the purpose of investment and not with a view to, or for sale
in connection with, any distribution thereof in violation of the Securities Act.
The Investor acknowledges that the shares of Series D Preferred Stock are not
registered under the Securities Act or any applicable state securities law, and
that such shares may not be transferred or sold except pursuant to the
registration provisions of such Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulations as
applicable and are subject to substantial restrictions on transferability under
the terms of the Stockholders' Agreement. The Investor is knowledgeable,
sophisticated and experienced in business and financial matters of the type
contemplated by the Transaction Documents and is able to bear the economic risks
associated with its investment in the Company. The Investor has been afforded
access to information regarding the Company and its Subsidiaries and their
respective financial condition, operating results, properties, liabilities,
operations and
26
management sufficient to enable it to evaluate the risks and merits of its
investment in the Company.
(c) BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by the Transaction Documents for which the Company will have any
liability or responsibility based on any arrangement or agreement binding upon
the Investor.
SECTION 5. COVENANTS.
(a) INSPECTION RIGHTS. The Company shall permit, and cause its
Subsidiaries to permit, the representatives designated by the Investor so long
as (i) the Investor and its Affiliates together beneficially own 1,600,000
shares of Common Stock (including Common Stock issuable upon conversion of
Series D Preferred Stock, Class B Common Stock or other convertible securities
or upon the exercise of any outstanding options, warrants, rights or
obligations, other than the Warrants) or (ii) the representation and warranties
of the Company set forth in Section 3 hereof survive, upon reasonable notice and
during normal business hours, to (x) visit and inspect any of the properties of
the Company and its Subsidiaries, (y) examine the corporate and financial
records of the Company and its Subsidiaries and to make copies thereof, and (z)
discuss the affairs, finances and accounts of any such corporations with the
directors, officers, key employees and (with the prior consent of the Company,
which will not be unreasonably withheld) independent accountants of the Company
and its Subsidiaries.
(b) CONFIDENTIALITY. The Investor shall hold in confidence all
information and data obtained by it from the Company or its Subsidiaries
(whether in connection with the negotiation of the transactions contemplated by
the Transaction Documents, pursuant to Section 5(a) or otherwise) and shall not
disclose such information to any Person without the prior written consent of the
Company (except that the Investor may disclose such information to those of its
Affiliates, directors, officers and other representatives who require access to
such information in order to enable the Investor to exercise its rights under
the Transaction Documents or for any other proper purpose contemplated thereby
and who agree to be subject to the restrictions set forth in this Section 5(b));
provided, however, that the provisions of this Section 5(b) shall not apply to
any information or data that can be shown (i) to be generally available to the
public through no fault of the Investor or its Affiliates, directors, officers
and other representatives or (ii) to have been lawfully obtained by the Investor
from other sources not subject to a confidentiality obligation to the Company.
27
(c) COMPLIANCE WITH AGREEMENTS. The Company shall perform and
observe all of its obligations to each holder of the Series D Preferred Stock
issued hereunder that are set forth in the Transaction Documents, the
Certificate of Amendment and the By-law Amendment.
(d) DEBT OFFERING. The Company shall use its reasonable best efforts
to raise at least $50,000,000 in debt no later than twelve months from the date
hereof which debt securities shall not be convertible into equity securities of
the Company; PROVIDED, FURTHER, that the Company shall not be obligated to
pursue, approve or effectuate any public debt offering which the Board of
Directors of the Company determines in good faith (whether based on prevailing
market conditions or other relevant factors) is not on commercially reasonable
terms or is not in the best interest of the Company and its stockholders.
(e) APPROVAL BY THE COMPANY'S STOCKHOLDERS. (i) Subject to the last
sentence of this subparagraph (i), the Company will take all action necessary in
connection with the irrevocable written consents delivered by the stockholders
listed on Appendix D to the Stockholders' Agreement (including the completion
and mailing of an information statement relating to the approval of the
Certificate of Amendment and the issuance of Common Stock in connection with the
exercise of any Warrants (the "INFORMATION STATEMENT")) in accordance with and
subject to the applicable provisions of the DGCL and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder and
its certificate of incorporation and bylaws to notify the holders of the
Company's shares as promptly as practicable of the approval of the Certificate
of Amendment and the issuance of Common Stock in connection with the exercise of
any Warrants. The record date for purposes of determining the holders of record
entitled to consent is pursuant to this subparagraph (i) shall be as determined
pursuant to Section 213(b) of the DGCL without any action being taken by the
Company or its board of directors with respect to setting such record date.
Notwithstanding the foregoing and notwithstanding any other provision of this
Agreement to the contrary, to the extent the Company is unable or it becomes
reasonably impractical for the Company, pursuant to the rules and regulations of
the SEC and/or of the Nasdaq National Market to obtain the requisite stockholder
approval for this Agreement, by means of the irrevocable written consents and as
contemplated by this subparagraph, the Company shall and shall be entitled to
seek to obtain such stockholder approval pursuant to subparagraph (ii) below.
(ii) To the extent required as contemplated by the last sentence
of subparagraph (i) above, the Company will take all action necessary (including
the completion and mailing of a proxy statement) in accordance with and subject
to the
28
applicable provisions of the DGCL and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder and its
Certificate of Incorporation and bylaws to convene a meeting of holders of
shares of the Company's Common Stock as promptly as practicable to consider
and vote upon the approval of the Certificate of Amendment and the issuance
of Common Stock in connection with the exercise of any Warrants. To the
extent the Company shall determine it to be necessary or appropriate, in
respect of any such meeting, to solicit proxies in order to obtain the
requisite stockholder approval, such solicitation shall be made in accordance
with Regulation 14A of the SEC. Subject to fiduciary duty requirements of
applicable law, in the event of such a proxy solicitation, the Board of
Directors of the Company shall recommend such approval and the Company shall
use its best efforts to solicit such approval.
(iii) The Information Statement or the proxy statement, as the
case may be, as of the date that it is first mailed to the Company's
stockholders, will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission
to state a material fact was made by the Company in reliance upon information
furnished to the Company by the Investor specifically for use in the
Information Statement.
(iv) Neither a preliminary nor a definitive Information Statement
(nor proxy statement) shall be filed, and no amendment or supplement to a
preliminary or definitive Information Statement (nor proxy statement) will be
made by the Company, without consultation with the Investor and its counsel.
The Information Statement shall contain the notices and other information
required by Section 228(d) of the DGCL as applicable.
(f) FILINGS. On the twentieth day following the mailing of the
Information Statement to the Company's stockholders in compliance with
Regulation 14C promulgated under the Securities Exchange Act of 1934, the
Company will file the Certificate of Amendment with the Secretary of State of
the State of Delaware. The Company and the Investor will promptly file with the
FTC and the Antitrust Division a notification and report form in connection with
the transactions contemplated by the Transaction Documents and will promptly
file documentary materials if and when required by the HSR Act in connection
with any of the transactions contemplated by this Agreement and the Transaction
Documents and promptly file any additional information requested as soon as
reasonably practicable after receipt of request thereof. Each of the Company
and the Investor will use their reasonable best efforts to obtain as promptly as
practicable after
29
the date hereof early termination or expiration of any waiting period
applicable under the HSR Act to the issuance to the Investor of shares of
common stock upon conversion of the shares of Series D Preferred Stock and
exercise of the Warrants.
(g) RESERVATION OF COMMON STOCK. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of the conversion of the shares of Series D
Preferred Stock, the number of shares of its Common Stock issuable upon the
conversion of such shares of Series D Preferred Stock. All shares of Common
Stock which are so issuable shall, when issued upon the conversion of the Series
D Preferred Stock, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges.
(h) FURTHER ASSURANCES. If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement or
the Transaction Documents, the proper officers or directors of the Company or
the Investor, as the case may be, shall execute and deliver any further
instruments or documents and take all such necessary action that may reasonably
be requested by the other party.
(i) VOICE AND DATA SERVICES AGREEMENT. Upon receipt of Regulatory
Relief, the Company shall cause HM Corporation promptly, and in no event later
than three days after receipt of Regulatory Relief (as hereinafter defined), to
enter into the Voice and Data Services Agreement (the "Voice/Data Agreement")
with SBCS substantially in the form attached as Exhibit 5(i) to this Agreement.
The Company shall cause HM Corporation to perform its obligations under the
Voice/Data Agreement entered into pursuant to this Section 5(i). HM Corporation
shall provide to SBCS, on a confidential basis, complete monthly call detail
records including, without limitation, information on where calls made by,
through or to HM Corporation originate or terminate by LATA and/or country and
the length of call. As used herein, "HM Corporation" shall mean HighwayMaster
Corporation, a Delaware corporation, and its successors and assigns and any
other subsidiary or other Affiliate controlled by the Company which purchases
Long Distance Service and/or Other Services, as those terms are defined in the
Voice/Data Agreement. "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. This covenant shall survive until the
Voice/Data Agreement is terminated or expires in accordance with its terms.
(j) MOBILE CARRIER. From and after the date of this Agreement, the
Company shall cause HM Corporation to procure cellular services from SBMS as
30
HM Corporation's primary carrier in any U.S. market in which SBMS has a
cellular network. Such cellular services will be provided at rates and on
terms and conditions comparable to those in the existing contract between HM
Corporation and SBMS for provision of cellular services (dated originally as
of June 7, 1993 as amended, which has been renewed and remains in effect as
of September 27, 1996), provided that such terms and conditions shall be no
less favorable to HM Corporation than those prevailing in the same market at
the same time. The Company shall cause HM Corporation to enter into and to
perform its obligations under any and all agreements required to effect the
foregoing obligation. This covenant shall survive as long as Sections 3(b)
and 3(c) to the Stockholders' Agreement survive. To the extent that the
foregoing obligation of HM Corporation to treat SBMS as the primary carrier
in any U.S. market in which SBMS has a cellular network would conflict with
an existing agreement for cellular services with another cellular carrier
("Existing Agreement"), the provision of cellular services by SBMS to HM
Corporation shall commence upon the termination of such Existing Agreement.
The Company shall cause all Existing Agreements (to the extent they provide
that a cellular provider other than SBMS will be the primary carrier for HM
Corporation in any market in which SBMS has a cellular network) to terminate
as soon as practicable, but only to the extent that no breach or penalty
results from termination of any such Existing Agreement. In the event that
termination of an Existing Agreement will result in penalties to HM
Corporation, the Company will allow such Existing Agreement to expire in
accordance with its terms and will take no action to renew, continue or
extend such Existing Agreement.
(k) TECHNICAL SERVICES AGREEMENT. The Company shall cause HM
Corporation to perform its obligations under the Technical Services Agreement.
SECTION 6. SURVIVAL AND INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; KNOWLEDGE OF BREACH; INDEMNIFICATION. Notwithstanding any otherwise
applicable statute of limitations, the representations and warranties of each of
the Investor and the Company, respectively, included or provided for herein
shall survive the execution and delivery of this Agreement until the expiration
of nine months after the receipt by the Investor or the Company, as the case may
be, of audited consolidated financial statements for the other party, as of and
for the year ending December 31, 1996, together with a report thereon by the
other party's independent public accountants PROVIDED, HOWEVER, that any
representation, warranty, covenant or agreement contained in Sections 3(j), 3(n)
and 4(c) shall survive the execution and delivery of this Agreement until the
expiration of the applicable statute of limitations (including any waivers or
extensions thereof) with respect to such matters; provided, however, that the
provisions of this Section 6 shall constitute the
31
exclusive remedy on the part of any party hereto in respect of a breach of
the representations and warranties of the other party contained in this
Agreement. The covenants and other agreements contained in this Agreement
shall survive the execution and delivery of this Agreement except that
covenants or agreements with a term specified therein shall terminate at the
end of such term. Investor and the Company shall indemnify each other for
breaches of the foregoing representations, warranties and covenants as to
which the indemnified party has given notice during the periods of survival
set forth above, PROVIDED, THAT, in no event shall the Investor be liable to
the Company or the Company be liable to the Investor, as the case may be,
pursuant to this Section 6(a), for any breach of the representations,
warranties, covenants and agreements included or provided for herein or in
any schedule or certificate or other document delivered pursuant to this
Agreement, unless and until all claims for which damages are recoverable
hereunder by the Investor or the Company, as the case may be, exceed $250,000
(the "DEDUCTIBLE"), in which case the Investor or the Company, as the case
may be, shall be entitled to damages equal to such excess, but not more than
the Purchase Price plus the charges and expenses (including reasonable
attorneys' fees and expenses) incurred by the party sustaining such damages
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby. Any payments pursuant to this
Section 6(a) shall be treated as an adjustment to the Purchase Price for all
Tax purposes. The indemnification provided for by this Section 6(a) shall
apply notwithstanding any investigation made by or on behalf of any party.
(b) INDEMNIFICATION FOR THIRD PARTY CLAIMS; METHOD OF ASSERTING
CLAIMS. (i) The Company on the one hand, or the Investor, on the other hand
(the "INDEMNIFYING PARTY"), shall indemnify respectively the Investor, on the
one hand, or the Company, on the other hand, as the case may be (the
"INDEMNIFIED PARTY"), against and in respect of all losses, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
expenses incurred in investigating, preparing or defending any claims covered
hereby) sustained or incurred arising out of any claims against the
Indemnified Party by a third party arising out of any breaches of the
Indemnifying Party's representations, warranties, covenants and agreements
set forth in this Agreement. The indemnification provided for by this
Section 6(b) shall apply notwithstanding any investigation made by or on
behalf of any party.
(ii) In the event that an Indemnified Party shall assert a claim for
indemnity under this Section 6(b), the Indemnified Party will promptly after the
receipt of notice of the commencement of any action, investigation, claim,
demand or other proceeding by a third party against such Indemnified Party in
respect of which indemnity may be sought from any Indemnifying Party under this
Section 6, notify the Indemnifying
32
Party in writing of the commencement thereof; PROVIDED, that the omission of
the Indemnified Party to so notify such Indemnifying Party of any such action
shall not relieve such Indemnifying Party from any liability which it may
have to such Indemnified Party under this Section 6(b) unless, and only to
the extent that, such omission prejudices the ability of the Indemnifying
Party to defend such action, investigation, claim, demand or other proceeding
or to reduce or mitigate its liability hereunder, whether as a result of the
forfeiture of substantive rights or defenses or otherwise. In case any such
action, claim or other proceeding shall be brought against the Indemnified
Party such Indemnified Party shall notify the applicable Indemnifying Party
of the commencement thereof, the Indemnifying Party shall be entitled to
assume the defense thereof at its own expense, with counsel satisfactory to
such Indemnified Party in its reasonable judgment, PROVIDED that the
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action,
claim or proceeding in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ
separate counsel at the Indemnifying Party's expense and to control its own
defense of such action, claim or proceeding if, in the reasonable opinion of
counsel to such Indemnified Party, a conflict or potential conflict exists
between the Indemnifying Party, on the one hand, and such Indemnified Party,
on the other hand, that would prevent the representation of the Indemnified
Party by counsel selected by and subject to the control of the Indemnifying
Party under applicable law or codes of professional responsibility. Each of
the Company and the Investor agrees that it will not, without the prior
written consent of the Indemnified Party, settle, compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated hereby (if the Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party from all liability arising or
that may arise out of such claim, action or proceeding.
SECTION 7. MISCELLANEOUS.
(a) EXPENSES. The Company shall (i) reimburse the Investor for stamp
and other stock issuance or similar taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery or
acquisition of any shares of Series D Preferred Stock to be issued hereunder and
(ii) bear all costs and expenses of printing and mailing the Information
Statement or proxy statement, and any filing and other fees paid to this the SEC
in connection with the filing of such Information Statement, and all costs and
expenses incurred in connection with the convening of a special meeting of the
stockholders of the Company pursuant to Section 5(e)(ii). Except as otherwise
33
expressly provided in this Agreement, the parties shall bear their own
respective expenses (including, but not limited to, all compensation and
expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
transactions contemplated hereby and by the Transaction Documents.
(b) PUBLIC DISCLOSURE. Each of the parties to this Agreement hereby
agrees with the other parties hereto that, except as may be required to comply
with the requirements of applicable law or the rules and regulations of each
stock exchange or of the Nasdaq National Market or other automated quotation
system upon which the securities of one of the parties is listed or to which
such securities are admitted for trading, no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by both parties hereto; PROVIDED, HOWEVER, that to the extent that
either party to this Agreement is required by law or the rules and regulations
of any stock exchange or of the Nasdaq National Market or other automated
quotation system upon which the securities of one of the parties is listed or to
which such securities are admitted for trading, to make such a public
disclosure, such public disclosure shall only be made after prior consultation
with the other party to this Agreement.
(c) SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Investor may designate, by written
notice to the Company, an Affiliate to purchase the shares of Series D Preferred
Stock hereunder; provided, however, that no such designation shall relieve the
Investor of its obligations under this Agreement.
(d) REMEDIES. Any Person having any rights under any provision of
this Agreement will be entitled to proceed to enforce such rights specifically,
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.
(e) AMENDMENTS AND WAIVERS. This Agreement and any of the terms
contained herein may only be amended or modified by the Company and the Investor
in writing.
34
(f) SEVERABILITY. 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, 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.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, 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.
(h) DESCRIPTIVE HEADINGS. 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.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware without
giving effect to the conflict of laws provisions thereof.
(j) NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Investor and to the Company at the addresses
indicated below:
IF TO THE INVESTOR, TO: Southwestern Bell Wireless Holdings, Inc.
17330 Preston Road
Suite 100A
Dallas, Texas 75252
Attention: President
Facsimile: (972) 733-2012
and to:
SBC Communications Inc.
175 E. Houston
San Antonio, Texas 78205
Attention: General Attorney, Mergers & Acquisitions
35
Facsimile: (210) 351-3488
WITH A COPY TO: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Janet T. Geldzahler
Facsimile: (212) 558-3588
IF TO THE COMPANY, TO: HighwayMaster Communications, Inc.
16479 Dallas Parkway, Suite 710
Dallas, Texas 75248
Attention: William C. Kennedy, Jr.
Facsimile: (972) 930-7263
WITH A COPY TO: Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Geoffrey L. Newton
Facsimile: (214) 953-6503
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(k) ENTIRE AGREEMENT. This Agreement and the Schedules hereto and
the other Transaction Documents represent the entire agreement between the
Investor and the Company with respect to the subject matter hereof, and such
agreements supersede all prior agreements between such parties with respect to
the subject matter hereof.
(l) DEFINITION OF KNOWLEDGE. For the purpose of this Agreement,
"knowledge" or "known" or a similar phrase shall mean the knowledge, after
reasonable inquiry, of the executive officers of the Company or its Subsidiaries
(which reasonable inquiry shall be limited to such executive officer's own
knowledge obtained in the performance of his duties and inquiry of employees of
the Company).
36
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the date first above written.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ William C. Saunders
---------------------------------------
Name: William C. Saunders
-------------------------------------
Title: President
-----------------------------------
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ Stan Sigman
---------------------------------------
Name: Stan Sigman
-------------------------------------
Title: President & Chief Executive Officer
-----------------------------------
37