<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from to
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Commission file number 0-26140
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HIGHWAYMASTER COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0352879
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16479 Dallas Parkway, Suite 710, Dallas, Texas 75248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 732-2500
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Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Number of Shares Outstanding as of
Title of each class August 1, 1997
- ---------------------------- ----------------------------------
<S> <C>
Common Stock, $.01 par value 24,866,986
</TABLE>
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HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Form 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at June 30, 1997
and December 31, 1996 1
Consolidated Statements of Operations for the
three months and six months ended June 30,
1997 and 1996 2
Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1996 3
Consolidated Statement of Changes in Stockholders'
Equity for the six months ended June 30, 1997 4
Notes to Consolidated Financial Statements 5-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-10
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 10
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 11
Item 2 Changes in Securities 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11-12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,987 $ 19,725
Accounts receivable, net 11,503 8,537
Other short-term receivables 838 919
Inventory 2,764 3,458
Prepaid expenses 420 231
--------- ---------
Total current assets 21,512 32,870
Property, plant and equipment, net 8,080 7,756
Long-term receivables 336 1,045
Deposits 308 309
Other assets 2,750 949
--------- ---------
Total assets $ 32,986 $ 42,929
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,345 $ 3,450
Telecommunications costs payable 4,828 2,805
Accrued warranty 709 273
Accrued loss on short-term contracts 367 570
Other current liabilities 1,888 1,167
--------- ---------
Total current liabilities 12,137 8,265
--------- ---------
Stockholders' equity:
Preferred stock -- --
Common stock 252 251
Additional paid-in capital 145,030 144,829
Accumulated deficit (123,886) (109,869)
Treasury stock (547) (547)
--------- ---------
Total stockholders' equity 20,849 34,664
--------- ---------
Total liabilities and stockholders' equity $ 32,986 $ 42,929
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
1
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HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product $ 8,417 $ 3,651 $ 14,249 $ 6,423
Service 5,948 3,930 11,006 7,449
-------- -------- -------- --------
Total revenues 14,365 7,581 25,255 13,872
-------- -------- -------- --------
Cost of revenues:
Product 7,150 3,672 12,148 6,403
Service 5,064 2,857 8,671 5,415
-------- -------- -------- --------
Total cost of revenues 12,214 6,529 20,819 11,818
-------- -------- -------- --------
Gross profit 2,151 1,052 4,436 2,054
General and administrative expenses 2,998 2,170 7,096 4,299
Sales and marketing expenses 1,963 2,427 4,055 4,710
Engineering expenses 1,095 894 2,212 1,736
Customer service expenses 3,023 2,045 5,538 3,930
-------- -------- -------- --------
Operating loss (6,928) (6,484) (14,465) (12,621)
Interest income 285 138 448 444
Interest expense to related parties -- (550) -- (1,088)
Other income (expense) -- (3) -- (3)
-------- -------- -------- --------
Loss before income taxes and extraordinary item (6,643) (6,899) (14,017) (13,268)
Income tax provision -- -- -- --
-------- -------- -------- --------
Net loss $ (6,643) $ (6,899) $(14,017) $(13,268)
======== ======== ======== ========
Per share data:
Net loss per share $ (0.27) $ (0.34) $ (0.56) $ (0.66)
======== ======== ======== ========
Weighted average number of shares outstanding 24,858 22,035 24,843 22,029
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
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HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six months ended June 30,
-- ----------------------
1997 1996
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(14,017) $(13,268)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 1,172 645
Amortization of discount on notes payable -- 574
(Increase) decrease in accounts receivable (2,966) 28
(Increase) decrease in other receivables 790 99
(Increase) decrease in inventory 694 (5,379)
(Increase) decrease in prepaid expenses and deposits (188) 158
Increase (decrease) in accounts payable 895 56
Increase (decrease) in accrued expenses and other current liabilities 2,977 (453)
Other (44) 116
-------- --------
Net cash used in operating activities (10,687) (17,424)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (1,191) (2,099)
Additions to capitalized software (2,062) (88)
-------- --------
Net cash used in investing activities (3,253) (2,187)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 202 272
-------- --------
Net cash provided by financing activities 202 272
-------- --------
Net decrease in cash (13,738) (19,339)
Cash and cash equivalents, beginning of period 19,725 23,969
-------- --------
Cash and cash equivalents, end of period $ 5,987 $ 4,630
======== ========
Supplemental cash flow information:
Interest paid $ -- $ 508
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Six months ended June 30, 1997
(UNAUDITED)
(in thousands, except share information)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional Treasury Stock
---------------- ------------------ Paid-in --------------- Accumulated
Shares Amount Shares Amount Capital Shares Amount Deficit Total
------ -------- ---------- ------ -------- ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity at December 31, 1996 1,000 $ -- 25,150,527 $251 $144,829 311,997 $(547) $(109,869) $34,664
Exercise of stock options 26,456 1 201 202
Net loss (14,017) (14,017)
------ -------- ---------- ---- -------- ------- ----- --------- -------
Stockholders' equity at June 30, 1997 1,000 $ -- 25,176,983 $252 $145,030 311,997 $(547) $(123,886) $20,849
====== ======== ========== ==== ======== ======= ===== ========= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
1. BUSINESS OVERVIEW
The Company develops and implements mobile communications
solutions, including integrated voice, data and position location
services, to meet the needs of its customers. The initial application
for the Company's wireless enhanced services has been developed for,
and is currently being marketed and sold to, companies which operate
in the long-haul trucking market. The Company provides long-haul
trucking companies with a comprehensive package of mobile
communications and management control services at low, fixed per
minute rates, thereby enabling its trucking customers to effectively
monitor the operations and improve the performance of their fleets.
The Company is currently developing additional applications for its
network to expand the range of trucking companies that utilize its
services and to address the need of the automotive and other markets.
Among other things, the Company recently entered into a strategic
business alliance with Prince Corporation, a subsidiary of Johnson
Controls International, Inc. and a leading supplier of automotive
interior systems and components, to develop and provide an automobile
safety and security service, the "AutoLink" service, to motorists in
the United States and Canada. The AutoLink service is expected to be
available on a commercial basis beginning in late 1998.
At the present time, the Company derives all of its revenues
from the long-haul trucking market from sales and installation of
Mobile Communication Units and charges for its services.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all footnote disclosures required by generally accepted
accounting principles. These consolidated financial statements should
be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 1996. The
accompanying consolidated financial statements reflect all adjustments
(all of which are of a normal recurring nature) which are, in the
opinion of management, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for
the interim periods. The results for any interim period are not
necessarily indicative of the results for the entire year.
3. LEASING OPERATIONS
The Company leases its products to certain customers with
terms ranging from three to five years. The related contracts are
accounted for as sales-type leases. At December 31, 1996, the total
amounts receivable under sales-type leases was $1,468,000. In March
1997, a customer who represented $1,239,000 of this amount receivable
notified the Company that it intended to terminate its long-term lease
commitment. Although the lease agreement contains termination
penalties, the amount due from this customer is in dispute.
Accordingly, the Company recorded a $1,000,000 charge to reduce the
carrying value of the receivable at March 31, 1997.
5
<PAGE> 8
4. INVENTORIES
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
Complete systems $ 543,000 $ 1,265,000
Component parts 2,221,000 2,193,000
------------- -------------
$ 2,764,000 $ 3,458,000
============= =============
</TABLE>
5. EARNINGS PER SHARE
Net loss per share for the three months and six months ended
June 30, 1997 was computed by dividing the net loss by the weighted
average number of shares outstanding during the periods. Net loss per
share for the three months and six months ended June 30, 1996 was
computed by dividing the net loss, increased by the accretion of
discount on Series B Preferred Stock ($610,000 and $1,220,000,
respectively), by the weighted average number of shares outstanding
during the periods.
Stock options are excluded from the calculation of weighted
average shares outstanding for the three months and six months ended
June 30, 1997 and 1996 since their effect would be anti-dilutive.
In February 1997, the FASB issued FAS No. 128, "Earnings per
Share" ("FAS 128"), which is effective for financial statements issued
for periods ending after December 15, 1997, including interim periods.
Effective December 31, 1997, the Company will adopt FAS 128, which
establishes standards for computing and presenting earnings per share
(EPS). Adoption of FAS 128 would not have changed the earnings per
share amounts reported in the accompanying consolidated financial
statements.
6. LITIGATION
As previously reported, the Company is party to a lawsuit
filed in the U.S. District Court, Northern District of Texas, Dallas
Division against AT&T Corp. ("AT&T") and Lucent Technologies, Inc.
("Lucent"). Since the filing of the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1997, there have been no
material changes in this matter except that with respect to AT&T's
Partial Motion to Dismiss and Lucent's Motion to Dismiss, the court has
requested supplemental briefing in lieu of a hearing on oral arguments.
Briefing dates extend into September and an Order by the Court will
follow. For further information regarding this matter, see the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
6
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARABILITY
At the present time the Company's service revenues are generated from
Units served by either a switching complex operated by AT&T (the " AT&T
Complex") or by the Company's Network Services Center ("NSC"). The amount of
service revenues and related expenses recognized by the Company varies
significantly based upon whether a particular customer receives service through
the AT&T Complex or the NSC. In the case of customers served through the AT&T
Complex, service charges are collected by AT&T. The Company receives payment
from AT&T for the portion of these service charges recognized by the Company as
revenue and the remainder is retained by AT&T as compensation for its cost of
providing services. In the case of customers served by the NSC, the entire
amount of the service charges to customers is recognized by the Company as
revenue and additional operating and service expenses are borne by the Company.
The operating expenses associated with the NSC are reflected in the Company's
financial statements as general and administrative expenses (primarily
depreciation, allowance for bad debts and billing expenses) and customer
service expenses (other third party and internal operating expenses). Because
of the difference in the economic relationships described above, to the extent
a greater proportion of customers are served by the NSC, service margins are
expected to improve, reflecting the increased revenues recognized by the
Company which are expected to be partially offset by additional operating and
service expenses. Because the operating expenses associated with the NSC
include certain fixed costs, such operating expenses are not expected increase
proportionately with the number of customers added.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to Three Months Ended
June 30, 1996
Revenues for the three months ended June 30, 1997 were $14.4 million
compared to $7.6 million for the three months ended June 30, 1996. Product
revenues for the three months ended June 30, 1997 were $8.4 million compared to
$3.7 million for the three months ended June 30, 1996. Service revenues for the
three months ended June 30, 1997 were $5.9 million compared to $3.9 million for
the three months ended June 30, 1996. The increase in product revenues from the
1996 period to the 1997 period is primarily attributable to a 185% increase in
Units sold. Units sold in the 1996 period were abnormally low due to, among
other things, inefficiencies in connection with a restructuring of the
Company's sales force, and adverse economic conditions affecting the trucking
industry. The increase in service revenues from the 1996 period to the 1997
period is primarily attributable to the increase in the number of Units in
service.
Cost of revenues for the three months ended June 30, 1997 was $12.2
million compared to $6.5 million for the three months ended June 30, 1996. This
increase is primarily as a result of the increase in the number of Units sold
and in service. Gross profit margin was 15.0% for the three months ended June
30, 1997 compared to 13.9% for the three months ended June 30, 1996.
Product gross profit margin was 15.1% for the three months ended June
30, 1997 compared to negative 0.6% for the three months ended June 30, 1996.
The improvement in product gross profit margin from the 1996 period to the 1997
period is primarily due to the leverage obtained on the fixed portion of the
Company's installation costs as a result of the significant increase from the
1996 period to the 1997 period in shipments and installations. Average sales
price per Unit decreased as a result of a larger percentage of sales qualifying
for the Company's most favorable tier pricing. This decrease in average sales
price was offset by a lower average cost per Unit sold. The lower average cost
per Unit is primarily attributable to manufacturing and procurement economies.
Service gross profit margin was 14.9% for the three months ended June
30, 1997 compared to 27.3% for the three months ended June 30, 1996. As
previously reported, the Company incurs certain costs for air time usage that
are not billable to customers under current billing practices. During the three
months ended June 30, 1997, the
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<PAGE> 10
Company recorded an adjustment to increase cellular airtime cost, a component of
cost of service revenue, based on new billing data received in July 1997. This
new billing data indicates that the portion of airtime usage not billable to
customers is higher than previously believed by the Company and used as the
basis for recording accounting estimates. This changed relationship between cost
of cellular airtime paid for by the Company and airtime billable to customers is
the reason for the decrease in service gross profit margin. A portion of the
adjustment made to cellular airtime costs relates to the three months ended
March 31, 1997. Excluding the portion of the adjustment attributable to the
prior quarter, the Company's service gross profit margin for the quarter ended
June 30, 1997 would have been approximately 20%. The Company is currently in the
process of evaluating the factors underlying the increase in cellular airtime
costs and will attempt to identify technical adjustments and modifications that
may enable it to improve its service gross profit margin. At the present time,
the Company's evaluation of these factors is in its preliminary stages and there
can be no assurance that the Company's results of operations in future periods
will not be impacted by the same or similar factors. However, based upon the
information currently available to it, the Company believes that its service
gross profit margin for the third and fourth quarters of 1997 will exceed its
service gross profit margin for the second quarter.
General and administrative expenses for the three months ended June
30, 1997 were $3.0 million compared to $2.2 million for the three months ended
June 30, 1996. The most significant increases in general and administrative
expenses from the 1996 period to the 1997 period were NSC depreciation expense,
professional fees and bad debt expense. The increase in professional fees is
primarily due to legal fees in connection with the AT&T litigation. The Company
records an allowance for doubtful accounts based on a percentage of sales.
Accordingly, bad debt expense increased because of the significant increase in
revenues from the 1996 period to the 1997 period.
Sales and marketing expenses for the three months ended June 30, 1997
were $2.0 million compared to $2.4 million for the three months ended June 30,
1996. The decrease from the 1996 period to the 1997 period is primarily related
to reduction in the number of sales and marketing employees. The 1996 period
was characterized by expansion of the sales force. Sales and marketing expenses
for the 1997 period reflects the results of a realignment of the sales force to
coincide with the Company's target markets.
Engineering expenses for the three months ended June 30, 1997 were
$1.1 million compared to $0.9 million for the three months ended June 30, 1996.
This increase is primarily attributable to increases in payroll related costs
as a result of an increase in the number of engineering personnel.
Customer service expenses for the three months ended June 30, 1997
were $3.0 million compared to $2.0 million for the three months ended June 30,
1996. This increase is primarily attributable to (i) NSC operating expenses and
(ii) costs incurred as a result of the increased number of Units shipped and in
service.
The reduction in interest expense to related parties from the 1996
period to the 1997 period is due to the retirement in September 1996 of all
outstanding indebtedness to related parties.
Six Months Ended June 30, 1997 Compared to Six Months Ended
June 30, 1996
Revenues for the six months ended June 30, 1997 were $25.3 million
compared to $13.9 million for the six months ended June 30, 1996. Product
revenues for the six months ended June 30, 1997 were $14.2 million compared to
$6.4 million for the six months ended June 30, 1996. Service revenues for the
six months ended June 30, 1997 were $11.0 million compared to $7.4 million for
the six months ended June 30, 1996. The increase in product revenues from the
1996 period to the 1997 period is primarily attributable to a 151% increase in
Units sold. Units sold in the 1996 period were abnormally low due to, among
other things, inefficiencies in connection with a restructuring of the
Company's sales force, and adverse economic conditions affecting the trucking
industry. The increase in service revenues from the 1996 period to the 1997
period is primarily attributable to the increase in the number of Units in
service.
Cost of revenues for the six months ended June 30, 1997 was $20.8
million compared to $11.8 million for the six months ended June 30, 1996. This
increase is primarily as a result of the increase in the number of Units sold
and in service. Gross profit margin was 17.6% for the six months ended June 30,
1997 compared to 14.8% for the six months ended June 30, 1996.
8
<PAGE> 11
Product gross profit margin was 14.7% for the six months ended June
30, 1997 compared to 0.3% for the six months ended June 30, 1996. The
improvement in product gross profit margin from the 1996 period to the 1997
period is primarily due to the leverage obtained on the fixed portion of the
Company's installation costs as a result of the significant increase from the
1996 period to the 1997 period in shipments and installations and a lower
average cost per Unit sold. The lower average cost per Unit is primarily
attributable to manufacturing and procurement economies.
Service gross profit margin was 21.2% for the six months ended June
30, 1997 compared to 27.3% for the six months ended June 30, 1996. The Company
incurs certain costs for air time usage that are not billable to customers under
current billing practices. During the six months ended June 30, 1997, the
Company recorded an adjustment to increase cellular airtime cost, a component of
cost of service revenue, based on new billing data received in July 1997. This
new billing data indicates that the portion of airtime usage not billable to
customers is higher than previously believed by the Company and used as the
basis for recording accounting estimates. This changed relationship between cost
of cellular airtime paid for by the Company and airtime billable to customers is
the reason for the decrease in service gross profit margin. As noted above, the
Company is currently in the process of evaluating the factors underlying the
increase in cellular airtime costs, but such evaluation is in its preliminary
stages and there can be no assurance that the Company's results of operations in
future periods will not be impacted by the same or similar factors.
General and administrative expenses for the six months ended June 30,
1997 were $7.1 million compared to $4.3 million for the six months ended June
30, 1996. The most significant increases in general and administrative expenses
from the 1996 period to the 1997 period were bad debt expense, NSC depreciation
expense, and professional fees. The Company records an allowance for doubtful
accounts based on a percentage of sales. Accordingly, bad debt expense
increased (i) because of the significant increase in revenues from the 1996
period to the 1997 period and (ii) because of a $1 million charge recorded to
provide for loss on the sales-type lease receivable due from a customer as a
result of the customer's early termination of the lease. See Note 3 of the
footnotes to the accompanying consolidated financial statements.
Sales and marketing expenses for the six months ended June 30, 1997
were $4.1 million compared to $4.7 million for the six months ended June 30,
1996. The decrease from the 1996 period to the 1997 period is primarily related
to reduction in the number of sales and marketing employees. The 1996 period
was characterized by expansion of the sales force. Sales and marketing expenses
for the 1997 period reflects the results of a realignment of the sales force to
coincide with the Company's target markets.
Engineering expenses for the six months ended June 30, 1997 were $2.2
million compared to $1.7 million for the six months ended June 30, 1996. This
increase is primarily attributable to increases in payroll related costs as a
result of headcount additions.
Customer service expenses for the six months ended June 30, 1997 were
$5.5 million compared to $3.9 million for the six months ended June 30, 1996.
This increase is primarily attributable to (i) NSC operating expenses and (ii)
costs incurred as a result of the increased number of Units shipped and in
service.
The reduction in interest expense to related parties from the 1996
period to the 1997 period is due to the retirement of all outstanding
indebtedness to related parties.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $9.4 million at June 30, 1997
compared to working capital of $24.6 million at December 31, 1996. The
Company's cash and cash equivalents balance at June 30, 1997 was $6.0 million
compared to $19.7 million at December 31, 1996.
In early August, 1997, the Company entered into an agreement with one
of its principal shareholders ("the Shareholder"), pursuant to which the
Shareholder agreed to fund the Company's short-term working capital requirements
up to a maximum of $5.0 million. The advance of any such Funds by the
Shareholder
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would be evidenced by promissory notes which bear interest at a rate not to
exceed 10%, and would be repayable in full out of the proceeds of any debt or
equity offering of more than $60.0 million by the Company (or, if such offering
has not been consummated, the promissory notes will be repayable in equal
monthly installments over a five year period). The obligation of the
Shareholder to make the foregoing investment will terminate in the event that
the Company ceases to proceed with its current plans to obtain debt financing
and there is no reasonable expectation that such financing will be obtained.
Net cash consumed during the six months ended June 30, 1997 was $13.7
million due primarily to a $14.0 loss from operations.
The capital resources currently available to the Company are limited
and, accordingly, the Company will need to obtain long-term financing from
outside sources during the third or fourth quarter of 1996 in order to continue
to fund its anticipated capital expenditures and other operating requirements.
The Company is currently in discussions with certain financing sources
regarding a possible private offering of senior debt securities that would
provide the Company with long-term capital required for the continued growth
and development of its business. However, there can be no assurance that the
Company will be able to complete such an offering or that it will be able to
obtain any other form of long-term financing on terms that it regards as
satisfactory, if at all.
If the Company is not able to obtain adequate long-term financing in
the near future, the Company's ability to implement its current operational
plans would be jeopardized and it may be required to modify or curtail certain
of its existing and planned business activities.
INFLATION
The Company believes that to date inflation has not had a material
effect on its results of operations. Although inflation may in the future
affect the cost of the Mobile Communication Units sold by the Company, the
Company expects that economies of scale and engineering improvements are likely
to offset any foreseeable cost increases.
FORWARD LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this report, including without
limitation, certain statements in this Item 2 under the captions "---Results of
Operations" and "---Liquidity and Capital Resources," may constitute forward
looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. Important factors
that could cause actual results to differ materially from the Company's
expectations ("cautionary statements") are disclosed in this report and the
Company's Annual Report on Form 10-K for the year ended December 31, 1996
(under the caption "Business --- Risk Factors" and elsewhere). All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by these
cautionary statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
10
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HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings --
AT&T Litigation. As previously reported, the Company is party to a
lawsuit filed in the U.S. District Court, Northern District of Texas,
Dallas Division against AT&T Corp. ("AT&T") and Lucent Technologies,
Inc. ("Lucent"). Since the filing of the Company's Form 10-Q Quarterly
Report for the quarterly period ended March 31, 1997, there have been no
material changes in this matter except that with respect to AT&T's
Partial Motion to Dismiss and Lucent's Motion to Dismiss, the court has
requested supplemental briefing in lieu of a hearing on oral arguments.
Briefing dates extend into September and an Order by the Court will
follow.
Item 2. Changes in Securities -- None.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was
held on May 20, 1997. At the Annual Meeting, the stockholders of the
Company (i) elected each of the persons listed below to serve as a
director of the Company until the next Annual Meeting of Stockholders
or until their respective successors have been duly elected and
qualified; and (ii) ratified the selection of Price Waterhouse LLP as
the Company's independent accountants for the Company's fiscal year
ending December 31, 1997.
The Company had 24,853,808 shares of Common Stock outstanding as of
April 17, 1997, the record date for the Annual Meeting. At the Annual
Meeting, holders of a total of 21,213,603 shares of Common Stock were
present in person or represented by proxy. The following sets forth
information regarding the results of the voting at the Annual Meeting:
Proposal 1: Election of Directors
<TABLE>
<CAPTION>
Shares Voting Shares
Director In Favor Withheld
-------- -------- --------
<S> <C> <C>
William C. Kennedy, Jr. 21,187,727 25,876
William C. Saunders 21,187,727 25,876
Stephen L. Greaves 21,188,527 25,076
Terry S. Parker 21,187,827 25,776
Gerry C. Quinn 21,188,527 25,076
</TABLE>
11
<PAGE> 14
Proposal 2: Ratification of Price Waterhouse as the Company's
Independent Accountants
Votes in favor: 21,210,253
Votes against: 2,000
Abstentions: 1,350
Item 5. Other Information -- None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits.
(b) Reports on Form 8-K -- None.
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HIGHWAYMASTER COMMUNICATIONS, INC.
Date: August 12, 1997
By: /s/ William C. Saunders
-------------------------------------
William C. Saunders
President and Chief Executive Officer
By: /s/ Stephen P. Tacke
-------------------------------------
Stephen P. Tacke
Vice President, Controller and Acting
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 16
Index to Exhibits
<TABLE>
<CAPTION>
Exhibits Description
-------- -----------
<S> <C>
3.1 - Certificate of Incorporation of the Company,
as amended.(1)(9)
3.2 - Amended and Restated By-Laws of the Company.(11)
4.1 - Specimen of certificate representing Common
Stock, $.01 par value, of the Company.(1)
4.2 - Warrant Certificate, dated September 27,
1996, issued to SBW.(7)
4.3 - Recapitalization Agreement, dated September
27, 1996, by and among the Company, the Erin
Mills Stockholders, the Carlyle Stockholders
and the other persons named therein.(7)
4.4 - Amended and Restated Stockholders' Agreement,
dated September 27, 1996, by and among the
Company, SBW, the Erin Mills Stockholders,
the Carlyle Stockholders, the By-Word
Stockholders and the other persons named therein.(7)
10.1 - License Agreement, dated April 23, 1992, by
and between Voice Control Systems and the Company
(as successor to By-Word Technologies, Inc.)(1)
10.2 - Agency Agreement, dated February 1, 1993, between
the Company and Saunders, Lubinski & White, Inc.(1)
10.3 - Employment Agreement, dated February 4, 1994,
by and between HighwayMaster Corporation and
William C. Kennedy, Jr., as amended.(1)(5)
10.4 - Employment Agreement, dated February 4, 1994,
by and between HighwayMaster Corporation and
William C. Saunders, as amended.(1)(5)
10.5 - Employment Agreement, dated November 23,
1994, by and between HighwayMaster
Corporation and Gordon D. Quick.(1)(5)
10.6 - Amended and Restated 1994 Stock Option Plan
of the Company, dated February 4, 1994, as
amended.(1)(5)(6)
10.7 - Purchase Agreement, dated September 27, 1996,
between the Company and SBW. (7)
10.8 - Mobile Communications (Voice and Data)
Services Agreement, dated as of July 15,
1993, between the Company and EDS Personal
Communications Corporation.(1)(2)
10.9 - Services Agreement, dated March 14, 1995,
between the Company and GTE Telecommunications
Services Incorporated.(1)(2)
10.10 - Services Agreement, dated March 20, 1996,
between the Company and GTE-Mobile
Communications Service Corporation.(3)(4)
10.11 - Agreement, dated June 8, 1994, between the
Company and Truckstops of America, Inc.(1)
10.12 - Amendment dated November 16, 1995 to that
certain Mobile Communications (Voice and
Data) Services Agreement, dated as of July 15,
1993, between the Company and EDS Personal
Communications Corporation.(3)(4)
10.13 - Letter Agreement, dated April 5, 1995,
between the Company and IEX Corporation.(1)
10.14 - Product Development Agreement, dated December 21,
1995, between the Company and IEX Corporation.(3)(4)
10.15 - Technical Services Agreement, dated September 27,
1996, between the HM Corporation and SBW.(7)
10.16 - Letter Agreement, dated February 19, 1996,
between the Company and IEX Corporation.(3)
10.17 - Form of Adoption Agreement, Regional Prototype Cash
or Deferred Profit-Sharing Plan and Trust Sponsored
by McKay Hochman Co., Inc., relating to the
HighwayMaster Corporation 401(k) Plan.(1)
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
10.18 - Agreement, dated December 3, 1996, between
the Company and Pickett Racing.(8)
10.19 - Software Transfer Agreement, dated April 25,
1997 between the Company and Burlington Motor
Carriers, Inc.(9)(10)
11 - Statement re: Computation of Per Share
Earnings.(11)
27 - Financial Data Schedule.(11)
</TABLE>
- --------
(1) Filed in connection with the Company's Registration Statement on Form
S-1, as amended (No. 33-91486) effective June 22, 1995.
(2) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with
Registration Statement on Form S-1 (No. 33-91486) effective June 22,
1995.
(3) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
(4) Certain confidential portions deleted pursuant to Application for
Confidential Treatment filed in connection with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
(5) Indicates management or compensatory plan or arrangement required to
be identified pursuant to Item 14(a)(4).
(6) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1996.
(7) Filed in connection with the Company's Current Report on Form 8-K
filed on October 7, 1996.
(8) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal Year ended December 31, 1996.
(9) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 1997.
(10) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Form 10-Q Quarterly Report for the quarterly period ended
March 31, 1997.
(11) Filed herewith.
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
HIGHWAYMASTER COMMUNICATIONS, INC.
a Delaware corporation
(the "Company")
(Effective as of September 27, 1996)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Registered Office . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Offices . . . . . . . . . . . . . . . . . . . . . . 1
STOCKHOLDERS MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . 2
2.5.1 Voting Lists . . . . . . . . . . . . . . . . . . . . 2
2.5.2 Votes Per Share . . . . . . . . . . . . . . . . . . . 2
2.5.3 Proxies . . . . . . . . . . . . . . . . . . . . . . . 2
2.5.4 Required Vote . . . . . . . . . . . . . . . . . . . . 3
2.5.5 Consents in Lieu of Meeting . . . . . . . . . . . . . 3
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Financial Information . . . . . . . . . . . . . . . . . . . . . 4
3.7.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
BOARD MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Quorum, Required Vote . . . . . . . . . . . . . . . . . . . . . 6
4.5 Consent In Lieu of Meeting . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Establishment; Standing Committees . . . . . . . . . . . . . . 7
5.1.1 Finance Committee . . . . . . . . . . . . . . . . . . 7
5.1.2 Audit Committee . . . . . . . . . . . . . . . . . . . 7
5.1.3 Compensation Committee . . . . . . . . . . . . . . . . 7
5.1.4 Nominating Committee . . . . . . . . . . . . . . . . 8
5.2 Available Powers . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Unavailable Powers . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Alternate Members . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 9
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Elected Officers . . . . . . . . . . . . . . . . . . . . . . . 9
6.1.1 Chairman of the Board . . . . . . . . . . . . . . . . 9
6.1.2 President . . . . . . . . . . . . . . . . . . . . . . 9
6.1.3 Vice Presidents . . . . . . . . . . . . . . . . . . . 10
6.1.4 Secretary . . . . . . . . . . . . . . . . . . . . . . 10
6.1.5 Assistant Secretaries . . . . . . . . . . . . . . . . 10
6.1.6 Treasurer . . . . . . . . . . . . . . . . . . . . . . 10
6.1.7 Assistant-Treasurers . . . . . . . . . . . . . . . . 10
6.1.8 Divisional Officers . . . . . . . . . . . . . . . . . 11
6.2 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Appointed Officers . . . . . . . . . . . . . . . . . . . . . . 11
6.4 Multiple Officeholders, Stockholder and Director Officers . . . 11
6.5 Compensation, Vacancies . . . . . . . . . . . . . . . . . . . . 11
6.6 Additional Powers and Duties . . . . . . . . . . . . . . . . . 11
6.7 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SHARE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Entitlement to Certificates . . . . . . . . . . . . . . . . . . 12
7.2 Multiple Classes of Stock . . . . . . . . . . . . . . . . . . . 12
7.3 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Issuance and Payment . . . . . . . . . . . . . . . . . . . . . 12
7.5 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . 12
7.6 Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Registered Stockholders . . . . . . . . . . . . . . . . . . . . 13
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.2 Actions by or in the Right of the Company . . . . . . . . . . . 13
8.3 Indemnification Against Expenses . . . . . . . . . . . . . . . 14
8.4 Board Determinations . . . . . . . . . . . . . . . . . . . . . 14
8.5 Advancement of Expenses . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.6 Nonexclusive . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.8 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 15
8.9 Change in Governing Law . . . . . . . . . . . . . . . . . . . . 15
INTERESTED DIRECTORS, OFFICERS AND STOCKHOLDERS . . . . . . . . . . . . . . . 15
9.1 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 Disclosure, Approval . . . . . . . . . . . . . . . . . . . . . 16
9.3 Nonexclusive . . . . . . . . . . . . . . . . . . . . . . . . . 16
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . 16
10.2 Fixing Record Dates . . . . . . . . . . . . . . . . . . . . . . 16
10.2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.2.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.3 Means of Giving Notice . . . . . . . . . . . . . . . . . . . . 17
10.4 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . 17
10.5 Attendance via Communications Equipment . . . . . . . . . . . . 18
10.6 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.7 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.8 Reports to Stockholders . . . . . . . . . . . . . . . . . . . . 18
10.9 Contracts and Negotiable Instruments . . . . . . . . . . . . . 18
10.10 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.11 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.12 Books and Records . . . . . . . . . . . . . . . . . . . . . . 19
10.13 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.14 Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . 19
10.15 Proxies in Respect of Securities of Other Corporations . . . 19
10.16 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 19
CLASS B COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.1 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.2 Classes and Number of Directors . . . . . . . . . . . . . . . . 20
11.3 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.4 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.6 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 21
11.7 Nominating Committee . . . . . . . . . . . . . . . . . . . . . 22
11.8 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
iii
<PAGE> 5
BYLAWS
ARTICLE I
OFFICES
Section 1.1 Registered Office. The registered office of the Company
within the State of Delaware shall be located at either (i) the principal place
of business of the Company in the State of Delaware or (ii) the office of the
corporation or individual acting as the Company's registered agent in Delaware.
Section 1.2 Additional Offices. The Company may, in addition to its
registered office in the State of Delaware, have such other offices and places
of business, both within and without the State of Delaware, as the Board of
Directors of the Company (the "Board") may from time to time determine or as
the business and affairs of the Company may require.
ARTICLE II
STOCKHOLDERS MEETINGS
Section 2.1 Annual Meetings. Annual meetings of stockholders shall
be held at a place and time on any weekday which is not a holiday and which is
not more than 150 days after the end of the fiscal year of the Company as shall
be designated by the Board and stated in the notice of the meeting, at which
the stockholders shall elect the directors of the Company and transact such
other business as may properly be brought before the meeting.
Section 2.2 Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by law or by the
certificate of incorporation, (i) may be called by the chairman of the board or
the president and (ii) shall be called by the president or secretary at the
request in writing of a majority of the Board or stockholders owning capital
stock of the Company a majority of the votes of all capital stock of the
Company entitled to vote thereat. Such request of the Board or the
stockholders shall state the purpose or purposes of the proposed meeting.
Section 2.3 Notices. Written notice of each stockholders' meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote thereat by or at the direction of the officer
calling such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting. If said notice is for a stockholders meeting
1
<PAGE> 6
other than an annual meeting, it shall in addition state the purpose or
purposes for which said meeting is called, and the business transacted at such
meeting shall be limited to the matters so stated in said notice and any
matters reasonably related thereto.
Section 2.4 Quorum. The presence at a stockholders' meeting of the
holders, present in person or represented by proxy, of capital stock of the
Company representing a majority of the votes of all capital stock of the
Company entitled to vote thereat shall constitute a quorum at such meeting for
the transaction of business except as otherwise provided by law, the
certificate of incorporation or these Bylaws. If a quorum shall not be present
or represented at any meeting of the stockholders, a majority of the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such reconvened meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for
the reconvened meeting, a notice of said meeting shall be given to each
stockholder entitled to vote at said meeting. The stockholders present at a
duly convened meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 2.5 Voting of Shares.
Section 2.5.1 Voting Lists. The officer or agent who has
charge of the stock ledger of the Company shall prepare, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote thereat arranged in alphabetical order and showing the address
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The original stock transfer books shall be prima facie evidence as to
who are the stockholders entitled to examine such list or transfer books or to
vote at any meeting of stockholders. Failure to comply with the requirements
of this section shall not affect the validity of any action taken at said
meeting.
Section 2.5.2 Votes Per Share. Unless otherwise provided in
the certificate of incorporation, each stockholder shall be entitled, to one
vote in person or by proxy at every stockholders meeting for each share of
capital stock held by such stockholder.
2
<PAGE> 7
Section 2.5.3 Proxies. Every stockholder entitled to vote at
a meeting or to express consent or dissent without a meeting or a stockholder's
duly authorized attorney-in-fact may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing, executed by the stockholder
giving the proxy or by his duly authorized attorney. No proxy shall be voted
on or after three (3) years from its date, unless the proxy provides for a
longer period. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it, or his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
has been given.
Section 2.5.4 Required Vote. When a quorum is present at any
meeting, the vote of the holders, present in person or represented by proxy, of
capital stock of the Company representing a majority of the votes of all
capital stock of the Company entitled to vote thereat shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of law or the certificate of incorporation or these Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 2.5.5 Consents in Lieu of Meeting. Any action
required to be or which may be taken at any meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt, written notice
of the action taken by means of any such consent which is other than unanimous
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 3.1 Purpose. The business of the Company shall be managed by
or under the direction of the Board, which may exercise all such powers of the
Company and do all such lawful acts and things as are not by law, the
certificate of incorporation or these Bylaws directed or required to be
exercised or done by the stockholders. Directors need not be stockholders or
residents of the State of Delaware.
Section 3.2 Number. The number of directors constituting the Board
shall never be less than one and shall be determined by resolution of the
Board.
Section 3.3 Election. Directors shall be elected by the stockholders
by plurality vote at an annual stockholders meeting as provided in the
certificate of incorporation, except as hereinafter provided, and each director
shall hold office until his successor has been duly elected and qualified.
3
<PAGE> 8
Section 3.4 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
their successors are duly elected and qualified. If there are no directors in
office, then an election of directors may be held in the manner provided by
law. If, at the time of filling any vacancy or any newly-created directorship,
the directors then in office shall constitute less than a majority of the whole
Board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent (10%) of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly-created directorships,
or to replace the directors chosen by the directors then in office. No
decrease in the size of the Board shall serve to shorten the term of an
incumbent director.
Section 3.5 Removal. Unless otherwise restricted by law, the
certificate of incorporation or these Bylaws, any director or the entire Board
may be removed, with or without cause, by a majority vote of the shares
entitled to vote at an election of directors, if notice of the intention to act
upon such matter shall have been given in the notice calling such meeting.
Section 3.6 Compensation. Unless otherwise restricted by the
certificate of incorporation or these Bylaws, the Board shall have the
authority to fix the compensation of directors. The directors may be
reimbursed their expenses, if any, of attendance at each meeting of the Board
and may be paid either a fixed sum for attendance at each meeting of the Board
or a stated salary as director. No such payment shall preclude any director
from serving the Company in any other capacity and receiving compensation
therefor. Members of committees of the Board may be allowed like compensation
for attending committee meetings. No director who is an employee of the
Company shall receive any compensation for serving as a director.
Section 3.7 Financial Information. Each Director shall receive:
Section 3.7.1 As soon as available but in any event within
thirty (30) days after the end of each monthly accounting period in each fiscal
year, (A) unaudited consolidating and consolidated statements of income and
cash flows of the Company and its subsidiaries for such monthly period and for
the period from the beginning of the fiscal year to the end of such month, and
unaudited consolidating and consolidated balance sheet of the Company and its
subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Company's annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
and (B) operating performance characteristics commonly used in the Company's
and its subsidiaries' industries for the Company and its subsidiaries for such
monthly period.
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Section 3.7.2 As soon as available but in any event within
forty-five (45) days after the end of each quarterly accounting period in each
fiscal year, (A) unaudited consolidating and consolidated statements of income
and cash flows of the Company and its subsidiaries for such quarterly period
and for the period from the beginning of the fiscal year to the end of such
quarterly period, and unaudited consolidating and consolidated balance sheets
of the Company and its subsidiaries as of the end of such quarterly period,
setting forth in each case comparisons to the Company's annual budget and to
the corresponding period in the preceding fiscal year, and all such statements
shall be prepared in accordance with generally accepted accounting principles,
consistently applied, and (B) operating performance characteristics commonly
used in the Company's and its subsidiaries' industries for the Company and its
subsidiaries for such quarterly period.
Section 3.7.3 Within forty-five (45) days after the end of
each quarterly accounting period in each fiscal year, (A) a management letter
discussing the revenues and operations of the Company and summary quarterly
financial information and a certificate of a duly authorized officer of the
Company stating that there is no Default Event, as such term is defined in the
Subscription Agreement by and among the Company and the Persons listed on the
Schedule of Purchasers thereto (the "Subscription Agreement"), in existence
and that neither the Company nor any of its subsidiaries is in default under
any of its other material agreements or, if any Default Event or any such
default exists, specifying the nature and period of existence thereof and what
actions the Company and its subsidiaries have taken and propose to take with
respect thereto, and (B) a certification by the Company's chief financial
officer of the most recent financial information provided pursuant to Section
3.7.1 above.
Section 3.7.4 Within one hundred and twenty (120) days after
the end of each fiscal year, consolidating and consolidated statements of
income and cash flows of the Company and its subsidiaries for such fiscal year,
the consolidating and consolidated balance sheets, of the Company and its
subsidiaries as of the end of such fiscal year, setting forth in each case
comparisons to the Company's annual budget and to the preceding fiscal year,
all prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (A) with respect to the consolidated
portions of such statements, an opinion of an independent accounting firm of
recognized national standing that is unqualified with respect to the scope of
such firm's examination and the status of the Company and its subsidiaries,
taken as a whole, as a going concern, (B) a certificate from such accounting
firm, addressed to the Board, stating that in the course of its examination
nothing came to its attention that caused it to believe that there was a
Default Event in existence or that there was any other default by the Company
or any subsidiaries in the fulfillment of or compliance with any of the terms,
covenants, provisions or conditions of any other material agreement to which
the Company or any subsidiary is a party or, if such accountants have reason to
believe any Default Event or other default by the Company or any subsidiary
exists, a certificate specifying the nature
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and period of existence thereof and (C) a copy of such firm's annual management
letter to the Board.
Section 3.7.5 Promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning the
operations or financial affairs of the Company or any of its subsidiaries given
to the Company or any of its subsidiaries by its independent accounts (and not
otherwise contained in other materials provided hereunder).
Section 3.7.6 At least 30 days but not more than ninety (90)
days prior to the beginning of each fiscal year, an annual budget prepared on a
monthly basis for the Company and its subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other significant budgets
prepared by the Company and any revisions of such annual or other budgets, and
within thirty (30) days after any monthly period in which there is a material
adverse deviation from the annual budget, a certificate of a duly authorized
officer of the Company explaining the deviation and what actions the Company
has taken and proposes to take with respect thereto.
Section 3.7.7 Within ten (10) days after transmission
thereof, copies of all financial statement, proxy statements, reports and any
other general written communications which the Company or any subsidiary sends,
to its stockholders and copies of all registration statements and all regular,
special or periodic reports which it files, or any of its officers or directors
file with respect to the Company or any subsidiary, with the Securities and
Exchange Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the Company's businesses.
Section 3.7.8 With reasonable promptness, such other
information and financial data concerning the Company and its subsidiaries as
any director may reasonably request.
ARTICLE IV
BOARD MEETINGS
Section 4.1 Annual Meetings. The Board shall meet as soon as
practicable after the adjournment of each annual stockholders' meeting at the
place of the stockholders' meeting. No notice to the directors shall be
necessary to legally convene this meeting, provided a quorum is present.
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Section 4.2 Regular Meetings. Regularly scheduled, periodic meetings
of the, Board may be held without notice at such times and places as shall from
time to time be determined by resolution of the Board and communicated to all
directors.
Section 4.3 Special Meetings. Special meetings of the Board (i) may
be called by the chairman of the board or president and (ii) shall be called by
the president or secretary on the written request of two directors or the sole
director, as the case may be. Notice of each special meeting of the Board
shall be given, either personally or as hereinafter provided, to each director
at least 24 hours before the meeting if such notice is delivered personally or
by means of telephone, telegram, telex or facsimile transmission and delivery;
two days before the meeting if such notice is delivered by a recognized express
delivery service; and three days before the meeting if such notice is delivered
through the United States mail. Any and all business may be transacted at a
special meeting which may be transacted at a regular meeting of the Board.
Except as may be otherwise expressly provided by law, the certificate of
incorporation or these Bylaws, neither the business to be transacted at, nor
the purpose of, any special meeting need be specified in the notice or waiver
of notice of such meeting.
Section 4.4 Quorum, Required Vote. A majority of the directors shall
constitute a quorum for the transaction of business at any meeting of the
Board, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board, except as may be
otherwise specifically provided by law, the certificate of incorporation or
these Bylaws. If a quorum shall not be present at any meeting, a majority of
the directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present
Section 4.5 Consent In Lieu of Meeting. Unless otherwise restricted
by the certificate of incorporation or these Bylaws, any action required or
permitted to be taken at any meeting. of the Board or any committee thereof may
be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
ARTICLE V
COMMITTEES OF DIRECTORS
Section 5.1 Establishment: Standing Committees. The Board may by
resolution establish, name or dissolve one or more committees, each committee
to consist of one or more of the directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required. There
shall exist the following standing
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committees, which committees shall have and may exercise the following powers
and authority:
Section 5.1.1 Finance Committee. The Finance Committee shall,
from time to time, meet to review the Company's consolidated operating and
financial affairs, both with respect to the Company and all of its
subsidiaries, and to report its finding and recommendations to the Board of
Directors for final action. The Finance Committee shall not be empowered to
approve any corporate action, of whatever kind or nature, and the
recommendations of the Finance Committee shall not be binding on the Board of
Directors, except when, pursuant to the provisions of Section 5.2 of these
Bylaws, such power and authority have been specifically delegated to such
committee by the Board of Directors by resolution. In addition to the
foregoing, the specific duties of the Finance Committee shall be determined by
the Board of Directors by resolution.
Section 5.1.2 Audit Committee. The Audit Committee shall,
from time to time, but no less than two times per year, meet to review and
monitor the financial and cost accounting practices and procedures of the
Company and all of its subsidiaries and to report its findings and
recommendations to the Board of Directors for final action. The Audit Committee
shall not be empowered to approve any corporate action, of whatever kind or
nature, and the recommendations of the Audit Committee shall not be binding on
the Board of Directors, except when, pursuant to the provisions of Section 5.2
of these Bylaws, such power and authority have been specifically delegated to
such committee by the Board of Directors by resolution. In addition to the
foregoing, the specific duties of the Audit Committee shall be determined by
the Board of Directors by resolution.
Section 5.1.3 Compensation Committee. The Compensation
Committee shall, from time to time, meet to review the various compensation
plans, policies and practices of the Company and all of its subsidiaries and to
report its findings and recommendations to the Board of Directors for final
action. The Compensation Committee shall not be empowered to approve any
corporate action, of whatever kind or nature, and the recommendations of the
Compensation Committee shall not be binding on the Board of Directors, except
when, pursuant to the provisions of Section 5.2 of these Bylaws, such power and
authority have been specifically delegated to such committee by the Board of
Directors by resolution. In addition to the foregoing, the specific duties of
the Compensation Committee shall be determined by the Board of Directors by
resolution.
Section 5.1.4 Nominating Committee. The Nominating Committee
shall, from time to time, meet to consider the nominees to the Board of
Directors to be elected by the shareholders (and any directors to be elected by
the Board of Directors to fill vacancies), the number of directors and the
directors to be selected for membership on the various board committees, and to
report its findings and recommendations to the Board of Directors for final
action. The Nominating Committee shall not be empowered to approve any
corporate action, of whatever kind or nature, and, other than the number of
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directors, which the Nominating Committee is hereby delegated the authority to
determine, the recommendations of the Nominating Committee shall not be binding
on the Board of Directors, except when, pursuant to the provisions of Section
5.2 of these Bylaws, such power and authority have been specifically delegated
to such committee by the Board of Directors by resolution. In addition to the
foregoing, the specific duties of the Nominating Committee shall be determined
by the Board of Directions by resolution.
Section 5.2 Available Powers. Any committee established pursuant to
Section 5.1 of these Bylaws, including the Finance Committee, the Audit
Committee and the Compensation Committee, but only to the extent provided in
the resolution of the Board establishing such committee or otherwise delegating
specific power and authority to such committee and as limited by law, the
certificate of incorporation and these Bylaws, shall have and may exercise all
the powers and authority of the Board in the management of the business and
affairs of the Company, and may authorize the seal of the Company to be affixed
to all papers which may require it. Without limiting the foregoing, such
committee may, but only to the extent authorized in the resolution or
resolutions providing for the issuance of Shares of stock adopted by the Board
as provided in Section 151(a) of the General Corporation Law of the State of
Delaware, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the Company
or the conversion into, or the exchange of such shares for, shares of any other
class or classes or any other series of the same or any other class or classes
of stock of the Company.
Section 5.3 Unavailable Powers. No committee of the Board shall have
the power or authority to amend the certificate of incorporation (except in
connection with the issuance of capital stock as provided in the previous
section); adopt an agreement of merger or consolidation; recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Company's property and assets, a dissolution of the Company or a revocation of
such a dissolution; amend the Bylaws of the Company; or, unless the resolution
establishing such committee or the certificate of incorporation expressly so
provides, declare a dividend, authorize the issuance of stock or adopt a
certificate of ownership and merger.
Section 5.4 Alternate Members. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
to act at the meeting in the place of any such absent or disqualified member.
Section 5.5 Procedures. Time, place and notice, if any, of meeting
of a committee shall be determined by such committee. At meetings of a
committee, a majority of the
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number of members designated by the Board shall constitute a quorum for the
transaction of business. The act of a majority of the members present at any
meeting at which a quorum is present awl be the act of the committee, except as
otherwise specifically provided by law, the certificate of incorporation or
these Bylaws. If a quorum is not present at a meeting of a committee, the
members present may adjourn the meeting from time to time, without notice other
than an announcement at the meeting, until a quorum is present.
ARTICLE VI
OFFICERS
Section 6.1 Elected Officers. The Board shall elect a chairman of
the board, a president, a treasurer and a secretary (collectively, the
"Required Officers") having the respective duties enumerated below and may
elect such other officers having the titles and duties set forth below which
are not reserved for the Required Officers or such other titles and duties as
the Board may by resolution from time to time establish:
Section 6.1.1 Chairman of the Board. The chairman of the
board, or in his absence, the president, shall preside when present at all
meetings of the stockholders and the Board. The chairman of the board shall
advise and counsel the president and other officers and shall exercise such
powers and perform such duties as shall be assigned to or required of him from
time to time by the Board or these Bylaws. The chairman of the board may
execute bonds, mortgages and other contracts requiring a seal under the seal of
the Company, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board to some other officer or agent of the Company.
The chairman of the board may delegate all or any of his powers or duties to
the president, if and to the extent deemed by the chairman of the board to be
desirable or appropriate. The chairman of the board shall be elected by a
majority of the entire board of directors.
Section 6.1.2 President. The president shall have general
and active management of the business of the Company and shall see that all
orders and resolutions of the Board are carried into effect. In the absence of
the chairman of the board or in the event of his inability or refusal to act,
the president shall perform the duties and exercise the powers of the chairman
of the board.
Section 6.1.3 Vice Presidents. In the absence of the
president or in the event of his inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated by the Board, or in the absence of any
designation, then in the order of their election or appointment) shall perform
the duties of the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president. The vice presidents
shall perform such other duties and have such other powers as the Board may
from time to time prescribe.
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Section 6.1.4 Secretary. The secretary shall attend all
meetings of the stockholders, the Board and (as required) committees of the
Board and shall record all the proceedings of such meetings in books to be kept
for that purpose. He shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board and shall perform such
other duties as may be prescribed by the Board or the president. He shall have
custody of the corporate seal of the Company and he, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it, and when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board may give general authority to any other officer
to affix the seal of the Company and to attest the affixing thereof by his
signature.
Section 6.1.5 Assistant Secretaries. The assistant
secretary, or if there be more than one, the assistant secretaries in the order
determined by the Board (or if there be no such determination, then in the
order of their election or appointment) shall, in the absence of the secretary
or in the event of his inability or refusal to art, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the Board may from time to time prescribe.
Section 6.1.6 Treasurer. Unless the Board by resolution
otherwise provides, the treasurer shall be the chief accounting and financial
officer of the Company. The Treasurer shall have the custody of the corporate
funds and securities, shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Company and shall deposit all moneys
and other valuable effects in the name and to the credit of the Company in such
depositories as may be designated by the Board. He shall disburse the funds of
the Company as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the president and the Board, at its regular
meetings, or when the Board so require, an account of all his transactions as
treasurer and of the financial condition of the Company.
Section 6.1.7 Assistant-Treasurers. The assistant treasurer,
or if there shall be more than one, the assistant treasurers in the order
determined by the Board (or if there be no such determination, then in the
order of their election or appointment) shall, in the absence of the treasurer
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the measurer and shall perform such other duties and
have such other powers as the Board may from time to time prescribe.
Section 6.1.8 Divisional Officers. Each division of the
Company, if any, may have a president, secretary, treasurer or controller and
one or more vice presidents, assistant secretaries, assistant treasurers and
other assistant offices. Any number of such offices may be held by the same
person. Such divisional officers will be appointed by, report to and serve at
the pleasure of the Board and such other officers of that Board may place in
authority over them. The officers of each division shall have such authority
with respect to the business and affairs of that division as may be granted
from time to time by
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the Board, and in the regular course of business of such division may sign
contracts and other documents in the name of the division where so authorized;
provided that in no case and under no circumstances shall an officer of one
division have authority to bind any other division of the Company except as
necessary in the pursuit of the normal and usual business of the division of
which he is an officer.
Section 6.2 Election. All elected officers shall serve until their
successors are duly elected and qualified or until their earlier death,
disqualification, retirement, resignation or removal from office.
Section 6.3 Appointed Officers. The Board may also appoint or
delegate the power to appoint such other officers, assistant officers and
agents, and may also remove such officers and agents or delegate the power to
remove same, as it shall from time to time deem necessary, and the titles and
duties of such appointed officers may be as described in Section 6.1 for
elected officers; provided that the officers and any officer possessing
authority over or responsibility for any functions of the Board shall be
elected officers.
Section 6.4 Multiple Officeholders, Stockholder and Director
Officers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these Bylaws otherwise provide. Officers need
not be stockholders or residents of the State of Delaware. Officers, such as
the chairman of the board, possessing authority over or responsibility for any
functions of the Board must be directors.
Section 6.5 Compensation, Vacancies. The compensation of elected
officers shall be set by the Board. The Board shall also fill any vacancy in
an elected office. The compensation of appointed officers and the filling of
vacancies in appointed offices may be delegated by the Board to the same extent
as permitted by these Bylaws for the initial filling of such offices.
Section 6.6 Additional Powers and Duties. In addition to the
foregoing especially enumerated powers and duties, the several elected and
appointed officers of the Company shall perform such other duties and exercise
such further powers as may be provided by law, the certificate of incorporation
or these Bylaws or as the Board may from time to time determine or as may be
assigned to them by any competent committee or superior officer.
Section 6.7 Removal. Any officer may be removed, either with or
without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the Board.
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ARTICLE VII
SHARE CERTIFICATES
Section 7.1 Entitlement to Certificates. Every holder of the capital
stock of the Company, unless and to the extent the Board by resolution provides
that any or all classes or series of stock shall be uncertificated, shall be
entitled to have a certificate, in such form as is approved by the Board and
conforms with applicable law, certifying the number of shares owned by him.
Section 7.2 Multiple Classes of Stock. If the Company shall be
authorized to issue more than one class of capital stock or more than one
series of any class, a statement of the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualification, limitations or restrictions of
such preferences and/or rights shall, unless the Board shall by resolution
provide that such class or series of stock shall be uncertificated, be set
forth in full or summarized on the face or back of the certificate which the
Company shall issue to represent such class or series of stock, provided that,
to the extent allowed by law, in lieu of such statement, the face or back of
such certificate may state that the Company will furnish a copy of such
statement without charge to each requesting stockholder.
Section 7.3 Signatures. Each certificate representing capital stock
of the Company shall be signed by or in the name of the Company by (1) the
chairman of the board, the president or a vice president or chief executive
officer; and (2) the treasurer, an assistant treasurer, the secretary or an
assistant secretary of the Company. The signatures of the officers of the
Company may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
hold such office before such certificate is issued, it may be issued by the
Company with the same effect as if he held such office on the date of issue.
Section 7.4 Issuance and Payment. Subject to the provisions of the
law, the certificate of incorporation or these Bylaws, shares may be issued for
such consideration and to such persons as the Board may determine from time to
time. Shares may not be issued until the full amount of the consideration has
been paid, unless upon the face or back of each certificate issued to represent
any partly paid shares of capital stock there shall have been set forth the
total amount of the consideration to be paid therefor and the amount paid
thereon up to and including the time said certificate is issued.
Section 7.5 Lost Certificates. The Board may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board may, in
its discretion
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and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Company a bond in such sum as it may direct as indemnity against
any claim that may be made against the Company with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 7.6 Transfer of Stock. Upon surrender to the Company or its
transfer agent, if any, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer and of the payment of all taxes applicable to the transfer of said
shares, the Company shall be obligated to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books; provided, however, that the Company shall not be so obligated unless
such transfer was made in compliance with applicable state and federal
securities laws.
Section 7.7 Registered Stockholders. The Company shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, vote and be held liable for calls and
assessments and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any person other than such
registered owner, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 General. The Company shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Company), by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, have reasonable cause to believe that his conduct was unlawful.
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Section 8.2 Actions by or in the Right of the Company. The Company
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture or trust or other
enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 8.3 Indemnification Against Expenses. To the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
sections 8.1 and 8.2, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 8.4 Board Determinations. Any indemnification under sections
8.1 and 8.2 (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in sections 8.1 and
8.2. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
Section 8.5 Advancement of Expenses. Expenses incurred by an officer
or director in defending a civil or criminal action, suit or proceeding may be
paid by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Company as authorized by law or in this
section. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the Board of Directors deem
appropriate.
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Section 8.6 Nonexclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, this section shall not be deemed
exclusive of any other rights to which any director, officer, employee or agent
of the Company seeking indemnification or advancement of expenses may be
entitled under any other Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent of the
Company and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.7 Insurance. The Company shall purchase and maintain
insurance on behalf of any person who is or was a director or officer, against
any liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of the
statutes, the Certificate of Incorporation or this section. The Company may
purchase and maintain insurance on behalf of any other person who is or was an
employee or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise.
Section 8.8 Certain Definitions. For purposes of this section, (a)
references to "the Company" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation, or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued; (b) references to "other enterprises"
shall include employee benefit plans; (c) references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit plan;
and (d) references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee, or agent
with respect to any employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "'not opposed to the best
interests of the Company" as referred to in this section.
Section 8.9 Change in Governing Law. In the event of any amendment
or addition to Section 145 of the General Corporation Law of the State of
Delaware or the addition of
16
<PAGE> 21
any other section to such law which shall limit indemnification rights
thereunder, the Company shall, to the extent permitted by the General
Corporation Law of the State of Delaware, indemnify to the fullest extent
authorized or permitted hereunder, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the Company or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding.
ARTICLE IX
INTERESTED DIRECTORS, OFFICERS AND STOCKHOLDERS
Section 9.1 Validity. Any contract or other transaction between the
Company and any of its directors, officers or stockholders (or any corporation
or firm in which any of them are directly or indirectly interested) shall be
valid for all purposes notwithstanding the presence of such director, officer
or stockholder at the meeting authorizing such contract or transaction, or his
participation or vote in such meeting or authorization.
Section 9.2 Disclosure, Approval. The foregoing shall, however,
apply only if the material facts of the relationship or the interest of each
such director, officer or stockholder is known or disclosed:
1. to the Board and it nevertheless in good faith
authorizes or ratifies the contract or transaction by a majority of
the directors present, each such interested director to be counted in
determining whether a quorum is present but not in calculating the
majority necessary to carry the vote; or
2. to the stockholders and they nevertheless in good
faith authorize or ratify the contract or transaction by a majority of
the shares present, each such interested person to be counted for
quorum and voting purposes.
Section 9.3 Nonexclusive. This provision shall not be construed to
invalidate any contract or transaction which would be valid in the absence of
this provision.
17
<PAGE> 22
ARTICLE X
MISCELLANEOUS
Section 10.1 Place of Meetings. All stockholders, directors and
committee meetings shall be held at such place or places, within or without the
State of Delaware, as shall be designated from time to time by the Board or
such committee and stated in the notices thereof. If no such place is so
designated, said meetings shall be held at the principal business office of the
Company.
Section 10.2 Fixing Record Dates.
Section 10.2.1 In order that the Company may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, the Board may fix, in advance, a record date, which
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board, and which record date shall not be more than sixty (60)
nor less than ten (10) days prior to such action. If no record date is fixed
by the Board, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day notice is given or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
Section 10.2.2 In order that the Company may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board, and which date shall not be more than ten days after the date upon which
the resolution fixing the record date is adopted by the Board. If no record
date has been fixed by the Board, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board is otherwise required, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Company by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Company having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Company's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board and prior action by the Board is
required, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board adopts the resolution taking such prior action.
Section 10.2.3 In order that the Company may determine the
stockholders entitled to receive payment of any divided or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board may fix a record
18
<PAGE> 23
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty (60) days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto.
Section 10.3 Means of Giving Notice. Whenever under law, the
certificate of incorporation or these Bylaws, notice is required to be given to
any director or stockholder, such notice may be given in writing and delivered
personally, through the United States mail, by a recognized express delivery
service (such as Federal Express) or by means of telegram, telex or facsimile
transmission number, as the case may be, appearing on the records of the
Company, with postage and fees thereon prepaid. Such notice shall be deemed to
be given at the time when the same shall be deposited in the United States mail
or with an express delivery service or when transmitted, as the case may be.
Notice of any meeting of the Board may be given to a director by telephone and
shall be deemed to be given when actually received by the director.
Section 10.4 Waiver of Notice. Whenever any notice is required to be
given under law, the certificate of incorporation or these bylaws, a written
waiver of such notice, signed before or after the date of such meeting by the
person or persons entitled to said notice, shall be deemed equivalent to such
required notice. All such waivers shall be filed with the corporate records.
Attendance at a meeting shall constitute a waiver of notice of such meeting,
except where a person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 10.5 Attendance via Communications Equipment. Unless
otherwise restricted by law, the certificate of incorporation or these Bylaws,
members of the Board, any committee thereof or the stockholders may hold a
meeting by means of conference telephone or other communications equipment by
means of which all persons participating in the meeting can effectively
communicate with each other. Such participation in a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
Section 10.6 Dividends. Dividends on the capital stock of the
Company, paid in cash, property, or securities of the Company and as may be
limited by applicable law and applicable provisions of the certificate of
incorporation (if any), may be declared by the Board at any regular or special
meeting.
Section 10.7 Reserves. Before payment of any dividend, there may be
set aside out of any funds of the Company available for dividends such sum or
sums as the Board from time to time, in its absolute discretion, think proper
as a reserve or reserves to meet
19
<PAGE> 24
contingencies, for equalizing dividends, for repairing or maintaining any
property of the Company, or for such other purpose as the Board shall determine
to be in the best interest of the Company; and the Board may modify or abolish
any such reserve in the manner in which it was created.
Section 10.8 Reports to Stockholders. The Board shall present at each
annual meeting of stockholders, and at any special meeting of stockholders when
called for by vote of the stockholders, a statement of the business and
condition of the Company.
Section 10.9 Contracts and Negotiable Instruments. Except as
otherwise provided by law or these Bylaws, any contract or other instrument
relative to the business of the Company may be executed and delivered in the
name of the Company and on its behalf by the chairman of the board or the
president; and the Board may authorize any other officer or agent of the
Company to enter into any contract or execute and deliver any contract in the
name and on behalf of the Company, and such authority may be general or
confined to specific instances as the Board may by resolution determine. All
bills, notes, checks or other instruments for the payment of money shall be
signed or countersigned by such officer, officers, agent or agents and in such
manner as are permitted by the Bylaws and/or as, from time to time, may be
prescribed by resolution (whether general or special) of the Board. Unless
authorized so to do by these Bylaws or by the Board, no officer, agent or
employee shall have any power or authority to bind the Company by any contract
or engagement, or to pledge its credit, or to render it liable pecuniarily for
any purpose or to any amount.
Section 10.10 Fiscal Year. The fiscal year of the Company shall be
fixed by resolution of the Board.
Section 10.11 Seal. The seal of the Company shall be in such form as
shall from time to time be adopted by the Board. The seal may be used by
causing it or a facsimile thereof to be impressed, affixed or otherwise
reproduced.
Section 10.12 Books and Records. The Company shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its stockholders, Board and committees and shall keep its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
Section 10.13 Resignation. Any director, committee member, officer
or agent may resign by giving written notice to the chairman of the board, the
president or the secretary. The resignation shall take effect at the time
specified therein, or immediately if no time is specified. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
20
<PAGE> 25
Section 10.14 Surety Bonds. Such officers and agents of the Company
(if any) as the president or the Board may direct, from time to time, shall be
bonded for the faithful performance of their duties and for the restoration to
the Company, in case of their death, resignation, retirement, disqualification
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in their possession or under their control belonging
to the Company, in such amounts and by such surety companies as the president
or the Board may determine. The premiums on such bonds shall be paid by the
Company, and the bonds so furnished shall be in the custody of the Secretary.
Section 10.15 Proxies in Respect of Securities of Other Corporations.
The chairman of the board, the president, any vice president or the secretary
may from time to time appoint an attorney or attorneys or an agent or agents
for the Company to exercise, in the name and on behalf of the Company, the
powers and rights which the Company may have as the holder of stock or other
securities in any other corporation to vote or consent in respect of such stock
or other securities, and the chairman of the board, the president, any vice
president or the secretary may instruct the person or persons so appointed as
to the manner of exercising such powers and rights; and the chairman of the
board, the president, any vice president or the secretary may execute or cause
to be executed, in the name and on behalf of the Company and under its
corporate seal or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in order that the Company may exercise such
powers and rights.
Section 10.16 Amendments. These Bylaws may be altered, amended,
repealed or replaced by the stockholders, or by the Board when such power is
conferred upon the Board by the certificate of incorporation, at any annual
stockholders meeting or annual or regular meeting of the Board, or at any
special meeting of the stockholders or of the Board if notice of such
alteration, amendment, repeal or replacement is contained in the notice of such
special meeting. If the power to adopt, amend, repeal or replace these Bylaws
is conferred upon the Board by the certificate of incorporation, the power of
the stockholders to so adopt, amend, repeal or replace these Bylaws shall not
be divested or limited thereby.
ARTICLE XI
CLASS B COMMON STOCK
For so long as there are outstanding shares of Class B Common
Stock, par value $0.01 per share ("Class B Common Stock"), Sections 2.4, 3.2,
3.3, 3.4, 3.5, 4.3, 5.1.4 and 10.16 of these Bylaws shall not be in effect and
the following Bylaws shall be applicable. Upon the conversion of all Class B
Common Stock into Common Stock, par value $0.01 per share ("Common Stock"), or
if all of the shares of Class B Common Stock issued by the Company cease to be
outstanding for any other reason, these provisions
21
<PAGE> 26
shall terminate, Sections 2.4, 3.2, 3.3, 3.4, 3.5, 4.3, 5.1.4 and 10.16 shall
again be applicable and this Article XI shall no longer be applicable.
Section 11.1 Quorum. The presence at a stockholders' meeting of the
holders, present in person or represented by proxy, of capital stock of the
Company representing a majority of the votes of all capital stock of the
Company entitled to vote thereat (and, if the holders of any class of capital
stock are entitled to vote as a class on any matter to be submitted to a vote
at such stockholders' meeting, a majority of the votes of all capital stock of
such class) shall constitute a quorum at such meeting for the transaction of
business except as otherwise provided by law, the certificate of incorporation
or these Bylaws. If a quorum shall not be present or represented at any
meeting of the stockholders, a majority of the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such reconvened
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the reconvened meeting, a notice
of said meeting shall be given to each stockholder entitled to vote at said
meeting. The stockholders present and entitled to vote on a matter submitted
to a vote at a duly convened stockholders' meeting may continue to transact
business with respect to such matter until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 11.2 Classes and Number of Directors. There shall be two
classes of directors, those elected by the Common Stock ("Common Directors")
and those elected by the Class B Common Stock ("Class B Directors"). The
rights, duties and authority of the Common Directors and the Class B Directors
shall be identical in all respects. The number of Common Directors shall be
the number to be determined by the Nominating Committee. The number of Class B
Directors shall be one, except that if Southwestern Bell Wireless Holdings,
Inc. ("SBW") and its Affiliates Beneficially Own (as hereinafter defined) 20%
or more of the outstanding Common Stock, including Common Stock issuable upon
conversion of Class B Common Stock or other convertible securities or upon the
exercise of any outstanding options, warrants, rights or obligations, other
than shares issuable upon the exercise of (i) the 5,000,000 warrants issued on
September 27, 1996 (the "Warrants") and (ii) options, warrants, rights or
obligations issued by any entity other than the Company ("Excluded Options"),
there shall be two Class B Directors. For the purposes of the foregoing
calculations, the number of outstanding shares of Common Stock shall include
all shares issuable upon conversion of outstanding convertible securities or
upon exercise of outstanding options, warrants, rights or obligations other
than the Warrants, Excluded Options and employee stock options. As used
herein, an "Affiliate" of SBW is any person or entity directly or indirectly
controlling or controlled by or under common direct or indirect control with
SBW.
22
<PAGE> 27
As used herein, the term "Beneficially Own" (and correlative
terms) shall mean, 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.
Section 11.3 Election. The Common Directors shall be elected by the
holders of Common Stock by a plurality vote and the Class B Directors shall be
elected by the holders of the Class B Common Stock by a plurality vote, in
either case at an annual stockholders meeting, except as hereinafter provided,
and each director shall hold office until his successor has been duly elected
and qualified or his earlier death, resignation or removal.
Section 11.4 Vacancies. Vacancies in any class of directors and newly
created directorships resulting from any increase in the authorized number of
directors of any class of common stock may be filled by the majority of
directors of such class then in office, though less than a quorum, or by a sole
remaining director so elected and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
qualified or until their earlier death, resignation or removal. If there are
no directors in office, then an election of directors may be held in the manner
provided by law. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a
majority or the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancy or
newly-created directorships, or to replace the directors chosen by the
directors then in office. No decrease in the size of the Board shall serve to
shorten the term of an incumbent director.
Section 11.5 Removal. Unless otherwise restricted by law, the
certificate of incorporation or these Bylaws, any director or the entire Board
may be removed, with or without cause, by a majority vote of the class of
common stock entitled to elect such director or directors.
Section 11.6 Special Meetings. Special meetings of the Board (i) may
be called by the chairman of the board or president and (ii) shall be called by
the president or secretary on the written request of two directors or the sole
director, as the case may be. Notice of each special meeting of the Board
shall be given, either personally or as hereinafter provided, to each director
at least 24 hours before the meeting if such notice is delivered personally or
by means of telephone, telegram, telex or facsimile transmission and delivery;
two days before the meeting if such notice is delivered by a recognized express
23
<PAGE> 28
delivery service; and three days before the meeting if such notice is delivered
through the United States mail. Notwithstanding the foregoing, notice must be
actually received by at least one Class B director at his designated address to
be effective. Any and all business may be transacted at a special meeting
which may be transacted at a regular meeting of the Board. Except as may be
otherwise expressly provided by law, the certificate of incorporation or these
Bylaws, neither the business to be transacted at, nor the purpose of, any
special meeting need be specified in the notice or waiver of notice of such
meeting.
Section 11.7 Nominating Committee. The Nominating Committee shall,
from time to time, meet to consider the nominees to the Board of Directors to
be elected by the shareholders (and any directors to be elected by the Board of
Directors to fill vacancies), the number of directors and the directors to be
selected for membership on the various board committees, and to report its
findings and recommendations to the Board of Directors for final action. There
shall at all times be three Common Directors and one Class B director on the
Nominating Committee. The Class B Director on the nominating committee shall
select any Class B nominees. The Nominating Committee shall not be empowered
to approve any corporate action, of whatever kind or nature, and, other than
the number of Directors, which the Nominating Committee is hereby delegated to
determine, the recommendations of the Nominating Committee shall not be binding
on the Board of Directors, except when, pursuant to the provisions of Section
5.2 of these Bylaws, such power and authority have been specifically delegated
to such committee by the Board of Directors by resolution. In addition to the
foregoing, the specific duties of the Nominating Committee shall be determined
by the Board of Directions by resolution.
Section 11.8 Amendments. These Bylaws may be altered, amended,
repealed or replaced by the stockholders as provided in the certificate of
incorporation and in accordance with applicable law, or when such authority is
conferred upon the Board by the certificate of incorporation, by a majority of
the directors, except that for so long as there shall be shares of Class B
Common Stock outstanding, Article XI (and any other Article if the effect
thereof would be similar to altering, amending, repealing or replacing Article
XI) may only be altered, amended, repealed or replaced by a majority of the
Common Directors and a majority of the Class B Directors. These Bylaws may be
altered, amended, repealed or replaced at any annual meeting of the
stockholders or annual or regular meeting of the Board, or at any special
meeting of the stockholders or the Board if notice of such alteration,
amendment, repeal or replacement is contained in the notice of such special
meeting. If the power to adopt, amend, repeal or replace these Bylaws is
conferred upon the Board by the certificate of incorporation, the power of the
stockholders to so adopt, amend, repeal or replace these Bylaws shall not be
divested or limited thereby.
24
<PAGE> 1
Exhibit 11
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three months ended June 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
Loss before accretion $ (6,643,000) $ (6,899,000)
Accretion of Series B preferred stock -- (610,000)
------------ ------------
Net loss applicable to common stockholders (6,643,000) (7,509,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Weighted average number of shares outstanding, net of treasury shares 24,858,372 22,035,490
Additional weighted average shares for assumed exercise of stock options,
net of shares assumed to be repurchased with exercise proceeds -- --
------------ ------------
Weighted average number of shares outstanding 24,858,372 22,035,490
============ ============
NET LOSS PER COMMON SHARE APPLICABLE TO COMMON STOCKHOLDERS
Loss before accretion $ (0.27) $ (0.31)
Accretion of Series B preferred stock -- (0.03)
------------ ------------
Net loss applicable to common stockholders (0.27) (0.34)
============ ============
<CAPTION>
Six months ended June 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
Loss before accretion $(14,017,000) $(13,268,000)
Accretion of Series B preferred stock -- (1,220,000)
------------ ------------
Net loss applicable to common stockholders (14,017,000) (14,488,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Weighted average number of shares outstanding, net of treasury shares 24,843,394 22,029,077
Additional weighted average shares for assumed exercise of stock options,
net of shares assumed to be repurchased with exercise proceeds -- --
------------ ------------
Weighted average number of shares outstanding 24,843,394 22,029,077
============ ============
NET LOSS PER COMMON SHARE APPLICABLE TO COMMON STOCKHOLDERS
Loss before accretion $ (0.56) $ (0.60)
Accretion of Series B preferred stock -- (0.06)
------------ ------------
Net loss applicable to common stockholders (0.56) (0.66)
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,987
<SECURITIES> 0
<RECEIVABLES> 12,806
<ALLOWANCES> (1,303)
<INVENTORY> 2,764
<CURRENT-ASSETS> 21,512
<PP&E> 10,746
<DEPRECIATION> (2,666)
<TOTAL-ASSETS> 32,986
<CURRENT-LIABILITIES> 12,137
<BONDS> 0
0
0
<COMMON> 252
<OTHER-SE> 20,597
<TOTAL-LIABILITY-AND-EQUITY> 20,849
<SALES> 14,249
<TOTAL-REVENUES> 25,255
<CGS> 12,148
<TOTAL-COSTS> 20,819
<OTHER-EXPENSES> 18,901
<LOSS-PROVISION> 1,473
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (14,017)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,017)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,017)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> 0
</TABLE>
