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AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
By and Among
Teletrac Holdings, Inc.
and
The Stockholders
as defined herein and set forth
on the signature pages hereto
Dated as of October 20, 1998
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................2
Section 1.1. Construction of Terms...................................2
Section 1.2. Number of Shares of Stock...............................2
Section 1.3. Defined Terms...........................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................4
Section 2.1. Representations and Warranties of the Stockholders......4
Section 2.2. Representations and Warranties of the Company...........5
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
AND DRAG-ALONG PROVISION..............................................5
Section 3.1. Restrictions on Transfer................................5
Section 3.2. Right of Last Refusal. ................................7
Section 3.3. Co-Sale Option.........................................10
Section 3.4. Drag-Along Obligations.................................12
Section 3.5 Contemporaneous Transfers..............................14
Section 3.6 Prohibited Transfers...................................14
Section 3.7 Exchange of Voting Securities for Non-Voting Securities
for Bank Holding Company Act Purposes..................14
ARTICLE IV RIGHTS TO PARTICIPATE IN FUTURE ISSUANCES.........................15
ARTICLE V ELECTION OF DIRECTORS..............................................16
Section 5.1. Board Composition......................................16
Section 5.2. Compensation Committee; Audit Committee................18
Section 5.3. Removal................................................18
Section 5.4. Vacancies..............................................18
Section 5.5. Increase in Size of Board..............................19
Section 5.6. Assignment.............................................19
Section 5.7. No Waiver..............................................19
Section 5.8. Board of Directors of Subsidiary.......................19
Section 5.9. Expenses...............................................19
Section 5.10. Observer Rights........................................20
ARTICLE VI RESTRICTIONS AND LIMITATIONS......................................20
Section 6.1. Combined Voting........................................20
Section 6.2. Voting as a Separate Class.............................21
(i)
ARTICLE VII MISCELLANEOUS PROVISIONS.........................................22
Section 7.1. Survival of Representations and Covenants..............22
Section 7.2. Term...................................................22
Section 7.3. Legend on Securities...................................22
Section 7.4. Amendment and Waiver...................................23
Section 7.5. Notices. .............................................23
Section 7.6. Acknowledgment.........................................23
Section 7.7. Headings...............................................24
Section 7.8. Counterparts...........................................24
Section 7.9. Remedies; Severability.................................24
Section 7.10. Entire Agreement.......................................24
Section 7.11. Adjustments............................................24
Section 7.12 Certain Provisions Applicable to SBIC and
Bank Stockholders....................................25
Section 7.13 Participation of Aliens. .............................25
Section 7.14. Law Governing..........................................25
Section 7.15. Successors and Assigns. ..............................25
Exhibit A - Form of Joinder Agreement
Exhibit B - Charter
(ii)
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
This Amended and Restated Stockholders' Agreement is made as of this
20th day of October, 1998 by and among Teletrac Holdings, Inc., a Delaware
corporation (the "Company"), the investors identified on Appendix A hereto as
the initial management investors (the "Founding Stockholders"), the investors
identified on Appendix A hereto that currently hold Common Stock (the "Common
Investors"), the investors identified on Appendix A hereto that currently hold
Series A Preferred Stock (the "Series A Preferred Investors"), the investors
identified on Appendix A hereto that are acquiring Series B Preferred Stock
(including any investors that purchase Series B Preferred Shares in connection
with the Second Closing and execute a Joinder Agreement in substantially the
form attached hereto as Exhibit A) (the "Series B Preferred Investors," together
with the Series A Preferred Investors, the "Preferred Investors" and together
with the Common Investors, the "Investors"), and any other stockholder,
warrantholder or optionholder of the Company who from time to time becomes party
to this Agreement by execution of a Joinder Agreement in substantially the form
attached hereto as Exhibit A (the "Management Stockholders"). The Founding
Stockholders, the Investors and any Management Stockholders are herein referred
to collectively as the "Stockholders" and individually as a "Stockholder."
Capitalized terms used but not otherwise defined herein, shall have the meanings
ascribed to them in that certain Stock Purchase Agreement, dated as of the date
hereof, by and among, inter alia, the Company and the Series B Preferred
Investors (the "Purchase Agreement").
W I T N E S S E T H
WHEREAS, reference is made to the Purchase Agreement pursuant to which
the Series B Preferred Investors have purchased up to 400,000 Series B Preferred
Shares from the Company;
WHEREAS, the effectiveness of this Agreement is a condition precedent
to the Series B Preferred Investors' obligation to purchase the Series B
Preferred Shares under the Purchase Agreement;
WHEREAS, the parties hereto desire to amend and restate the terms of
the Stockholders' Agreement, dated as of December 6, 1996 by and among certain
stockholders of the Company (the "1996 Stockholders' Agreement"), and for this
Agreement to supersede the terms of the 1996 Stockholders' Agreement; and
WHEREAS, the parties hereto desire to agree upon the terms upon which
their investment in the capital stock of the Company will be held, transferred
and voted.
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NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I DEFINITIONS
Section 1.1. Construction of Terms. As used herein, the masculine,
feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.
Section 1.2. Number of Shares of Stock. Whenever any provision of this
Agreement calls for any calculation based on a number of Shares held by a
Stockholder or Investor, the number of Shares deemed to be held by that
Stockholder or Investor shall be the total number of shares of Common Stock,
either Class A or Class B, then owned by the Stockholder or Investor, plus the
total number of Shares of Common Stock, either Class A or Class B, issuable upon
conversion of any Preferred Stock or other convertible securities or exercise of
any options, warrants or subscription rights then owned by the Stockholder or
Investor.
Section 1.3. Defined Terms. The following capitalized terms, as used
in this Agreement, shall have the meanings set forth below.
"Affiliate" means, with respect to any Person, a Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with the first mentioned Person. A Person shall be
deemed to control another Person if such first Person possesses directly or
indirectly the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.
"Charter" has the meaning specified in the definition of Preferred
Stock below.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A or Class B Common Stock, par value
$.01 per share, of the Company, and any other shares of stock issued or issuable
with respect thereto (whether by way of a stock dividend or stock split or in
exchange for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Conversion Shares" shall mean the shares of Common Stock issued by the
Company upon conversion of the shares of Preferred Stock in accordance with the
Charter.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Offer Notice" has the meaning specified in Section 3.2(a)
"Offeror" has the meaning specified in Section 3.2.
"Permitted Transferee" has the meaning specified in Section 3.1.
"Person" means an individual, a corporation, an association, a
partnership, an estate, a trust, and any other entity or organization,
governmental or otherwise.
"Preferred Stock" means the Series A Redeemable Convertible
Participating Preferred Stock, par value $.01 per share, of the Company, First
Series of Diluted Series A Preferred Stock, par value $.01 per share, of the
Company, and the Series B Convertible Participating Preferred Stock, par value
$.01 per share, of the Company, as issued or to be issued in accordance with the
Purchase Agreement and subject to the terms set forth in the Amended and
Restated Certificate of Incorporation of the Company substantially in the form
attached hereto as Exhibit B (the "Charter"), together with any other shares
issued or issuable with respect thereto including, without limitation, shares of
any New Series of Diluted Series A Preferred Stock, shares of Redeemable
Preferred Stock, shares of Diluted Series B Preferred Stock, and any shares of
Common Stock (whether by way of a stock dividend, stock split or in exchange for
or in replacement or upon conversion of such shares or otherwise in connection
with a combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Qualified Series A Public Offering" means an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock to the public with a per share
value at least equal to the greater of $300.00 per share (subject to adjustment
for stock splits, stock dividends, recapitalization and the like) and the then
Series A Liquidation Preference Amount (as defined in the Charter) per share.
"Qualified Series B Public Offering" means an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock to the public, of which the
aggregate gross proceeds attributable to sales for the account of the Company
exceed $30,000,000 at a price per share reflecting a pre-money valuation for the
Company's equity of at least $180,000,000, and either (a) all outstanding shares
of Redeemable Preferred Stock are redeemed immediately upon and as of the
closing of such offering or (b) contemporaneously with such offering cash in an
amount sufficient to redeem all outstanding shares of Redeemable Preferred Stock
3
is segregated and irrevocably held by the Company for payment to holders of
Redeemable Preferred Stock in connection with the redemption thereof pursuant to
the Charter.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, dated the date hereof, by and among, inter alia,
the Company and the Stockholders.
"Right of Last Refusal" has the meaning specified in Section 3.2(b).
"Sale of the Company" means the sale of the Company to a
non-Affiliate(s) of the Company or any of the Stockholders pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power to elect a majority of the Board of Directors (whether by merger,
consolidation or sale or transfer of the Company's capital stock); or (ii) all
or substantially all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations promulgated thereunder.
"Shares" means the shares of Common Stock, Preferred Stock and any
other equity securities now or hereafter issued by the Company, together with
any options or warrants thereon and any other shares of stock issued or issuable
with respect thereto (whether by way of a stock dividend, stock split or in
exchange for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Transaction Offer" has the meaning specified in Section 3.2.
"Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights. "Transferred" means the accomplishment of a Transfer, and "Transferee"
means the recipient or intended recipient of a Transfer.
"Transferring Stockholder" has the meaning specified in Section 3.2.
ARTICLE II REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Stockholders. Each
of the Stockholders, individually and not jointly, hereby represents, warrants
and covenants to the Company as follows: (a) such Stockholder has full authority
and power and, if an individual, capacity, under its charter, by-laws, governing
4
partnership agreement or comparable document, as applicable, to enter into this
Agreement; (b) this Agreement constitutes the valid and binding obligation of
such Stockholder; and (c) the execution, delivery and performance by such
Stockholder of this Agreement: (i) does not and will not violate any laws, rules
or regulations of the United States or any state or other jurisdiction
applicable to such Stockholder, or require such Stockholder to obtain any
approval, consent or waiver of, or to make any filing with, any Person that has
not been obtained or made (other than filings or approvals that may have to be
made or obtained in connection with any acquisition or disposition of Shares by
an Investor that is a regulated institutional investor); and (ii) does not and
will not result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of any indenture or loan
or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which such Stockholder is a party or by
which the property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the assets or properties of such Stockholder.
Section 2.2. Representations and Warranties of the Company. The
Company, hereby represents, warrants and covenants to the Stockholders as
follows: (a) the Company has full corporate authority and power to enter into
this Agreement; (b) this Agreement constitutes the valid and binding obligation
of the Company enforceable against it in accordance with its terms; and (c) the
execution, delivery and performance by the Company of this Agreement: (i) does
not and will not violate any laws, rules or regulations of the United States or
any state or other jurisdiction applicable to the Company or any of its
subsidiaries, or require the Company or any of its subsidiaries to obtain any
approval, consent or waiver of, or to make any filing with, any Person that has
not been obtained or made; and (ii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give rise to a
right of termination of any indenture or loan or credit agreement or any other
material agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Company or any of its subsidiaries is a party or
by which the property of the Company or any of its subsidiaries is bound or
affected, or result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the assets or
properties of the Company or any of its subsidiaries.
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
AND DRAG-ALONG PROVISIONS
Section 3.1. Restrictions on Transfer. No Transfers of any Shares
shall be made except in accordance with all applicable provisions of the
Securities Act and any relevant state securities law. In addition, each
5
Stockholder agrees that he, she or it will not, without the prior written
consent of the holders of a majority of the issued and outstanding shares of
Common Stock and Preferred Stock, voting as a single class on an as converted
basis, Transfer all or any portion of the Shares now owned or hereafter acquired
by it or him, except in connection with, and strictly in compliance with the
conditions of, any of the following:
(a) Transfers effected pursuant to Sections 3.2 and
3.3 and 3.4, in each case made in accordance with the procedures set
forth therein;
(b) Any Transfers by a Stockholder to his or her
spouse or children or to a trust of which he is the settlor and a
trustee for the benefit of his or her spouse or children, provided that
any such trust does not require or permit distribution of such Shares
during the term of this Agreement, and provided further that the
Transferee shall have executed and delivered a Joinder Agreement in the
form attached hereto as Exhibit A;
(c) Transfers upon the death of any Stockholder to
his or her heirs, executors or administrators or to a trust under his
or her will or Transfers between such Stockholder and his or her
guardian or conservator, provided that the Transferee shall have
executed and delivered a Joinder Agreement in the form attached hereto
as Exhibit A;
(d) Transfers pursuant to a public offering of the
Company's Common Stock registered under the Securities Act effected in
accordance with the terms of the Registration Rights Agreement;
(e) With respect to any of the Investors, a Transfer
to any other Investor or to a partner or Affiliate of such Investor
(other than the Company) or to any other investment fund or other
entity for which such Investor and/or one or more partners thereof,
directly or indirectly through one or more intermediaries, serve as
general partner or manager or in a like capacity, provided that the
Transferee shall have executed and delivered a Joinder Agreement in the
form attached hereto as Exhibit A; and
(f) In the event that Toronto Dominion Capital
(U.S.A.), Inc. ("Toronto Dominion"), EOS Partners SBIC, L.P. ("EOS") or
BancBoston Ventures Inc. ("BancBoston") reasonably determines that it
has a Regulatory Problem (as defined below), each of Toronto Dominion,
EOS and BancBoston shall have the right to (i) Transfer its Shares to a
non-Affiliate of the Company and the other Stockholders, provided that
the transferee shall have executed and delivered a Joinder Agreement in
the form attached hereto as Exhibit A, or (ii) exchange their Shares
for non-voting securities in the Company with the same economic rights,
and the Company shall xxxx
0
all such actions as are reasonably requested by Toronto Dominion, EOS
and BancBoston in order to (a) effectuate and facilitate any such
Transfer or (b) permit Toronto Dominion, EOS and/or BancBoston, as the
case may be, to exchange for all or any portion of their Shares on a
share-for-share basis for shares of non-voting securities of the
Company, which non-voting securities shall be identical in all respects
to the Shares exchanged for it, except that such exchanged securities
shall be non-voting and shall be convertible into voting securities on
such terms as are reasonably requested by Toronto Dominion, EOS and/or
BancBoston, as the case may be, in light of regulatory considerations
then prevailing and do not alter the economic interests of the parties
hereto. For purposes of this Agreement, a "Regulatory Problem" means
any set of facts or circumstances wherein it has been asserted by any
governmental authority, including by the United States Small Business
Administration (the "SBA"), and any successor agency satisfactory to
the Company performing the functions thereof (or, based on written
advice of counsel satisfactory to the Company, Toronto Dominion, EOS
and/or BancBoston reasonably believes that there is a substantial risk
of such assertion), that, pursuant to the Small Business Act of 1958,
as amended, and the regulations issued by the SBA thereunder, codified
at Title 13 of the Code of Federal Regulations, Parts 107 and 121 (the
"SBIC Regulations"), or pursuant to the Bank Holding Company Act, as
amended, and the regulations issued thereunder, Toronto Dominion, EOS
or BancBoston, as applicable, is not entitled to hold all or a portion
of the Preferred Stock or Common Stock held by it.
Any permitted Transferee described in the preceding clauses
(b), (c), (e) or (f) shall be referred to herein as a "Permitted
Transferee." Anything to the contrary in this Agreement
notwithstanding, Permitted Transferees shall take any Shares so
Transferred subject to all provisions of this Agreement as if such
Shares were still held by the Transferring Stockholder, whether or not
they so agree with the Transferring Stockholder and/or the Company.
Without limitation of the foregoing, in connection with any otherwise
permitted transfer of Shares that are restricted shares subject to any
stock restriction or vesting agreement, any Permitted Transferee of any
such Shares shall agree in writing to be bound by the terms of such
stock restriction, vesting or similar agreement, including, without
limitation, any repurchase or similar right contained therein.
Section 3.2. Right of Last Refusal. In the event that any of the
Stockholders, including any of their Permitted Transferees, receives a bona fide
offer to purchase all or any portion of the Shares held by such Stockholder (a
"Transaction Offer") from a non-Affiliate (the "Offeror") in a transaction not
expressly permitted under Section 3.1, such Stockholder (a "Transferring
Stockholder") may, subject to the provisions of Section 3.3 hereof, Transfer
such Shares pursuant to and in accordance with the following provisions of this
Section 3.2:
7
(a) Such Transferring Stockholder shall cause the
Transaction Offer and all of the terms thereof to be reduced to writing
and shall notify each Preferred Investor of its wish to accept the
Transaction Offer and otherwise comply with the provisions of this
Section 3.2 and, if applicable, Section 3.3 (such notice, the "Offer
Notice"). The Transferring Stockholder's Offer Notice shall constitute
an irrevocable offer to sell such shares to the Preferred Investors on
the basis described below at a purchase price equal to the price
contained in, and on the same terms and conditions of, the Transaction
Offer. The notice shall be accompanied by a true copy of the
Transaction Offer (which shall identify the Offeror and all relevant
information in connection therewith).
(b) Each Preferred Investor shall have the right (the
"Right of Last Refusal") to offer to purchase up to that number of
Shares covered by the Transaction Offer as shall be equal to the
product obtained by multiplying (i) the total number of Shares subject
to the Transaction Offer by (ii) a fraction, the numerator of which is
the total number of shares of Common Stock owned by such Preferred
Investor on the date of the Offer Notice on an as converted basis
(including any shares of Common Stock that may be received upon
conversion of the Preferred Stock), and the denominator of which is the
total number of shares of Common Stock then held by all Preferred
Investors (other than the Transferring Stockholder) on the date of the
Offer Notice on an as converted basis, such that Preferred Investors
shall have the right to accept the Transaction Offer with respect to
all or a portion of the shares covered thereby. (The number of Shares
that each Preferred Investor is entitled to purchase under this Section
3.2 shall be referred to as its "Pro Rata Fraction"). In the event that
a Preferred Investor shall elect to purchase all or a part of the
Shares covered by the Transaction Offer (an "Electing Investor"), such
Electing Investor shall individually communicate in writing such
election to purchase to the Transferring Stockholder within thirty (30)
days after receipt of the Offer Notice (which election notice may
specify an amount in excess of such Electing Investor's Pro Rata
Fraction in the event that one or more Preferred Investor(s) desire not
to elect to purchase their Pro Rata Fraction). Such communication shall
be delivered by hand or mailed to such Transferring Stockholder in
accordance with Section 7.5 hereof and shall, when taken in conjunction
with the Transaction Offer, be deemed to constitute a valid, legally
binding and enforceable agreement for the sale and purchase of the
Shares covered thereby to the extent of the number of Shares, if any,
allocated to such Electing Investor in accordance with the following
paragraph. In the event that one or more Preferred Investor(s) do not
elect to purchase their full Pro Rata Fraction, then any Preferred
Investors who do so elect shall have an additional five (5) days from
the date the Preferred Investors are notified of the election by any
Preferred Investors not to purchase their Pro Rata Fraction to offer to
purchase, on a pro rata basis with any other Preferred Investors who so
8
elect, the shares representing any Pro Rata Fraction not purchased by
a Preferred Investor. In the event that the price set forth in the
Offer Notice is stated in consideration other than cash or cash
equivalents, the Board of Directors of the Company may determine the
fair market value of such consideration, reasonably and in good faith,
and the Electing Investors may, at their option, exercise their Right
of Last Refusal by payment of such fair market value in cash or cash
equivalents.
Upon the expiration of thirty (30) days following receipt of
the Offer Notice by all Preferred Investors, the Transferring
Stockholder shall notify all of the Preferred Investors as to how many
of the Shares subject to the Offer Notice have been subscribed for by
the Electing Investors and, after the expiration of the five (5) day
overallotment period thereafter, the number of Shares to be purchased
by each Electing Investor shall be determined as follows: (x) there
shall first be allocated to each Electing Investor a number of Shares
equal to the lesser of (A) the number of Shares as to which such
Electing Investor accepted the Transaction Offer or (B) such Electing
Investor's Pro Rata Fraction, and (y) the balance, if any, not
allocated under clause (x) above, shall be allocated to those Electing
Investors who accepted the Transaction Offer as to a number of Shares
which exceeded their respective Pro Rata Fractions, in each case on a
pro rata basis in proportion to the amount of such excess. The closing
for any purchase of Shares to the Electing Investors hereunder shall
take place within thirty (30) days after the expiration of the first
thirty-day period following the Electing Investors' receipt of the
Offer Notice (and, if applicable, the additional five (5) day
overallotment period) at the place and on the date specified by a
majority-in-interest of the Electing Investors.
(c) In the event that the Preferred Investors do not
elect to exercise, in the aggregate, the Right of Last Refusal with
respect to all of the Shares proposed to be sold, the Transferring
Stockholder may sell all such Shares proposed to be sold to the Offeror
on the terms and conditions set forth in the Offer Notice, subject to
the restrictions set forth in the last paragraph of Section 3.1 and the
further provisions of Section 3.3. If the Transferring Stockholder's
transfer to an Offeror is not consummated in accordance with the terms
of the Transaction Offer within the later of (i) ninety (90) days after
the expiration of the periods for exercise by the Preferred
Stockholders of the Right of Last Refusal and the Co-Sale Option set
forth in Section 3.3 below, if applicable, and (ii) the satisfaction of
all governmental approval or filing requirements, the Transaction Offer
shall be deemed to lapse, and any Transfers of Shares pursuant to such
Transaction Offer shall be deemed to be in violation of the provisions
of this Agreement unless the Preferred Investors are once again
afforded the Right of Last Refusal provided for herein with respect to
such Transaction Offer.
9
Section 3.3. Co-Sale Option. In the event that any Transferring
Stockholder receives a Transaction Offer from an Offeror, and the Right of Last
Refusal is not exercised with respect to all of the Shares proposed to be sold,
such Transferring Stockholder may Transfer such Shares only pursuant to and in
accordance with the following provisions of this Section 3.3:
(a) Each of the Investors and the Founding
Stockholders, other than the Transferring Stockholder if it, he or she
is also an Investor or Founding Stockholder, shall have the right,
subject to the provisions of Section 3.3(f) below, to participate in
the Transaction Offer on the terms and conditions herein stated, which
right shall be exercisable upon written notice to the Transferring
Stockholder within the later of (i) thirty (30) days after delivery to
it of the Offer Notice and (ii) ten (10) days after the Transferring
Stockholder notifies the Investors and the Founding Stockholders in
writing that the Preferred Investors have not collectively elected to
exercise the Right of Last Refusal with respect to all of the Shares
proposed to be sold (the "Co-Sale Option").
(b) Each of the Investors and the Founding
Stockholders, other than the Transferring Stockholder if it, he or she
is also an Investor or Founding Stockholder (each such Investor and
Founding Stockholder who elects to participate, a "Selling Investor"),
shall have the right, subject to the provisions of Section 3.3(f)
below, to sell a portion of its Shares pursuant to the Transaction
Offer which is equal to or less than the product obtained by
multiplying (i) the total number of Shares subject to the Transaction
Offer by (ii) a fraction, the numerator of which is the total number of
shares of Common Stock owned by such Selling Investor on the date of
the Offer Notice on an as converted basis (including any shares of
Common Stock that may be received upon conversion of the Preferred
Stock), and the denominator of which is the total number of shares of
Common Stock then held by all Investors, Founding Stockholders and the
Transferring Stockholder on the date of the Offer Notice on an as
converted basis (including any shares of Common Stock that may be
received upon conversion of the Preferred Stock). To the extent one or
more Investors and/or Founding Stockholders elect not to sell, or fail
to exercise their right to sell, the full amount of such Shares which
they are entitled to sell pursuant to this Section 3.3, the other
Investors' and/or Founding Stockholders' rights to sell Shares shall be
increased proportionately and the other Investors and/or Founding
Stockholders shall have an additional five (5) days from the date upon
which they are notified of such election or failure to exercise in
which to increase the number of Shares to be sold by them hereunder.
(c) Within ten (10) days after the date by which the
Investors and the Founding Stockholders were first required to notify
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the Transferring Stockholder of their intent to participate, the
Transferring Stockholder shall notify each Selling Investor of the
number of Shares held by such Selling Investor that will be included
in the sale and the date on which the Transaction Offer will be
consummated, which shall be no later than the later of (i) thirty (30)
days after the date by which the Selling Investors were required to
notify the Transferring Stockholder of their intent to participate and
(ii) the satisfaction of any governmental approval or filing
requirements, if any.
(d) Each of the Selling Investors may effect its
participation in any Transaction Offer hereunder by delivery to the
Offeror, or to the Transferring Stockholder for delivery to the
Offeror, of one or more instruments or certificates, properly endorsed
for transfer, representing the Shares it elects to sell therein. At the
time of consummation of the Transaction Offer, the Offeror shall remit
directly to each Selling Investor that portion of the sale proceeds to
which each Selling Investor is entitled by reason of its participation
therein (less any adjustments due to the conversion of any convertible
securities or the exercise of any exercisable securities).
(e) In the event that the Transaction Offer is not
consummated within the period required by subsection (c) hereof or the
Offeror fails to timely remit to each Selling Investor its portion of
the sale proceeds, the Transaction Offer shall be deemed to lapse, and
any Transfers of Shares pursuant to such Transaction Offer shall be
deemed to be in violation of the provisions of this Agreement unless
the Transferring Stockholder once again complies with the provisions of
Section 3.2 and this Section 3.3 hereof with respect to such
Transaction Offer.
(f) To the extent that any Investor or Founding
Stockholder holds Shares ("Junior Shares") which are junior or inferior
in terms of rights to the Shares subject to purchase under such
Transaction Offer (e.g., the Common Stock is junior to the Series A
Preferred Stock and the Series A Preferred Stock is junior to the
Series B Preferred Stock), the right of such Investor or Founding
Stockholder to participate in a Transaction Offer and to sell a portion
of its Shares pursuant to such Transaction Offer shall be conditioned
upon either (i) the consent of the Offeror to purchase such Junior
Shares on the same terms and conditions (including price) stated in the
Transaction Offer or (ii) the willingness of the Offeror to purchase
such Junior Shares on such other terms and conditions as may be
acceptable to such Investor or Founding Stockholder, as the case may
be, provided that in either case such consent or agreement is obtained
within the specified time period set forth in subsection (c) hereof.
Nothing herein shall be construed to impose any "good faith" or other
obligation on the Offeror (or any Transferring Stockholder or Selling
Investor) to grant such consent or negotiate such agreement.
11
Section 3.4. Drag-Along Obligations.
(a) In the event that Investors holding both (i) the
applicable percentage of the issued and outstanding shares of Common
Stock (treating for such purposes each share of issued and outstanding
Preferred Stock as the number of issued and outstanding Conversion
Shares into which such Preferred Stock may be converted) specified
below and (ii) sixty-six and two-thirds percent (662/3%) of the issued
and outstanding shares of Preferred Stock determine (A) to sell or
otherwise dispose of all or substantially all of the assets of the
Company, or Shares representing a majority of the Common Stock on a
fully-diluted, as converted basis, to any non-Affiliate(s) of the
Company or any of the Investors, or (B) to cause the Company to merge
with or into or consolidate with any non-Affiliate(s) of the Company or
any of the Investors (in each case, the "Buyer") in a bona fide
negotiated transaction (a "Sale"), each of the Stockholders, including
any of their respective Permitted Transferees, shall be obligated to
and shall upon the written request of Investors holding both (x) the
applicable percentage of the issued and outstanding Shares of Common
Stock (treating for such purposes each share of issued and outstanding
Preferred Stock as the number of issued and outstanding Conversion
Shares into which such Preferred Stock may be converted) specified
below and (y) sixty-six and two-thirds percent (662/3%) of the issued
and outstanding shares of Preferred Stock: (I) sell, transfer and
deliver, or cause to be sold, transferred and delivered, to the Buyer,
his, her or its Shares (including for this purpose all of such
Stockholder's Shares that presently or as a result of any such
transaction may be acquired upon the exercise of options (following the
payment of the exercise price therefore)) on substantially the same
terms applicable to the Investors (with appropriate adjustments to
reflect the conversion of convertible securities, the redemption of
redeemable securities and the exercise of exercisable securities as
well as the relative preferences and priorities of the Preferred
Stock); and (II) execute and deliver such instruments of conveyance and
transfer and take such other action, including voting such Shares in
favor of any Sale proposed by the Investors and executing any purchase
agreements, merger agreements, indemnity agreements, escrow agreements
or related documents, as the Investors or the Buyer may reasonably
require in order to carry out the terms and provisions of this Section
3.4.
For purposes of this Section 3.4(a), the applicable percentage
of the Shares of the issued and outstanding Common Stock (treating for
such purposes each share of issued and outstanding Preferred Stock as
the number of issued and outstanding Conversion Shares into which such
Preferred Stock may be converted) shall mean the following percent for
the following periods:
12
Period Percent
October 1, 1998 through December 31, 1998 54.0%
January 1, 1999 through March 31, 1999 52.5%
April 1, 1999 and thereafter 51.0%
(b) In the event of a Sale to a Buyer as contemplated
in Section 3.4(a) above, each of the Founding Stockholders shall, in
the event that the Investors do not exercise their "drag-along" rights
in Section 3.4(a) above, have the right to require the Investors to
include such Founding Stockholder's Shares in the Sale on the same
terms and conditions, including price and type, as the Investors'
Shares, which such right shall be exercisable by the delivery of
written notice to the Company and each of the Investors at least
fifteen (15) days prior to the date proposed for the closing of the
Sale.
(c) Not less than thirty (30) days prior to the date
proposed for the closing of any Sale, the Investors shall give written
notice to each Founding Stockholder, setting forth in reasonable detail
the name or names of the Buyer, the terms and conditions of the Sale,
including the purchase price, and the proposed closing date. In
furtherance of the provisions of this Section 3.4, each of the Founding
Stockholders hereby (i) irrevocably appoints BEDCO (as defined below)
as its agent and attorney-in-fact (the "Agent") (which such appointment
shall be deemed coupled with an interest and irrevocable and have full
power of substitution) to execute all agreements, instruments and
certificates and take all actions necessary or desirable to effectuate
any Sale hereunder, and (ii) grants to the Agent a proxy (which shall
be deemed to be coupled with an interest and irrevocable) to vote the
Shares held by such Stockholder and exercise any consent rights
applicable thereto in favor of any Sale hereunder; provided, however,
that the Agent shall not exercise such powers-of-attorney or proxies
with respect to any Stockholder unless such Stockholders are in breach
of their obligations under this Section 3.4.
(d) Each Stockholder participating in the Sale
pursuant to the "drag-along" rights in Section 3.4(a) shall deliver to
the Buyer at a closing to be held at the offices of the Company (or
such other place as the parties agree), one or more certificates,
properly endorsed for transfer, representing all the Shares (including
vested options) owned by such Stockholder, and each such Stockholder
shall make such representations and warranties, and shall enter into
such agreements, as are customary and reasonable in the context of the
Sale, including, without limitation, representations and warranties
(and indemnities with respect thereto) that the Buyer (or interests
therein) is receiving good and marketable title to such Shares (or
interests therein), free and clear of all pledges, security interests
or other liens. In addition, the Stockholders shall reasonably
cooperate and consult with each other in order to effect the Sale
13
described in this Section 3.4, including the determination of the
appropriate scope of, or limitations or exceptions to, representations
and warranties to be made in connection with such Sale and the
preparation of disclosure schedules with respect thereto.
Section 3.5 Contemporaneous Transfers. If two or more Stockholders
propose concurrent transfers which are subject to this Article III, then the
relevant provisions of Sections 3.2 and 3.3 shall apply separately to each such
proposed transfer.
Section 3.6 Prohibited Transfers. If any Transfer is made or attempted
contrary to the provisions of this Agreement, such purported Transfer shall be
void ab initio; the Company, the Investors and the other Stockholders shall
have, in addition to any other legal or equitable remedies which they may have,
the right to enforce the provisions of this Agreement by actions for specific
performance (to the extent permitted by law); and the Company shall have the
right to refuse to recognize any Transferee as one of its stockholders for any
purpose. Without limitation of the foregoing, each of the Investors and
Stockholders further agrees that the provisions of Section 7.9 shall apply in
the event of any violation or threatened violation of this Agreement.
Section 3.7 Exchange of Voting Securities for Non-Voting Securities
for Bank Holding Company Act Purposes.
(a) As long as any Shares of Class B Common Stock are
outstanding, before the Company redeems, purchases or otherwise
acquires, directly or indirectly, or converts or takes any action with
respect to the voting rights of, any shares of any class of its capital
stock or any securities convertible into or exchangeable for any shares
of any class of its capital stock (other than (i) a conversion of Class
B Common Stock into Class A Common Stock, (ii) a conversion of shares
of Preferred Stock into shares of Common Stock, (iii) a conversion of
shares of Series A Preferred Stock into shares of Diluted Series A
Preferred Stock, (iv) a conversion of shares of Series B Preferred
Stock into shares of Diluted Series B Preferred Stock, and (v) a
conversion of shares of Series B Preferred Stock into shares of
Redeemable Preferred Stock and Common Stock), the Company shall give
written notice of such pending action to each holder of shares of Class
B Common Stock. Upon the written request of any such holder made within
ten (10) days after its receipt of any such notice, stating that after
giving effect to such action such holder would have a Regulatory
Problem, the Company shall defer taking such action for such period
(not to extend beyond thirty (30) days after such holder's receipt of
the Company's original notice) as such holder reasonably requests to
permit it and its Affiliates to reduce the quantity of the Company's
voting securities they own in order to avoid the Regulatory Problem.
For purposes of this Section 3.7 only, a "Regulatory Problem" (as
defined in Section 3.1(f)) shall not include prohibitions arising under
the SBIC Regulations.
14
(b) At the request of Toronto Dominion or any of its
affiliates at any time (whether in connection with any action by the
Company referred to in subparagraph (a) above or otherwise), the
Company shall exchange with such Investor for such number of shares of
Class A Common Stock then held by such Investor as it designates a like
number of Shares of Class B Common Stock. In the event of any such
exchange of Shares of Class B Common Stock for Shares of Class A Common
Stock, the holders of such Shares of Class B Common Stock shall be
entitled to all the rights which such holders had pursuant to this
Agreement, the Stock Purchase Agreement and the Registration Rights
Agreement as holders of Class A Common Stock (including, without
limitation, the right to have such shares treated as "Class B Common
Stock" and as shares that may be converted into "Registrable
Securities," as applicable).
ARTICLE IV RIGHTS TO PARTICIPATE IN FUTURE ISSUANCES
The Company hereby covenants and agrees that it will not sell or issue
any shares of capital stock of the Company, or other securities convertible into
or exchangeable for capital stock of the Company, or options, warrants or rights
carrying any rights to purchase capital stock of the Company (the "Additional
Equity Securities"), other than Excluded Offerings (as defined below), unless
the Company first notifies the Investors of the proposed issuance of Additional
Equity Securities and submits an offer to the Investors identifying the terms of
the proposed sale (including price, number or aggregate principal amount of
securities and all other material terms), and offers to each Investor the
opportunity to purchase its pro rata share of such Additional Equity Securities.
Each Investor's pro rata share of any such Additional Equity Securities shall be
based upon the ratios which the shares of Common Stock held by such Investor
(determined on an as converted basis after giving effect to the conversion of
any Preferred Stock) bears to all of the Shares of the Company determined on a
fully-diluted, as converted basis. For purposes of this Article IV, "Excluded
Offerings" shall consist of (i) issuances made in connection with an acquisition
of a non-Affiliate of the Company (whether by acquisition of assets or capital
stock, merger or consolidation) or a joint venture or strategic alliance with a
non-Affiliate of the Company, (ii) issuances made to officers, directors,
employees, consultants or agents of the Company pursuant to the Company's 1995
Stock Option Plan, the Company's 1996 Stock Option Plan the Company's Amended
and Restated 1998 Stock Option Plan or other compensation plans which have been
adopted and approved by the Compensation Committee of the Board of Directors
(collectively, the "Plans"), (iii) Conversion Shares issued upon the conversion
of the Preferred Stock, (iv) capital stock issued upon the exercise, conversion
or exchange of Additional Equity Securities that were previously sold in
compliance with the terms of this Article IV, (v) shares issued in connection
with a duly authorized stock split, stock dividend or recapitalization, (vi)
shares of Redeemable Preferred Stock issued in accordance with the Charter, and
(vii) Additional Series B Preferred Shares issued to any Additional Investors
under the Purchase Agreement.
15
The Company's offer to the Investors shall be irrevocable and remain
open for a period of thirty (30) days. Each Investor electing to purchase any
Additional Equity Securities shall provide a written notice to the Company
within such period indicating the amount it elects to purchase (which notice may
specify an amount in excess of such Investors pro rata share of the Additional
Equity Securities in the event that other Investors do not elect to purchase
their full pro rata share). Any Additional Equity Securities so offered to the
Investors and which are not purchased pursuant to such offer shall be sold to
the Investors which have elected to purchase in excess of their pro rata share
based upon their relative excess purchase indications and, if any Additional
Equity Securities remain unpurchased, may be sold by the Company to any other
Person on terms and conditions, including price, not more favorable to such
Person than those set forth in such offer within ninety (90) days of the date of
such offer. In the event that the Company has not sold the Additional Equity
Securities within such ninety-day period, the Company shall not thereafter issue
or sell such Additional Equity Securities without first complying with the terms
of this Article IV. For purposes of this Article IV, the purchase of Series B
Preferred Shares by Westbury Equity Partners, L.P. pursuant to the Purchase
Agreement shall be deemed to be a purchase by Westbury Capital Partners, L.P. of
its pro rata share of such Series B Preferred Stock.
ARTICLE V ELECTION OF DIRECTORS
Section 5.1. Board Composition. The number of directors of the Company
shall be as set forth in the By-laws of the Company, and the Stockholders agree
to vote all of their respective shares, and to take such other actions as are
necessary, so as to fix the number of directors at no more than nine (9)
directors initially, subject to increase to ten (10) directors as provided
herein. The Stockholders agree to vote their respective shares as follows:
The Preferred Investors shall vote as a class to elect
two directors as follows:
(i) one (1) individual nominated by
BancBoston Ventures Inc. ("BancBoston"), who shall
initially be, and is duly elected hereby, Xxxxxxx
Xxxxxx (the "BancBoston Nominee"), and hereafter such
individual as shall be designated by BancBoston; and
(ii) one (1) individual nominated by GCC
Investments, Inc. ("GCC"), who shall initially be,
and is duly elected hereby, Xxxxxxx X. Xxxxxxx (the
"GCC Nominee"), and hereafter such individual as
shall be designated by GCC.
16
(b) The Stockholders, including the Preferred Investors, shall
vote together as one class to elect the remaining six (6) of the
directors, as follows:
(i) one (1) individual who shall be the duly elected
Chief Executive Officer of the Company (the "CEO"), who shall
initially be Xxxx Xxxxx;
(ii) two (2) individuals, neither of whom shall be an
Affiliate of any of the Preferred Stockholders, who shall be
nominated by the CEO and reasonably acceptable to a majority
of the members of the Board of Directors;
(iii) one (1) individual nominated by Burr, Egan,
Deleage & Co., and its Affiliates ("BEDCO"), who shall
initially be Xxxxxx X. Xxxxxx;
(iv) one (1) individual nominated by EOS
Partners, L.P., SBIC, who shall initially be Xxxx X. Xxxxxx;
(v) one (1) individual nominated by Toronto Dominion
Capital (U.S.A.), Inc. ("Toronto Dominion"), who shall
initially be Xxxxx X. Xxxx; and
(vi) one (1) individual nominated by Kingdon
Associates, L.P., and its Affiliates, who shall initially be
Xxxxxxx Markbrieter.
(c) In the event that the Board of Directors determine that a
nominee of an Additional Investor (the "Additional Investor Nominee") should be
added as an additional Director to the Board of Directors in connection with the
Second Closing, the Stockholders hereby agree that the Board of Directors shall
thereupon be increased to ten (10) or, in the event that a Director resigns in
connection with or prior to the Second Closing, the Stockholders may, not
withstanding the provisions of Section 5.4 hereof, fill such vacancy with the
Additional Investor Nominee and agree to vote their respective Shares for such
Additional Director or replacement Director, as the case may be, in favor of the
Additional Investor Nominee or such successor or replacement individual as shall
be designated from time to time by such Additional Investor.
Additionally, the parties hereby acknowledge and agree that the
composition of the Board of Directors may be amended in connection with the
Second Closing.
Section 5.2. Compensation Committee; Audit Committee. The Company and
each of the Stockholders further agrees to cause the Board of Directors to
maintain the Compensation Committee of the Board of Directors which shall
continue to have exclusive authority over all compensation and employment
matters and the administration of the Plans; provided, however, that the
Compensation Committee may delegate standing authority to the Chief Executive
17
Officer of the Company to issue stock options and other compensation to
consultants who are not Affiliates of either the Company or any of the
Stockholders on terms set forth in such delegation. The Compensation Committee
shall consist of no more than three (3) persons. The Company and each of the
Stockholders further agrees to cause the Board of Directors to maintain the
Audit Committee of the Board of Directors which shall continue to be charged
with, among other matters, reviewing the Company's financial statements and
accounting practices and which shall consist of no more than two (2) persons,
each of whom shall be non-management members of the Board of Directors. Except
as expressly set forth herein, the Company and each of the Stockholders hereby
further agrees to cause the Board of Directors not to create any other committee
thereof and not, except as set forth above, to delegate any other action or
authority to any existing committee thereof.
Section 5.3. Removal. Each Stockholder agrees to vote all of its shares
of the Company's capital stock having voting power (and any other shares over
which she or it exercises voting control) for the removal of any director upon
the request of the stockholder or group designating such director and for the
election to the Board of Directors of a substitute designated by such party in
accordance with the provisions of Section 5.1 hereof.
Section 5.4. Vacancies. Each Stockholder agrees to vote all shares of
the Company's capital stock having voting power (and any other shares over which
she or it exercises voting control) in such manner as shall be necessary or
appropriate to ensure that any vacancy on the Board of Directors of the Company
(occurring for any reason) shall be filled only in accordance with the
provisions of this Article V. In addition, if any Investor which is entitled to
nominate a member of the Board of Directors pursuant to the terms of Section 5.1
fails to do so within ninety (90) days after receipt of written notice from the
Company that such directorship becomes vacant, then the holders of a majority of
the issued and outstanding Common Stock (treating for such purposes each share
of issued and outstanding Preferred Stock as the number of issued and
outstanding Conversion Shares into which such Preferred Stock may be converted)
shall nominate such director (a "Replacement Director") and the Replacement
Director shall serve as a member of the Board of Directors until such Investor
exercises its rights under Section 5.1 to nominate a director, in which event
the Replacement Director shall be removed.
Section 5.5. Increase in Size of Board. Any increase in the size of
the Board of Directors shall require an amendment to this Agreement.
Section 5.6. Assignment. Each Stockholder agrees, as a condition to any
Transfer of its Shares, to cause the Transferee to agree to the provisions of
this Article V, whereupon such Transferee shall be subject to the provisions
hereof as a Preferred Investor or Stockholder, as applicable, in connection with
its ownership of the Shares Transferred for purposes of this Article V.
Notwithstanding any provision herein, Toronto Dominion shall not have the right
18
to transfer to any third party its right to nominate a Director under this
Section 5.1(b) without the affirmative vote of a majority of the members of the
Board of Directors (other than any directors nominated by, or representing,
Toronto Dominion), if such transfer is made in connection with a transfer by
Toronto Dominion of its Shares under Section 3.1(f) hereof.
Section 5.7. No Waiver. Any failure by any of the parties hereto to
fully exercise their rights to designate one or more directors under this
Article V at any time shall not be construed to waive or limit their rights to
designate such director(s) hereunder at any time thereafter.
Section 5.8. Board of Directors of Subsidiary. Each of the Stockholders
agrees, with respect to the composition, election, removal and other
considerations with respect to the Board of Directors of each of the Company's
subsidiaries, Teletrac, Inc. and Teletrac License, Inc., to cause the Company to
vote, and the Company hereby agrees to vote, its shares of capital stock of each
such subsidiary in a manner consistent with and identical to the provisions set
forth above in this Article V.
Section 5.9. Expenses. The Company hereby agrees to reimburse each
member of the Board of Directors for his or her reasonable and documented travel
and other out-of-pocket expenses (to the extent consistent with the Company's
policies related thereto, which do provide for reimbursement of directors'
travel expenses and which have been delivered to the Investors prior to the date
hereof) incurred in connection with matters relating to such director's
attendance at meetings of the Board of Directors or performing such other
business on behalf of the Company.
Section 5.10. Observer Rights. For so long as any Investor and its
Affiliates (i) owns at least five percent (5%) of the issued and outstanding
Common Stock of the Company (treating for such purposes each share of issued and
outstanding Preferred Stock as the number of issued and outstanding Conversion
Shares into which such Preferred Stock may be converted) and (ii) does not have
a representative serving on the Board of Directors pursuant to Section 5.1
hereof, such Investor (or an Affiliate thereof) and Xxxxx X. Queen shall be
entitled to notice of and to have one representative (an "Observer") attend, at
its own expense, meetings of the Board of Directors or any of its committees;
provided, however, that any such Observer (a) shall not be entitled to
participate in the discussions, deliberations or voting of the Board of
Directors or such committees and (b) shall be excluded from any meetings or
deliberations if the Board of Directors reasonably determines that the inclusion
of such Observer might compromise or waive the attorney-client privilege for any
material matters discussed therein.
19
ARTICLE VI RESTRICTIONS AND LIMITATIONS
Section 6.1. Combined Voting. The Company shall not, without the
affirmative vote or written consent of the holders of a majority of the issued
and outstanding shares of Common Stock and Preferred Stock, voting as a single
class on an as converted basis (or the affirmative vote or written consent of
such greater percentage as provided below):
(a) Authorize any merger or consolidation of the
Company with or into any other corporation, partnership or entity (with
respect to which less than a majority of the outstanding voting power
of such surviving corporation is held by stockholders of the Company
immediately prior to such event) or permit the sale of all or any
material portion of the capital stock or assets of the Company (other
than sales in the ordinary course of business and consistent with past
practices);
(b) Authorize or issue, or obligate itself to issue,
any shares of Common Stock (other than pursuant to the exercise of
stock options or other rights granted under the Plans or upon
conversion of the Preferred Stock);
(c) Incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any new or additional
indebtedness or liability (other than up to $30 million in connection
with the Company's revolving credit facilities with Banque Paribas and
Fleet National Bank);
(d) Authorize or issue, or obligate itself to issue,
any equity securities at an effective per share price which is less
than $173.25 (which price shall be appropriately adjusted for stock
splits, stock dividends, recapitalizations and the like), without the
affirmative vote or written consent of holders of sixty-six and
two-thirds percent (662/3%) of the issued and outstanding shares of
Common Stock and Preferred Stock, voting as a single class on an as
converted basis, other than the issuance of any Additional Series B
Preferred Shares under the Purchase Agreement;
(e) Authorize any acquisition, merger or
consolidation of assets or stock of another corporation, partnership or
entity in exchange for shares of equity securities of the Company which
results in dilution to the existing Stockholders, on a fully diluted,
as converted basis, in excess of fifteen percent (15%) without the vote
or affirmative written consent of holders of sixty-six and two-thirds
percent (662/3%) of the issued and outstanding shares of Common Stock
and Preferred Stock, voting as a single class on an as converted basis;
(f) Authorize or issue a class or series of stock
having rights equal or senior to the Class B Preferred Stock, or a new
20
class or series of Preferred Stock without the vote or affirmative
written consent of holders of sixty-six and two-thirds percent
(66 2/3%) of the issued and outstanding shares of Common Stock and
Preferred Stock, voting as a single class on an as converted basis,
other than the issuance of any Additional Series B Preferred Shares
under the Purchase Agreement; and
(g) Authorize or permit the reorganization,
liquidation, dissolution or winding up of the Company, without the vote
or affirmative written consent of holders of sixty-six and two-thirds
percent (662/3%) of the issued and outstanding shares of Common Stock
and Preferred Stock, voting as a single class on an as converted basis;
Section 6.2. Voting as a Separate Class. The Series B Preferred
Investors shall vote as a separate class, and the affirmative vote of the
holders of a majority of the outstanding shares of Series B Preferred Stock
shall be required for the Company to:
(a) Redeem, purchase or otherwise acquire for value
(or pay into or set aside for a sinking fund for such purpose) any
shares of Common Stock or of any other class of capital stock of the
Company or any of the Company's outstanding options, warrants or
convertible or exchangeable securities, except for repurchases of
shares of Common Stock at cost by the Company under employee stock
plans and programs approved by the Board of Directors;
(b) Enter into any transaction or agreement with: any
officer, director or shareholder of the Company or any wholly- or
partially-owned subsidiary of the Company, or any entity that controls,
is controlled by or under common control with the Company, except for
any transaction or agreement on terms no less favorable to the Company
than would be available in a bona fide arm's length transaction with a
non-affiliated person or entity and which has been approved by the
disinterested members of the Audit Committee of the Board of Directors
of the Company;
(c) Amend the charter documents of the Company so as
to adversely affect the rights of the Series B Preferred Investors with
respect to dividends, liquidation preferences, redemption or any other
preference, power, right or privilege; and
(d) Increase or decrease (other than by conversion as
permitted hereby) the total number of authorized shares of Preferred
Stock.
ARTICLE VII MISCELLANEOUS PROVISIONS
Section 7.1. Survival of Representations and Covenants. Each of the
parties hereto agrees that each representation, warranty, covenant and agreement
21
made by each of them in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be deemed
to have been relied upon by the other parties and shall remain operative and in
full force and effect after the date hereof regardless of any investigation.
This Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties hereto and their respective successors and
permitted assigns to the extent contemplated herein.
Section 7.2. Term. This Agreement and the provisions herein contained
shall remain in effect until the earlier of: (i) the closing of both a Qualified
Series A Public Offering and a Qualified Series B Public Offering, or the
closing of a public offering which constitutes both a Qualified Series A Public
Offering and a Qualified Series B Public Offering; (ii) a sale of the Company;
or (iii) the affirmative vote or written consent of the holders of sixty-six and
two-thirds percent (662/3%) of each of the Common Stock and the Preferred Stock.
Section 7.3. Legend on Securities. The Company, the Preferred Investors
and the Stockholders acknowledge and agree that the following legend shall be
typed on each certificate evidencing any of the securities held at any time by
any of the Stockholders or their Permitted Transferees:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR
THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THESE
SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS OF A CERTAIN AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT, DATED AS OF OCTOBER 20, 1998, INCLUDING CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Section 7.4. Amendment and Waiver. Any party may waive any provision
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to any party hereto at
law or in equity or otherwise. This Agreement may be amended with the prior
written consent of the Company and the holders of sixty-six and two-thirds
percent (662/3%) of each of the Common Stock and the Preferred Stock; provided,
22
however, that any amendment which directly, materially and adversely affects any
right specifically granted to a particular Investor or Stockholder in a manner
different than the other Investors or Stockholders shall not be effective unless
such Person has consented to that amendment. All actions by the Company
hereunder shall be taken by or upon the direction of a majority of the directors
designated, from time to time, pursuant to Article V hereof.
Section 7.5. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the address set forth opposite each party's name on
the signature page hereto (or at such other address for any party as shall be
specified by notice given in accordance with the provisions hereof), provided
that notices of a change of address shall be effective only upon receipt
thereof. Notices delivered personally shall be effective on the day so
delivered, notices sent by registered or certified mail shall be effective three
days after mailing, notices sent by telex shall be effective when answered back,
notices sent by facsimile shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective on the
earlier of the second business day after timely delivery to the courier or the
day of actual delivery by the courier:
Section 7.6. Acknowledgment. The Stockholders hereby expressly
acknowledge and consent to the Board of Directors taking any action to sell or
otherwise liquidate the Company in furtherance of its obligations under Section
5(c) of the terms of the Preferred Stock contained in the Charter.
Section 7.7. Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 7.8. Counterparts. This Agreement may be executed in one or
more counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
Section 7.9. Remedies; Severability. It is specifically understood and
agreed that any breach of the provisions of this Agreement by any Person subject
hereto will result in irreparable injury to the other parties hereto, that the
remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such
other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by law) and the Company may refuse to
recognize any unauthorized Transferee as one of its stockholders for any
23
purpose, including, without limitation, for purposes of dividend and voting
rights, until the relevant party or parties have complied with all applicable
provisions of this Agreement.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
Section 7.10. Entire Agreement. This Agreement, together with the
Purchase Agreement and other agreements specifically contemplated hereby and
thereby, is intended by the parties as a final expression of their agreement and
intended to be complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Agreement and the Purchase Agreement and the other
agreements contemplated hereby and thereby (including the exhibits hereto and
thereto) supersede all prior agreements and understandings between the parties
with respect to such subject matter. In furtherance of the foregoing, the
Company and the Stockholders expressly agree that the Stockholders' Agreement
dated as of December 6, 1996 by and among the Company and the parties identified
therein is hereby terminated and of no further force and effect.
Section 7.11. Adjustments. All references to share prices and amounts
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
Section 7.12 Certain Provisions Applicable to SBIC and Bank
Stockholders. Sections 3.1(f) and 3.7 hereof contain certain provisions that are
included herein solely for the benefit of certain Stockholders that are or may
become a small business investment company ("SBIC") subject to the SBA or a bank
holding company or bank holding company subsidiary subject to the Bank Holding
Company Act. A Stockholder may not assert any rights or claims with respect to
such provisions arising at any time after it has ceased to be a SBIC or bank
holding company or bank holding company subsidiary, as appropriate.
Section 7.13 Participation of Aliens. In the event that the Board of
Directors determines, after consultation with legal counsel, that the Company's
capital stock ownership structure (including, without limitation, the percentage
of the Company's capital stock held by or for the account of any Alien or
Aliens, as determined in accordance with applicable rules and policies of the
Federal Communications Commission) violates or otherwise is not in compliance
with Section 310(b) of the Communications Act of 1934, as amended (the
"Communications Act"), each of the parties hereto hereby agrees to cooperate in
24
good faith, and to use their commercially reasonable, good faith efforts (which
may include seeking waivers of compliance with applicable provisions of the
Communications Act, the exchange or conversion of shares of capital stock held
by any parties hereto that are attributable to Aliens into other securities or
the disposition of such shares of capital stock on such terms as are
commercially reasonable and as may be mutually agreed to by the parties hereto),
to obtain regulatory waivers if available, to negotiate and implement such
modifications in the ownership and capital structure of the Company as may be
necessary in order to bring such ownership and capital structure into full
compliance with Section 310(b) of the Communications Act.
Section 7.14. Law Governing. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware
(without giving effect to any choice or conflicts of law principles the effect
of which would cause the application of the domestic substantive laws of any
other jurisdiction). Each party hereby waives trial by jury in any action
relating to this Agreement.
Section 7.15. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns hereto and shall inure to the benefit of such
successors and assigns permitted hereunder, provided that any transfer or
assignment shall have complied in all respects with the provisions of Article
III hereof and provided, further, that each assignee of a Stockholder's shares
shall, as a condition to such consent to assignment, execute a Joinder Agreement
in the form attached hereto as Exhibit A.
[Remainder of Page Intentionally Left Blank]
25
IN WITNESS WHEREOF, the undersigned have executed this Stockholders'
Agreement as a sealed instrument as of the day and year first written above.
ADDRESS: COMPANY:
2323 Grand TELETRAC HOLDINGS, INC., a
Suite 1100 Delaware corporation
Xxxxxx Xxxx, XX 00000-0000
Attn: Chairman/CEO By:
Name:
Title:
INVESTORS:
Toronto Dominion Capital TORONTO DOMINION
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx XXXXXXX (X.X.X.), INC.
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxx By:
Name:
Title:
Kingdon Capital Management Corporation KINGDON ASSOCIATES, L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 By: Kingdon Capital Management
Attn: Xxxx Xxxxxxx Corp., its general partner
By:____________________________
Name:
Title:
26
00 Xxxx 00xx Xxxxxx XXXXXXX PARTNERS, L.P.
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx By: Kingdon Capital Management
Corp., its general
partner
By:____________________________
Name:
Title:
00 Xxxx 00xx Xxxxxx X. XXXXXXX OFFSHORE NV
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx By: Kingdon Capital Management
Corp., its investment
advisor
By:____________________________
Name:
Title:
Burr, Egan, Deleage & Co. ALTA SUBORDINATED DEBT
One Embarcadero Center PARTNERS III, L.P.
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 By: Alta Subordinated Debt
Attn: Xxxxxx X. Xxxxxx Management III, L.P.
By:________________________
General Partner
Burr, Egan, Deleage & Co. ALTA V LIMITED PARTNERSHIP
One Embarcadero Center
Suite 4050 By: Alta V Management Partners,
Xxx Xxxxxxxxx, XX 00000 L.P.
Attn: Xxxxxx X. Xxxxxx
By:_________________________
General Partner
27
Burr, Egan, Deleage & Co. CUSTOMS HOUSE PARTNERS
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx By:_________________________
General Partner
Burr, Egan, Deleage & Co. ALTA COMMUNICATIONS VI, L.P.
One Embarcadero Center
Suite 4050 By: Alta Communications VI
Xxx Xxxxxxxxx, XX 00000 Management Partners, L.P.
Attn: Xxxxxx X. Xxxxxx
By:_________________________
General Partner
Burr, Egan, Deleage & Co. ALTA COMM S by S, LLC
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 By:_____________________________
Attn: Xxxxxx X. Xxxxxx Member
000 Xxxxxxx Xxxxxx EOS PARTNERS SBIC, L.P.
00xx Xxxxx
Xxx Xxxx, XX 00000 By: EOS SBIC General, L.P.
Attn: Xxxxx Xxxxx
By:________________________
Name:
Title:
0 Xxxx Xxxxx Xxxx TRUEPOSITION, INC.
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx By:_____________________________
Name:
Title:
28
000 Xxxxxxx Xxxxxx XXXXXXXXXX VENTURES INC.
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
By:_____________________________
Name:
Title:
00 Xxxxxxxxx Xxxxxxxxx XXXXXXXXX VENTURES
Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx
By:_____________________________
Name:
Title:
0000 Xxxxxxxx Xxxxxx XXXXXXXX XXXX WIRELESS, INC.
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
By:_____________________________
Name:
Title:
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000 WESTBURY EQUITY PARTNERS, L.P.
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx By: X.X. Xxxx Co.
By:_____________________
Name:
Title:
00
Xxx Xxxx Xxxx XXXXXX XXXXXXX XXXXXXXX
Xxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxxxx
By:_____________________________
Name:
Title:
0000 XX Xxxxxxxx Xxxxx Xxxxx HIGH POINT XXXXXX
Suite 100 LIMITED PARTNERSHIP
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx XX By: High Point Management, Inc.,
its general partner
By:_________________________
Name:
Title:
0000 XX Xxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: X. X. Xxxxxx
X. X. Xxxxxx
0000 XX Xxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx XX
Xxxxxxx X. Xxxxxx XX
FOUNDING STOCKHOLDERS:
c/o Teletrac Holdings, Inc.
0000 Xxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000-0000 ________________________________
Xxxxx X. Queen
30
c/o Teletrac Holdings, Inc.
0000 Xxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000-0000 ________________________________
Xxxxxx X. Xxxxxxx
c/o Teletrac Holdings, Inc.
0000 Xxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000-0000 ________________________________
Xxxxxxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxx ________________________________
Xxx Xxx Xxxxx Mrs. T.N. Xxxxxxxxxxx
Kowloon
Hong Kong
00 Xxxxxx Xxxxxx ________________________________
Xxxxxxxxx Xxxxxx, XX 00000 Xxxxx Xxxxxxx
c/o Kirkland & Xxxxx K&E PARTNERS II
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
By:_____________________________
Partner
00 Xxxxxxxxxxx Xxxxx XXXXXX, XXXXXXXXX, HEWITT,
Xxx Xxxx, XX 00000 XXXXXXX & KRISTOL
Attn: Xxxxxx X. Xxxxxx, Esq.
By:_____________________________
Partner
31
EXHIBIT A
Form of Joinder Agreement
The undersigned hereby agrees, effective as of the date hereof, to
become a party to that certain Stockholders' Agreement (the "Agreement") dated
as of December __, 1996 by and among Teletrac, Inc. (the "Company") and the
parties named therein and for all purposes of the Agreement, the undersigned
shall be included within the term ["Management Stockholder"], ["Common
Investor"], ["Preferred Investor"] and "Stockholder" (each as defined in the
Agreement). As of the date hereof the undersigned makes each of the
representations and warranties set forth in Section 2.1 of the Agreement. The
address and facsimile number to which notices may be sent to the undersigned is
as follows:
---------------------------------------------------------------------------
Facsimile No.____________________.
------------------------------
[NAME OF UNDERSIGNED]
32
EXHIBIT B
Charter
33
APPENDIX A
Initial Management Investors Investors in Common Stock Series A Preferred Investors Series B Preferred Investors
("Founding Stockholders") ("Common Investors") ("Preferred Investors") ("Preferred Investors")
Name Name Name Name
34
Exhibit Index
27.1 Financial data schedule
