SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HIGHWAYMASTER COMMUNICATIONS, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
431263 10 2
(Cusip Number)
Annalee Cohen
The Erin Mills Group
7501 Keele Street, Suite 500
Concord, Ontario L4K 1Y2
(416) 736-1809
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Terry M. Schpok, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Dallas, Texas 75201-4675
(214)969-2870
September 27, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement. [ ]
<PAGE>
CUSIP 431263 10 2 13D Page 2 of 16 Pages
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C>
1) Names of Reporting Person The Erin Mills Development Corporation
S.S. or I.R.S. Identification
No. of Above Person
- --------------------------------------------------------------------------------------------------
2) Check the Appropriate Box (a)
if a Member of a Group (b) X
----- --------
(See Instructions)
- -----------------------------------------------------------------------------------------------------
3) SEC Use Only
- -----------------------------------------------------------------------------------------------------
4) Source of Funds (See instructions) 00, BK
- -----------------------------------------------------------------------------------------------------
5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
- -----------------------------------------------------------------------------------------------------
(6) Citizenship or Place of Ontario, Canada
Organization
- -----------------------------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power* 527,680
Beneficially Owned (8) Shared Voting Power* 9,305,526
by Each Reporting (9) Sole Dispositive Power* 527,680
Person With (10) Shared Dispositive Power* 9,305,526
- -----------------------------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially 9,833,206
Owned by Each Reporting Person*
- -----------------------------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount
in Row (11) Excludes Certain Shares
(See Instructions)
- -----------------------------------------------------------------------------------------------------
(13) Percent of Class Represented 39.7%
by Amount in Row (11)
- -----------------------------------------------------------------------------------------------------
(14) Type of Reporting Person CO
(See Instructions)
- -----------------------------------------------------------------------------------------------------
* But see Item 5.
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 3 of 16 Pages
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C>
1) Names of Reporting Person The Erin Mills Investment Corporation
S.S. or I.R.S. Identification
No. of Above Person
- --------------------------------------------------------------------------------------------------
2) Check the Appropriate Box (a)
if a Member of a Group (b) X
----- --------
(See Instructions)
- -----------------------------------------------------------------------------------------------------
3) SEC Use Only
- -----------------------------------------------------------------------------------------------------
4) Source of Funds (See instructions) 00
- -----------------------------------------------------------------------------------------------------
5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
- -----------------------------------------------------------------------------------------------------
(6) Citizenship or Place of Alberta, Canada
Organization
- -----------------------------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power* 0
Beneficially Owned (8) Shared Voting Power* 9,305,526
by Each Reporting (9) Sole Dispositive Power* 0
Person With (10) Shared Dispositive Power* 9,305,526
- -----------------------------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially 9,305,526
Owned by Each Reporting Person*
- -----------------------------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount
in Row (11) Excludes Certain Shares
(See Instructions)
- -----------------------------------------------------------------------------------------------------
(13) Percent of Class Represented 37.6%
by Amount in Row (11)
- -----------------------------------------------------------------------------------------------------
(14) Type of Reporting Person CO
(See Instructions)
- -----------------------------------------------------------------------------------------------------
* But see Item 5.
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 4 of 16 Pages
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C>
1) Names of Reporting Person Erin Mills International Investment
S.S. or I.R.S. Identification Corporation
No. of Above Person
- --------------------------------------------------------------------------------------------------
2) Check the Appropriate Box (a)
if a Member of a Group (b) X
----- --------
(See Instructions)
- -----------------------------------------------------------------------------------------------------
3) SEC Use Only
- -----------------------------------------------------------------------------------------------------
4) Source of Funds (See instructions) 00, AF
- -----------------------------------------------------------------------------------------------------
5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
- -----------------------------------------------------------------------------------------------------
(6) Citizenship or Place of Barbados, W.I.
Organization
- -----------------------------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power* 0
Beneficially Owned (8) Shared Voting Power* 9,061,310
by Each Reporting (9) Sole Dispositive Power* 0
Person With (10) Shared Dispositive Power* 9,061,310
- -----------------------------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially 9,061,310
Owned by Each Reporting Person*
- -----------------------------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount
in Row (11) Excludes Certain Shares
(See Instructions)
- -----------------------------------------------------------------------------------------------------
(13) Percent of Class Represented 36.6%
by Amount in Row (11)
- -----------------------------------------------------------------------------------------------------
(14) Type of Reporting Person CO
(See Instructions)
- -----------------------------------------------------------------------------------------------------
* But see Item 5.
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 5 of 16 Pages
Item 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value of $.01 per share
(the "Common Stock"), of HighwayMaster Communications, Inc., a Delaware
Corporation (the "Issuer"). The Common Stock is registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
principal executive offices of the Issuer are located at 16479 Dallas Parkway,
Suite 710, Dallas, Texas 75248.
Item 2. IDENTITY AND BACKGROUND.
This Statement is filed by The Erin Mills Development Corporation, an
Ontario, Canada corporation ("EMDC"), The Erin Mills Investment Corporation, an
Alberta, Canada corporation ("TEMIC"), and Erin Mills International Investment
Corporation, a Barbados, W. I. corporation ("EMIIC"). EMDC, TEMIC and EMIIC are
collectively referred to herein as the "Reporting Persons". EMDC is principally
engaged in the business of developing real estate for sale and commercial
rental. Its principal business offices are located at 7501 Keele Street, Suite
500, Concord, Ontario L4K 1Y2, Canada. TEMIC is a venture capital company and is
principally engaged in the business of financing other companies through equity
and debt-based instruments. Its principal business offices are located at 7501
Keele Street, Suite 500, Concord, Ontario L4K 1Y2, Canada. EMIIC is also a
venture capital company and is principally engaged in the business of financing
other companies through equity and debt-based instruments. Its principal
business offices are located at Trident House, Suite 204(1), Broad Street,
Bridgetown, Barbados, W. I.
Attached as Schedule I hereto and incorporated herein by reference is a
list of all executive officers and directors of EMDC, TEMIC, and EMIIC. Such
Schedule I also sets forth the business address and principal occupation or
employment of each individual listed thereon.
All such individuals are citizens of Canada.
During the last five years, none of the Reporting Persons and, to the
best knowledge of the Reporting Persons, none of the other persons with respect
to whom information is given in response to this Item 2, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On February 14, 1996, TEMIC and EMIIC filed a Schedule 13G with respect
to shares of Common Stock that were acquired by TEMIC and EMIIC in transactions
prior to and in connection with the initial public offering of the Common Stock.
This Schedule 13D is being
<PAGE>
CUSIP 431263 10 2 13D Page 6 of 16 Pages
filed to report the acquisition of additional shares of Common Stock by the
Reporting Persons which occurred on September 27, 1996.
The acquisition of shares of Common Stock by the Reporting Persons that
requires the filing of this Schedule 13D was part of a recapitalization
transaction of the Issuer effected by the Recapitalization Agreement dated as of
September 27, 1996 (the "Recapitalization"). As of such date, (i) the Reporting
Persons sold their holdings of shares of Class B Preferred Stock, par value $.01
per share, of HighwayMaster (the "Class B Preferred Stock") to the Issuer in
exchange for certain shares of Common Stock, and (ii) EMDC and EMIIC purchased
certain newly issued shares of Common Stock from the Issuer. Immediately prior
to the Recapitalization, (i) EMDC held 459.60 shares of Class B Preferred Stock,
(ii) TEMIC held 120 shares of Class B Preferred Stock, and (iii) EMIIC held
349.505 shares of Class B Preferred Stock. Pursuant to the Recapitalization, (i)
the Issuer issued 367,680 shares of Common Stock to EMDC in exchange for 459.60
shares of Class B Preferred Stock, (ii) the Issuer issued 96,000 shares of
Common Stock to TEMIC in exchange for 120 shares of Class B Preferred Stock, and
(iii) the Issuer issued 279,604 shares of Common Stock to EMIIC in exchange for
349.505 shares of Class B Preferred Stock. In addition, pursuant to the
Recapitalization, (i) the Issuer issued 160,000 shares of Common Stock to EMDC
for $2,000,000 and (ii) the Issuer issued 640,000 shares of Common Stock to
EMIIC for $8,000,000. The source of such funds was a certain nonrevolving credit
facility, dated as of October 9, 1996, by and among EMDC and the Bank of Nova
Scotia (the "Bank"). EMDC and the Bank entered into a letter agreement and
binding term sheet as evidence of the $10,000,000 credit facility (the letter
agreement and binding term sheet collectively, the "Letter Agreement"). EMDC and
the Bank will enter into a definitive credit agreement to evidence the
$10,000,000 credit facility. Under this Letter Agreement, EMDC borrowed
$10,000,000, at an interest rate of LIBOR plus 2% or Base Rate Canada plus 1%,
depending on the circumstances, maturing on May 31, 1999. EMDC used $2,000,000
of the $10,000,000 facility to purchase 160,000 shares of Common Stock. The
remaining $8,000,000 balance was advanced by EMDC to TEMIC through an
interest-bearing loan. TEMIC used such funds to purchase from EMIIC Class F
Special Shares of EMIIC. EMIIC used such funds to purchase 640,000 shares of
Common Stock. A copy of the Letter Agreement is attached hereto as Exhibit B and
is incorporated herein by reference.
Item 4. PURPOSE OF TRANSACTION.
All shares of Common Stock held by the Reporting Persons are held for
investment purposes. The Reporting Persons intend to continue to review their
investment in the Issuer on an ongoing basis. Based upon the results of such
review, the Reporting Persons' contractual obligations entered into in
connection with such investment, market and general economic conditions,
regulatory approvals and other regulatory conditions and other factors the
Reporting Persons deem relevant, the Reporting Persons may seek to modify their
investment in the Issuer through any available means including, without
limitation, increases or decreases in its investment through open market
purchases or sales or privately negotiated transactions or actions of the type
enumerated in clauses (a) through (j) of Item 4 of the Schedule 13D.
<PAGE>
CUSIP 431263 10 2 13D Page 7 of 16 Pages
Except as stated above, the Reporting Persons have not formulated any
plans or proposals of the type referred to in clauses (a) through (j) of Item 4
of the Schedule 13D, although they reserve the right to formulate such plans or
proposals in the future.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons may be deemed, pursuant to Rule 13d-3, to own
beneficially an aggregate of 9,833,206 shares of Common Stock, representing
approximately 39.7% of the outstanding Common Stock. EMIIC beneficially owns
9,061,310 shares of Common Stock, representing approximately 36.6% of the
outstanding Common Stock. TEMIC, which is the controlling shareholder of EMIIC,
may be deemed to beneficially own 9,305,526 shares of Common Stock, representing
approximately 37.6% of the outstanding Common Stock. EMDC, which retains voting
control over TEMIC, may be deemed, pursuant to Rule 13d-3, to own beneficially
9,833,206 shares of Common Stock, representing approximately 39.7% of the
outstanding Common Stock.
The persons listed on Schedule I attached hereto, by virtue of
direct or indirect control of EMDC, TEMIC and EMIIC, may be deemed, for purposes
of determining beneficial ownership, pursuant to Rule 13d-3, to own beneficially
the Common Stock owned beneficially by EMDC, TEMIC and EMIIC. Such individuals
expressly disclaim any such beneficial ownership.
See Item 6 for a discussion of the relationship of the Reporting Persons
with other stockholders of the Issuer pursuant to the Stockholders' Agreement
(as defined below) and the disclaimer regarding the formation of a group
pursuant thereto.
(b) EMIIC is the beneficial owner of 9,061,310 shares of Common Stock
and is deemed to share beneficial ownership and the power to vote and dispose of
all such shares with TEMIC and EMDC by reason of TEMIC's status as controlling
shareholder of EMIIC and EMDC holding voting control over TEMIC.
TEMIC is the beneficial owner of 9,305,526 shares of Common
Stock, which includes (i) 9,061,310 shares of Common Stock owned directly by
EMIIC and (ii) 244,216 shares of Common Stock owned directly by TEMIC, and is
deemed to share beneficial ownership and the power to vote and dispose of (i)
all such shares with EMDC by reason of EMDC holding voting control over TEMIC
and (ii) 9,061,310 shares of Common Stock with EMIIC by reason of TEMIC's status
as controlling shareholder of EMIIC.
EMDC may be deemed the beneficial owner of 9,833,206 shares of
Common Stock, which includes (i) 9,061,310 shares of Common Stock owned directly
by EMIIC, (ii) 244,216 shares of Common Stock owned directly by TEMIC and (iii)
527,680 shares of Common Stock owned directly by EMDC, and may be deemed to
share beneficial ownership and the power to vote and dispose of (i) 9,305,526
shares of Common Stock with TEMIC by reason of EMDC holding voting control over
TEMIC and (ii) 9,061,310 shares of Common
<PAGE>
CUSIP 431263 10 2 13D Page 8 of 16 Pages
Stock with EMIIC by reason of TEMIC's status as controlling shareholder of
EMIIC. EMDC holds the sole power to vote and dispose the 527,680 shares of
Common Stock owned directly by EMDC.
(c) See Item 3.
(d) Not applicable.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
On September 27, 1996, the Issuer entered into certain transactions
including (i) the issuance and sale by the Issuer of 1,000 shares of its Series
D Participating Convertible Preferred Stock, par value $.01 per share, to
Southwestern Bell Wireless Holdings, Inc. ("SBWH") in exchange for a payment in
the amount of $20,000,000 and (ii) the issuance by the Issuer to SBWH of
5,000,000 warrants to purchase shares of Common Stock ((i) and (ii)
collectively, the "SBWH Investment").
Concurrently with the SBWH Investment, the Reporting Persons entered
into a Recapitalization Agreement, dated as of September 27, 1996, by and
between the Issuer, the Reporting Persons, and certain other stockholders of the
Issuer listed therein (the "Recapitalization Agreement"). A copy of the
Recapitalization Agreement is attached hereto as Exhibit C and is incorporated
herein by reference. As provided in the Recapitalization Agreement, among other
things, (i) EMDC purchased 160,000 shares of Common Stock for $2,000,000, (ii)
EMIIC purchased 640,000 shares of Common Stock for $8,000,000, (iii) EMDC
exchanged 459.60 shares of Class B Preferred Stock for 367,680 shares of Common
Stock, (iv) TEMIC exchanged 120 shares of Class B Preferred Stock for 96,000
shares of Common Stock, and (v) EMIIC exchanged 349.505 shares of Class B
Preferred Stock for 279,604 shares of Common Stock.
In connection with the SBWH Investment and the Recapitalization, the
Reporting Persons also entered into an Amended and Restated Stockholders'
Agreement, dated as of September 27, 1996 (the "Stockholders' Agreement"), by
and among the Issuer, the Reporting Persons, SBWH and certain other stockholders
of the Issuer as identified in the Stockholder's Agreement. As a result of the
Stockholders' Agreement, the parties thereto may be deemed to be members of a
"group" within the meaning of Rule 13d-5(b)(1) promulgated under the Securities
Exchange Act of 1934 and, accordingly, may be deemed to be the beneficial owners
of all shares of the Common Stock subject to the Stockholders' Agreement. In
total, 20,617,328 shares of Common Stock, representing approximately 83.3% of
the outstanding shares of the Common Stock, are subject to the Stockholders'
Agreement. EMDC, TEMIC and EMIIC do not affirm the existence of such a group and
expressly disclaim beneficial ownership of the shares of Common
<PAGE>
CUSIP 431263 10 2 13D Page 9 of 16 Pages
Stock held by the other parties to the Stockholders' Agreement. A copy of the
Stockholders' Agreement is attached hereto as Exhibit D and is incorporated
herein by reference. Capitalized terms used in this Item 6 and not defined
herein shall have the meanings assigned to them in the Stockholders' Agreement.
As provided in the Stockholders' Agreement, none of the Carlyle
Stockholders, the Erin Mills Stockholders (other than Robert S. Folsom and
Robert T. Hayes), William C. Kennedy, Jr. or William C. Saunders (collectively
the "First Refusal Stockholders") shall sell or otherwise transfer any shares of
the Issuer unless such First Refusal Stockholder provides a written notice of an
offer to SBWH promptly that contains an irrevocable offer to sell such shares to
SBWH. The following transactions shall be exempt from these requirements: (i) a
transfer of shares by a First Refusal Stockholder to SBWH; (ii) a transfer by a
stockholder by will or intestate succession; (iii) a transfer by a stockholder
to any related party of such stockholder; (iv) a transfer of shares (A) by any
Carlyle Stockholder to any other Carlyle Stockholder or to a Clipper
Stockholder, (B) by any Erin Mills Stockholder to any other Erin Mills
Stockholder, or (C) by William C. Kennedy, Jr. or William C. Saunders to any
By-Word Stockholder; or (v) a transfer of shares that has been approved in
writing by SBWH as an exempt transfer.
Pursuant to the Stockholders' Agreement, the Issuer has granted certain
stockholders, including the Reporting Persons, "piggyback" and demand
registration rights in order for them to register and sell shares of Common
Stock under the Securities Act of 1933, as amended.
The Stockholders' Agreement also provides that within fifteen (15) days
after the execution of the Stockholders' Agreement, the total number of members
of the Board of Directors of the Issuer will be reduced to six (6). An
independent director shall be added no later than the date of the next annual
meeting of the stockholders of the Issuer. Prior to the receipt of Regulatory
Relief, the Board shall be composed of seven (7) members: (i) two (2) Directors
shall be designated by a majority in interest of the Erin Mills Stockholders;
(ii) two (2) Directors shall be designated by a majority in interest of the
By-Word Stockholders; (iii) one (1) Director shall be designated by a majority
in interest of the Carlyle Stockholders; and (iv) two (2) additional Directors
shall be persons who are not employed by the Issuer or affiliated with any party
to the Stockholders' Agreement. Upon the conversion of the Series D Preferred
Stock into Class B Common Stock, the number of Directors shall be increased by
one who shall be a person designated by SBWH. If SBWH and its affiliates
beneficially own 20% or more of the common stock of HighwayMaster on a fully
diluted basis, the number of Directors shall further be increased by one and the
additional Director shall also be a designee of SBWH.
The Stockholders' Agreement also provides that following the receipt of
regulatory relief, if SBWH does not hold any Series D Preferred Stock or Class B
Common Stock but does own at least 1.6 million shares of Common Stock (other
than Common Stock issuable under the Warrants or options or warrants issued by
entities other than the Issuer), the approval of SBWH shall be required to
approve the actions that require approval of the holders of the Class B Common
Stock.
<PAGE>
CUSIP 431263 10 2 13D Page 10 of 16 Pages
In connection with the SBWH Investment, EMIIC granted an irrevocable
proxy to SBWH on September 30, 1996, granting SBWH the power to exercise all
voting and other rights in connection with the shares of Common Stock held by
EMIIC on such date (i) in favor of approval of the adoption of a Certificate of
Amendment to the Issuer's Certificate of Incorporation; (ii) in favor of
approval of the issuance by the Issuer to SBWH of shares of Common Stock upon
the exercise of the warrants to purchase an aggregate of up to 5,000,000 shares
of Common Stock; and (iii) against any action or agreement that is inconsistent
with or that is reasonably likely to impeded, interfere with, delay or postpone
the transactions referred to in clause (i) or (ii) above. A copy of the Form of
Irrevocable Proxy executed by EMIIC is attached hereto as Exhibit E and
incorporated herein by reference.
EMDC is currently considering transferring the Common Stock held by EMDC
to TEMIC. After such transfer (i) EMIIC would be the beneficial owner of
9,061,310 shares of Common Stock and would share beneficial ownership and the
power to vote and dispose of all such shares with TEMIC and EMDC by reason of
TEMIC's status as controlling shareholder of EMIIC and EMDC holding voting
control over TEMIC; (ii) TEMIC would be the beneficial owner of 9,833,206 shares
of Common Stock, which would include 9,061,310 shares of Common Stock owned
directly by EMIIC and 771,896 shares of Common Stock owned directly by TEMIC,
and would be deemed to share beneficial ownership and the power to vote and
dispose of (A) all such shares with EMDC by reason of EMDC holding voting
control over TEMIC and (B) 9,061,310 shares of Common Stock with EMIIC by reason
of TEMIC's status as controlling shareholder of EMIIC; and (iii) EMDC may be
deemed the beneficial owner of 9,833,206 shares of Common Stock, which includes
9,061,310 shares owned directly by EMIIC and 771,896 shares owned directly by
TEMIC, and may be deemed to share beneficial ownership and the power to vote and
dispose of (A) 9,833,206 shares of Common Stock with TEMIC by reason of EMDC
holding voting control over TEMIC and (B) 9,061,310 shares of Common Stock with
EMIIC by reason of TEMIC's status as controlling shareholder of EMIIC.
Item 7. MATERIALS TO BE FILED AS EXHIBITS.
EXHIBIT A Joint Filing Agreement, dated as of October 31, 1996, between
the Erin Mills Development Corporation, The Erin Mills Investment
Corporation and Erin Mills International Investment Corporation.
EXHIBIT B Letter Agreement, dated as of October 9, 1996, by and between
The Erin Mills Development Corporation and the Bank of Nova
Scotia.
EXHIBIT C Recapitalization Agreement, entered into as of September 27,
1996, by and between HighwayMaster Communications, Inc. and the
Carlyle Stockholders and the Erin Mills Stockholders (as such
terms are defined in the Recapitalization Agreement).
<PAGE>
CUSIP 431263 10 2 13D Page 11 of 16 Pages
EXHIBIT D Amended and Restated Stockholders' Agreement, dated as of
September 27, 1996, by and among HighwayMaster Communications,
Inc. and each of the Stockholders identified therein.
EXHIBIT E Form of Irrevocable Proxy, executed by Erin Mills International
Investment Corporation.
<PAGE>
CUSIP 431263 10 2 13D Page 12 of 16 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATE: October 31, 1996
SIGNED: THE ERIN MILLS DEVELOPMENT
CORPORATION
By: /s/ GERRY C. QUINN
Gerry C. Quinn
Executive Vice President
SIGNED: THE ERIN MILLS INVESTMENT
CORPORATION
By: /s/ GERRY C. QUINN
Gerry C. Quinn
President
SIGNED: ERIN MILLS INTERNATIONAL
INVESTMENT CORPORATION
By: /s/ STEPHEN L. GREAVES
Stephen L. Greaves
General Manager
<PAGE>
CUSIP 431263 10 2 13D Page 13 of 16 Pages
SCHEDULE I
Information Concerning Executive Officers and Directors
of The Erin Mills Development Corporation,
The Erin Mills Investment Corporation, and
Erin Mills International Investment Corporation.
Unless otherwise indicated, the business address of each individual and
corporation listed below is 7501 Keele Street, Suite 500, Concord, Ontario L4K
1Y2, Canada.
THE ERIN MILLS DEVELOPMENT CORPORATION
<TABLE>
<CAPTION>
NAME AND PRINCIPAL EMPLOYMENT
BUSINESS ADDRESS POSITION AND EMPLOYER
<S> <C> <C>
Mr. Marco Muzzo Director and President President of EMDC and
of EMDC Chairman of the Board
of TEMIC
Mr. John Daniels Director and Vice Vice President of EMDC
President of EMDC and TEMIC
Mr. Alfredo DeGasperis Director and Vice Vice President of EMDC
President of EMDC and TEMIC
Mr. Peter Daniels Director and Vice Vice President of EMDC
President of EMDC and TEMIC
Ms. Elly Reisman Director and Vice Vice President of EMDC
President of EMDC and TEMIC
Mr. Larry Robbins Director and Secretary Secretary of EMDC and
of EMDC TEMIC
Mr. Rudolph Bratty Director and Treasurer Treasurer of EMDC and
of EMDC TEMIC
Mr. Gerry C. Quinn Executive Vice President President of TEMIC and
of EMDC Executive Vice President
of EMDC
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 14 of 16 Pages
THE ERIN MILLS INVESTMENT CORPORATION
<TABLE>
<CAPTION>
NAME AND PRINCIPAL EMPLOYMENT
BUSINESS ADDRESS POSITION AND EMPLOYER
<S> <C> <C>
Mr. Marco Muzzo Director and President President of EMDC and
of TEMIC Chairman of the Board
of TEMIC
Mr. John Daniels Director and Vice Vice President of EMDC
President of TEMIC and TEMIC
Mr. Alfredo DeGasperis Director and Vice Vice President of EMDC
President of TEMIC and TEMIC
Mr. Peter Daniels Director and Vice Vice President of EMDC
President of TEMIC and TEMIC
Ms. Elly Reisman Director and Vice Vice President of EMDC
President of TEMIC and TEMIC
Mr. Larry Robbins Director and Secretary Secretary of EMDC and
of TEMIC TEMIC
Mr. Rudolph Bratty Director and Treasurer Treasurer of EMDC and
of TEMIC TEMIC
Mr. Gerry C. Quinn President of TEMIC President of TEMIC and
Executive Vice President
of EMDC
Ms. Annalee Cohen Vice President Vice President of
of TEMIC TEMIC
ERIN MILLS INTERNATIONAL INVESTMENT CORPORATION
Dr. Trevor A. Carmichael Director, Chairman and Chairman and Secretary of
Trident House Secretary of EMIIC EMIIC
Suite 204(1)
Broad Street
Bridgetown, Barbados W.I.
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 15 of 16 Pages
<TABLE>
<CAPTION>
NAME AND PRINCIPAL EMPLOYMENT
BUSINESS ADDRESS POSITION AND EMPLOYER
<S> <C> <C>
Mr. Andrew C. Ferreira Director and Assistant Assistant Secretary of
Trident House Secretary of EMIIC EMIIC
Suite 204(1)
Broad Street
Bridgetown, Barbados W.I.
Mr. Stephen L. Greaves Director and General General Manager of
Trident House Manager of EMIIC EMIIC
Suite 204(1)
Broad Street
Bridgetown, Barbados W.I.
Mr. Gerry C. Quinn Director of EMIIC President of TEMIC and
Executive Vice President
of EMDC
Ms. Annalee Cohen Director of EMIIC Vice President of TEMIC
</TABLE>
<PAGE>
CUSIP 431263 10 2 13D Page 16 of 16 Pages
EXHIBIT INDEX
EXHIBIT A Joint Filing Agreement, dated as of October 31, 1996, between
the Erin Mills Development Corporation, The Erin Mills Investment
Corporation and Erin Mills International Investment Corporation.
EXHIBIT B Letter Agreement, dated as of October 9, 1996, by and between
The Erin Mills Development Corporation and the Bank of Nova
Scotia.
EXHIBIT C Recapitalization Agreement, entered into as of September 27,
1996, by and between HighwayMaster Communications, Inc. and the
Carlyle Stockholders and the Erin Mills Stockholders (as such
terms are defined in the Recapitalization Agreement).
EXHIBIT D Amended and Restated Stockholders' Agreement, dated as of
September 27, 1996, by and among HighwayMaster Communications,
Inc. and each of the Stockholders identified therein.
EXHIBIT E Form of Irrevocable Proxy, executed by Erin Mills International
Investment Corporation.
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, the undersigned agree to the joint filing on behalf of each of
them of a Statement on Schedule 13D (including any and all amendments thereto)
with respect to the Common Stock, par value $.01 per share, of HighwayMaster
Communications, Inc., and further agree that this Joint Filing Agreement shall
be included as an Exhibit to such joint filings.
The undersigned further agree that each party hereto is responsible for
timely filing of such Statement on Schedule 13D and any amendments thereto, and
for the accuracy and completeness of the information concerning such party
contained therein; provided, however, that no party is responsible for the
accuracy or completeness of the information concerning any other party, unless
such party knows or has reason to believe that such information is inaccurate.
This Joint Filing Agreement may be signed in counterparts with the same
effect as if the signature on each counterpart were upon the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
October 31, 1996.
THE ERIN MILLS DEVELOPMENT CORPORATION
By: /s/ Gerry C. Quinn
Title: Executive Vice President
THE ERIN MILLS INVESTMENT CORPORATION
By: /s/ Gerry C. Quinn
Title: President
ERIN MILLS INTERNATIONAL INVESTMENT
CORPORATION
By: /s/ Stephen L. Greaves
Title: General Manager
<PAGE>
EXHIBIT B
September 24, 1996
The Erin Mills Development Corporation
7501 Keele Street
Suite 500
Concord, Ontario
L4K 1Y2
Attention: Mr. R. P. Bratty, Treasurer
Dear Sir:
Re: Amendment of Credit Facilities in Favour of
The Erin Mills Development Corporation
We are pleased to advise that, subject to the negotiation and completion
of a satisfactory Amended and Restated Loan Agreement, The Bank of Nova Scotia
(the "Bank") will establish facilities in the aggregate amount of
CDN$225,000,000 AND US$11,000,000 upon the terms and conditions as set out in
the attached Term Sheet.
It should be recognized that this Term Sheet represents an outline of
the basis on which the Bank is prepared to extend financing and it is not
necessarily exhaustive as to terms and conditions. The Amended and Restated Loan
Agreement will contain representations, warranties, covenants, hazardous
materials, indemnity and capital adequacy provisions and events of default
standard to the type and amount of the credit facilities offered.
The obligation of the Bank to continue to extend the credit facilities
outlined in this Term Sheet are conditional upon no material adverse change
occurring in the business or financial prospects of the Borrower and the
Borrower and the Bank entering into a mutually satisfactory Amended and Restated
Loan Agreement (and security documentation) on or prior to OCTOBER 30, 1996.
If the terms and conditions as outlined on the attached Term Sheet are
acceptable to you, please have the duplicate copy of this letter executed by the
authorized signing officers of the company and return it to us. Upon receipt of
that copy, we will forward a draft Amended and Restated Loan Agreement for your
consideration.
<PAGE>
We reserve the right to withdraw this letter any time after OCTOBER 10,
1996 if your acceptance has not been received at that time.
Yours very truly,
THE BANK OF NOVA SCOTIA
/s/ M.H. Hallin
M. H. Hallin
Senior Relationship Manager
Real Estate Banking
Accepted this 9th day of October, 1996.
THE ERIN MILLS DEVELOPMENT THE ERIN MILLS INVESTMENT
CORPORATION CORPORATION
By: /s/ Marco Muzzo By: /s/ Marco Muzzo
Name: Marco Muzzo Name: Marco Muzzo
Title: President Title: President
By: /s/ Larry Robbins By: /s/ Larry Robbins
Name: Larry Robbins Name: Larry Robbins
Title: Secretary Title: Secretary
ERIN MILLS INTERNATIONAL
INVESTMENT CORPORATION
By:
Name:
Title:
By: /s/ S.L. Greaves
Name: Stephen L. Greaves
Title: General Manager
Attachments
<PAGE>
TERM SHEET
THE ERIN MILLS DEVELOPMENT CORPORATION
Lender: The Bank of Nova Scotia (the "Bank")
Borrower: The Erin Mills Development Corporation (the "Borrower")
Booking Point: North York Commercial Banking Centre
CREDIT FACILITY A (UNCHANGED)
Amount: Up to $170,000,000 Candian, Operating.
Purpose:
To fund the Borrower's ongoing financing requirements for
the development of its Erin Mills and Whitby projects and to
facilitate the transfer of up to $22.1 million Canadian
outstanding under Credit Facility B (transfer already
executed). This transfer relates solely to assets acquired
under Facility B which are owned directly by EMDC and no
further funding of these assets are permitted under
Facility A.
Availment/
Utilization: As per Loan Agreement dated as of March 31, 1995, Amendment
dated as of December 18, 1995 and Amendment dated as of May
31, 1996 (currently with Borrower for acceptance).
Standby Fee: A Standby fee of 1/4% p.a. on the unused portion of the
operating credit payable monthly in arrears.
Interest Rate: The Prime Lending Rate of the Bank plus 3/4% p.a. calculated
and payable monthly in arrears.
Commission: - Commercial Bankers' Acceptance Rate plus 3/4%.
- Letters of Credit at 3/4% p.a.
Termination: As per Loan Agreement dated as of March 31, 1995, Amendment
dated as of December 18, 1995 and Amendment dated as of
May 31, 1996 (currently with Borrower for acceptance).
CREDIT FACILITY B (UNCHANGED)
Amount: Up to $55,000,000 Canadian and/or U.S. dollar equivalent,
Revolving Term ("R/T").
Purpose: To fund real estate related investments and asset
acquisitions.
<PAGE>
Availment/
Utilization: As per Loan Agreement dated as of March 31, 1995, Amendment
dated as of December 18, 1995 and Amendment dated as of May
31, 1996 (currently with Borrower for acceptance).
Standby Fee: A Standby Fee of 1/4% p.a. on the unused portion of the
revolving credit payable monthly in arrears.
Interest Rate: - The Prime Lending Rate of the Bank plus 1% p.a.
calculated and payable monthly in arrears
OR
- LIBOR plus 2% (1, 2, 3, 6 or 12 months) OR
- Base Rate Canada plus 1%.
Commission: - Commercial Banker's Acceptance Rate plus 1%.
- Letters of Credit at 3/4% p.a.
Maturity: - May 31, 1997.
CREDIT FACILITY C (NEW)
Amount: Up to $10,000,000 U. S. dollars Non-Revolving ("N/R").
Purpose: To assist in financing the operations of HighwayMaster
Communication Inc., an affiliate of the Borrower.
Availment: As per Credit Facility B. Any drawings under this
facility to be utilized first to repay all
outstanding amounts under the carve-out facility
outlined in the Amendment to the Letter Loan
Agreement dated as of May 31, 1996 (currently with
Borrower for acceptance).
Facility Fee: $70,000 Canadian, payable upon acceptance of this
Term Sheet.
Standby Fee: A Standby Fee of 1/4% p.a. on the unused portion of the N/R
credit payable monthly, in arrears.
Interest Rate: - LIBOR plus 2% (1,2,3,6 or 12 months) OR
- Base Rate Canada plus 1%.
Maturity: May 31, 1999.
<PAGE>
Security: The pledge and hypothecation of all shares in HighwayMaster
Communications Inc. held by the Borrower, The Erin Mills
Investment Corporation, Erin Mills International Investment
Corporation and any other affiliates of the Borrower.
Special Conditions: - All pledged shares of HighwayMaster Communications Inc.
shall also be held as security for all the Borrower's
indebtedness to the Bank.
- The market value of shares pledged that are not held in
escrow should cover the N/R facility on a 2:1 margin at all
times.
- The value of the pledged shares shall not be included in
calculating the security margin for Credit Facilities A and
B.
CREDIT FACILITY D (UNCHANGED)
Amount: Up to $1,000,000 U.S. dollars, Non-Revolving.
Purpose: To assist in the purchase of 5-year State of Israel Bond.
Availment: Fully availed.
Interest Rate: LIBOR plus 1/2% (1, 2, 3, 6, or 12 months) or Base Rate
Canada plus 1/2%.
Repayment: In full by December 1, 1999.
Security: Hypothecation of $1,000,000 U.S. dollar State of Israel
5-year Term Note.
THE FOLLOWING TERMS AND CONDITIONS ARE APPLICABLE TO ALL CREDIT FACILITIES:
Security: As per Loan Agreement dated as of March 31, 1995, Amendment
dated as of December 18, 1995 and Amendment dated as of May
31, 1996 (currently with the Borrower for acceptance).
General Conditions: - As per Loan Agreement dated as of March 31, 1995 and
Amendment dated as of December 18, 1995 plus the following:
- There shall be no payment, distribution or withdrawal of
any dividend or fee (whether licensing, administrative or
other fee) without the Bank's prior written approval, other
<PAGE>
than reasonable management fees payable by EMDC for services
rendered up to an aggregate principal amount of $2,000,000
Canadian in each fiscal year of EMDC, to or by its
shareholders, affiliates or subsidiaries.
Expenses: All fees and expenses of the Bank including legal and
consulting fees in respect of negotiations, preparation and
enforcement of the loan, security documentation and ongoing
subsearch fees etc. are for the account of the Borrower.
Document Fee: The Borrower shall pay to the Bank a fee of $50 for each
document executed by the Bank at the Borrower's request.
Reporting: - As per Loan Agreement dated as of March 31, 1995 and
Amendment dated as of December 18, 1995, plus the following:
- Quarterly variance report (in conjunction with Security
Reporting) on lot/asset sales/closings as compared to
projections.
<PAGE>
EXHIBIT C
RECAPITALIZATION AGREEMENT
This RECAPITALIZATION AGREEMENT (the "AGREEMENT"), entered into as of
September 27, 1996, by and between HIGHWAYMASTER COMMUNICATIONS, INC., a
Delaware corporation (the "COMPANY"), and each of the entities and persons
listed on EXHIBIT A attached to this Agreement as Carlyle stockholders (the
"CARLYLE STOCKHOLDERS") and each of the entities and persons listed on Exhibit A
attached to this Agreement as Erin Mills Stockholders (the "ERIN MILLS
STOCKHOLDERS").
BACKGROUND
Certain of the Carlyle Stockholders beneficially own approximately 10.3%
of the issued and outstanding shares of common stock, par value $.01 per share
(the "COMMON STOCK"), of the Company.
Certain of the Erin Mills Stockholders beneficially own approximately
37.6% of the issued and outstanding shares of Common Stock.
The Erin Mills Investment Corporation ("EMIC") is the holder of
promissory notes dated August 23, 1996 and September 16, 1996 in the aggregate
original principal amount of $5,000,000 (the "BRIDGE NOTES") issued pursuant to
a Note Purchase Agreement dated August 23, 1996 between the Company and EMIC
(the "BRIDGE NOTE AGREEMENT").
The Erin Mills Development Corporation is the holder of 459.6 shares of
Series B Preferred Stock, par value $.01 per share (the "SERIES B PREFERRED
STOCK"), of the Company. The Erin Mills Investment Corporation ("EMIC") is the
holder of 120.0 shares of Series B Preferred Stock. Erin Mills International
Investment Corporation ("EMIIC") is the holder of 349.505 shares of Series B
Preferred Stock. Robert S. Folsom is the holder of 42.85 shares of Series B
Preferred Stock. Robert T. Hayes is the holder of 108.0450 shares of Series B
Preferred Stock. The holders of shares of Series B Preferred Stock are
collectively referred to as the "SERIES B PREFERRED STOCKHOLDERS."
Clipper Capital Associates, L.P. is the holder of promissory notes dated
June 28, 1995 in the original aggregate principal amount of $29,871.76
(together, "CARLYLE NOTE NO. 1") issued by the Company pursuant to the Note
Exchange and Amendments Agreement dated May 26, 1995 (the "NOTE EXCHANGE
AGREEMENT"). Clipper/Merban, L.P. is the holder of promissory notes dated June
28, 1995 in the original aggregate principal amount of $1,684,009.32 (together,
"CARLYLE NOTE NO. 2") issued by the Company pursuant to the Note Exchange
Agreement. Clipper/Merchant Partners, L.P. is the holder of promissory notes
dated June 28, 1995 in the original aggregate principal amount of $1,662,712.05
(together, "CARLYLE NOTE NO. 3") issued by the Company pursuant to the Note
Exchange Agreement. Carlyle-HighwayMaster Investors, L.P. is the holder of
promissory notes dated June 28, 1995 in the original aggregate principal amount
of $5,187,536.53 (together, "CARLYLE NOTE NO. 4") issued by the Company pursuant
to the Note Exchange Agreement. Carlyle-HighwayMaster
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Investors II, L.P. is the holder of promissory notes dated June 28, 1995 in the
original aggregate principal amount of $488,604.30 (together, "CARLYLE NOTE NO.
5") issued by the Company pursuant to the Note Exchange Agreement. Chase
Manhattan Investment Holdings, Inc. is the holder of promissory notes dated June
28, 1995 in the original aggregate principal amount of $1,241,756.43 (together,
"CARLYLE NOTE NO. 6") issued by the Company pursuant to the Note Exchange
Agreement. H.M. Rana Investments Limited is the holder of promissory notes dated
June 28, 1995 in the original aggregate principal amount of $2,110,316
(together, "CARLYLE NOTE NO. 7") issued by the Company pursuant to the Note
Exchange Agreement. Archery Partners is the holder of promissory notes dated
June 28, 1995 in the original aggregate principal amount of $215,218.08
(together, "CARLYLE NOTE NO. 8") issued by the Company pursuant to the Note
Exchange Agreement. The Carlyle Note No. 1, Carlyle Note No. 2, Carlyle Note No.
3, Carlyle Note No. 4, Carlyle Note No. 5, Carlyle Note No. 6, Carlyle Note No.
7 and Carlyle Note No. 8 are collectively referred to as the "CARLYLE NOTES."
The holders of the Carlyle Notes are hereinafter collectively referred to as the
"CARLYLE NOTEHOLDERS."
Concurrently with the execution and delivery of this Agreement, the
Company is entering into certain transactions (the "INVESTMENT TRANSACTIONS")
with Southwestern Bell Wireless Holdings, Inc. (the "INVESTOR"). The Investment
Transactions include, but are not limited to, (i) the issuance and sale by the
Company of 1,000 shares of its Series D Participating Convertible Preferred
Stock, par value $.01 per share, to the Investor pursuant to a Purchase
Agreement (the "PURCHASE AGREEMENT") in exchange for a payment in the amount of
$20,000,000, (ii) the execution and delivery of an Amended and Restated
Stockholders' Agreement (the "STOCKHOLDERS' AGREEMENT") among the Company, the
Carlyle Stockholders, the Erin Mills Stockholders, the Investor and certain
other stockholders of the Company, (iii) the agreement on the part of the
Investor to provide certain services to the Company pursuant to a Technical
Services Agreement (the "TECHNICAL SERVICES AGREEMENT") and (iv) the issuance by
the Company to the Investor of 5,000,000 warrants to purchase shares of Common
Stock evidenced by a Warrant Certificate (the "WARRANT CERTIFICATE"). The
Purchase Agreement, the Stockholders' Agreement, the Technical Services
Agreement, and the Warrant Certificate are collectively referred to as the
"INVESTMENT DOCUMENTS." Copies of the Investment Documents have been provided by
the Company to each of the other parties to this Agreement.
In order, among other things, to induce the Investor to enter into the
Investment Transactions, (i) Erin Mills International Investment Corporation
("EMIIC") and The Erin Mills Development Corporation ("EMD") are willing to
invest $8,000,000 and $2,000,000, respectively, in cash in Common Stock; (ii)
the Series B Preferred Stockholders are willing to exchange the shares of Series
B Preferred Stock owned by them for shares of Common Stock on the basis
described in this Agreement; and (iii) the Carlyle Noteholders are willing to
exchange the Carlyle Notes for shares of Common Stock on the basis described in
this Agreement, in each case upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
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<PAGE>
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:
SECTION 1. RECAPITALIZATION.
(a) Concurrently with the execution and delivery of this Agreement, the
Company will repay in full the principal amount of, and all interest accrued on,
the Bridge Notes and EMIC will surrender the Bridge Notes to the Company for
cancellation.
(b) Concurrently with the execution and delivery of this Agreement, the
Company will issue, sell, and deliver (against payment of the A Purchase Price
(as defined below)) to EMIIC and EMD, and EMIIC and EMD will purchase, accept,
and receive from the Company, 640,000 and 160,000 shares, respectively, of
Common Stock, free and clear of all liens, claims and encumbrances. The purchase
price (the "A PURCHASE PRICE") for such shares of Common Stock to be paid by
EMIIC and EMD will be $8,000,000 and $2,000,000, respectively, which will be
paid to the Company in immediately available funds on the date of this
Agreement.
(c) Concurrently with the execution and delivery of this Agreement, the
Company will issue, sell and deliver (against payment of the B Purchase Price
(as defined below)) to the several Erin Mills Stockholders set forth on EXHIBIT
B attached to this Agreement, and such Erin Mills Stockholders severally will
purchase, accept and receive from the Company, the number of shares of Common
Stock set forth opposite their names on such exhibit (the "B STOCK"), free and
clear of all liens, claims and encumbrances. The purchase price (the "B PURCHASE
PRICE") for the B Stock will be paid by the several Erin Mills Stockholders on
the date of this Agreement by surrender to the Company of the number of shares
of Series B Preferred Stock set forth on EXHIBIT B attached to this Agreement,
duly endorsed in blank or accompanied by duly executed blank stock powers, which
shares will be free and clear of all liens, claims, and encumbrances.
(d) Concurrently with the execution and delivery of this Agreement, the
Company will issue, sell, and deliver (against payment of the C Purchase Price
(as defined below)) to the Carlyle Noteholders, and the Carlyle Noteholders
severally will purchase, accept and receive from the Company, the number of
shares of Common Stock determined by dividing (i) the sum of the principal
amount of the Carlyle Notes held by each Carlyle Noteholder as set forth in the
recitals to this Agreement and the amount of interest accrued and unpaid on each
Carlyle Note set forth on EXHIBIT C hereto (the "EXCLUDED INTEREST") by (ii)
$12.50 (the "C SHARES"), free and clear of all liens, claims, and encumbrances.
The purchase price (the "C PURCHASE PRICE") for the C Shares will be paid by the
several Carlyle Stockholders on the date of this Agreement by surrender to the
Company of each of the Carlyle Notes for cancellation, which notes will be free
and clear of all liens, claims, and encumbrances. No fractional shares or scrip
representing fractional shares will be issued upon the exchange of the Carlyle
Notes for the C Shares in accordance with this SECTION 1(d). If any such
exchange
3
<PAGE>
would require the issuance of a fractional share, an amount equal to such
fraction multiplied by the Closing Price (as defined below) of the Common Stock
on the trading day immediately preceding the date of this Agreement will be paid
to the holder in cash by the Company. In addition, concurrently with the
execution and delivery of this Agreement, the Company will pay to the Carlyle
Noteholders in cash on the date hereof all accrued and unpaid interest on the
Carlyle Notes, other than the Excluded Interest. As used herein, the term
"Closing Price" shall mean on any day the reported last sale price per share of
Common Stock regular way on such day or, in case no such sale takes place on
such day, the average of the reported closing bid and asked prices regular way,
in each case on the New York Stock Exchange, or, if the shares of Common Stock
are not listed or admitted to trading on such Exchange, the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if not so quoted,
the average of the closing bid and asked prices quoted on the Nasdaq National
Market, or, if not so quoted, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers, Inc.
selected from time to time by the corporation for that purpose.
(e) The closing of the transactions provided for in this SECTION 1 (the
"CLOSING") will take place at the offices of the Company (or at such other place
as is specified by the Company) on the date of this Agreement.
SECTION 2. TERMINATED DOCUMENTS. Effective upon the execution and
delivery of this Agreement and without any other action, each of the Carlyle
Stockholders and the Erin Mills Stockholders, severally and not jointly, hereby
(a) agrees that the Terminated Documents (as defined below) will terminate and
be of no further force and effect and that it will have no further rights
thereunder; and (b) represents and warrants with respect to itself that it has
not transferred any of its rights or interests under or in respect of the
Terminated Documents and that such party has the sole right, capacity, and
exclusive authority to terminate its rights under the Terminated Documents. As
used in this Agreement, the term "TERMINATED DOCUMENTS" means (i) the
Subscription Agreement dated as of February 4, 1994 by and among the Company
(formerly known as HM Holding Corporation) and the other parties named in such
agreement, as amended to the date of this Agreement; (ii) the Bridge Note and
the Bridge Note Agreement; and (iii) the Carlyle Notes.
SECTION 3. INVESTMENT INTENT. Each of the Carlyle Stockholders and the
Erin Mills Stockholders hereby severally and not jointly represents and warrants
to the Company that the shares of Common Stock to be acquired by such party
pursuant to this Agreement are to be acquired for the such party's own account
for investment and not with a view to, or for resale in connection with, any
distribution of such shares within the meaning of the Securities Act of 1933, as
amended (the "SECURITIES ACT").
SECTION 4. INVESTOR STATUS. In connection with the purchase of the
shares of Common Stock, each of the Erin Mills Stockholders and the Carlyle
Stockholders hereby severally and not jointly represents and warrants to the
Company with respect to itself as
4
<PAGE>
follows:
(a) Such party acknowledges that the shares of Common 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 the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to such state securities laws and regulations
as may be applicable.
(b) Such party is knowledgeable, sophisticated, and experienced in
business and financial matters of the type contemplated by this Agreement and is
able to bear the economic risks associated with its investment in the Company.
Such party has been afforded access to information regarding the Company and its
subsidiaries and their respective financial condition, operating results,
properties, liabilities, operations, and management sufficient to enable it to
evaluate the risks and merits of its investment in the Company.
SECTION 5. OTHER REPRESENTATIONS OF THE ERIN MILLS STOCKHOLDERS. Each of
the Erin Mills Stockholders hereby further severally and not jointly represents
and warrants to the Company with respect to itself as follows:
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by such Erin Mills Stockholder. This Agreement has been duly executed
by such Erin Mills Stockholder and constitutes a valid and binding obligation of
such Erin Mills Stockholder, enforceable in accordance with its terms.
(b) The execution, delivery, and performance by such Erin Mills
Stockholder of this Agreement and the consummation of the transactions
contemplated by this Agreement: (i) is within such Erin Mills Stockholder's
corporate or partnership power and authority and has been duly authorized by all
necessary corporate or partnership action on the part of such Erin Mill
Stockholder, as appropriate; (ii) does not and will not conflict with or
contravene the terms of or require any consent, authorization, or approval
pursuant to such Erin Mills Stockholder's certificate of incorporation or
bylaws, partnership agreement or similar organizational document; (iii) does 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 (A) any material
agreement, lease, or contract of such Erin Mills Stockholder, or (B) any
applicable statute or any rule or regulation of any governmental authority or
any order or decree applicable to such Erin Mills Stockholder.
SECTION 6. OTHER REPRESENTATIONS OF THE CARLYLE STOCKHOLDERS.
Each of the Carlyle Stockholders hereby further severally and not jointly
represents and warrants to the Company with respect to itself as follows:
(a) The execution, delivery and performance of this Agreement and the
consummation
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of the transactions contemplated by this Agreement have been duly authorized by
such Carlyle Stockholder. This Agreement has been duly executed by such Carlyle
Stockholder and constitutes a valid and binding obligation of such Carlyle
Stockholder, enforceable in accordance with its terms.
(b) The execution, delivery, and performance by such Carlyle Stockholder
of this Agreement and the consummation of the transactions contemplated by this
Agreement: (i) is within such Carlyle Stockholder's corporate or partnership
power and authority and has been duly authorized by all necessary corporate or
partnership action on the part of such Carlyle Stockholder, as appropriate; (ii)
does not and will not conflict with or contravene the terms of or require any
consent, authorization, or approval pursuant to such Carlyle Stockholder's
certificate of incorporation or bylaws, partnership agreement or similar
organizational document; (iii) does 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 (A) any material agreement, lease, or contract of such Carlyle
Stockholder, or (B) any applicable statute or any rule or regulation of any
governmental authority or any order or decree applicable to such Carlyle
Stockholder.
SECTION 7. REPRESENTATIONS OF THE COMPANY. The Company hereby represents
and warrants to each of the Carlyle Stockholders and the Erin Mills Stockholders
as follows:
(a) The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by the Company. This Agreement has been duly executed by the Company
and constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms. All outstanding shares of the Company's capital stock
are, and the shares of Common Stock to be issued to the several Carlyle
Stockholders and Erin Mills Stockholders will be upon such issuance and receipt
by the Company of payment therefor, duly authorized, fully paid, and
nonassessable. The offer, sale, and issuance of the Common Stock to the several
Carlyle Stockholders and the Erin Mills Stockholders under this Agreement do not
require registration under the Securities Act or any applicable state securities
laws or blue sky laws, assuming that all representations made by the Carlyle
Stockholders and the Erin Mills Stockholders in SECTIONS 3 and 4 are true.
(b) Each of the representations made by the Company in Section 3 of the
Purchase Agreement is true and correct and is incorporated by this reference
into this Agreement, except that (i) the Company makes no representation to the
Erin Mills Stockholders or the Carlyle Stockholders as to the matters set forth
in the first two sentences of Section 3(b)(iii) or in Section 3(b)(iv) of the
Purchase Agreement; and (ii) each reference to "prejudice in any material
respect the rights of the Investor under any of the Transaction Documents" will
be deemed to read as "prejudice in any material respect the rights of the
Carlyle Stockholders or the Erin Mills Stockholders under this Agreement."
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SECTION 8. SURVIVAL AND INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS, AND
AGREEMENTS; KNOWLEDGE OF BREACH. Notwithstanding any otherwise applicable
statute of limitation, the representations and warranties of the Company
included or provided for in this Agreement will survive the execution and
delivery of this Agreement until the expiration of nine months after the receipt
by the Erin Mills Stockholders and the Carlyle Stockholders of audited
consolidated financial statements for the Company, as of and for the year ending
December 31, 1996, together with a report thereon by the Company's independent
public accountants; PROVIDED, HOWEVER, that any representation, warranty,
covenant, or agreement contained in Sections 3(j) and 3(n) of the Purchase
Agreement and incorporated by reference in this Agreement will 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, FURTHER, that the provisions of this SECTION
8 will constitute the exclusive remedy on the part of the Erin Mills
Stockholders and the Carlyle Stockholders in respect of a breach of the
representations and warranties of the Company contained in this Agreement. The
covenants and other agreements contained in this Agreement will survive the
execution and delivery of this Agreement until the date or dates specified in
such covenant or agreement or the expiration of the applicable statute of
limitations (including any waivers or extensions thereof) with respect to such
matters, whichever is later. In no event will the Company be liable (i) to the
Carlyle Stockholders for any breach of the representations, warranties,
covenants, and agreements included or provided for in this Agreement or other
document delivered pursuant to this Agreement, unless and until all claims for
which aggregate damages are recoverable under this Agreement by the Carlyle
Stockholders exceed the product of (x) $250,000 and (y) a fraction the numerator
of which is the total numbers of shares of Common Stock issued to the Carlyle
Stockholders pursuant to this Agreement and the denominator is the total number
of shares issued by the Company pursuant to this Agreement (the "CARLYLE
STOCKHOLDER DEDUCTIBLE") or (ii) to the Erin Mills Stockholders for any breach
of the representations, warranties, covenants, and agreements included or
provided for in this Agreement or other document delivered pursuant to this
Agreement, unless and until all claims for which aggregate damages are
recoverable under this Agreement by the Erin Mills Stockholders exceed the
product of (x) $250,000 and (y) a fraction the numerator of which is the total
numbers of shares of Common Stock issued to the Erin Mills Stockholders pursuant
to this Agreement and the denominator is the total number of shares issued by
the Company pursuant to this Agreement (the "ERIN MILLS STOCKHOLDER
DEDUCTIBLE"), in which case such party will be entitled to damages equal to such
excess, but, in the case of the Carlyle Stockholders and the Erin Mills
Stockholders, not more than the purchase price paid by such party for the Common
Stock acquired under this Agreement by such party plus the charges and expenses
(including reasonable attorneys' fees and expenses) incurred by such party
sustaining such damages in connection with this Agreement and the transactions
contemplated hereby;
(b) INDEMNIFICATION. For a period commencing on the date of this
Agreement and ending, as the case may be, upon the expiration of the periods
specified in SECTION 8(a), the Company, on the one hand, and each Erin Mills
Stockholder or Carlyle Stockholder, as
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applicable, on the other, (the "INDEMNIFYING PARTY"), will, subject to the
limitations set forth in SECTION 8(a), indemnify the Erin Mills Stockholders or
the Carlyle Stockholders, on the one hand, or the Company on the other, 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 by this SECTION 8(b) sustained or incurred arising out of any breaches
by such Indemnifying Party of its representations, warranties, covenants, and
agreements set forth in this Agreement (it being understood and agreed that no
Carlyle Stockholder or Erin Mills Stockholder shall be obligated to indemnify
the Company pursuant to this SECTION 8(b) as a result of a breach of any
representation, warranty, covenant, or agreement on the part of any other party
hereto). The indemnification provided for by this SECTION 8(b) will apply
notwithstanding any investigation made by or on behalf of any party. Any
payments pursuant to this SECTION 8(b) will be treated as an adjustment to the
purchase price for all tax purposes.
(c) METHOD OF ASSERTING CLAIMS. In the event that an Indemnified Party
shall assert a claim for indemnity under this SECTION 8, (i) 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 8, notify the Indemnifying Party in
writing of the commencement thereof or (ii) if the claim is other than such a
third party claim, the Indemnified Party will notify the Indemnifying Party
promptly following its discovery of the facts or circumstances giving rise
thereto; PROVIDED, that in either case (i) or (ii), no such notice need be
provided by the Company to an Indemnifying Party who is a Carlyle Stockholder or
an Erin Mills Stockholder if the Carlyle Stockholder Deductible or Erin Mills
Stockholder Deductible, as applicable, has not been exceeded and will not be
exceeded by such claim or demand and the omission of the Indemnified Party to so
notify such Indemnifying Party of any such action will not relieve such
Indemnifying Party from any liability that it may have to such Indemnified Party
under this SECTION 8(c) 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 under this SECTION 8, whether as a result of the forfeiture of
substantive rights or defenses or otherwise. In case any such action, claim, or
other proceeding is brought against the Indemnified Party such Indemnified Party
will notify the applicable Indemnifying Party of the commencement thereof, the
Indemnifying Party will 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 Deductible has been or will be exceeded; PROVIDED,
FURTHER, 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, is, or is 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
8
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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, the
Erin Mills Stockholders, and the Carlyle Stockholders 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 by this SECTION 8 (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 9. COVENANTS.
(a) INSPECTION RIGHTS. The Company will permit, and cause its
subsidiaries to permit, the representatives designated by the Erin Mills
Stockholders and the Carlyle Stockholders so long as (i) the Erin Mills
Stockholders and the Carlyle Stockholders and their affiliates together
beneficially own 1,600,000 shares of Common Stock or (ii) the representation and
warranties of the Company set forth in this Agreement 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 entities
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. Each of the Erin Mills Stockholders and the Carlyle
Stockholders will 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 this Agreement, pursuant to SECTION 9(a) or
otherwise) and will not disclose such information to any person or entity
without the prior written consent of the Company (except that the Erin Mills
Stockholders and the Carlyle Stockholders may disclose such information to their
affiliates, directors, officers, and other representatives who require access to
such information in order to enable them to exercise their rights under this
Agreement or for any other proper purpose contemplated thereby and who agree to
be subject to the restrictions set forth in this SECTION 9(b)); PROVIDED,
HOWEVER, that the provisions of this SECTION 9(b) will not apply to any
information or data that can be shown (i) to be generally available to the
public through no fault of such party or its affiliates, directors, officers,
and other representatives or (ii) to have been lawfully obtained by the Erin
Mills Stockholders or the Carlyle Stockholders from other sources not subject to
a confidentiality obligation to the Company.
9
<PAGE>
SECTION 10. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ANY CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
SECTION 11. PARTIES IN INTEREST; ASSIGNMENT. This Agreement will be
binding on and will inure to the benefit of the parties to this Agreement and
their respective successors and permitted assigns. No party may assign this
Agreement or its rights and benefits under this Agreement or delegate and duties
under this Agreement to any other person or entity without the prior written
consent of the other parties.
SECTION 12. AMENDMENT; WAIVER. The provisions of this Agreement may be
amended only by a written instrument executed by each of parties to this
Agreement, and compliance with the provisions of this Agreement may be waived
only by a written instrument executed by each party entitled to the benefits of
such provision. No failure on the part of any party to exercise any right,
power, or privilege granted under this Agreement will operate as a waiver of
such right, power, or privilege, nor will any single or partial exercise of such
right, power, or privilege preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power or privilege
granted under this Agreement.
SECTION 13. FURTHER ASSURANCES. Each party agrees to do, or cause to be
done, such further acts and to execute and deliver, or to cause to be executed
and delivered, such further agreements, instruments, certificates, and other
documents as may be necessary or appropriate to effectuate and carry out the
purposes of this Agreement.
SECTION 14. NOTICES AND OTHER COMMUNICATIONS. All notices and other
communications under this Agreement will be in writing and will be given by
delivery in person, by registered or certified mail (return receipt requested
and with postage prepaid thereon) or by cable, telex or facsimile transmission
to the parties at the following addresses (or at such other address as either
party will have furnished to the other in accordance with the terms of this
SECTION 14):
if to the Company, to:
HighwayMaster Communications, Inc.
16479 Dallas Parkway
Suite 710
Dallas, Texas 75248
Attention: William C. Kennedy, Jr.
if to any of the Erin Mills Stockholders, to:
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Erin Mills International Investment Corporation
Trident House, Suite 204(a)
Broad StreetBridgetown, Barbados
West Indies
Attention: Stephen Greaves
if to any of the Carlyle Stockholders (except for the Carlyle Stockholders that
are Clipper Stockholders (as defined in the Stockholders' Agreement)), to:
The Carlyle Group, L.P.
1001 Pennsylvania Avenue
Suite 220 South
Washington, D.C. 20004-2505
Attention: Mark D. Ein
if to any Clipper Stockholders, to:
The Clipper Group, L.P.
12 East 49th Street
New York, New York 10017
Attention: Daniel V. Cahillane
All notices and other communications under this Agreement that are
addressed as provided in or pursuant to this SECTION 14 will be deemed duly and
validly given (a) if delivered in person, upon delivery, (b) if delivered by
registered or certified mail (return receipt requested and with postage paid
thereon), 72 hours after being placed in a depository of the United States
mails; and (c) if delivered by cable, telex, or facsimile transmission, upon
transmission thereof and receipt of the appropriate answer back.
SECTION 15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties to this Agreement with respect to the
subject matter of this Agreement and supersedes any prior or contemporaneous
oral and prior written agreements or understandings between the parties with
respect to the subject matter of this Agreement.
SECTION 16. HEADINGS. The section headings contained in this Agreement
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION 17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
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<PAGE>
SECTION 18. NO GROUP OR BENEFICIAL OWNERSHIP. Nothing in this Agreement
will be deemed to constitute any party to this Agreement as member of a "group"
for the purposes of the Securities Exchange Act of 1934, as amended, or to be an
admission that any party to this Agreement beneficially owns any of the
securities of any other party to this Agreement.
SECTION 19. EXPENSES. The Company will (i) reimburse each of the Carlyle
Stockholders and the Erin Mills Stockholders for stamp and other stock issuance
or similar taxes that may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery, or acquisition of any shares of Common
Stock to be issued under this Agreement (but excluding any income or similar
state of federal taxes).
Except as otherwise expressly provided in this Agreement, the parties
will 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 by this Agreement or the Investment
Documents.
SECTION 20. LIMITATION ON COMPANY REPRESENTATIONS. Notwithstanding any
provision of this Agreement to the contrary, the Company makes no representation
or warranty, and will have no obligation to indemnify or liability for damages
for, any matter to the extent that the material facts with respect to such
matter are known to any Carlyle Stockholders or Erin Mills Stockholders as of
the date of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
12
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first above written.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ WILLIAM C. SAUNDERS
Name: William C. Saunders
Title: President
CLIPPER CAPITAL ASSOCIATES, L.P.
By: CLIPPER CAPITAL ASSOCIATES, INC.
Its: General Partner
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CLIPPER/MERBAN, L.P.
By: CLIPPER CAPITAL ASSOCIATES, L.P.
Its: General Partner
By: CLIPPER CAPITAL ASSOCIATES, INC.
Its: General Partner
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
13
<PAGE>
CLIPPER/MERCHANT PARTNERS, L.P.
By: CLIPPER CAPITAL ASSOCIATES, L.P.
Its: General Partner
By: CLIPPER CAPITAL ASSOCIATES, INC.
Its: General Partner
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CARLYLE-HIGHWAYMASTER INVESTORS, L.P.
By: T.C. GROUP, L.L.C.
Its: General Partner
By: /s/ MARK D. EIN
Name: Mark D. Ein
Title: Vice-President of Managing Member
of TC Group
14
<PAGE>
CARLYLE-HIGHWAYMASTER INVESTORS II, L.P.
By: T.C. GROUP, L.L.C.
Its: General Partner
By: /s/ MARK D. EIN
Name: Mark D. Ein
Title: Vice-President of Managing Member
of TC Group
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By: /s/ JEFFREY C. WALKER
Name: Jeffrey C. Walker
Title: Chief Executive Officer
H.M. RANA INVESTMENTS LIMITED
By:
By: /s/ FAHAD A. ALMUBARAK
Name: Fahad A. Almubarak
Title: President
ARCHERY PARTNERS
By:
Its: General Partner
15
<PAGE>
By: /s/ JEFFREY C. WALKER
Name: Jeffrey C. Walker
Title: Managing Partner
THE ERIN MILLS INVESTMENT
CORPORATION
By: /s/ G. C. QUINN
Name: G. C. Quinn
Title: President
THE ERIN MILLS DEVELOPMENT
CORPORATION
By: /s/ G. C. QUINN
Name: G. C. Quinn
Title: Executive Vice-President
ERIN MILLS INTERNATIONAL INVESTMENT
CORPORATION
By: /s/ S. L. GREAVES
Name: Stephen L. Greaves
Title: General Manager
16
<PAGE>
/s/ ROBERT T. HAYES by Douglas Dunlap
ATTORNEY-IN-FACT
Robert T. Hayes
/s/ ROBERT S. FOLSOM by Haddon O. Winkler
ATTORNEY-IN FACT
Robert S. Folsom
17
<PAGE>
EXHIBIT A
1. CARLYLE STOCKHOLDERS.
Clipper Capital Associates, L.P.
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
Carlyle-HighwayMaster Investors, L.P.
Carlyle-HighwayMaster Investors II, L.P.
Chase Manhattan Investment Holdings, Inc.
H.M. Rana Investments Limited
Archery Partners
2. ERIN MILLS STOCKHOLDERS.
The Erin Mills Investment Corporation
The Erin Mills Development Corporation
Erin Mills International Investment Corporation
Robert T. Hayes
Robert S. Folsom
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EXHIBIT B
NUMBER OF SHARES
NUMBER OF SHARES OF SERIES B
OF B STOCK TO BE PREFERRED STOCK TO BE
NAME RECEIVED SURRENDERED
The Erin Mills Development ......... 367,680 459.6
Corporation
The Erin Mills Investment .......... 96,000 120.0
Corporation
Erin Mills International ........... 279,604 349.505
Investment Corporation
Robert T. Hayes .................... 86,436 108.0450
Robert S. Folsom ................... 34,280 42.85
------- ----------
TOTALS ....................... 864,000 1,080
======= ==========
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EXHIBIT C
NAME EXCLUDED INTEREST
- ---- -----------------
Clipper Capital Associates, L.P. ............ $ 148.96
Clipper/Merban, L.P. ........................ 8,396.97
Clipper/Merchant Partners, L.P. ............. 8,290.78
Carlyle-HighwayMaster Investors, L.P. ....... 25,866.62
Carlyle-HighwayMaster Investors II, L.P. .... 2,436.33
Chase Manhattan Investment Holdings, Inc. ... 6,191.77
H.M. Rana Investments Limited ............... 10,522.67
Archery Partners ............................ 1,282.93
--------
$ 63,137.03
=============
20
<PAGE>
EXHIBIT D
HIGHWAYMASTER COMMUNICATIONS, INC.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
DATED AS OF
SEPTEMBER 27, 1996
<PAGE>
TABLE OF CONTENTS
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
Page
Section 1. DEFINITIONS.............................................. 2
Section 2. THE RECAPITALIZATION; AMENDMENT OF CERTIFICATE OF
INCORPORATION............................................ 5
Section 3. TRANSFER OF SECURITIES................................... 6
Section 4. REGISTRATION RIGHTS..................................... 8
Section 5. GOVERNANCE............................................... 22
Section 6. MISCELLANEOUS............................................ 28
i
<PAGE>
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("AGREEMENT"), dated as
of September 27, 1996, amends and restates in its entirety that Stockholders'
Agreement, dated as of February 4, 1994 (the "Original Agreement"), by and among
HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware corporation (previously named HM
HOLDING CORPORATION) (the "COMPANY"), and the other Persons (as hereinafter
defined) identified in Appendix A hereto, as the Original Agreement has been
amended by the amendments and addenda set forth in Appendix B hereto, adds an
additional party hereto, Southwestern Bell Wireless Holdings, Inc., a Delaware
corporation ("SBW") and provides that the Persons identified in Appendix C
hereto shall no longer be parties hereto.
RECITALS:
A. Simultaneously with the execution hereof, SBW is acquiring certain
shares of Series D Preferred Stock (as hereinafter defined) of the Company
pursuant to the Purchase Agreement dated as of the date hereof, by and between
the Company and SBW (the "PURCHASE AGREEMENT") and agreeing to provide certain
services to the Company pursuant to a separate technical services agreement.
B. Certain of the parties hereto have effected, or agreed to effect, the
Recapitalization reflected in Sections 2(a), (b) and (c) hereof.
C. Pursuant to Section 7(h) of the Original Agreement with respect to the
terms hereof generally and Section 4(k) of the Original Agreement with respect
to the registration rights provisions, holders of a sufficient number of Shares
(as hereinafter defined) have executed this Agreement thereby amending and
restating the Original Agreement, as amended to date, in its entirety as set
forth herein, for the purpose of regulating certain aspects of the Stockholders'
relationships with regard to each other and the Company.
D. Immediately after the execution hereof, the Stockholders (as
hereinafter defined) will consist of (i) Carlyle HighwayMaster Investors, L.P.,
Carlyle HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Mark D. Ein, Chase Manhattan Investment Holdings, Inc. and
Archery Partners (the "CARLYLE ENTITIES"), (ii) Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P. and Clipper Capital Associates, L.P. (the
"CLIPPER ENTITIES"), (iii) Erin Mills International Investment Corporation, The
Erin Mills Investment Corporation and The Erin Mills Development Corporation
(the "ERIN MILLS COMPANIES"), (iv) William C. Kennedy, Jr., Donald M. Kennedy,
William C. Saunders, Robert S. Folsom and Robert T. Hayes and (v) SBW.
E. Simultaneously with the execution hereof, the Company is issuing to SBW
a warrant certificate for warrants (the "Warrants") for 5,000,000 shares of
Common Stock (as hereinafter defined) in consideration for SBW entering into the
transactions contemplated by the Purchase Agreement and the other Transaction
Documents (as hereinafter defined).
<PAGE>
AGREEMENT:
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the Company and Stockholders
agree as follows:
Section 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings:
"AFFILIATE" of any specified person or entity means any person or entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with such person or entity.
"ANTI-TAKEOVER PROVISION" shall have the meaning set forth in Section 5(g)
hereto.
"BENEFICIALLY OWN" (and correlative terms) means, with respect to any
shares of Common Stock or other securities, to be entitled, directly or
indirectly through one or more intermediaries, to all material incidents of
ownership with respect to such securities, including, but not limited to, (i)
the right to vote such securities (in the case of voting securities), (ii)
subject to any transfer restrictions, the right to dispose of such securities
and to receive any proceeds realized from the disposition thereof and (iii) the
right to receive any dividends and other distributions with respect to such
securities.
"BY-WORD STOCKHOLDER" means each of William C. Kennedy, Jr., Donald M.
Kennedy, William C. Saunders, Robert T. Hayes and Robert S. Folsom.
"CARLYLE ENTITIES" shall have the meaning set forth in the Recitals
hereto.
"CARLYLE STOCKHOLDER" means each of the Carlyle Entities and any Permitted
Assign (as hereinafter defined) who acquires shares of Common Stock directly or
indirectly from a Carlyle Stockholder and who executes a supplemental agreement
as contemplated in Section 6(b) hereof, in his, her or its capacity as a holder
of Common Stock.
"CLASS B COMMON STOCK" means the new class of Company Common Stock, par
value $0.01 per share, to be authorized as contemplated in Section 2(e) hereof,
the terms of which are set forth on Exhibit B to the Purchase Agreement.
"CLIPPER ENTITIES" shall have the meaning set forth in the Recitals
hereto.
"CLIPPER STOCKHOLDER" means each of the Clipper Entities.
"COMMISSION" means the Securities and Exchange Commission.
2
<PAGE>
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Company and any other capital stock of the Company into which such Common Stock
is reclassified or reconstituted.
"COMPANY COMMON STOCK" means the Common Stock and the Class B Common
Stock.
"DEMAND REGISTRATION" shall have the meaning set forth in Section 4(b)
hereof.
"DIRECTOR" means a member of the Board of Directors of the Company.
"ERIN MILLS COMPANIES" shall have the meaning set forth in the Recitals
hereto.
"ERIN MILLS STOCKHOLDER" means each of the Erin Mills Companies and any
Permitted Assign who acquires shares of Common Stock directly or indirectly from
an Erin Mills Company and who executes a supplemental agreement as contemplated
in Section 6(b) hereof and, solely for purposes of Section 4 hereof, Robert S.
Folsom and Robert T. Hayes, in each case in his, her or its capacity as a holder
of Common Stock.
"EXCLUDED OPTIONS" means options, warrants, rights or obligations to
acquire Common Stock issued by any Person other than the Company.
"EXCLUDED RELATED PARTY" means, with respect to any Stockholder, a Related
Party of such Stockholder which either (i) is a natural person or (ii) is not an
Affiliate of such Stockholder.
"EXEMPT TRANSFER" shall mean the meaning set forth in Section 3(d) hereof.
"EXISTING LINE OF BUSINESS" shall have the meaning set forth in Section
5(g) hereof.
"INCENTIVE STOCK OPTION PLAN" means the HM Holding Corporation 1994
Incentive Stock Option Plan, as adopted by the Company's Board of Directors and
as amended from time to time, providing for the grant to certain management
employees of the Company and its Subsidiaries of options to purchase shares of
Common Stock.
"MAJORITY IN INTEREST" means, with respect to any specified group of
Stockholders, Stockholders included in such group which hold more than fifty
percent (50%) of the aggregate shares of Common Stock held collectively by such
group of Stockholders on a Fully Diluted Basis (as hereinafter defined).
"ON A FULLY DILUTED BASIS" with respect to the Company's Common Stock
means on a basis that takes into account the number of shares of Common Stock
which are issued and outstanding plus the number of shares of Common Stock
issuable upon conversion of any outstanding Series D Preferred Stock and, once
authorized and issued, Class B Common Stock
3
<PAGE>
or pursuant to outstanding options, warrants, rights or obligations to purchase
or subscribe for shares of Common Stock or securities of the Company which are
exchangeable or exercisable into shares of Common Stock as of the applicable
date of determination, other than the Warrants, Excluded Options and employee
stock options.
"PERMITTED ASSIGN" shall have the meaning set forth in Section 6(b)
hereof.
"PERSON" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or department, agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in Section 4(a)
hereof.
"PUBLIC TRANSFEREE" means any subsequent holder of Common Stock who
acquires Shares from a Stockholder pursuant to an effective registration
statement under the Securities Act (as hereinafter defined) or pursuant to Rule
144 promulgated thereunder.
"RECAPITALIZATION AGREEMENT" means the Recapitalization Agreement, dated
as of the date hereof, among the Company, certain Erin Mills Stockholders,
Carlyle Stockholders and Clipper Stockholders, a copy of which is attached as
Exhibit A hereto.
"RECAPITALIZATION SHARES" shall have the meaning set forth in Section 4(c)
hereof.
"REGULATORY RELIEF" means that SBC Communications, Inc. or its Affiliates,
in their sole judgment, have obtained all necessary federal and state regulatory
approvals to provide landline, interLATA long-distance service pursuant to the
Communications Act of 1934, as amended by The Telecommunications Act of 1996.
"RELATED PARTY" with respect to any Stockholder means: (A) an Affiliate of
such Stockholder; (B) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, or owners, or persons holding a
controlling interest of which consist of such Stockholder and/or its Affiliates;
(C) with respect to any Stockholder who is an individual, such Stockholder's
spouse, siblings, children or parents; (D) with respect to any Stockholder which
is a partnership, such Stockholders' partners as of the date hereof; and (E)
with respect to any Stockholder which is a corporation, such Stockholder's
stockholders as of the date hereof.
"SBW STOCKHOLDER" means SBW and any Affiliate of SBW who acquires Shares
from SBW and who executes a supplemental agreement as contemplated in Section
6(b) hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
4
<PAGE>
"SERIES D PREFERRED STOCK" means the Series D Participating Convertible
Preferred Stock, par value $.01 per share, of the Company, the Certificate of
Designation for which is set forth in Exhibit A to the Purchase Agreement.
"SHARES" means (i) any shares of the capital stock of the Company and (ii)
any securities convertible into, and any rights, options or warrants
exchangeable or exercisable for, any of the shares of the capital stock of the
Company, in either case, at any time outstanding.
"STOCKHOLDERS" means the By-Word Stockholders, the Carlyle Stockholders,
the Clipper Stockholders, the Erin Mills Stockholders and the SBW Stockholders.
"SUBSIDIARY" of any specified person or entity means a corporation or
other entity of which a majority of the voting power of the equity securities or
other equity interests is owned, directly or indirectly, by such specified
person or entity or any Subsidiary of such specified person or entity.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in the Purchase
Agreement.
"TRANSFER" shall have the meaning set forth in Section 3(a) hereof.
"WARRANTS" shall have the meaning set forth in the Recitals hereto.
Section 2. THE RECAPITALIZATION; AMENDMENT OF CERTIFICATE OF
INCORPORATION.
(a) ERIN MILLS COMPANIES.
(1) $10 MILLION INVESTMENT. Simultaneously with the execution
hereof, Erin Mills International Investment Corporation and one of its
affiliates are investing $10.0 million in cash in the Company in exchange
for 800,000 shares of Common Stock, as provided in the Recapitalization
Agreement.
(2) SERIES B PREFERRED STOCK. Simultaneously with the execution
hereof, the Series B Preferred Stock owned by The Erin Mills Development
Corporation and certain of its affiliates and by Robert S. Folsom and
Robert T. Hayes is being exchanged for 864,000 shares of Common Stock, as
provided in the Recapitalization Agreement.
(b) CARLYLE AND CLIPPER ENTITIES. Simultaneously with the execution
hereof, the promissory notes in the aggregate principal amount of approximately
$12.7 million held by certain Carlyle Stockholders and the Clipper Stockholders
together with accrued and unpaid interest in the amount of approximately
$63,000, which were issued by the Company pursuant to the Note Exchange and
Amendments Agreement, dated as of May 26, 1995, are
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being converted into shares of Common Stock at a price of $12.50 per share, as
provided in the Recapitalization Agreement.
(c) TERMINATION OF SUBSCRIPTION AGREEMENT. Simultaneously with the
execution hereof, the Company, certain Carlyle Stockholders and the Clipper
Stockholders are terminating certain provisions of the Subscription Agreement,
dated as of February 4, 1994, as provided in the Recapitalization Agreement.
(d) BYLAWS. Simultaneously with the execution hereof, the Company has
amended the Bylaws as set forth as Exhibit B hereto.
(e) AMENDMENT OF CERTIFICATE OF INCORPORATION. The Stockholders listed on
Appendix D have granted written consents and irrevocable proxies to SBW covering
the shares of Common Stock owned by them with respect to the amendment of the
Certificate of Incorporation as set forth on Exhibit B to the Purchase Agreement
and the issuance of the Common Stock pursuant to the exercise of the Warrants,
and SBW has delivered to the Company written consents covering such shares, and
immediately following the issuance of the Series D Preferred Stock, will deliver
to the Company a written consent covering such shares, each approving such
amendment. On the twentieth day following the mailing of an information
statement to the Company's stockholders in compliance with Regulation 14C
promulgated under the Securities Exchange Act of 1934, the Company will cause
the Certificate of Amendment to be filed with the Secretary of State of the
State of Delaware.
Section 3. TRANSFER OF SECURITIES
(a) GENERAL PROHIBITION ON TRANSFER. None of the Stockholders shall sell,
assign, transfer, pledge, encumber or in any way dispose of ("TRANSFER") any
Shares unless (i) such Stockholder shall have delivered to the Company an
opinion of counsel to such Stockholder, in form and substance reasonably
satisfactory to the Company, to the effect that such Transfer is exempt from the
registration requirements of the Securities Act or (ii) the registration
requirements of the Securities Act have been complied with in connection with
such Transfer, provided, however, that the Company shall be entitled in its sole
discretion to waive the requirement that an opinion of counsel be delivered
pursuant to this Section 3(a) if it determines that a Transfer is in accordance
with applicable law.
(b) TRANSFER BY FIRST REFUSAL STOCKHOLDERS. None of the Carlyle
Stockholders, the Erin Mills Stockholders (other than Robert S. Folsom and
Robert T. Hayes), William C. Kennedy, Jr. or William C. Saunders (collectively
the "First Refusal Stockholders") shall Transfer any Shares unless (i) such
First Refusal Stockholder has complied with the provisions of this Section 3(c)
to the extent applicable to such Transfer and (ii) the transferee (if other than
a Public Transferee or an Excluded Related Party) has agreed to become a party
to, and be bound by the terms of, Section 3 of this Agreement pursuant to a
supplemental agreement hereto in form and substance reasonably satisfactory to
the Company and SBW, executed by such transferee (provided, however, that the
requirement set forth in this clause (ii) shall not apply to any transferee
(other than a Permitted Assign or a transferee pursuant to
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Section 3(d) who is not an Excluded Related Party) acquiring Shares from a
Seller (as hereinafter defined) after the earlier of (A) the date of Regulatory
Relief and (B) September 27, 1997 pursuant to a sale effected by such Seller in
compliance with the provisions of subsection (c) below). Notwithstanding the
foregoing, no First Refusal Stockholder shall be required to execute a
supplemental agreement.
(c) RIGHT OF FIRST REFUSAL.
(i) If any First Refusal Stockholder (a "SELLER") receives a bona
fide offer, which the Seller desires to accept ("Offer") to purchase any
or all of the Shares (the "TRANSFER STOCK") then owned by such Seller from
any person (an "Offeror"), such Seller shall notify SBW in writing of the
terms of such Offer, which notice shall identify the Offeror, the price
offered, and all the other material terms and conditions of such Offer. In
addition, if a Seller wishes to sell to the public pursuant to a
registration statement under the Securities Act or pursuant to Rule 144
promulgated thereunder (a "Public Sale"), the Seller shall notify SBW in
writing of the proposed terms of the Public Sale, which Public Sale shall
also constitute an Offer for the purposes hereof. The Seller shall provide
a written notice (the "NOTICE") of an Offer to SBW promptly, but in no
event later than five (5) business days following the determination by the
Seller that it desires to accept an Offer which does not relate to a
Public Sale. The Notice shall contain an irrevocable offer to sell the
Transfer Stock to SBW at a price equal to the price and upon substantially
the same terms as the terms contained in such Offer; provided, however,
that (A) if such Offer shall relate to a proposed Public Sale, the Notice
shall offer to sell the Transfer Stock at a price determined by the Seller
(which in the case of a registered public offering shall not be higher
than the price the Seller in good faith believes can be obtained in such
offering), minus, in the case of a registered public offering pursuant to
a firm commitment underwriting, customary underwriting commissions, and
(B) if the terms of the Offer entitle the Offeror to purchase the Transfer
Stock for securities of such Offeror (the "OFFERED SECURITIES") or other
property, SBW shall be entitled to purchase the Transfer Stock for an
amount of cash equal to the fair market value of the Offered Securities or
such other property. SBW shall have the irrevocable right and option (the
"RIGHT OF FIRST REFUSAL"), to accept such irrevocable offer as to all
Shares as to which the Offer is made (except in the event of a Public Sale
pursuant to Rule 144, in which event SBW may accept as to any number of
Shares) by providing the Seller with an irrevocable written notice of
acceptance within fifteen (15) business days, or, in the case of a Public
Sale pursuant to Rule 144, five (5) business days, after the date the
Notice is received (the "NOTICE PERIOD"). The closing of the purchases of
the Transfer Stock by SBW shall take place at the principal office of SBW
no later than the fifth (5th) business day after the acceptance by SBW. At
such closing, SBW shall deliver a certified check or checks or wire
transfer in the appropriate amount to the Seller against delivery of
certificates representing the Transfer Stock so purchased, duly endorsed
in blank by the person or persons in whose name a stock certificate is
registered or accompanied by a duly executed assignment separate from the
certificate with the signatures thereon guaranteed by a commercial bank or
trust company. If SBW does not elect to purchase the Transfer
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Stock during the Notice Period or if SBW fails or refuses for any reason
(including, but not limited to, the existence of any requirement that SBW
obtain any required regulatory approval) to complete the closing of the
purchase of any Transfer Stock upon the day specified above, the Seller
shall have ninety (90) days from the end of the Notice Period (the "SALES
PERIOD") in which to Transfer all of the Transfer Stock pursuant to the
Offer to the Offeror or in a Public Sale, it being understood that (A) in
a registered public offering the sales price may be greater than or less
than the Offer price and (B) in any other transaction the sales price and
other terms of the Transfer may be more favorable to the Seller than those
set forth in the Notice. In addition, Seller may not knowingly make a
Public Sale to any purchaser which Seller knows to own in excess of 5% of
the Common Stock, provided that this restriction shall not create any duty
of inquiry on the part of the Seller. Promptly after any sale pursuant to
this Section 3(c), the Seller shall notify SBW of the consummation thereof
and shall furnish such evidence of the completion (including time of
completion) of such sale and of the terms thereof as SBW may reasonably
request. If, at the termination of the Sales Period, the Seller has not
completed the sale of the Transfer Stock to the Offeror or in a Public
Sale, all of the restrictions on Transfer contained in this Section 3(c)
shall again be in effect with respect to all such Seller's Transfer Stock.
(d) EXEMPT TRANSFER. The following transactions shall constitute "EXEMPT
TRANSFERS" for the purpose of Section 3 and shall be exempt from the
requirements of subsection (c), but not subsections (a) and (b): (i) a Transfer
of Shares by a First Refusal Stockholder to SBW, (ii) a Transfer by a
Stockholder of Shares by will or intestate succession to such Stockholder's
executors, administrators, testamentary trustees, legatees or beneficiaries,
(iii) a Transfer of Shares by a Stockholder to any Related Party of such
Stockholder and (iv) a Transfer of Shares (A) by any Carlyle Stockholder to any
other Carlyle Stockholder or to any Clipper Stockholder, (B) by any Erin Mills
Stockholder to any other Erin Mills Stockholder or (C) by William C. Kennedy,
Jr. or William C. Saunders to any By-Word Stockholder, or (vi) a Transfer of
Shares that has been approved in writing by SBW as an Exempt Transfer.
(e) RESTRICTIONS ON SBW. No SBW Stockholder shall Transfer any Series D
Preferred Stock or Class B Common Stock except to an Affiliate of SBW.
Section 4. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION RIGHTS.
(1) RIGHT TO PIGGYBACK. Subject to the last sentence of this
subsection (1), whenever the Company proposes to register any shares of
Common Stock (or securities convertible into or exchangeable for, or
options, warrants or other rights to acquire, Common Stock) with the
Securities and Exchange Commission (the "COMMISSION") under the Securities
Act (other than (A) registrations on Form S-4 or Form S-8 and (B) the
registration of the Recapitalization Shares (as hereinafter defined)
pursuant to subsection (c) below) and the registration form to be used may
be used for the registration of the Registrable Securities (as defined in
subsection (k) below) (a
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"PIGGYBACK REGISTRATION"), the Company will give written notice to all
Stockholders, at least thirty-five (35) days prior to the anticipated
filing date, of its intention to effect such a registration, which notice
will specify the proposed offering price, the kind and number of
securities proposed to be registered, the distribution arrangements and
such other information that at the time would be appropriate to include in
such notice, and will, subject to subsection (a)(2) below, include in such
Piggyback Registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within
fifteen (15) business days after the effectiveness of the Company's
notice. Except as may otherwise be provided in this Agreement, Registrable
Securities with respect to which such request for registration has been
timely received will be registered by the Company and offered to the
public in a Piggyback Registration pursuant to this Section 4 on terms and
conditions at least as favorable as those applicable to the registration
of shares of Common Stock (or securities convertible into or exchangeable
or exercisable for Common Stock) to be sold by the Company and by any
other person selling under such Piggyback Registration.
(2) PRIORITY ON PIGGYBACK REGISTRATIONS. If the managing underwriter
or underwriters, if any, advise the holders of Registrable Securities in
writing that in its or their reasonable opinion or, in the case of a
Piggyback Registration not being underwritten, the Company shall
reasonably determine (and notify the holders of Registrable Securities of
such determination), after consultation with an investment banker of
nationally recognized standing, that the number or kind of securities
proposed to be sold in such registration (including Registrable Securities
to be included pursuant to subsection (a)(1) above) will materially
adversely affect the success of such offering (including, without
limitation, a material impact on the selling price), the Company will
include in such registration the number of securities, if any, which, in
the opinion of such underwriter or underwriters, or the Company, as the
case may be, can be sold, without having a material adverse effect on the
success of such offering, as follows: (i) first, the shares the Company
proposes to sell, (ii) second, the Registrable Securities requested to be
included in such registration by SBW, the Carlyle Stockholders, the
Clipper Stockholders and the Erin Mills Stockholders, pro rata among such
requesting Stockholders on the basis of their respective holdings of
Common Stock on a Fully Diluted Basis, and (iii) third, the Registrable
Securities requested to be included in such registration by the By-Word
Stockholders, pro rata among such requesting Stockholders on the basis of
their respective holdings of Common Stock on a Fully Diluted Basis.
(3) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the Company (by action of the Board of Directors)
will select a managing underwriter or underwriters to administer the
offering, which managing underwriter or underwriters will be of nationally
recognized standing and reasonably acceptable to the holders of a majority
of the Registrable Securities included therein.
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(b) DEMAND REGISTRATION RIGHTS.
(1) RIGHT TO DEMAND REGISTRATION. Each of (A) the Carlyle
Stockholders and the Clipper Stockholders as a group; (B) the Erin Mills
Stockholders as a group and (C) SBW (each referred to herein as a
"DEMANDING GROUP") shall have the right on the number of occasions set
forth in subsection (b)(2) to make a written request of the Company for
registration with the Commission, under and in accordance with the
provisions of the Securities Act, of all or part of their Registrable
Securities (a "DEMAND REGISTRATION"); PROVIDED, that (x) the Company shall
not effect a Demand Registration unless such Demand Registration has been
requested by persons holding at least a majority of the Registrable
Securities held by the Demanding Group on the date of such written request
and unless the number of Shares to be sold in such Demand Registration by
the Demanding Group is at least 1,000,000 shares of Common Stock, (y) if
the Board of Directors determines in the exercise of its reasonable
judgment that, due to a pending or contemplated acquisition or
disposition, to effect such Demand Registration at such time would have a
material adverse effect on the Company, the Company may defer such Demand
Registration for a single period not to exceed one hundred eighty (180)
days (but if the Company elects to defer any Demand Registration pursuant
to the terms of this sentence, no Demand Registration shall be deemed to
have occurred for purposes of this Agreement) and (z) the Company shall be
obligated to effect only the number of Demand Registrations set forth in
subsection 4(b)(2) below. Within ten (10) days after receipt of the
request for a Demand Registration, the Company will send written notice
(the "NOTICE") of such registration request and its intention to comply
therewith to all Stockholders who are holders of Registrable Securities
and, subject to subsection (3) below, the Company will include in such
registration all Registrable Securities of such Stockholders with respect
to which the Company has received written requests for inclusion therein
within twenty (20) business days after the effectiveness of the Notice.
All requests made pursuant to this subsection (b)(1) will specify the
aggregate number of Registrable Securities requested to be registered and
will also specify the intended methods of disposition thereof.
(2) NUMBER OF DEMAND REGISTRATIONS. Each Demanding Group
shall be entitled to two (2) Demand Registrations, and the expenses of
each (including the fees and expenses of a total of one counsel for the
Demanding Group in accordance with subsection (f)(2) below) shall be borne
by the Company. A Demand Registration shall not be counted as a Demand
Registration hereunder until such Demand Registration has been declared
effective by the Commission and maintained continuously effective for a
period of at least three months or such shorter period when all
Registrable Securities included therein have been sold in accordance with
such Demand Registration.
If the Company elects to issue and sell and ultimately sells any
equity securities pursuant to any Registration Statement filed in
connection with a Demand Registration, then such Registration shall be
deemed not to be a Demand Registration for purposes of determining the
number of Demand Registrations granted by this Agreement.
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(3) PRIORITY ON DEMAND REGISTRATIONS. If in any Demand Registration
the managing underwriter or underwriters thereof (or in the case of a
Demand Registration not being underwritten, the holders of a majority of
the Registrable Securities held by the Demanding Group after consultation
with an investment banker of nationally recognized standing), advise the
Company in writing that in its or their reasonable opinion the number of
securities proposed to be sold in such Demand Registration exceeds the
number that can be sold in such offering without having a material adverse
effect on the success of the offering (including, without limitation, an
impact on the selling price), the Company will include in such
registration only the number of securities that, in the reasonable opinion
of such underwriter or underwriters (or such holders of Registrable
Securities held by the Demanding Group, as the case may be) can be sold
without having a material adverse effect on the success of the offering,
as follows: (i) first, the Registrable Securities requested to be included
in such Demand Registration by the Demanding Group, pro rata, among such
Stockholders on the basis of their respective holdings of Common Stock on
a Fully Diluted Basis, (ii) second, the Registrable Securities requested
to be included in such Demand Registration by the Erin Mills Stockholders
and SBW (if the Demanding Group is the Carlyle Stockholders and the
Clipper Stockholders), or the Carlyle Stockholders and the Clipper
Stockholders, as a group, and SBW (if the Demanding Group is the Erin
Mills Stockholders), or the Carlyle Stockholders and the Clipper
Stockholders, as a group, and the Erin Mills Stockholders (if the
Demanding Group is SBW), in all such cases pro rata among such
Stockholders on the basis of their respective holdings of Common Stock on
a Fully Diluted Basis, (iii) third, shares to be issued and sold by the
Company and requested to be included in such Demand Registration, and (iv)
fourth, the Registrable Securities requested to be included in such Demand
Registration by the By-Word Stockholders, pro rata among such requesting
Stockholders on the basis of their respective holdings of Common Stock on
a Fully Diluted Basis.
(4) SELECTION OF UNDERWRITERS. If a Demand Registration is an
underwritten offering, the holders of a majority of the Registrable
Securities to be included in such Demand Registration held by members of
the Demanding Group that initiated such Demand Registration will select a
managing underwriter or underwriters of recognized national standing to
administer the offering, which managing underwriter or underwriters shall
be reasonably acceptable to the Company.
(c) REGISTRATION OF RECAPITALIZATION SHARES. Within a reasonable
period prior to each Registration Date (as hereinafter defined), the Company
shall prepare and file with the Commission a registration statement on an
appropriate form in order to register the Recapitalization Shares under the
Securities Act for sale in one or more privately negotiated transactions or in
open market transactions effected on any stock exchange on which the Common
Stock is then listed, or if not so listed, on any automated quotation system to
which the Common Stock is then admitted to trading; provided, however, that if
the Board of Directors determines in the exercise of its reasonable judgment
that, due to a pending or contemplated acquisition or disposition, to effect
such registration at such time would have a material adverse effect on the
Company, the Company may defer such registration for a single period not to
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exceed ninety (90) days. The Company shall use its reasonable best efforts to
have each such registration statement declared effective by the Commission as
promptly as reasonably practicable after the filing thereof with the Commission;
provided, however, that (i) no sales of Recapitalization Shares shall be
effected pursuant to any such registration statement prior to March 31, 1997 and
(ii) sales of an aggregate of no more than one-half of the total number of
Recapitalization Shares shall be effected pursuant to any such registration
statement prior to September 27, 1997, such dates being referred to as the
"Registration Dates". In addition, the Company shall use its reasonable best
efforts to keep such registration statement effective for a period of at least
three months after the applicable Registration Date. As used herein, the term
"Recapitalization Shares" shall mean the shares of Common Stock issued pursuant
to the Recapitalization Agreement to Erin Mills International Investment
Corporation as described in Section 2(a)(1) hereof and to certain Carlyle
Stockholders and Clipper Stockholders as described in Section 2(b) hereof.
(d) REGISTRATION PROCEDURES. With respect to any Piggyback Registration or
Demand Registration and (except as expressly provided in subsection (c) above)
the registration to be effected pursuant to subsection (c) above (generically, a
"REGISTRATION"), the Company will, subject to subsections 4(a)(2) and 4(b)(3),
as expeditiously as practicable:
(1) prepare and file with the Commission, within 60 days after
mailing the applicable Notice, a registration statement or registration
statements (the "REGISTRATION STATEMENT") relating to the applicable
Registration on any appropriate form under the Securities Act, which form
shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof;
PROVIDED that the Company will include in any Registration Statement on a
form other than Form S-1 all information that the holders of the
Registrable Securities so to be registered shall reasonably request and
shall include all financial statements required by the Commission to be
filed therewith, cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. ("NASD") or any
securities exchange on which the Common Stock may then be listed, and use
its reasonable best efforts to cause such Registration Statement to become
effective promptly; PROVIDED, FURTHER, that before filing a Registration
Statement or prospectus related thereto (a "PROSPECTUS") or any amendments
or supplements thereto, the Company will furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed,
which documents will be subject to the reasonable review of such holders
and underwriters and their respective counsel, and the Company will not
file any Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which the holders of a majority of the
Registrable Securities covered by such Registration Statement, the
Demanding Group, if a Demand Registration, or the underwriters, if any,
shall reasonably object;
(2) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep each Registration Statement effective for the applicable
period, or such shorter period which will terminate
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when all Registrable Securities covered by such Registration Statement
have been sold; cause each Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the Prospectus,
PROVIDED, that the Company shall not be deemed to have used its reasonable
best efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that would result in
selling holders of the Registrable Securities covered thereby not being
able to sell such Registrable Securities during that period unless such
action is required under applicable law, and PROVIDED, FURTHER that the
foregoing shall not apply to actions taken by the Company in good faith
and for valid business reasons, including without limitation the
acquisition or divestiture of assets, so long as the Company promptly
thereafter complies with the requirements of subsection (11) of this
subsection (d), if applicable;
(3) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such
person or entity) confirm such advice in writing, (A) when the Prospectus
or any Prospectus supplement or post-effective amendment has been filed,
and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any request by the
Commission for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose, (D) if at any time the representations and warranties of the
Company contemplated by subsection (14) below cease to be true and
correct, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, (F) of any other correspondence from
the Commission with respect to the Registration and (G) of the happening
of any event which makes any statement made in the Registration Statement,
the Prospectus or any document incorporated therein by reference untrue in
any material respect or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated
therein by reference in order to make the statements therein not
materially misleading;
(4) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(5) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an
underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and
either the holders of a majority of the Registrable
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Securities being sold or the Demanding Group, if a Demand Registration,
agree should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being
sold to such underwriters the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post- effective amendment promptly following notification of
the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(6) furnish to each selling holder of Registrable securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference);
(7) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such selling holder of Registrable Securities and underwriters
may reasonably request; the Company consents to the use in accordance with
applicable law of each Prospectus or any amendment or supplement thereto
by each of the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or
supplement thereto;
(8) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or "blue sky" laws of
such jurisdictions as any seller or underwriter reasonably requests in
writing, considering the amount of Registrable Securities proposed to be
sold in each such jurisdiction, and do any and all other acts or things
necessary or reasonably advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; PROVIDED that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject;
(9) cooperate in all reasonable respects with the selling holders of
Registrable Securities and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and to be in such denominations and registered in such
names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters;
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(10) use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(11) upon the occurrence of any event contemplated by subsection
(3)(F) above, prepare a supplement or post effective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(12) cause all Registrable Securities covered by any Registration
Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed, or cause such
Registrable Securities to be authorized for trading on the Nasdaq National
Market if any similar securities issued by the Company are then so
authorized, if requested by the holders of a majority of such Registrable
Securities, the Demanding Group, if a Demand Registration, or the managing
underwriters, if any;
(13) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable Registration Statement;
(14) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the Registration is an
underwritten Registration (A) make such representations and warranties to
the holders of such Registrable Securities and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings; (B) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority of the
Registrable Securities being sold) addressed to each selling holder and
the underwriters, if any, covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may
be reasonably requested by such holders and underwriters; (C) obtain "cold
comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the selling holders of
Registrable Securities and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters by underwriters in connection with primary
underwritten offerings; (D) if an underwriting agreement is entered into,
the same shall set forth in full the indemnification provisions and
procedures set forth in subsection (f) below with respect to all parties
to be indemnified pursuant to said subsection; and (E) the Company shall
deliver such documents and certificates as may be requested by the holders
of a majority of the Registrable Securities being sold and the
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managing underwriters, if any, to evidence compliance with subsection 3(G)
of this subsection (d) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company. The
above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder;
(15) make available (at reasonable times and places) for inspection
by a representative of the holders of a majority of the Registrable
Securities, any underwriter participating in any disposition pursuant to
such Registration, and any attorney or accountant retained by the sellers
or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such representative, underwriter, attorney or accountant in connection
with such Registration Statement; PROVIDED, that any records, information
or documents that are designated by the company in writing as confidential
shall be kept confidential by such Persons unless disclosure of such
records, information or documents is required by court or administrative
order or any regulatory body having jurisdiction;
(16) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than
forty-five (45) days after the end of any twelve (12)-month period (or
ninety (90) days, if such period is a fiscal year) (A) commencing at the
end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm or best efforts underwritten offering, or (B) if
not sold to underwriters in such an offering, beginning with the first
month of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statements shall cover said
twelve (12)-month periods; and
(17) promptly prior to the filing of any document that is to be
incorporated by reference into any Registration Statement or Prospectus
(after initial filing of the Registration Statement), provide copies of
such document to counsel to the selling holders of Registrable Securities
and to the managing underwriters, if any, make the Company's
representatives available for discussion of such document and make such
changes in such document prior to the filing thereof as counsel for such
selling holders or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to which
any Registration is being effected to furnish to the Company such information
regarding the proposed distribution of such securities as the Company may from
time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection (3)(G) of this
subsection (d), such holder will forthwith discontinue
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disposition of Registrable Securities pursuant to the Registration Statement
until such holder's receipt of copies of the supplemented or amended Prospectus
as contemplated by subsection (11) of this subsection (d), or until it is
advised in writing (the "ADVICE") by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus, and, if so
directed by the Company, such holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods referred to in subsection (2) of this
subsection (d) shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
prospectus contemplated by subsection (11) of this subsection (d) or the Advice.
(e) RESTRICTIONS ON PUBLIC SALE.
(1) PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. To
the extent not inconsistent with applicable law, each Stockholder, if
requested by the managing underwriter or underwriters for any Demand
Registration or Piggyback Registration, agrees not to effect any public
sale or distribution of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), including a sale pursuant
to Rule 144 (or any similar provision then in force) under the Securities
Act, during the 15 business days prior to, and during the ninety (90)-day
period (or such shorter period as may be agreed to by such holders)
beginning on, the effective date of the applicable Registration Statement
(except as part of such Registration).
(2) PUBLIC SALE BY THE COMPANY AND OTHERS. If requested by the
managing underwriter or underwriters for any underwritten Demand
Registration or Piggyback Registration, (i) the Company will not effect
any public sale or distribution of Common Stock (or securities convertible
into or exchangeable or exercisable for Common Stock) during the fifteen
(15) business days prior to, and during the ninety (90)- day period
beginning on the effective date of such Registration and (ii) the Company
will cause each holder of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock) purchased from the Company
at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public sale or distribution of
any such securities during such period described in clause (i) above
(except as part of such Registration, if otherwise permitted).
(3) OTHER REGISTRATIONS. If the Company has previously filed a
Registration Statement with respect to Registrable Securities, and if such
previous Registration has not been withdrawn or abandoned, the Company
will not file or cause to be effected any other registration of any of its
Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) under the Securities Act (except on Form S-8
or any similar successor form), whether on its own behalf or
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at the request of any holder or holders of Common Stock (or securities
convertible into or exchangeable or exercisable for Common Stock), until a
period of at least three (3) months has elapsed from the effective date of
such previous Registration; provided, that if the holders of fifty percent
(50%) or more of the aggregate number of Registrable Securities included
in such previous Registration shall agree in writing, such period may be
shortened to a period specified by such holders.
(f) REGISTRATION EXPENSES.
(1) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, including,
without limitation, all registration and filing fees, the fees and
expenses of the counsel and accountants for the Company (including the
expenses of any "cold comfort" letters and special audits required by or
incident to the performance of such persons), all other costs and expenses
of the Company incident to the preparation, printing and filing under the
Securities Act of the Registration Statement (and all amendments and
supplements thereto) and furnishing copies thereof and of the Prospectus
included therein, the costs and expenses incurred by the Company in
connection with the qualification of the Registrable Securities under the
state securities or "blue sky" laws of various jurisdictions, the costs
and expenses associated with filings required to be made with the NASD
(including, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel as may be required by the rules
and regulations of the NASD), the costs and expenses of listing the
Registrable Securities for trading on a securities exchange or authorizing
them for trading on NASDAQ and all other costs and expenses incurred by
the Company in connection with any Registration hereunder; PROVIDED, that,
except as otherwise provided in subsection (2) below, each Stockholder
shall bear the costs and expenses of any underwriters' commissions,
brokerage fees or transfer taxes relating to the Registrable Securities
sold by such Stockholders and the fees and expenses of any counsel,
accountants or other representative retained by Stockholder.
(2) Notwithstanding the foregoing and except as provided below, in
connection with each Registration hereunder, the Company will reimburse
the Stockholders who are holders of Registrable Securities being
registered in any Registration hereunder for (i) the reasonable fees and
disbursements of not more than one counsel, which counsel shall be chosen
(x) by the holders of a majority of the Registrable Securities to be
included therein that are held by the Demanding Group, in the case of a
Demand Registration and (y) otherwise, by the holders of a majority of all
Registrable Securities to be included therein, and (ii) the reasonable
out-of-pocket expenses (including travel costs) of the holders of
Registrable Securities in connection with such Registration.
(g) INDEMNIFICATION.
(1) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each Stockholder, its
officers, directors, partners and agents and each person who controls such
Stockholder (within the meaning
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of the Securities Act and the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")), against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or any omission or alleged omission to state
therein a material fact necessary to make the statements therein (in the
case of a Prospectus or any preliminary Prospectus, in light of the
circumstances under which they were made) not misleading, except insofar
as the same are caused by or contained in any information with respect to
such Stockholder furnished in writing to the Company by such Stockholder
in its capacity as a selling Stockholder expressly for use therein. The
Company will also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the
distribution, their officers and directors and each person who controls
such persons (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities; PROVIDED, HOWEVER, if pursuant to an underwritten
public offering of Registrable Securities, the Company and any
underwriters enter into an underwriting or purchase agreement relating to
such offering that contains provisions relating to indemnification and
contribution between the Company and such underwriters, such provisions
shall be deemed to govern indemnification and contribution as between the
Company and such underwriters.
(2) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
In connection with any Registration in which a Stockholder is
participating, each such Stockholder will furnish to the Company in
writing such information with respect to such Stockholder as the Company
reasonably requests for use in connection with any Registration Statement
or Prospectus and agrees to indemnify, to the full extent permitted by
law, the Company, the directors and officers of the Company signing the
Registration Statement and each person who controls the Company (within
the meaning of the Securities Act and the Exchange Act) against any
losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements in
the Registration Statement or Prospectus or preliminary Prospectus (in the
case of the Prospectus or any preliminary Prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in any information with respect to such Stockholder so furnished
in writing by such Stockholder in its capacity as a selling Stockholder
specifically for inclusion therein. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount
than the dollar amount of the net proceeds received by such holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information with respect to such
persons or entities so furnished in writing by such persons or entities or
their representatives specifically for inclusion in any Prospectus or
Registration Statement.
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(3) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person or
entity entitled to indemnification hereunder will (i) give prompt written
notice to the indemnifying party after the receipt by the indemnified
party of a written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which
such indemnified party will claim indemnification or contribution pursuant
to this Agreement; PROVIDED, HOWEVER, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding subparagraphs (1) and (2),
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim, permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party will
not be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of more than one
counsel in any one jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or
counsels.
(4) CONTRIBUTION. If for any reason the indemnification provided for
in the preceding subparagraphs (1) and (2) is unavailable to an
indemnified party as contemplated by the preceding clauses (1) and (2),
then the indemnifying party in lieu of indemnification shall contribute to
the amount paid or payable by the indemnified party as a result of such
loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations, provided that no Stockholder shall be
required to contribute in an amount greater than the difference between
the net proceeds received by such Stockholder with respect to the sale of
any Shares and all amounts already contributed by such Stockholder with
respect to such claims, including amounts paid for any legal or other fees
or expenses incurred by such Stockholder.
(h) RULE 144. The Company agrees that at all times after it has filed a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities of the Company, it will file in a
timely manner all reports required to be filed by it pursuant to the Securities
Act and the Exchange Act and will take such further action as any
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holder of Registrable Securities may reasonably request in order that such
holder may effect sales of Common Stock pursuant to Rule 144. At any reasonable
time and upon request of any Stockholder, the Company will furnish such
Stockholder and others with such information as may be necessary to enable the
Stockholder to effect sales of Common Stock pursuant to Rule 144 under the
Securities Act and will deliver to such Stockholder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
the Company may deregister any class of its equity securities under Section 12
of the Exchange Act or suspend its duty to file reports with respect to any
class of its securities pursuant to Section 15(d) of the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
(i) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Stockholder
may participate in any underwritten Registration hereunder unless such
Stockholder (i) agrees to sell its Registrable Securities on the basis provided
in any underwriting arrangements approved by the persons entitled hereunder to
select the underwriter pursuant to subsections 4(a)(3) and (4)(b)(4) above, and
(ii) accurately completes in a timely manner and executes all questionnaires,
powers of attorney, underwriting agreements and other documents customarily
required under the terms of such underwriting arrangements.
(j) OTHER REGISTRATION RIGHTS. The Company will not grant to any person
(including the Stockholders) any demand or piggyback registration rights with
respect to the Common Stock of the Company (or securities convertible into or
exchangeable or exercisable for Common Stock) other than piggyback registration
rights that are not inconsistent with the terms of this Section 4. To the extent
that the Company grants to any person registration rights with respect to any
securities of the Company having provisions more favorable to the holders
thereof than the provisions contained in this Agreement, the Company will confer
comparable rights to the holders of Registrable Securities under this Agreement.
Except as provided herein, the Company will not grant any registration rights
that would permit any person or entity the right to piggyback on any Demand
Registration.
(k) DEFINITION OF REGISTRABLE SECURITIES. "REGISTRABLE SECURITIES" means
the shares of Common Stock now owned or hereafter acquired by any Stockholder,
but with respect to any share, only until such time as such share (i) has been
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement covering it or (ii) has been sold to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act and the Legend referred to in Section 6(a) has been removed from
the certificate representing such share (at which time such share shall cease to
be a Registrable Security).
(l) AMENDMENTS AND WAIVERS. The provisions of this Section 4, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers of or consents to departures from the provisions hereof may not be
given unless approved by the Company in writing and the Company has obtained the
written consent of Stockholders holding at least eighty-five percent (85%) of
the then outstanding Registrable Securities (including for
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such purposes all securities convertible into or exchangeable for Registrable
Securities, other than the Warrants). Notwithstanding the foregoing, any
amendment, waiver or consent that materially and adversely affects any of the
By-Word Stockholders as a group, the Erin Mills Stockholders as a group, the
Carlyle Stockholders as a group, the Clipper Stockholders as a group or SBW
differently from the other Stockholders, shall require the prior written
approval of the holders of at least a Majority in Interest of Stockholders who
are then members of the group or the entity so affected.
Section 5. GOVERNANCE.
(a) Within fifteen days after the execution hereof, the total number of
members of the Board of Directors will be reduced to six, which number shall be
adjusted from time to time in order to give effect to the provisions of
subsection (b) below. The Company and the Stockholders hereby agree to take, at
any time and from time to time, all action necessary (including, without
limitation, voting the shares of Company Common Stock owned or controlled by
such Stockholder, calling special meetings of stockholders, executing and
delivering written consents and requiring designees to resign) to establish the
number of total number of directors as provided herein.
(b) At all times from and after fifteen days after the execution hereof
(except for the addition of a second Independent Director, which shall occur no
later than the date of the next annual meeting of the stockholders of the
Company), the Board of Directors of the Company (the "BOARD") shall be composed
of Directors to be designated in the manner set forth below. The Company and
each Stockholder hereby agree to take, at any time and from time to time, all
action necessary (including, without limitation, voting the shares of the
Company Common Stock owned or controlled by such Stockholder, calling special
meetings of stockholders and executing, delivering written consents and
requiring designees to resign) to elect Directors as provided herein. Prior to
the receipt of Regulatory Relief, the Board shall be composed of seven (7)
members, of which two (2) Directors shall be persons designated by a Majority in
Interest of the Erin Mills Stockholders, two (2) Directors shall be persons
designated by a Majority in Interest of the By-Word Stockholders (one of which
shall be the chief executive officer of the Company), one (1) Director shall be
a person designated by a Majority in Interest of the Carlyle Stockholders and
two (2) additional Directors (or, if determined by the Nominating Committee as
hereinafter provided, three (3) additional Directors) shall be persons who are
not employed by the Company or affiliated with any party to this Agreement
("Independent Directors"). SBW shall be entitled to designate one non-director
delegate who shall be entitled to receive notice of, in accordance with the
provisions of Section 11.6 of the Bylaws with respect to Class B Directors, and
to attend all meetings of the Board and to receive all materials received by
Directors, but who shall not be a member of the Board of Directors, shall have
no fiduciary duties to the Company, to the Board or stockholders of the Company
and shall not be entitled to vote at meetings of the Board. Upon the conversion
of the Series D Preferred Stock into Class B Common Stock, the number of
Directors shall be increased by one who shall be a person designated by SBW and
the right to a non-director delegate shall terminate. If SBW and its Affiliates
Beneficially Own 20% or more of the Common Stock (including Common Stock
issuable upon conversion of Series D Preferred Stock or Class B Common Stock or
other
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convertible securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than shares issuable upon exercise of the
Warrants and Excluded Options) on a Fully Diluted Basis, the number of Directors
shall further be increased by one and the additional Director shall also be a
designee of SBW. For so long as SBW or its Affiliates hold Class B Common Stock,
one or both of SBW's designees will be elected by SBW as the holder of the Class
B Common Stock and will be Class B Directors, with the rights set forth in the
terms of such Class B Common Stock and the Bylaws, and which directors will have
the corporate authority to sign a stockholder consent of SBW on behalf of each
of the SBW Stockholders.
All Independent Directors shall be nominated by a committee consisting of
one Director designated by the Erin Mills Stockholders, one Director designated
by the By-Word Stockholders, one Director designated by the Carlyle Stockholders
and, following receipt of Regulatory Relief, one Director designated by SBW (the
"Nominating Committee"). The Nominating Committee also shall determine whether
to increase the number of Independent Directors to three (3).
Notwithstanding the foregoing, no Stockholder or group of Stockholders
shall be entitled to designate any Director or have such designee serve on the
Nominating Committee if the percentage of Common Stock (including Common Stock
issuable upon conversion of outstanding securities or upon the exercise of any
outstanding options, warrants, rights or obligations other than the Warrants and
Excluded Options) Beneficially Owned by such Stockholder or group of
Stockholders falls below 5% (or, with respect to the Erin Mills Stockholders and
By-Word Stockholders, 20% for the right to designate two Directors and 5% for
the right to designate one Director) on a Fully Diluted Basis. If By-Word has
only one designee, it shall be the chief executive officer of the Company if the
chief executive officer is a By-Word Stockholder. Upon the failure of any
Stockholder or group of Stockholders to maintain the required percentage, the
Stockholder or group of Stockholders shall require its designee to resign and
the size of the Board may, in the determination of the Nominating Committee,
either be reduced to eliminate such the resulting vacancy on the Board or remain
the same (in which case, the resulting vacancy on the Board will be filled by a
Director nominated by the Nominating Committee), provided that the Stockholders
agree that if the chief executive officer is not a By-Word designee, in
accordance with the provisions hereof, the chief executive officer shall be
nominated by the Nominating Committee.
(c) Pursuant to Article VII of the Incentive Stock Option Plan, the Board
shall appoint a three-person Compensation Committee to administer the Incentive
Stock Option Plan. Following receipt of Regulatory Relief, a Director designated
by SBW shall serve on the Compensation Committee. The Compensation Committee
shall be comprised of only non-management Directors serving on the Board. Each
Stockholder hereby agrees to take, at any time and from time to time, all action
necessary (including, without limitation, voting the shares of the Common Stock
owned or controlled by such Stockholder, calling special meetings of
stockholders and executing and delivering written consents) to cause the Board
to appoint to the Compensation Committee the number of persons meeting the
requirements of this subsection.
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(d) The Stockholders agree that no Director may be removed except at the
request of the holders of a majority of the shares of Common Stock entitled to
appoint such Director in accordance with Section 5(b), and each Stockholder
hereby agrees to take all action necessary (including, without limitation,
voting the shares of Common Stock owned or controlled by such Stockholder,
calling special meetings of stockholders and executing and delivering written
consents) for the purpose of accomplishing the purposes of this Agreement. If a
vacancy on the Board occurs by reason of the death, removal, resignation,
retirement or election not to serve of a designee, the remaining Directors and
the Company shall cause the vacancy thereby created to be filled by a new
designee as soon as possible (the "REPLACEMENT DIRECTOR"), who is designated in
the same manner and by the same persons specified in Section 5(b) as the
Director being replaced had been, and the Company and each Stockholder hereby
agrees to take, at any time and from time to time, all actions necessary to
accomplish the same; PROVIDED, HOWEVER, that if any group fails to designate a
representative in accordance with Section 5(b) above for a period of thirty (30)
consecutive days, then such vacancy shall be filled by the Nominating Committee
until such time as the Replacement Director is designated in accordance with
Section 5(b), at which time the term of the Director not elected in accordance
with Section 5(b) shall expire.
(e) In addition to any compensation to which the members of the Board may
be entitled, the Company shall reimburse each Director for the reasonable
out-of-pocket expenses incurred by such Director (including, without limitation,
reasonable fees and expenses of counsel, accountants, or representatives, if
any) involved with such Director's services as a member of the Company. In
addition, the Company shall obtain and maintain at all times during which this
Agreement remains in effect, at the cost and expense of the Company, director
liability insurance policies covering each member of the Board. Such director
liability insurance policies shall be provided by a reputable nationally
recognized insurance carrier and shall provide coverage in such amounts and on
such terms as may be reasonably acceptable to each member of the Board. Should
SBW so request, the Company will enter into contractual indemnification
arrangements with the Director reasonably satisfactory to SBW.
(f) In addition to any vote or consent of the Board of Directors or its
stockholders required by law or the Certificate of Incorporation, including the
terms of Series D Preferred Stock and the Class B Common Stock, the affirmative
vote of a majority of the entire Board of Directors (not merely a quorum) shall
be necessary for authorizing, effecting or validating the following actions:
(i) the approval of any annual budget or business plan for the
Company or any Subsidiary of the Company or the deviation by the Company
or any such Subsidiary from any annual budget for the Company or such
Subsidiary approved by the Board of Directors by more than five percent
(5%);
(ii) any capital expenditure or expenditures by the Company or any
Subsidiary of the Company which, individually or in the aggregate, exceeds
$1,000,000;
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(iii) the hiring or termination by the Company or any Subsidiary of
the Company of any officer or senior management employee of the Company or
such Subsidiary;
(iv) directly or indirectly redeem, purchase or make any payments
with respect to any stock appreciation rights, phantom stock plans or
similar rights or plans;
(v) (A) sell, lease, transfer or otherwise convey, or permit any
Subsidiary to sell, lease, transfer or otherwise convey, any assets
representing five percent (5%) or more of the consolidated assets of the
Company and its Subsidiaries, (B) consolidate or merge with, or permit any
Subsidiary to consolidate or merge with, any Person, (C) reclassify or
otherwise change, or permit any Subsidiary to reclassify or otherwise
change, any capital stock of the Company or any Subsidiary or (D)
dissolve, liquidate or wind-up the Company or permit any Subsidiary to
dissolve, liquidate or wind up such Subsidiary.
(vi) except as expressly contemplated by the Purchase Agreement or
the any of the Transaction Documents, authorize, issue or enter into any
agreement providing for the issuance, or permit any Subsidiary to
authorize, issue or enter into any agreement providing for the issuance
(contingent or otherwise) in excess of an aggregate of $5,000,000 (A) any
notes or debt securities containing equity features (including, without
limitation, any note or debt securities convertible into or exchangeable
for capital stock or other equity securities, issued in connection with
the issuance of capital stock or other equity securities, or containing
profit participation features) or (B) any capital stock or other equity
securities, or any securities convertible into or exchangeable for any
capital stock or other equity securities, other than issuances pursuant to
the Incentive Stock Option Plan;
(vii) acquire, or permit any Subsidiary to acquire, in one
transaction or a series of related transactions, any capital stock, other
equity interests or assets of any Person for aggregate consideration in
excess of $5,000,000;
(viii) enter into, or permit any Subsidiary to enter into, any
agreement, contract, lease or commitment on the part of the Company or
such Subsidiary involving the payment or provision of consideration by or
to the Company or such Subsidiary, the fair market value of which exceeds
$1,000,000;
(ix) make any capital expenditure, or permit any Subsidiary to make
any capital expenditure, in excess of $1,000,000;
(x) except as expressly contemplated by the Purchase Agreement,
amend the Certificate of Incorporation, or the Company's bylaws or file
any resolution of the board of directors with the Secretary of State of
the State of Delaware containing any provisions which would adversely
affect or otherwise impair the rights of the holders of the Common Stock;
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(xi) enter into, or permit any Subsidiary to enter into, any
agreement, transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors, employees, stockholders or Affiliates or
with any individual related by blood, marriage or adoption to any such
individual or with any entity in which such Person or individual own, in
the aggregate, a more than 10% beneficial interest, except for (A)
customary employment arrangements and benefit programs on arms' length
terms and (B) agreements, transactions, commitments or arrangements on
arms' length terms and approved by a majority of the Company's
disinterested directors; or
(xii) enter into, or permit any Subsidiary to enter into, any
agreement to do or effect any of the foregoing.
(g) Following the receipt of Regulatory Relief, if SBW does not hold any
Series D Preferred Stock or Class B Common Stock but does own at least 1.6
million shares of Common Stock (including Common Stock issuable upon conversion
of outstanding securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than the Warrants and Excluded Options)
on a Fully Diluted Basis, the approval of SBW shall be required for the
following actions:
(i) the approval of any annual budget or business plan for the
Company or any Subsidiary of the Company or the deviation by the Company
or any such Subsidiary from any annual budget for the Company or such
Subsidiary approved by the Board of Directors by more than five percent
(5%);
(ii) issuance by the Company of any equity securities, including
securities convertible into equity securities (other than (A) the grant of
employee stock options (subject to the proviso set forth in (D) below),
(B) the issuance of equity securities in accordance with the terms of the
Purchase Agreement or any of the other Transaction Documents), (C) the
issuance of equity securities upon the exercise or conversion of
securities or employee stock options that are outstanding as of the date
hereof or (D) the issuance of equity securities after giving effect to the
consummation of the transactions contemplated hereby or employee stock
options granted hereafter, PROVIDED, HOWEVER, that there shall not be
outstanding at any time employee stock options for more than 1.5 million
shares of Common Stock plus the options granted to William C. Kennedy, Jr.
and William C. Saunders that are outstanding at September 27, 1996) or
incurrence of any indebtedness for borrowed money or evidenced by bonds,
notes or debentures, provided that the Company can incur up to $5 million
in indebtedness in any year without the consent of SBW;
(iii) the hiring or termination by the Company of its chief
executive officer, chief operating officer or chief financial officer;
(iv) the Company's entering into any lines of business which is not
its Existing Line of Business (as hereinafter defined) or any joint
ventures, partnerships or similar arrangements;
26
<PAGE>
(v) the Company's exiting its Existing Line of Business (as
hereinafter defined) or disposing of assets (other than telecommunications
equipment and other assets sold in the ordinary course of business) in any
year with a value in excess of $500,000 or which are otherwise material to
the Company's operations;
(vi) the adoption, implementation or acceptance (including the
failure to opt out) of any Anti-Takeover Provision not in effect as of the
date hereof that would be applicable to, and, in the reasonable
determination of SBW, adversely affect, SBW and its Affiliates; or
(vii) the taking of any corporate action that would reduce the
number of Shares held by SBW and its Affiliates to fewer than 1.6 million
shares of Common Stock such that SBW no longer has the right to approve
any of the actions specified in this subsection (g).
As used in this subsection (g), the terms set forth below shall have the
following respective meanings;
"Anti-takeover Provision" means (i) any provision of the certificate of
incorporation or bylaws of the Company or any contract, agreement or plan to
which the Company is a party or by which it is bound or any statutory provision
enacted after the date hereof which is applicable to the Company which the
Company may opt out of if the effect of such provision would be to materially
delay, hinder or prevent a change in control of the Company or (ii) a
stockholder rights plan or "poison pill," including the provisions of any
preferred stock or common stock purchase rights issued pursuant thereto;
provided, however, that such term shall not include any customary change of
control provisions contained in employment agreements between the Company and
any of its directors, officers or other employees or in any plans or agreements
relating to stock options or other awards of equity securities made by the
Company to any such persons.
"Existing Line of Business" means a non-facilities based, enhanced service
provider that offers fleet management and/or status or information about
vehicles and/or location capabilities through mobile communications service.
(h) The Board shall hold, during the term of this Agreement, regularly
scheduled, inperson meetings no less frequently than six times per year.
(i) At all times during which this Agreement remains in effect, each
Stockholder hereby agrees to take all action necessary (including, without
limitation, voting the shares of the Company's Common Stock owned or controlled
by such Stockholder, calling special meetings of stockholders and executing and
delivering written consents) to ensure that the By-Laws of the Company provide
that the information listed on Schedule A hereto shall be provided to each
member of the Board of Directors, at the time and in the manner required by the
provisions of Schedule A.
27
<PAGE>
(j) The Company and each Stockholder agrees not to, and to cause its
designees on the Board not to, without the prior approval of SBW, alter, amend,
repeal or replace the Bylaws set forth on Exhibit B hereto or to enact any
Bylaws inconsistent therewith.
(k) For the purpose of this Section 5, Chase Manhattan Investment
Holdings, Inc., Archery Partners and their respective assigns shall not be
considered Carlyle Stockholders.
Section 6. MISCELLANEOUS.
(a) LEGEND. The certificates representing the capital stock of the Company
held by each of the Stockholders shall bear the following legend (provided that
with respect to SBW and any certificates issued after the date hereof such
legend shall refer to this Agreement):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES OR SUCH SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY
SIMILAR REQUIREMENTS OF ANY APPLICABLE STATE SECURITIES LAW. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 4,
1994, A COPY OF WHICH IS AVAILABLE UPON REQUEST FROM THE SECRETARY OF THE
COMPANY."
If any capital stock of the Company becomes eligible for sale pursuant to
Rule 144(k) promulgated under the Securities Act, the Company shall, subject to
applicable law and upon the request of any holder of such capital stock, remove
the legend set forth in this Section 6(a) from the certificates evidencing the
shares of such capital stock held by such holder. In addition, (i) in connection
with any Transfer of shares of any capital stock of the Company pursuant to any
public offering registered under the Securities Act or pursuant to Rule 144 (or
any similar rule or rules then in effect promulgated under the Securities Act)
if such rule is available or (ii) if the holder of any shares of capital stock
of the Company delivers to the Company an opinion of counsel reasonably
acceptable to the Company that no subsequent Transfer of such shares shall
require registration under the Securities Act, the Company shall promptly upon
such Transfer deliver new certificates for such shares which do not bear the
legend set forth in this Section 6(a).
(b) SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, heirs, legatees, successors and permitted assigns. The
only permitted assigns (each, a "Permitted Assign") are as follows: (i) each of
the Clipper Stockholders shall be entitled to assign any of its rights under
this Agreement to any other Clipper Stockholder; (ii) each of the
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<PAGE>
Carlyle Stockholders shall be entitled to assign any of its rights under this
Agreement to any other Carlyle Stockholder or any Related Party of a Carlyle
Stockholder (other than an Excluded Related Party); (iii) each of the By-Word
Stockholders shall be entitled to assign any of its rights under this Agreement
to any other By-Word Stockholder; (iv) each of the Erin Mills Stockholders shall
be entitled to assign any of its rights under this Agreement to any other Erin
Mills Stockholder or any Related Party of an Erin Mills Stockholder (other than
an Excluded Related Party) and (v) SBW shall be entitled to assign any of its
rights under this Agreement to any of its Affiliates. No party hereto shall be
entitled to assign any of its rights under this Agreement to any Person which is
otherwise a Permitted Assign hereunder unless, concurrently with such
assignment, such party is Transferring all or a portion of the Shares owned by
it to such Person in compliance with the terms and provisions set forth herein
and such Person executes a supplemental agreement hereto in form and substance
reasonably satisfactory to the Company pursuant to which such Person agrees to
become a party to, and be bound by, this Agreement.
(c) SPECIFIC PERFORMANCE, ETC. The Company and each Stockholder, in
addition to being entitled to exercise all rights provided herein, in the
Company's Certificate of Incorporation or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Stockholder agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(d) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal law of the State of Delaware without giving effect
to the conflict of laws provisions thereof.
(e) INTERPRETATION. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
(f) NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. SBW agrees to give the Company written notice when Regulatory Relief
has been obtained. Any such notice shall be deemed given when so delivered
personally, sent by facsimile transmission or, if mailed, three (3) business
days after the date of deposit in the United States mail, by certified mail
return receipt requested, as follows:
(i) If to the Company to:
HighwayMaster Communications, Inc.
16479 Dallas Parkway, Suite 710
Dallas, Texas 75248
Attention: William Kennedy
29
<PAGE>
Telecopier: (972) 930-7263
with a copy (which shall not constitute notice) to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Geoffrey L. Newton
Telecopier: (214) 953-6503
(ii) If to any of the Carlyle Entitles, to
c/o The Carlyle Group, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004-2505
Attention: Mark D. Ein
Telecopier: (202) 347-1818
with a copy (which shall not constitute notice) to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Attention: Bruce E. Rosenblum, Esq.
Telecopier: (202) 637-2201
(iii) If to any of the Clipper Entities, to
The Clipper Group, L.P.
12 East 49th Street
New York, N.Y. 10017
Attention: Daniel V. Cahillane
Telecopier: (212) 318-1360
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, N.Y. 10153
Attention: Howard Chatzinoff
Telecopier: (212) 310-8007
30
<PAGE>
(iv) If to any of the Erin Mills Companies, to
Erin Mills International
Trident House, Suite 204(a)
Broad Street
Bridgetown, Barbados
West Indies
Attention: Stephen Greaves
Telecopier: (809) 436-2120
with a copy (which shall not constitute notice) to:
7501 Keele Street, Suite 500
Concord, Ontario L4K 1Y2
Canada
Attention: Gerry C. Quinn
Telecopier: (416) 736-8373
(v) If to any of the By-Word Stockholders, to:
HighwayMaster Communications, Inc.
16479 Dallas Parkway
Suite 710
Dallas, Texas 75248
Attention: William Kennedy
Telecopier: (972) 930-7263
(vi) If to Chase Manhattan Investment Holdings, Inc. or Archery
Partners:
The Chase Manhattan Bank
One Chase Plaza
New York, NY 10081
Attention: William K. Luby
Telecopier: (212) 552-2958
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Emile Karafiol
Telecopier: (312) 861-2200
31
<PAGE>
(vii) If to Southwestern Bell Wireless Holdings, Inc.
Southwestern Bell Wireless Holdings, Inc.
17330 Preston Road
Suite 100A
Dallas, Texas 75252
Attention: President
Telecopier: (972) 733-2012
and to:
SBC Communications, Inc.
175 E. Houston
San Antonio, Texas 78205
Attention: General Attorney, Mergers & Acquisitions
Telecopier: (210) 351-3488
with a copy (which shall not constitute notice) to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Janet T. Geldzahler
Telecopier: (212) 558-3588
Any party may change its address for notice by written notice to the other
parties in accordance with this provision.
(g) TERMINATION. This Agreement will terminate and the Original Agreement,
as in effect on the date prior to the date hereof, will be deemed to be in
effect if the Purchase Agreement is terminated pursuant to Section 2(c) thereof.
Sections 3(b) and (c) hereof shall terminate at that time that SBW and its
Affiliates cease to own at least 1.6 million shares of Common Stock (including
Common Stock issuable upon conversion of outstanding securities or upon the
exercise of any outstanding options, warrants, rights or obligations, other than
the Warrants and Excluded Options).
(h) INSPECTION AND COMPLIANCE WITH LAW. Copies of this Agreement will be
available for inspection or copying by any Stockholder at the offices of the
Company through the Secretary of the Company.
(i) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this paragraph (h), may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given, except by a written instrument executed by (i) the
Company, (ii) a Majority in Interest of the By-Word
32
<PAGE>
Stockholders, (iii) a Majority in Interest of the Carlyle Stockholders and the
Clipper Stockholders acting as a group, (iv) a Majority in Interest of the Erin
Mills Stockholders and (v) SBW; PROVIDED, HOWEVER, that amendments of or
modification to Section 4 will be subject to the requirements of Section 4(k).
No action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
waiver of any preceding or succeeding breach and no failure by any party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
(j) TRANSFER VOID. Any Transfer of any security of the Company in
violation of this Agreement shall be null and void and the Company covenants and
agrees that it will not register or otherwise recognize a Transfer (whether for
the purposes of shareholder voting or in connection with the distribution of
dividends or other corporate assets) of any securities which it has reason to
believe was effected in violation of this Agreement.
(k) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, by the original parties hereto and any successor in interest, each
of which shall be deemed to be an original and all of which together shall be
deemed to constitute one and the same agreement.
(l) ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(m) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HIGHWAYMASTER COMMUNICATIONS, INC.,
By: /s/ WILLIAM C. SAUNDERS
Name: William C. Saunders
Title: President
33
<PAGE>
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ STAN SIGMAN
Name: Stan Sigman
Title: President & Chief Executive Officer
CARLYLE-HIGHWAYMASTER INVESTORS, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ MARK D. EIN
Name: Mark D. Ein
Title: Vice-President of Managing Member
of TC Group
CARLYLE-HIGHWAYMASTER INVESTORS II, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ MARK D. EIN
Name: Mark D. Ein
Title: Vice-President of Managing Member
of TC Group
34
<PAGE>
H.M. RANA INVESTMENTS LIMITED
By: /s/ FAHAD A. ALMUBARAK
Name: Fahad A. Almubarak
Title: President
TC GROUP, L.L.C.
By: /s/ MARK D. EIN
Name: Mark D. Ein
Title: Vice-President of Managing Member
/s/ MARK D. EIN
Mark D. Ein
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By: /s/ JEFFREY C. WALKER
Name: Jeffrey C. Walker
Title: Chief Executive Officer
35
<PAGE>
ARCHERY PARTNERS
By: /s/ JEFFREY C. WALKER, MANAGING PARTNER
Its: General Partner
Name: Jeffrey C. Walker
Title: Managing Partner
CLIPPER CAPITAL ASSOCIATES, L.P.
By: Clipper Capital Associates, Inc.
its General Partner
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CLIPPER/MERCHANT PARTNERS, L.P.
By: Clipper Capital Associates, L.P.,
its General Partner
By: Clipper Capital Associates, Inc.
its General Partner
36
<PAGE>
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CLIPPER/MERBAN,, L.P.
By: Clipper Capital Associates, L.P.
its General Partner
By: Clipper Capital Associates, Inc.
its General Partner
By: /s/ DANIEL V. CAHILLANE
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
ERIN MILLS INTERNATIONAL INVESTMENT
CORPORATION
By: /s/ STEPHEN L. GREAVES
Name: Stephen L. Greaves
Title: General Manager
37
<PAGE>
THE ERIN MILLS DEVELOPMENT CORPORATION
By: /s/ G.C. QUINN
Name: G.C. Quinn
Title: Executive Vice-President
THE ERIN MILLS INVESTMENT CORPORATION
By: /s/ G.C. QUINN
Name: G.C. Quinn
Title: President
/s/ WILLIAM C. KENNEDY, JR.
William C. Kennedy, Jr.
Donald M. Kennedy
/s/ WILLIAM C. SAUNDERS
William C. Saunders
/s/ ROBERT T. HAYES by Douglas Dunlap
attorney-in-fact
Robert T. Hayes
38
<PAGE>
/s/ ROBERT S. FOLSOM by Haddon O. Winckler
attorney-in-fact
Robert S. Folsom
39
<PAGE>
The undersigned are executing this Agreement solely for the purpose of
evidencing their approval of the amendment and restatement of the Original
Agreement (as amended from time to time) in its entirety as set forth herein, it
being understood that the undersigned shall not be deemed Stockholders for
purposes of this Agreement and shall not have any rights or obligations
hereunder.
/s/ MARGARET D. FOLSOM
Margaret D. Folsom
/s/ R. STEPHEN FOLSOM
Stephen R. Folsom
Joann Hayes
/s/ CYNTHIA ANN HAYES
Cynthia Ann Hayes
/s/ ALICIA ELLEN HAYES
Alicia Ellen Hayes
40
<PAGE>
APPENDIX A
ORIGINAL PARTIES
Carlyle-HighwayMaster Investors, L.P.
Carlyle-HighwayMaster Investors II, L.P.
Chase Manhattan Investment Holdings, Inc.
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
Clipper Capital Associates, L.P.
Erin Mills International Investment Corporation
FU Enterprises Ltd.
By-Word Technologies, Inc.
Robert S. Folsom
Robert T. Hayes
A-1
<PAGE>
APPENDIX B
AMENDMENTS AND ADDENDA
1. Addendum No. 1 to Subscription Agreement and Stockholders Agreement by
and among HM Holding Corporation, Carlyle-HighwayMaster Investors, L.P.,
Carlyle- HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Chase Manhattan Investment Holdings, Inc., Clipper/Merban, L.P.,
Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Erin Mills
International Investment Corporation, FU Enterprises Ltd., By-Word Technologies,
Inc., Robert S. Folsom and Robert T. Hayes.
2. Consent of Security Holders of HM Holding Corporation and Second
Amendment to Stockholders' Agreement, dated November, 1994, among HM Holding
Corporation, By-Word Technologies, Inc., the former shareholders of By-Word
Technologies, Inc. listed on EXHIBIT A, Clipper/Merban, L.P., Clipper Merchant
Partners, L.P., Clipper Capital Associates, L.P., Carlyle-HighwayMaster
Investors, L.P., Carlyle-HighwayMaster Investors II, L.P., TC Group, L.L.C.,
H.M. Rana Investments Limited, Chase Manhattan Investment Holdings, Inc., Erin
Mills International Investment Corporation, Robert S. Folsom and Robert T.
Hayes.
3. Joinder Agreement to Stockholders Agreement executed as of January 3,
1995 by Mark D. Ein.
4. Third Amendment to Stockholders Agreement, dated as of April 28, 1995,
among HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan
Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P., Carlyle-
HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC Group,
L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital
Associates, L.P., Erin Mills International Investment Corporation, Robert S.
Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes, Cynthia Ann
Hayes, Alicia Ellen Hayes, Joann Hayes, William C. Saunders, William C. Kennedy,
Jr. and Donald M. Kennedy.
5. Note Exchange and Amendments Agreement, dated as of May 26, 1995, among
HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan Investment
Holdings, Inc., Carlyle-HighwayMaster Investors, L.P., Carlyle- HighwayMaster
Investors II, L.P., H.M. Rana Investments Limited, TC Group, L.L.C.,
Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital
Associates, L.P., Erin Mills International Investment Corporation, Robert S.
Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes, Cynthia Ann
Hayes, Alicia Ellen Hayes, Joann Hayes, William C. Saunders, William C. Kennedy,
Jr., Donald M. Kennedy, Mark D. Ein and The Erin Mills Investment Corporation.
B-1
<PAGE>
APPENDIX C
FORMER PARTIES
Margaret D. Folsom
R. Stephen Folsom
Joann Hayes
Cynthia Ann Hayes
Alicia Ellen Hayes
C-1
<PAGE>
APPENDIX D
CERTAIN STOCKHOLDERS NUMBER OF SHARES
Erin Mills International Investment Corporation 8,141,706
William C. Kennedy, Jr. 2,029,318
Carlyle-HighwayMaster Investors, L.P. 1,805,727
William C. Saunders 892,015
Clipper/Merban, L.P. 530,930
Clipper/Merchant Partners, L.P. 524,209
H.M. Rana Investments Limited 423,802
T.C. Group, L.L.C. 291,315
Robert S. Folsom 280,000
Carlyle-HighwayMaster Investors II, L.P. 170,071
D-1
<PAGE>
EXHIBIT E
FORM OF IRREVOCABLE PROXY
The undersigned stockholder of HighwayMaster Communications, Inc., a
Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent
provided by law) appoints Southwestern Bell Wireless Holdings, Inc., a Delaware
corporation ("SBW"), or its nominee, the attorney and proxy of the undersigned,
with full power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the __________ shares of Common Stock, par
value $0.01 per share ("Common Stock"), of the Company owned beneficially or of
record by the undersigned (the "Shares"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof, to
exercise the voting and other rights specified below in accordance with the
provisions and subject to the limitations set forth herein. Upon the execution
hereof, all prior proxies given by the undersigned with respect to the Shares
and any and all other shares or securities issued or issuable in respect thereof
on or after the date hereof as to matters covered hereby are hereby revoked and
no subsequent proxies will be given as to the matters covered hereby. This proxy
is irrevocable (to the fullest extent provided by law), coupled with an
interest, and is granted in connection with the Amended and Restated
Stockholders' Agreement, dated the date hereof, among the Company and the
stockholders party thereto, including the undersigned stockholder (the
"Stockholders' Agreement"), and is granted in consideration of SBW entering into
the Purchase Agreement, dated the date hereof (the "Purchase Agreement"),
between the Company and SBW.
The attorney and proxy named above will be empowered to exercise all
voting and other rights (including, without limitation, the power to execute and
deliver written consents with respect to the Shares) of the undersigned at every
annual, special or adjourned meeting of stockholders of the Company and in every
written consent in lieu of such a meeting, or otherwise, (i) in favor of
approval of the adoption of the Certificate of Amendment attached hereto as
Exhibit A (the "Certificate of Amendment"), (ii) in favor of the approval of the
issuance by the Company to SBW of shares of Common Stock upon the exercise of
the Warrants to purchase an aggregate of up to 5,000,000 shares of Common Stock
evidenced by the Warrant Certificate, dated the date hereof, executed by the
Company in favor of SBW and (iii) against any action or agreement that, directly
or indirectly, is inconsistent with or that is reasonably likely to impede,
interfere with, delay or postpone the transactions referred to in clause (i) or
(ii) above.
The attorney and proxy named above may only exercise this proxy to vote
the Shares subject hereto at any annual, special or adjourned meeting of the
stockholders of the Company, and in any written consent in lieu of such meeting,
with respect to the matters specified in clauses (i), (ii) and (iii) of the
immediately preceding paragraph, and may not exercise this proxy in respect of
any other matter. The undersigned stockholder may vote the Shares (or grant one
or more proxies to vote the Shares) on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
<PAGE>
The undersigned stockholder shall perform such further acts and execute
such further documents as may reasonably be required to vest in SBW the power to
vote the Shares in accordance with the provisions and subject to the limitations
set forth herein and to otherwise carry out the provisions of this proxy.
This power of attorney and proxy shall terminate upon the earlier of the
filing of the Certificate of Amendment with the Secretary of State of the State
of Delaware and the termination of the Purchase Agreement pursuant to Section 2
thereof.
Date: September __, 1996
STOCKHOLDER
By:
Name:
Title:
