1
EXHIBIT 10.20
HIGHWAYMASTER COMMUNICATIONS, INC.
HIGHWAYMASTER CORPORATION
125,000 Units
PURCHASE AGREEMENT
September 18, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
BEAR ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies & Gentlemen:
HighwayMaster Communications, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell to Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear
▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. (together with Bear ▇▇▇▇▇▇▇, the "Initial
Purchasers"), acting severally and not jointly, the respective number of units
(the "Units"), each consisting of $1,000 principal amount of 13 3/4% Senior
Notes due 2005 (the "Series A Notes") of the Company and one warrant (a
"Warrant") initially entitling the holder thereof to purchase 6.566 shares (the
"Warrant Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock"), subject to the terms and conditions set forth herein. The
Series A Notes will be issued pursuant to an indenture (the "Indenture"), to be
dated the Closing Date (as defined below), among the Company, the Company's
wholly owned subsidiary HighwayMaster Corporation, a Delaware corporation
("HMC"), as guarantor, and Texas Commerce Bank, National Association, as
trustee (the "Trustee"). The Warrants are to be issued pursuant to a warrant
agreement (the "Warrant Agreement"), to be dated the Closing Date, between the
Company and Texas Commerce Bank, National Association, as warrant agent (the
"Warrant Agent").
1. ISSUANCE OF SECURITIES.
The Company proposes, upon the terms and subject to the
conditions set forth herein, to issue and sell to the Initial Purchasers
125,000 Units. The Series A Notes and the Series B Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the "Note
Securities." The Warrants and the Warrant Shares are collectively referred to
herein as the "Warrant Securities." The Note Securities and the
1
2
Warrant Securities are collectively referred to as the "Securities." The
proceeds to the Company from the sale to the Initial Purchasers of the Units
will be used as described under "Use of Proceeds" in the Offering Memorandum
(as defined below).
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Securities (and all securities issued
in exchange therefor or in substitution thereof) shall bear the following
legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A)
OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO
THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI") THAT PRIOR TO
SUCH TRANSFER, FURNISHES TO THE [TRUSTEE* [WARRANT AGENT]** A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE [TRUSTEE]* [WARRANT AGENT]**) AND, IN THE CASE OF
ANY TRANSFER TO ANY IAI OF [SECURITIES WITH AN AGGREGATE PRINCIPAL
AMOUNT OF $100,000 OR LESS]* [SECURITIES ENTITLING THE HOLDER TO
PURCHASE 656.6 OR FEWER SHARES OF COMMON STOCK]**, AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS OR (6) PURSUANT TO ANY OTHER
__________________________________
*In the case of the Notes
**In the case of the Warrants
2
3
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
2. OFFERING.
The Units will be offered and sold to the Initial Purchasers
pursuant to an exemption from the registration requirements under the Act. The
Company has prepared a preliminary offering memorandum, dated August 28, 1997
(the "Preliminary Offering Memorandum"), and a final offering memorandum, dated
September 18, 1997 (the "Offering Memorandum"), relating to the Company and its
subsidiaries, and the issuance of the Units.
The Initial Purchasers have advised the Company that the
Initial Purchasers will make offers of the Units on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to (a) persons whom the
Initial Purchasers reasonably believe to be "qualified institutional buyers,"
as defined in Rule 144A under the Act ("QIBs"), and (b) persons whom the
Initial Purchasers reasonably believe to be non-U.S. persons in offers and
sales that occur outside the United States within the meaning of Regulation S
under the Act (the "Regulation S Investors"). The QIBs and the Regulation S
Investors are referred to herein as the "Eligible Purchasers." Sales to
Eligible Purchasers under this Agreement are referred to herein as "Exempt
Resales." The Initial Purchasers will offer the Units to such Eligible
Purchasers initially at a price equal to $1,000 per Unit. Such price may be
changed at any time without notice.
Holders (including subsequent transferees) of the Note
Securities will have the registration rights set forth in the exchange and
registration rights agreement relating thereto (the "Note Registration Rights
Agreement"), to be dated the Closing Date, in the form of Exhibit A hereto.
Pursuant to the Note Registration Rights Agreement, the Company will use its
best efforts to file with the Securities and Exchange Commission (the
"Commission"), to the extent provided therein (a) a registration statement
under the Act (the "Exchange Offer Registration Statement") relating to the 13
3/4% Senior Notes due 2005 (the "Series B Notes") in exchange for the Series A
Notes (the "Exchange Offer") and (b) a shelf registration statement pursuant to
Rule 415 under the Act (the "Note Shelf Registration Statement") relating to
the resale by holders of the Note Securities, and to use its best efforts to
cause such registration statements to be declared effective and to consummate
the Exchange Offer.
3
4
Holders (including subsequent transferees) of the Warrant
Securities will have the registration rights set forth in the warrant
registration rights agreement relating thereto (the "Warrant Registration
Rights Agreement"), to be dated the Closing Date, in the form of Exhibit B
hereto. Pursuant to the Warrant Registration Rights Agreement, the Company
will use its best efforts to file with the Commission, to the extent provided
therein a shelf registration statement pursuant to Rule 415 under the Act (the
"Warrant Shelf Registration Statement") relating to the resale by holders of
the Warrants and the issuance by the Company of the Warrant Shares, and to use
its best efforts to cause such registration statement to be declared effective.
The Note Registration Rights Agreement and the Warrant Registration Rights
Agreement are hereinafter collectively referred to as the "Registration Rights
Agreements." This Purchase Agreement (this "Agreement" or the "Purchase
Agreement"), the Securities, the Indenture, the Pledge Agreement (as defined in
the Indenture), the Note Registration Rights Agreement, the Warrant Agreement,
and the Warrant Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
3. PURCHASE, SALE AND DELIVERY.
(a) On the basis of the representations, warranties and
covenants contained in this Agreement, and subject to its terms and conditions,
the Company agrees to issue and sell to each Initial Purchaser, and each
Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, the number of Units set forth opposite its name on Schedule 3(a)
hereto. The Initial Purchasers shall pay a purchase price equal to $967.50 per
Unit.
(b) Delivery of, and payment of the purchase price for,
the Units shall be made at the offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,
L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 9:30 a.m. Dallas time on September 23, 1997 or at such other date and time
as shall be agreed upon by the Initial Purchasers and the Company. The time and
date of such delivery and the payment of the purchase price are herein called
the "Closing Date."
(c) On the Closing Date, (i) (A) one or more of the
Series A Notes that are part of the Units, registered in the name of Cede & Co.
as nominee of The Depository Trust Company ("DTC"), having an aggregate
principal amount of $125,000,000 less the aggregate principal amount of the
Series A Notes that are part of the Units to be resold in Exempt Resales to
Regulation S Investors and (B) one or more of the Series A Notes that are part
of the Units registered in the name of Cede & Co. for the accounts of the
Euroclear System and Cedel, S.A. having an aggregate principal amount equal to
the aggregate principal amount of the Series A Notes that are part of the Units
to be sold in Exempt Resales to Regulation S Investors (collectively, the
"Global Note"), and (ii) (A) one or more of the Warrants that are part of the
Units registered in the name of Cede & Co. as nominee of DTC for 125,000
Warrants less the aggregate number of Warrants that are part of the
4
5
Units to be resold in Exempt Resales to Regulation S Investors and (B) one or
more of the Warrants registered in the name of Cede & Co. for the accounts of
the EuroClear System and Cedel, S.A. for the number of Warrants that are part
of the Units to be resold in Exempt Resales to Regulation S Investors
(collectively, the "Global Warrant"), shall be delivered by the Company to the
Initial Purchasers (or as the Initial Purchasers direct), against payment by
the Initial Purchasers of the purchase price therefor by wire transfer of same
day funds to an account or accounts designated by the Company, provided that
the Company shall give at least two business days' prior written notice to the
Initial Purchasers of the information required to effect such wire transfer.
The Global Note and the Global Warrant shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m. New York City time on the
business day immediately preceding the Closing Date.
4. AGREEMENTS OF THE COMPANY AND HMC.
The Company and HMC covenant and agree with the Initial
Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing,
of (i) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of
any of the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority and (ii) the happening of any
event that makes any statement of a material fact made in the
Preliminary Offering Memorandum or the Offering Memorandum untrue or
that requires the making of any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company shall use its best
efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any of the Securities under any
state securities or Blue Sky laws and, if at any time any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption of any of the
Securities under any state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest practicable time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge,
as many copies of the Preliminary Offering Memorandum and the Offering
Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may request. The Company consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the
Initial Purchasers in connection with Exempt Resales.
5
6
(c) Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum prior to the Closing Date unless
the Initial Purchasers shall previously have been advised thereof and
shall not have objected thereto within a reasonable time after being
furnished a copy of such amendment or supplement. The Company shall
promptly prepare, upon the Initial Purchasers' request, any amendment
or supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that the Initial Purchasers believe may be necessary or
advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation
of any Exempt Resale, any event shall occur as a result of which, in
the judgment of the Company based on the advice of its counsel, it
becomes necessary or advisable to amend or supplement the Preliminary
Offering Memorandum or the Offering Memorandum in order to make the
statements of material fact therein, in the light of the circumstances
when such Offering Memorandum is delivered to an Eligible Purchaser
which is a prospective purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum to comply with applicable law,
(i) to notify the Initial Purchasers and (ii) forthwith to prepare an
appropriate amendment or supplement to such Preliminary Offering
Memorandum or Offering Memorandum so that the statements therein as so
amended or supplemented will not, in the light of the circumstances
when it is so delivered, be misleading, or so that such Preliminary
Offering Memorandum or Offering Memorandum will comply with applicable
law.
(e) To cooperate with the Initial Purchasers and counsel
for the Initial Purchasers in connection with the qualification or
registration of the Securities under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may request and to
continue such qualification in effect so long as required for the
Exempt Resales; provided, however that the Company shall not be
required in connection therewith to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to service of process in suits or taxation, in
each case in any jurisdiction where it is not now so subject.
(f) To use the proceeds from the sale of the Units in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(g) Not to claim voluntarily, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders
of any Note Securities.
(h) To do and perform all things required to be done and
performed under this Agreement by it prior to the Closing Date and to
use its best efforts to satisfy all conditions precedent within its
control to the delivery of the Units.
(i) Not to sell, offer for sale or solicit offers to buy
or otherwise negotiate
6
7
in respect of any security (as defined in the Act) that would be
integrated with the sale of the Units in a manner that would require
the registration under the Act of the sale to the Initial Purchasers
or the Eligible Purchasers of the Units or to take any other action
that would result in the Exempt Resales not being exempt from
registration under the Act.
(j) For so long as any of the Securities remain
outstanding and during any period in which the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to make available to any holder or
beneficial owner of Securities in connection with any sale thereof and
any prospective purchaser of such Securities from such holder or
beneficial owner, the information required by Rule 144A(d)(4) under
the Act.
(k) To cause the Exchange Offer to be made in accordance
with and subject to the terms set forth in the Note Registration
Rights Agreement on the appropriate form to permit Series B Notes to
be offered in a registered exchange for the Series A Notes and to
comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(l) To comply in all material respects with all of the
agreements set forth in the Operative Documents and in the
representation letter of the Company to DTC relating to the approval
of the Securities by DTC for "book-entry" transfer.
(m) To cooperate with the Initial Purchasers to effect
the inclusion of the Securities in the National Association of
Securities Dealers, Inc. ("NASD") Private Offering, Resales and
Trading through Automated Linkages ("PORTAL") market and to use its
best efforts to obtain approval of the Securities by DTC for
"book-entry" transfer.
(n) From the Closing Date to the later of (w) the second
anniversary of the Closing Date, (x) the consummation of the Exchange
Offer, (y) the expiration of the period in which the Company is
required to maintain the Note Shelf Registration Statement under the
Note Registration Rights Agreement, or (z) the expiration of the
period in which the Company is required to maintain the Warrant Shelf
Registration Statement under the Warrant Registration Rights
Agreement, to deliver without charge to the Initial Purchasers
promptly upon their becoming available, copies of (i) all reports or
other publicly available information that the Company shall mail or
otherwise make available to its stockholders and (ii) all reports,
financial statements and proxy or information statements filed by the
Company with the Commission or any national securities exchange and
such other publicly available information concerning the Company and
its subsidiaries including without limitation, press releases, as the
Initial Purchasers may reasonably request.
(o) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon
7
8
as they have been prepared by the Company, a copy of any unaudited
interim financial statements for any period subsequent to the periods
covered by the financial statements appearing in the Offering
Memorandum.
(p) Until the later of (x) the consummation of the
Exchange Offer, (y) the expiration of the period in which the Company
is required to maintain in effect the Note Shelf Registration
Statement under the Note Registration Rights Agreement, or (z) the
expiration of the period in which the Company is required to maintain
in effect the Warrant Shelf Registration Statement under the Warrant
Registration Rights Agreement, not to take, and not to permit any of
the Company's subsidiaries to take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any Securities. Except as
permitted by the Act, the Company will not distribute any (i)
preliminary offering memorandum, including, without limitation, the
Preliminary Offering Memorandum, (ii) offering memorandum, including,
without limitation, the Offering Memorandum or (iii) other offering
material, in connection with the offering and sale of the Securities.
(q) Not to, and not to permit any of the Company's
subsidiaries to take, directly or indirectly, any action that could
cause the Company or any such subsidiary to be an "investment company"
or a company "controlled" by an "investment company" under the
Investment Company Act of 1940, as amended (the "Investment Company
Act") at any time that any of the Securities are outstanding.
8
9
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
HMC.
The Company and HMC represent and warrant to the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum have been prepared in connection with the Exempt Resales.
The Preliminary Offering Memorandum and the Offering Memorandum do
not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties contained in this paragraph shall not apply to statements
in the Preliminary Offering Memorandum and the Offering Memorandum (or
any supplement or amendment thereto) made in reliance upon and in
conformity with information furnished to the Company in writing by the
Initial Purchasers expressly for use therein. No stop order preventing
the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement
are subject to the registration requirements of the Act, has been
issued.
(b) The Company (i) has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, (ii) has all requisite corporate power and
authority to carry on its business as it is currently being conducted
and as described in the Offering Memorandum and to own, lease and
operate its properties, and (iii) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified (A) could not, individually or in the
aggregate with other acts, omissions or circumstances, have an actual
or reasonably foreseeable prospective material adverse effect on the
properties, business, results of operations, financial condition, or
affairs of the Company and its subsidiaries taken as a whole, or (B)
could not, individually or in the aggregate with other acts, omissions
or circumstances, materially interfere with or materially adversely
affect the issuance of the Units pursuant hereto or the Company's and
HMC's ability to perform their obligations under this Agreement, any
other Operative Document or any of the transactions contemplated
thereby (any of the events set forth in clauses (A) or (B), a
"Material Adverse Effect").
(c) Each subsidiary of the Company is listed on Schedule
5(c) hereto. Each such subsidiary (i) has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, (ii) has all requisite
corporate power and authority to carry on its business as it is
currently being conducted and as described in the Offering Memorandum
and to
9
10
own, lease and operate its properties, and (iii) is duly qualified and
in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect.
(d) All of the issued and outstanding shares of capital
stock of each subsidiary of the Company have been duly authorized,
validly issued and are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights. The Company
owns directly or indirectly all of the issued and outstanding shares
of capital stock of each of its subsidiaries. All such shares of
capital stock of each such subsidiary are owned by the Company free
and clear of any lien, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust or
other restrictions, except for restrictions on transfer imposed by
applicable law and the Amended Stockholders' Agreement (as defined in
the Offering Memorandum). The Company does not directly or indirectly
own any shares of capital stock or any equity interest of any
corporation, firm, partnership, association or other entity, other
than the capital stock of the subsidiaries listed on Schedule 5(c).
(e) All of the issued and outstanding shares of capital
stock of the Company have been duly authorized, validly issued, and
are fully paid and nonassessable and were not issued in violation of
any preemptive or similar rights. On June 30, 1997, after giving pro
forma effect to the issuance and sale of the Units pursuant hereto and
the other transactions described therein, the Company would have had
an authorized and outstanding capitalization as set forth in the
Offering Memorandum under the caption "Capitalization," subject to the
notes and assumptions included therein. Neither the issuance nor the
exercise of the Warrants will cause any increase to the number of
shares of Common Stock into which any of the Company's convertible
securities, warrants, stock options, or similar rights are convertible
or exercisable, directly or indirectly, or any decrease to the
conversion or exercise price with respect thereto.
(f) Except as set forth in the Offering Memorandum, there
are not currently any outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, capital stock or other equity
interests of the Company or any of its subsidiaries that have been
issued by the Company or any of its subsidiaries.
(g) The Company and HMC have all requisite corporate
power and authority to execute, deliver and perform their obligations
under the Operative Documents and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the
corporate power and authority to issue, sell and deliver the
Securities as provided herein and therein.
10
11
(h) When the Units are issued and delivered pursuant to
this Agreement, such Units, and the Series A Notes and Warrants of
which the Units consist, will not be of the same class (within the
meaning of Rule 144A under the Act) as any security of the Company
that is listed on a national securities exchange registered under
Section 6 of the Exchange Act, or that is quoted in a United States
automated inter-dealer quotation system.
(i) This Agreement has been duly and validly authorized,
executed and delivered by the Company and HMC and (assuming the due
authorization, execution and delivery of this Agreement by the Initial
Purchasers) is the legal, valid and binding agreement of the Company
and HMC, enforceable against the Company and HMC in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity,
regardless of whether such enforcement is sought in a proceeding in
equity or at law (the "Enforceability Exceptions") and subject to any
limitations on the enforceability thereof imposed by the applicable
provisions of federal or state securities laws or principles of public
policy underlying such laws.
(j) The Indenture has been duly and validly authorized by
the Company and HMC and, when duly executed and delivered by the
Company and HMC, will be the legal, valid and binding obligation of
the Company and HMC, enforceable against the Company and HMC in
accordance with its terms, subject to the Enforceability Exceptions.
The Offering Memorandum contains an accurate summary of the material
terms of the Indenture.
(k) The Pledge Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to the Enforceability Exceptions. The Offering Memorandum
contains an accurate summary of the material terms of the Pledge
Agreement.
(l) The Note Registration Rights Agreement has been duly
and validly authorized by the Company and HMC and, when duly executed
and delivered by the Company and HMC, will be the legal, valid and
binding obligation of the Company and HMC, enforceable against the
Company and HMC in accordance with its terms, subject to the
Enforceability Exceptions. The Offering Memorandum contains an
accurate summary of the material terms of the Note Registration Rights
Agreement.
(m) The Warrant Registration Rights Agreement has been
duly and validly authorized by the Company and, when duly executed and
delivered by the Company, will be the legal, valid and binding
obligation of the Company,
11
12
enforceable against the Company in accordance with its terms, subject
to the Enforceability Exceptions. The Offering Memorandum contains an
accurate summary of the material terms of the Warrant Registration
Rights Agreement.
(n) The Series A Notes have been duly and validly
authorized by the Company for issuance and sale to the Initial
Purchasers pursuant to this Agreement and, when issued and
authenticated in accordance with the terms of the Indenture and
delivered against payment for the Units of which they are a part in
accordance with the terms hereof and thereof, will be the legal, valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of
the Indenture, subject to the Enforceability Exceptions. The Offering
Memorandum contains an accurate summary of the material terms of the
Series A Notes.
(o) The Series B Notes have been duly and validly
authorized for issuance by the Company and, when issued and
authenticated in accordance with the terms of the Exchange Offer and
the Indenture, will be the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms and entitled to the benefits of the Indenture, subject to the
Enforceability Exceptions.
(p) The guarantee of the Series A Notes and Series B
Notes by HMC has been duly and validly authorized by HMC and, when
issued and authenticated in accordance with the terms of the
Indenture, will be the legal, valid and binding obligation of HMC,
enforceable against HMC in accordance with the terms of the Series A
Notes, the Series B Notes, and the Indenture, subject to the
Enforceability Exceptions.
(q) The Warrant Agreement has been duly and validly
authorized by the Company and, upon its execution, delivery and
performance by the Company and assuming due authorization, execution,
delivery and performance by the Warrant Agent, will be a legal, valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to the Enforceability
Exceptions. The Offering Memorandum contains an accurate summary of
the material terms of the Warrant Agreement.
(r) The Warrants have been duly and validly authorized by
the Company for issuance and sale to the Initial Purchasers pursuant
to this Agreement and, when issued and authenticated in accordance
with the terms of the Warrant Agreement and delivered against payment
for the Units of which they are a part in accordance with the terms
hereof and thereof, will be validly issued and the legal, valid and
binding obligations of the Company, subject to the Enforceability
Exceptions. The Company has duly reserved a sufficient number of its
shares of Common Stock for the issuance of the Warrant Shares upon the
exercise of the
12
13
Warrants. The Company has duly and validly authorized the issuance of
the Warrant Shares upon the exercise of the Warrants. Upon the
exercise of the Warrants and the payment of the exercise price
thereof, the respective Warrant Shares will be validly issued, fully
paid and nonassessable, and not issued in violation of any preemptive
or similar rights.
(s) Neither the Company nor any of its subsidiaries is
(i) in violation of its charter or bylaws, (ii) in default in the
performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties is subject, or
(iii) in violation of any local, state, federal or foreign law,
statute, ordinance, rule, regulation, judgment or court decree
applicable to it or any of its assets or properties (whether owned or
leased), including the Communications Act of 1934, as amended by the
Telecommunications Act of 1996 and otherwise, and the rules and
regulations promulgated thereunder (collectively, the "Communications
Act"), and any other statute, rule or regulation (the "Other
Telecommunication Laws") administered by the Federal Communications
Commission ("FCC") or the "state commissions" as defined in Section
3(t) of the Communications Act (the "State Telecommunications
Agencies"), except as disclosed in the Offering Memorandum and, except
in the case of clauses (ii) and (iii), for any such default or
violation that could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. To the knowledge of
the Company after reasonable inquiry, there exists no condition that,
with notice or the passage of time or both, would constitute such a
default under any such document or instrument except for any such
default that could not, individually or in the aggregate with other
defaults, reasonably be expected to have a Material Adverse Effect.
(t) None of (i) the execution, delivery or performance by
the Company or HMC of this Agreement and the other Operative
Documents, (ii) the issuance and sale of the Securities, nor (iii) the
consummation by the Company and HMC of the transactions described in
the Offering Memorandum under the caption "Use of Proceeds," violates,
conflicts with or constitutes a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or requires
consent (other than those consents that have been obtained) under, or
results in the imposition of a lien or encumbrance (except for
encumbrances arising under the Operative Documents) on any properties
of the Company or any of its subsidiaries, or an acceleration of any
indebtedness of the Company or any of its subsidiaries pursuant to,
(A) the charter or bylaws of the Company or any such subsidiary, (B)
any bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of their respective properties is subject other than the
Indenture and the other Operative Documents, (C) any statute, rule or
regulation applicable to the Company or any such subsidiary or their
respective
13
14
assets or properties, including but not limited to, the Communications
Act and Other Telecommunications Laws, or (D) any judgment, order or
decree of any court or governmental agency or authority having
jurisdiction over the Company or any such subsidiary or their
respective assets or properties, except in the cases of clauses (B),
(C) and (D), for any such violation, default, consent, imposition of a
lien or acceleration that could not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect. Except as
may be required under applicable state securities or Blue Sky laws,
and except for the filing of registration statements under the Act,
and any other requirements of the Act or Exchange Act applicable in
connection with the transactions contemplated by the Registration
Rights Agreements, and qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") in
connection with the Registration Rights Agreements, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency or any other person is required
for (1) the execution, delivery and performance by the Company and HMC
of this Agreement and the other Operative Documents or (2) the
issuance and sale of the Securities and the transactions contemplated
thereby, except such as have been obtained and made and except where
the failure to obtain such consents and waivers would not,
individually or in the aggregate, have a Material Adverse Effect.
(u) There is (i) no action, suit, investigation or
proceeding before or by any court, arbitrator or governmental agency,
body or official, domestic or foreign, now pending, or to the
knowledge of the Company and HMC after reasonable inquiry, threatened,
to which the Company or any of its subsidiaries is or may be a party
or to which the business or property of the Company or any of its
subsidiaries is or may be subject, (ii) no statute, rule, regulation
or order that has been enacted adopted or issued by any governmental
agency or that has been proposed by any governmental body, and (iii)
no injunction, restraining order or order of any nature by a federal
or state court or foreign court of competent jurisdiction to which the
Company or any of its subsidiaries is or may be subject or to which
the business, assets, or property of the Company or any of its
subsidiaries is or may be subject, that, in the case of clauses (i),
(ii) and (iii) above, (A) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that
is not so disclosed or (B) could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(v) No action has been taken and no statute, rule,
regulation, injunction or order has been enacted, adopted or issued by
any federal or state court of competent jurisdiction or by any
governmental agency that prevents or suspends the issuance or sale of
the Securities or prevents or suspends the use of the Offering
Memorandum; no injunction, restraining order or order of any nature by
a federal or state court of competent jurisdiction has been issued
that prevents the issuance of the Securities or prevents or suspends
the sale of the Securities in any
14
15
jurisdiction referred to in Section 4(e) hereof; and every request of
any securities authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
(w) There is (i) no significant unfair labor practice
complaint pending against the Company or any of its subsidiaries, nor
to the knowledge of the Company and HMC after reasonable inquiry,
threatened against the Company or any of its subsidiaries, before the
National Labor Relations Board, any state or local labor relations
board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the
Company or any of its subsidiaries, or to the knowledge of the Company
and HMC after reasonable inquiry, threatened against the Company or
any of its subsidiaries, (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Company or any of its
subsidiaries, nor to the knowledge of the Company and HMC after
reasonable inquiry, threatened against the Company or any of its
subsidiaries and (iii) no union organizing or union representation
question existing with respect to the employees of the Company or any
of its subsidiaries. No claim has been filed against the Company or
any of its subsidiaries alleging violation of (A) any federal, state
or local law or foreign law relating to discrimination in hiring,
promotion or pay of employees, (B) any applicable wage or hour laws or
(C) any provision of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules and regulations thereunder,
except as could not reasonably be expected to have a Material Adverse
Effect.
(x) Except as disclosed in the Offering Memorandum and
with such exceptions as could not reasonably be expected to have a
Material Adverse Effect, the Company and its subsidiaries own, possess
or have the right on either an exclusive or non-exclusive basis to use
all patents, patent rights, licenses (including all state, local or
other jurisdictional regulatory licenses), inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software,
systems or procedures), trademarks, service marks and trade names,
computer programs, technical data and information (collectively, the
"Intellectual Property") presently used in connection with the
businesses now operated by them, free and clear of and without
violating any right, claimed right, charge, encumbrance, pledge,
security interest, restriction or lien of any kind of any other
person. Except as disclosed in the Offering Memorandum and with such
exceptions as could not reasonably be expected to have a Material
Adverse Effect, neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing. The use of the
Intellectual Property in connection with the business and operations
of the Company and its subsidiaries does not infringe on the rights of
any person, except for any infringement that could not reasonably be
expected to have a Material Adverse
15
16
Effect. The description of the patents and other intellectual
property rights of the Company set forth in the Offering Memorandum
under the captions "Risk Factors--AT&T Litigation," "Risk
Factors--Uncertainty Regarding Patents and Proprietary Rights,"
"Business--Patents and Proprietary Rights" and "Business--Legal
Proceedings" is accurate in all material respects.
(y) Each contract, agreement or arrangement to which the
Company or any of its subsidiaries is a party or by which any of them
is bound, or to which any of the property or assets of the Company or
any of its subsidiaries is subject and which is material to the actual
or reasonably foreseeable prospective properties, business, results of
operations, financial condition or affairs of the Company and its
subsidiaries has been duly and validly authorized, executed and
delivered by the Company or the respective subsidiary, as applicable;
neither the Company nor any of its subsidiaries is in breach or
default of any obligation, agreement, covenant or condition contained
in any such contract; none of such contracts, agreements or
arrangements has been assigned by the Company or any of its
subsidiaries, and the Company knows of no present condition or fact
which would prevent compliance by the Company or any of its
subsidiaries or any other party thereto with the terms of any such
contract, agreement or arrangement, except where the failure to comply
with the same could not reasonably be expected to have a Material
Adverse Effect; except as disclosed in the Offering Memorandum,
neither the Company nor any of its subsidiaries has any present
intention to exercise any right that it may have to cancel any such
contract, agreement or arrangement or otherwise to terminate its
rights and obligations thereunder, and the Company has no knowledge
that any other party to any such contract, agreement or arrangement
has any intention not to render full performance as contemplated by
the terms thereof, except where any such failure to perform such terms
could not reasonably be expected to have a Material Adverse Effect.
(z) Neither the Company nor any of its subsidiaries, nor
any of their respective officers, directors, employees, agents or
affiliates or any other person acting on their behalf has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency,
instrumentality of any government or any political party or candidate
for office (domestic or foreign) or other person who was, at the time,
in a position to help or hinder the business of the Company or any of
its subsidiaries (or assist the Company or any of its subsidiaries in
connection with any actual or proposed transaction) which could at the
time have subjected the Company or any of its subsidiaries to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), except for such damages or
penalties, either individually or in the aggregate, that could not
reasonably be expected to have a Material Adverse Effect.
(aa) Neither the Company nor any of its subsidiaries has
violated any
16
17
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), except for such violations, either individually or in the
aggregate, that could not reasonably be expected to have a Material
Adverse Effect.
(bb) There is no alleged liability or potential liability
(including, without limitation, alleged or potential liability or
investigatory costs, cleanup costs, governmental response costs,
material resource damages, property damages, personal injuries or
penalties) of the Company or any of its subsidiaries arising out of,
based on or resulting from (i) the presence or release into the
environment of any Hazardous Material (as defined below) at any
location, whether or not owned by the Company or any of its
subsidiaries, as the case may be, or (ii) any violation or alleged
violation of any Environmental Law, which alleged or potential
liability is required to be disclosed in the Offering Memorandum other
than as disclosed therein, except, in the case of clauses (i) and (ii)
above, for such liability, either individually or in the aggregate,
that could not reasonably be expected to have a Material Adverse
Effect. The term "Hazardous Material" means (A) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (B) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl, and (E) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other law relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any such chemical material, waste or
substance.
(cc) Except as disclosed in the Offering Memorandum, the
Company and each of its subsidiaries has such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities ("permits"), including without limitation, under the
Communications Act, any Other Telecommunications Laws, or any
applicable Environmental Laws, as are necessary to own, lease and
operate its properties and to conduct its business, except for such
permits the absence of which, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
The Company and each of its subsidiaries has fulfilled and performed
all of its obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit, and, except
as described in the Offering Memorandum, such permits contain no
restrictions that are materially burdensome to the Company or any of
its subsidiaries, as the case may be.
(dd) The Company and each of its subsidiaries has (i) good
and marketable title to all of the properties and assets described in
the Offering
17
18
Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions (except liens, charges, encumbrances and
restrictions that do not in the aggregate materially detract from the
value of such properties and assets or materially impair the use
thereof in the operation of the business of the Company and its
subsidiaries, taken as a whole) and (ii) peaceful and undisturbed
possession under all material leases to which any of them is a party
as lessee and each of which lease is valid and binding and no default
exists thereunder.
(ee) All federal tax returns and material state tax
returns required to be filed by the Company or any of its subsidiaries
in all jurisdictions have been so filed. All material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities or that are due
and payable have been paid, other than those being contested in good
faith and for which adequate reserves have been provided. To the
knowledge of the Company and HMC after reasonable inquiry, there are
no material proposed additional tax assessments against the Company or
any of its subsidiaries, or the assets or property of the Company or
any of its subsidiaries.
(ff) Neither the Company nor any of its subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act, and
following the Company's receipt of the proceeds from the issuance of
the Units, neither the Company nor any of its subsidiaries will be
such an "investment company" or company "controlled" by an investment
company at any time in the future because of the investment of such
proceeds.
(gg) There are no holders of securities of the Company who
have the right to request or demand that the Company register their
transfer of securities on either the Exchange Offer Registration
Statement or the Note Shelf Registration Statement. Except as
disclosed in the Offering Memorandum, there are no holders of
securities of the Company who have the right to request or demand that
the Company register their transfer of securities on the Warrant Shelf
Registration Statement.
(hh) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
18
19
(ii) The Company and each of its subsidiaries maintains,
or the Company maintains on behalf of each of its subsidiaries,
insurance against losses and risks to their properties, operations,
personnel and businesses which is adequate in accordance with
customary industry practice to protect the Company and its
subsidiaries and their respective businesses. Neither the Company nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that substantial capital improvements or other
material expenditures will have to be made in order to continue such
insurance. All such insurance is outstanding and duly in force on the
date hereof and will be outstanding and duly in force on the Closing
Date on the terms in effect on the date hereof.
(jj) Neither the Company nor any of its subsidiaries has
(i) taken, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (ii) since the date of the
Preliminary Offering Memorandum sold, bid for, purchased or paid any
person any compensation for soliciting purchases of the Securities or
paid or agreed to pay to any person any compensation for soliciting
another person to purchase any other securities of the Company.
(kk) No registration under the Act of the Units is
required for the sale of the Units to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (i) that the
Initial Purchasers are QIBs, (ii) that the purchasers who buy the
Units in the Exempt Resales are Eligible Purchasers, (iii) the
accuracy of the Initial Purchasers' representations set forth in
Section 6 hereof, and (iv) receipt by the purchasers to whom the
Initial Purchasers initially resell the Units of a copy of the
Offering Memorandum at or prior to the delivery of confirmation of
sale. No form of general solicitation or general advertising was used
by the Company or any of its subsidiaries or any of their
representatives (although no representation or warranty is made as to
actions taken by the Initial Purchasers and their representatives) in
connection with the offer and sale of any of the Units or in
connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of the same
class as the Units have been issued and sold by the Company or any of
its subsidiaries within the six month period immediately prior to the
date hereof.
(ll) The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Units to be purchased by
the Eligible Purchasers will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986. The representations made in the
preceding sentence are made in reliance upon and subject to the
accuracy of, and compliance with, the representations and covenants
made or deemed made
19
20
by the Eligible Purchasers as set forth in the Offering Memorandum
under the caption "Notice to Investors."
(mm) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing
Date, except as set forth in the Offering Memorandum, (i) neither the
Company nor any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, except in the ordinary course of
business consistent with past practices, which are material,
individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole, other than the possible draw upon the $5,000,000
interim financing made available by a stockholder of the Company and
described in the Offering Memorandum, nor entered into any material
transaction not in the ordinary course of business consistent with
past practices, (ii) there has not been, individually or in the
aggregate, any change or development of which the Company is aware
which could reasonably be expected to result in a Material Adverse
Effect and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or any of its subsidiaries
on any class of their capital stock.
(nn) None of the execution, delivery and performance of
this Agreement, the issuance and sale of the Units, the application of
the proceeds from the issuance and sale of the Units and the
consummation of the transactions contemplated thereby as set forth in
the Offering Memorandum, will violate Regulations G, T, U or X
promulgated by the Board of Governors of the Federal Reserve System or
analogous foreign laws and regulations.
(oo) The accountants who have issued a report on the
financial statements included as part of the Offering Memorandum are
independent accountants. The annual historical financial statements of
the Company included in the Offering Memorandum comply as to form in
all material respects with the requirements applicable to registration
statements on Form S-1 under the Act and present fairly in all
material respects the financial position and results of operations of
the Company at the respective dates and for the respective periods
indicated. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis throughout the periods presented except as indicated in the
notes thereto. The pro forma adjustments and as adjusted information
included in the Offering Memorandum give effect to assumptions made on
a reasonable basis with respect to the proposed transactions
contemplated by the Offering Memorandum and this Agreement. The other
financial and statistical information and data included in the
Offering Memorandum, historical, as adjusted and pro forma, are
accurately presented on a basis consistent with the financial
statements included in the Offering Memorandum and the books and
records of the Company.
(pp) In connection with the issuance of the Series A Notes,
neither the
20
21
Company nor HMC intends to, nor does it believe that it will, incur
debts beyond its ability to pay or refinance such debts as they
mature. After giving effect to the transactions contemplated by the
Offering Memorandum, the present fair market value of the assets of
the Company and its subsidiaries, taken as a whole, will exceed the
amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent
liabilities) of the Company and its subsidiaries when and as they
become absolute and matured. After giving effect to such
transactions, the assets of the Company and its subsidiaries, taken as
whole, will not constitute unreasonably small capital to carry out
their businesses as now conducted, including the capital needs of the
Company and its subsidiaries, taking into account the projected
capital requirements and capital availability.
(qq) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between or among the Company
or any of its subsidiaries and any other person that would give rise
to a valid claim against the Company or any of its subsidiaries or the
Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the
Units.
(rr) There exist no conditions that would constitute a
default by the Company or HMC (or an event which with notice or the
lapse of time, or both, would constitute a default) under any of the
Operative Documents.
(ss) Each certificate signed by any officer of the Company
or HMC and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty
by the Company and HMC to the Initial Purchasers as to the matters
covered thereby.
(tt) Except as could not reasonably be expected to have a
Material Adverse Effect, the Company and its subsidiaries have not
violated or created a price matching event under any provision of any
agreement with any of their customers that provides that the Company
and its subsidiaries will not charge any other person a lower price
for a particular product or service than the price charged such
customer (the "Most Favored Nation Pricing Provisions").
(uu) The Company and HMC have provided to the Initial
Purchasers or counsel for the Initial Purchasers all documents that
would be required to be filed as exhibits to a Registration Statement
on Form S-1 registering the sale of the Units.
The Company and HMC acknowledge that the Initial Purchasers
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 9 hereof, counsel to the Company and HMC and counsel to the
Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations as to factual matters and
21
22
hereby consent to such reliance.
6. REPRESENTATIONS AND WARRANTIES OF THE INITIAL
PURCHASERS.
Each of the Initial Purchasers severally, but not jointly,
represents and warrants to the Company and HMC that:
(a) Such Initial Purchaser is a QIB, with such knowledge
and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Units.
(b) Such Initial Purchaser (i) is not acquiring the
Units with a view to any distribution thereof that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (ii) will be reoffering and
reselling the Units only to (A) QIBs in reliance on the exemption from
the registration requirements of the Act provided by Rule 144A and (B)
non-U.S. persons in offers and sales that occur outside the United
States within the meaning of Regulation S under the Act.
(c) No form of general solicitation or general
advertising has been or will be used in the United States by such
Initial Purchaser or any of its representatives in connection with the
Exempt Resales, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation
or general advertising.
(d) Such Initial Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Units only
from, and will offer to sell the Units only to Eligible Purchasers.
Such Initial Purchaser further agrees that it will offer to sell the
Units only to, and will solicit offers to buy the Units only from
Eligible Purchasers (i) that in purchasing such Units will be deemed
to have represented and agreed that they are purchasing the Units for
their own accounts or accounts with respect to which they exercise
sole investment discretion and that they or such accounts are Eligible
Purchasers; (ii) that acknowledge and agree that such Units will not
have been registered under the Act; and (iii) that agree (A) to offer,
sell, pledge or otherwise transfer such Units only (1) to the Company,
(2) pursuant to a registration statement which has been declared
effective under the Act, (3) to a person they reasonably believe is a
QIB in a transaction meeting the requirements of Rule 144A of the Act,
(4) pursuant to an offer and sale to a Regulation S Investor in a
transaction meeting the requirements of Rule 904 of Regulation S of
the Act, (5) to an IAI that (A) with respect to the Series A Notes,
prior to such transfer, furnishes to the Trustee a signed letter
containing certain representations and agreements relating to the
transfer of such Series A Notes (the form of which letter can be
obtained from the Trustee), and, in the case of any transfer to any
IAI of an
22
23
aggregate principal amount of Series A Notes of $100,000 or less, an
opinion of counsel if the Company so requests, and (B) with respect to
the Warrants, prior to such transfer, furnishes to the Warrant Agent a
signed letter containing certain representations and agreements
relating to the transfer of such Warrants (the form of which letter
can be obtained from the Warrant Agent), and, in the case of any
transfer to any IAI of Warrants entitling the holder to purchase 656.6
or fewer shares of Common Stock, an opinion of counsel if the Company
so requests, or (6) pursuant to any other available exemption from the
registration requirements under the Act (and based on an opinion of
counsel if the Company so requests), subject in each of the foregoing
cases to applicable securities laws of any State of the United States
or any other applicable jurisdiction and (B) to notify any person
purchasing from them such Units of the resale restrictions set forth
in (A) above.
Such Initial Purchaser understands that the Company and HMC
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 9 hereof, counsel to the Company and HMC and counsel to the
Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations as to factual matters and hereby consents to such reliance.
23
24
7. INDEMNIFICATION.
(a) The Company and HMC, jointly and not severally, shall
indemnify and hold harmless, to the fullest extent permitted by law, the
Initial Purchasers, each person, if any, who controls the Initial Purchasers
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchasers or any controlling
persons, against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to reasonable attorneys' fees and any and
all reasonable expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any supplement thereto or amendment thereof, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company and HMC will not be liable in any such case
to the extent, but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made (i) in the
Preliminary Offering Memorandum or the Offering Memorandum in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of the Initial Purchasers expressly for use therein or (ii) in the Preliminary
Offering Memorandum or the Offering Memorandum, as the case may be, if a copy
of the Offering Memorandum (as then amended or supplemented) was not sent or
given by or on behalf of such Initial Purchasers to the person asserting any
such loss, claim, damage, liability or expense, at or prior to the written
confirmation of the sale of the Units and the Offering Memorandum (as then
amended or supplemented) corrected such untrue or alleged untrue statement or
such omission or alleged omission. This indemnity agreement will be in
addition to any liability which the Company and HMC may otherwise have,
including under this Agreement.
(b) The Initial Purchasers, severally but not jointly,
shall indemnify and hold harmless the Company, HMC, each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and the respective officers, directors, partners,
employees, representatives and agents of the Company, HMC or any controlling
persons, against any and all losses, liabilities, claims, damages, and expenses
whatsoever (including but not limited to reasonable attorneys' fees and any and
all reasonable expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they may become subject under the Act,
the Exchange Act or otherwise, insofar as
24
25
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum
or the Offering Memorandum, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
expressly for use therein; provided, however, that in no case shall the Initial
Purchasers be liable or responsible for any amount in excess of the discounts
and commissions received by the Initial Purchasers, as set forth on the cover
page of the Offering Memorandum. This indemnity will be in addition to any
liability which the Initial Purchasers may otherwise have, including under this
Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7, except to the extent that it
has been prejudiced in any material respect by such failure, or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action or (iii)
such indemnified party or parties shall have concluded, upon the advice of
counsel, that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct such
different or additional defenses on behalf of the indemnified party or parties,
but shall retain any common defenses), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties; provided,
however, that the indemnifying party under subsection (a) or (b) above, shall
only be liable for the legal expenses of one counsel (in addition to any local
counsel) for all indemnified parties in each jurisdiction in which any claim or
action is brought. Anything in this subsection to the
25
26
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent.
26
27
8. CONTRIBUTION.
In order to provide for contribution in circumstances in which
the indemnification provided for in Section 7 is for any reason held to be
unavailable or is insufficient (other than by reason of the express terms
thereof) to hold harmless a party indemnified thereunder, the Company and HMC
on the one hand, and the Initial Purchasers, on the other hand, shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company and HMC, any contribution
received by the Company or HMC from persons, other than the Initial Purchasers,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) to which the Company, HMC and the Initial Purchasers may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company and HMC, on the one hand, and the Initial Purchasers,
on the other hand, from the offering of the Units or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and HMC, on the
one hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and HMC, on the
one hand, and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as (x) the total proceeds from the offering of the Units
(net of discounts and commissions but before deducting expenses) received by
the Company and (y) the discounts and commissions received by the Initial
Purchasers, respectively, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Company and HMC, on
the one hand, and of the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or HMC, on
the one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, HMC and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall the Initial Purchasers be required to contribute any amount in
excess of the amount by which the discounts and commissions applicable to the
Units purchased by the Initial Purchasers pursuant to this Agreement exceeds
the amount of any damages which the Initial Purchasers have otherwise been
required to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission and (ii)
27
28
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person, if any, who controls the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchasers or any controlling persons shall have the same rights to
contribution as the Initial Purchasers, and each person, if any, who controls
the Company, within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act and the respective officers, directors, partners, employees,
representatives and agents of the Company, HMC or any controlling persons shall
have the same rights to contribution as the Company and HMC, subject in each
case to clauses (i) and (ii) of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
failure to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS.
The obligations of the Initial Purchasers to purchase and pay
for the Units, as provided herein, shall be subject to the following
conditions:
(a) All of the representations and warranties of the
Company and HMC contained in this Agreement shall be true and correct
on the date hereof and on the Closing Date with the same force and
effect as if made on and as of the date hereof and the Closing Date,
respectively. The Company and HMC shall have performed or complied
with all of the agreements herein contained and required to be
performed or complied with by them at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and
copies distributed to the Initial Purchasers in New York as soon as
practicable after the date of this Agreement but not later than such
time as the Initial Purchasers reasonably request, and no stop order
suspending the qualification or exemption from qualification of the
Units in any jurisdiction referred to in Section 4(e) shall have been
issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued
by any governmental agency which could, as of the Closing Date,
reasonably be expected to have a Material Adverse Effect; no action,
suit or proceeding shall have been commenced and be pending against or
affecting or threatened against, the Company or any of its
subsidiaries before any court or arbitrator or any governmental body,
agency or
28
29
official that could reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued preventing
the use of the Offering Memorandum, or any amendment or supplement
thereto, or which could have a Material Adverse Effect.
(d) Since the dates as of which information is given in
the Offering Memorandum and other than as set forth in the Offering
Memorandum, (i) there shall not have been any material and adverse
change or any development that is reasonably likely to result in a
material and adverse change in the long-term debt, or material
increase in the short-term debt, of the Company or any of its
subsidiaries from that set forth in the Offering Memorandum, other
than the possible draw upon the $5,000,000 interim financing made
available by a stockholder of the Company and described in the
Offering Memorandum, (ii) no dividend or distribution of any kind
shall have been declared, paid or made by the Company or any of its
subsidiaries on any class of the Company's capital stock, and (iii)
neither the Company nor any of its subsidiaries shall have incurred
any liabilities or obligations other than in the ordinary course of
business consistent with past practices, direct or contingent, that
are material and adverse, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, and that are required
to be disclosed on a balance sheet or notes thereto in accordance with
generally accepted accounting principles and are not disclosed on the
latest balance sheet or notes thereto included in the Offering
Memorandum. Since the date hereof and since the dates as of which
information is given in the Offering Memorandum there shall not have
occurred any material adverse change in the actual or reasonably
foreseeable prospective properties, business, results of operations,
financial condition, or affairs of the Company and its subsidiaries
taken as a whole.
(e) The Initial Purchasers shall have received a
certificate, dated the Closing Date, signed by the president and chief
executive officer and the chief financial officer of each of the
Company and HMC (i) confirming as of the Closing Date, the matters set
forth in paragraphs (a), (b), (c) and (d) of this Section 9, and (ii)
stating that as of the Closing Date, no facts have come to such
officers' attention that would cause such officers to believe that the
Offering Memorandum, as of its date or the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(f) The Initial Purchasers shall have received on the
Closing Date (i) the opinion, dated the Closing Date, of ▇▇▇▇▇ &
▇▇▇▇▇, L.L.P., Dallas, Texas, counsel to the Company and HMC, to the
effect set forth in Exhibit C hereto, (ii) the opinion, dated the
Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, special regulatory counsel
to the Company and HMC, to the effect set forth in Exhibit D hereto
and (iii) the opinion, dated the Closing Date, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Counsel of the
29
30
Company and HMC, to the effect set forth in Exhibit E hereto. Such
opinions shall not be "accord" opinions.
(g) The Initial Purchasers shall have received on the
Closing Date the certificate of Texas Commerce Bank, National
Association, in its capacity as Trustee and Warrant Agent, to the
effect that (i) it is a national banking association or state
chartered bank or trust company and is duly incorporated and validly
existing in good standing under the laws of the jurisdiction in which
it is incorporated, (ii) it has the corporate power and authority
necessary to enter into the Indenture and authenticate or countersign
the Securities as Trustee and Warrant Agent thereunder, (iii) the
Indenture and the Warrant Agreement have been duly and validly
authorized, executed and delivered by it and are the legal, valid and
binding agreements of it enforceable against it in accordance with
their terms, (iv) the Series A Notes have been duly authenticated and
delivered by it pursuant to the terms of this Agreement and the
Indenture, and (v) the Warrants have been duly countersigned and
delivered by it pursuant to the terms of this Agreement and the
Warrant Agreement.
(h) The Initial Purchasers shall have received on the
Closing Date the opinion, dated the Closing Date, of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the Initial Purchasers,
covering such matters as are customarily covered in such opinions.
(i) At the time this Agreement is executed and at the
Closing Date the Initial Purchasers shall have received from Price
Waterhouse, L.L.P., independent public accountants for the Company and
HMC, dated as of the date of this Agreement and as of the Closing
Date, customary comfort letters addressed to the Initial Purchasers
and in form and substance previously agreed upon by the Initial
Purchasers and counsel to the Initial Purchasers with respect to the
financial statements and certain financial information of the Company
and its subsidiaries contained in the Offering Memorandum.
(j) The Company, HMC and the Trustee shall have entered
into the Indenture and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(k) The Company and the Trustee shall have entered into
the Pledge Agreement and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(l) The Company and HMC shall have entered into the Note
Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
30
31
(m) The Company and the Warrant Agent shall have entered
into the Warrant Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(n) The Company shall have entered into the Warrant
Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(o) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. shall have
been furnished with such documents, in addition to those set forth
above, as they may reasonably require for the purpose of enabling them
to review or pass upon the matters referred to in this Section 9 and
in order to evidence the accuracy, completeness or satisfaction in all
material respects of any of the representations, warranties or
conditions herein contained.
(p) Prior to the Closing Date, the Company and HMC shall
have furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
All opinions, certificates, letters and other documents
required by this Section 9 to be delivered by the Company and HMC will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and their counsel. The Company
and HMC will furnish the Initial Purchasers with such conformed copies of such
opinions, certificates, letters and other documents as they shall reasonably
request.
10. INITIAL PURCHASERS' INFORMATION.
The Company, HMC and the Initial Purchasers severally
acknowledge that the statements with respect to the offering of the Units set
forth in (a) the last paragraph of the cover page, (b) the last paragraph on
page iv, and (c) the third paragraph, the fifth, sixth and seventh sentences of
the fourth paragraph (counting the cross-reference sentence as the second
sentence of such paragraph) the sixth paragraph and the seventh paragraph under
the caption "Plan of Distribution" in the Offering Memorandum constitute the
only information furnished in writing by the Initial Purchasers expressly for
use in the Offering Memorandum.
11. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements
of the Initial Purchasers, the Company and HMC contained in this Agreement,
including without limitation, the agreements contained in Sections 12(d) and
14, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on
31
32
behalf of the Initial Purchasers, any controlling person thereof or by or on
behalf of the Company, HMC or any controlling person thereof, and shall survive
delivery of and payment for the Units to and by the Initial Purchasers. The
agreements contained in Sections 12(d) and 14 shall survive the termination of
this Agreement, including any termination pursuant to Section 12.
12. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon execution
and delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to
terminate this Agreement at any time prior to the Closing Date by
notice to the Company and HMC from the Initial Purchasers, without
liability (other than with respect to Sections 7 and 8) on the Initial
Purchasers' part to the Company and HMC if, on or prior to such date,
(i) the Company or HMC shall have failed, refused or been unable to
perform in any material respect any agreement on its part to be
performed hereunder, (ii) any other condition to the obligations of
the Initial Purchasers hereunder as provided in Section 9 is not
fulfilled when and as required in any material respect, (iii) in the
reasonable judgment of the Initial Purchasers, any material adverse
change shall have occurred since the respective dates as of which
information is given in the Offering Memorandum in the actual or
reasonably foreseeable prospective properties, business, results of
operations, financial condition or affairs of the Company and its
subsidiaries, taken as a whole, other than as set forth in the
Offering Memorandum, or (iv)(A) any domestic or international event or
act or occurrence has materially disrupted, or in the reasonable
opinion of the Initial Purchasers will in the immediate future
materially disrupt, the market for the Company's securities or for
securities in general; or (B) trading in securities generally on
either of the New York or American Stock Exchanges shall have been
suspended or materially limited, or minimum or maximum prices for
trading shall have been established, or maximum ranges for prices for
securities shall have been required, on such exchange, or by such
exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by
federal or state authorities, or a moratorium in foreign exchange
trading by major international banks or persons shall have been
declared; or (D) there is an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof,
or if there has been a declaration by the United States of a national
emergency or war, the effect of which shall be, in the Initial
Purchasers' reasonable judgment, to make it inadvisable or
impracticable to proceed with the offering or delivery of the Units on
the terms and in the manner contemplated in the Offering Memorandum;
or (E) there shall have been such a material adverse change in general
economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Initial Purchasers' reasonable judgment,
makes it inadvisable or
32
33
impracticable to proceed with the offering or delivery of the Units as
contemplated thereby; or (F) (I) there shall have occurred a
downgrading in the rating accorded the Series A Notes by any
"nationally recognized statistical rating organization" as that term
is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations of the Commission under the Act or (II) any such
organization shall have publicly announced that it has under
surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Series A
Notes or any other securities of the Company.
(c) Any notice of termination pursuant to this Section 12
shall be by telephone, telex, telephonic facsimile, or telegraph,
confirmed in writing by letter within three days thereof.
(d) If this Agreement shall be terminated pursuant to
Sections 12(b)(i), 12(b)(ii) or 12(b)(iv)(F) or if the sale of the
Units provided for herein is not consummated because any condition to
the obligations of the Initial Purchasers set forth herein is not
satisfied or because of any refusal, inability or failure on the part
of the Company or HMC to perform any agreement herein or comply with
any provision hereof, the Company and HMC will, jointly and not
severally, subject to demand by the Initial Purchasers, reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of Initial Purchasers'
counsel), incurred by the Initial Purchasers in connection herewith.
13. DEFAULTING INITIAL PURCHASERS.
(a) If, on the Closing Date, an Initial Purchaser
defaults in the performance of its obligations under this Agreement,
the non-defaulting Initial Purchaser may make arrangements for the
purchase of the Units by other persons satisfactory to the Company and
the non-defaulting Initial Purchaser, but if no such arrangements are
made within 36 hours after such default, this Agreement shall
terminate without liability on the part of the non-defaulting Initial
Purchaser or the Company, except that the Company will continue to be
liable for the payment of expenses only to the extent set forth in
Section 14. As used in this Agreement, the term "Initial Purchaser"
includes, for all purposes of this Agreement unless the context
otherwise requires, any party not listed in Schedule 3(a) hereto who,
pursuant to this Section 13, purchases Units which a defaulting
Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or the
non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Units of a
defaulting Initial Purchaser, either the non-defaulting Initial
Purchaser or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion
of counsel for the Company or
33
34
counsel for the Initial Purchasers may be necessary in the Offering
Memorandum or in any other document or arrangement and the Company
agrees to promptly make any amendment or supplement to the Offering
Memorandum that effects any such changes.
14. FEES AND EXPENSES.
Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, the
Company and HMC shall pay all costs, expenses, fees and taxes incurred by or on
their behalf in connection with this Agreement and the transactions
contemplated hereby and by the other Operative Documents, including without
limitation all costs, expenses, fees and taxes relating to: (a) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation,
financial statements) and all amendments and supplements thereto required
pursuant hereto, (b) the preparation (including, without limitation,
duplication costs) and delivery of this Agreement, the other Operative
Documents, all preliminary and final Blue Sky memoranda and all other
agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith and with the Exempt Resales, (c) the issuance,
transfer and delivery by the Company of the Units to the Initial Purchasers,
(d) the qualification or registration of the Securities for offer and sale
under the securities or Blue Sky laws of the jurisdictions referred to in
Section 4(e) above (including, without limitation, the cost of analyzing such
Blue Sky laws and printing and mailing any preliminary and final Blue Sky
Memorandum and the reasonable fees and disbursements of counsel to the Initial
Purchasers relating thereto up to a maximum of $5,000), (e) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
all amendments and supplements thereto, as may be requested for use in
connection with Exempt Resales, (f) the preparation of certificates for the
Securities (including, without limitation, printing and engraving thereof), (g)
the fees, disbursements and expenses of counsel to the Company and HMC and
their independent public accountants, (h) all expenses and listing fees in
connection with the application for quotation of the Securities in the PORTAL
market, (i) all fees and expenses (including fees and expenses of counsel to
the Company and HMC) of the Company and HMC in connection with the approval of
the Securities by DTC for "book-entry" transfer, (j) rating the Note Securities
by rating agencies, (k) the fees and expenses of the Trustee and its counsel in
connection with the Indenture and the Note Securities, (l) the fees and
expenses of the Warrant Agent and its counsel in connection with the Warrant
Agreement, the Warrants, and the Warrant Shares, (m) the performance by the
Company and HMC of their other obligations under this Agreement and the other
Operative Documents, (n) one half of the expense of a chartered aircraft that
the Initial Purchasers chartered in connection with a due diligence trip taken
by the Initial Purchasers, (o) "roadshow" travel and other expenses incurred by
the Company and HMC (including one-half of the expense of a chartered aircraft)
in connection with the marketing and sale of the Units and (p) the Exchange
Offer, the Exchange Offer Registration Statement, the Note Shelf Registration
Statement, and the Warrant Shelf
34
35
Registration Statement, including any items incidental thereto such as the fees
and expenses of accountants and counsel to the Company or other persons to the
extent provided in the Registration Rights Agreements, the Commission filing
fees for the registration statements, and the cost to reproduce and distribute
the prospectuses included in such registration statements.
15. NOTICE.
All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, or sent by facsimile, to Bear, Steams &
Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Finance Department, facsimile number (212) 272- 3092; and if sent to the
Company and HMC, shall be mailed, delivered or sent by facsimile to
HighwayMaster Communications, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇;
provided, however, that any notice pursuant to Sections 7 or 8 shall be mailed,
delivered or sent by facsimile and confirmed in writing within three days
thereof.
16. PARTIES.
This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Initial Purchasers, the Company, HMC and the controlling
persons and agents referred to in Sections 7 and 8, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The term
"successors and assigns" shall not include a purchaser, in its capacity as
such, of Units from the Initial Purchasers.
17. CONSTRUCTION.
This Agreement shall be construed in accordance with the
internal laws of the State of New York. Time is of the essence in this
Agreement.
18. CAPTIONS.
The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
35
36
19. SUBSIDIARIES AND PREDECESSORS.
For purposes of this Agreement, the "subsidiaries" of the Company
shall be all entities that the Company directly or indirectly controls at the
time to which the respective provision of this Agreement refers. In addition,
any representation and warranty concerning the Company or any subsidiary of the
Company concerning any liabilities, obligations, or violations of the Company
or such subsidiary shall be deemed to refer to the Company and each of its
predecessors or such subsidiary and each of its predecessors, respectively.
20. COUNTERPARTS.
This Agreement may be executed in various counterparts which
together shall constitute one and the same instrument.
36
37
If the foregoing correctly sets forth the understanding
between the Initial Purchasers, the Company and HMC, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /S/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
HIGHWAYMASTER CORPORATION
By: /S/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
Accepted and agreed to as of
the date first above written:
BEAR ▇▇▇▇▇▇▇ & CO. INC.
By: /S/ J. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Managing Director
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
37
38
Schedule 3(a)
Purchase of Units
Initial Purchaser Number of Units
----------------- ---------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. 87,500
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 37,500
------
Total 125,000
=======
Page Solo
39
Schedule 5(c)
Subsidiaries
HighwayMaster Corporation, a Delaware corporation
Page Solo
40
EXHIBIT A
Form of Note Registration Rights Agreement
A-1
41
EXHIBIT B
Form of Warrant Registration Rights Agreement
B-1
42
EXHIBIT C
Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to carry on its
business as it is currently being conducted and as described in the Offering
Memorandum and to own, lease and operate its properties.
2. HMC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. HMC has
all requisite corporate power and authority to carry on its business as it is
currently being conducted and as described in the Offering Memorandum and to
own, lease and operate its properties.
3. The Company and HMC have all requisite corporate power and
authority to execute, deliver and perform their obligations under the Operative
Documents and to consummate the transactions contemplated thereby, including,
without limitation, the corporate power and authority to issue, sell and
deliver the Securities as provided therein.
4. When the Units are issued and delivered pursuant to the
Purchase Agreement, such Units, and the Series A Notes and Warrants of which
the Units consist, will not be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
5. The Purchase Agreement has been duly and validly authorized,
executed and delivered by the Company and HMC and (assuming the due
authorization, execution and delivery of the Purchase Agreement by the Initial
Purchasers), is the legal, valid and binding agreement of the Company and HMC,
enforceable against the Company and HMC in accordance with its terms, subject
to the Enforceability Exceptions and subject to any limitations on the
enforceability thereof imposed by the applicable provisions of federal or state
securities laws or principles of public policy underlying such laws. Such
counsel, however, shall not be required to opine upon the enforceability of the
indemnification and contribution provisions contained in the Purchase
Agreement.
6. The Indenture has been duly and validly authorized, executed
and delivered by the Company and HMC and (assuming the due authorization,
execution and delivery of the Indenture by the Trustee), will be the legal,
valid and binding obligation of the Company and HMC, enforceable against the
Company and HMC in accordance with its terms, subject to the Enforceability
Exceptions. As of the initial date of issuance of the Series A Notes, the
Indenture is not required to be qualified under the Trust Indenture Act.
Nevertheless, the Indenture conforms as to form in all material respects with
the
C-1
43
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture that is qualified thereunder.
7. The Pledge Agreement has been duly and validly authorized,
executed and delivered by the Company, and (assuming the due authorization,
execution and delivery of the Pledge Agreement by the Trustee) is the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.
8. The Note Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Company and HMC, and
(assuming the due authorization, execution and delivery of the Note
Registration Rights Agreement by the Initial Purchasers) is the legal, valid
and binding obligation of the Company and HMC, enforceable against the Company
and HMC in accordance with its terms, subject to the Enforceability Exceptions.
Such counsel, however, shall not be required to opine upon the enforceability
of the indemnification and contribution provisions contained in the Note
Registration Rights Agreement.
9. The Warrant Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Company, and (assuming the
due authorization, execution and delivery of the Warrant Registration Rights
Agreement by the Initial Purchasers) is the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to the Enforceability Exceptions. Such counsel, however, shall not be
required to opine upon the enforceability of the indemnification and
contribution provisions contained in the Warrant Registration Rights Agreement.
10. The Series A Notes have been duly and validly authorized by
the Company for issuance and sale to the Initial Purchasers pursuant to the
Purchase Agreement and, when issued and authenticated in accordance with the
terms of the Indenture and delivered against payment for the Units of which
they are a part in accordance with the terms of the Purchase Agreement and the
Indenture, will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject to the Enforceability Exceptions.
11. The Series B Notes have been duly and validly authorized for
issuance by the Company and, when issued and authenticated in accordance with
the terms of the Exchange Offer and the Indenture, will be the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject to the Enforceability Exceptions.
12. The guarantee of the Series A Notes and Series B Notes by HMC
has been duly and validly authorized by HMC and, when issued and authenticated
in accordance with the terms of the Indenture, will be the legal, valid and
binding obligation of HMC
C-2
44
enforceable against HMC in accordance with their terms, subject to the
Enforceability Exceptions.
13. The Warrant Agreement has been duly and validly authorized,
executed and delivered by the Company, and (assuming the due authorization,
execution and delivery of the Warrant Agreement by the Warrant Agent) is the
legal, valid, and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the Enforceability Exceptions.
Such counsel, however, shall not be required to opine upon the enforceability
of the indemnification and contribution provisions contained in the Warrant
Agreement.
14. The Warrants have been duly and validly authorized by the
Company for issuance and sale to the Initial Purchasers pursuant to the
Purchase Agreement and, when issued and authenticated in accordance with the
terms of the Warrant Agreement and delivered against payment for the Units of
which they are a part in accordance with the terms of the Purchase Agreement
and the Warrant Agreement, will be validly issued and the legal, valid and
binding obligations of the Company, subject to the Enforceability Exceptions.
The Company has duly reserved a sufficient number of its shares of Common Stock
for the issuance of the 820,750 Warrant Shares upon the exercise of the
Warrants. The Company has duly and validly authorized the issuance of the
Warrant Shares upon the exercise of the Warrants. Upon the exercise of the
Warrants and the payment of the exercise price thereof, the respective Warrant
Shares will be validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive or similar rights arising under the General
Corporation Law of the State of Delaware, the Certificate of Incorporation or
the Bylaws of the Company, or the documents listed in the schedule to such
counsel's opinion described in paragraph 15 below.
15. None of (a) the execution, delivery or performance by the
Company or HMC of the Purchase Agreement and the other Operative Documents, (b)
the issuance and sale of the Securities, nor (c) the consummation by the
Company and HMC of the transactions contemplated by the Operative Documents
violates, or constitutes a breach of any of the terms or provisions of, or a
default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or requires consent (other than those consents
that have been obtained) under, or results in the imposition of a lien or
encumbrance (except for encumbrances arising under the Operative Documents) on
any properties of the Company or HMC, or an acceleration of any indebtedness of
the Company or HMC pursuant to: (i) the charter or bylaws of the Company or
HMC, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or HMC is a party or by
which the Company or HMC is bound or to which any of their respective
properties is subject, provided that such counsel may limit such opinion to
those bonds, debentures, notes, indentures, mortgages, deeds of trust, and
other agreements and instruments listed on a schedule to the opinion that
officers of the Company and HMC have certified as identifying each material
bond, debenture, note, indenture, mortgage, deed of trust, or other agreement
or instrument to which the
C-3
45
Company or HMC is a party or by which the Company or HMC is bound or to which
any of their respective properties is subject, (iii) any existing statute, rule
or regulation of the United States, the State of Delaware (solely with respect
to the General Corporation Law of the State of Delaware), the State of New
York, or the State of Texas applicable to the Company or HMC, or (iv) to the
knowledge of such counsel, any judgment, order or decree of any court or
governmental agency or authority of competent jurisdiction that specifically
names the Company or HMC or states that it applies to any of their properties,
except in the cases of clauses (ii), (iii) and (iv), for any such violation,
default, consent, imposition of a lien or acceleration that could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. Except as may be required under applicable state securities or
Blue Sky laws, and except for the filing of registration statements under the
Act and any other requirements of the Act or Exchange Act applicable in
connection with the transactions contemplated by the Registration Rights
Agreements and qualification of the Indenture under the Trust Indenture Act in
connection with the Registration Rights Agreements, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, any court or governmental agency of the United States, the
State of Delaware (solely with respect to the General Corporation Law of the
State of Delaware), the State of New York, or the State of Texas is required
for (1) the execution, delivery and performance by the Company and HMC of the
Purchase Agreement and the other Operative Documents or (2) the issuance and
sale of the Securities and the transactions contemplated thereby, except such
as have been obtained and made and except where the failure to obtain such
consents, approvals, authorizations or orders or make or obtain such filings,
registrations, qualifications, licenses or permits, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
16. To the knowledge of such counsel, there is no action, suit,
investigation or proceeding before or by any court, arbitrator or governmental
agency, body or official now pending or threatened to which the Company or HMC
is a party or to which the business or property of the Company or HMC is
subject, that could, individually or in the aggregate, reasonably be expected
to (i) have a Material Adverse Effect, or (ii) prevent or suspend the issuance
or sale of the Securities or prevent or suspend the use of the Offering
Memorandum.
17. To the knowledge of such counsel, there are no holders of
securities of the Company or HMC who have the right to request or demand that
the Company or HMC register their transfer of securities on either the Exchange
Offer Registration Statement or the Note Shelf Registration Statement. To the
knowledge of such counsel, except as described in the Offering Memorandum,
there are no holders of securities of the Company or HMC who have the right to
request or demand that the Company or HMC register their transfer of securities
on the Warrant Shelf Registration Statement.
18. To the knowledge of such counsel, except as disclosed in the
Offering Memorandum, neither the Company nor any of its subsidiaries has
received any notice of
C-4
46
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property presently used in connection with their businesses,
except for any infringement that could not reasonably be expected to have a
Material Adverse Effect. The description of the patents and other intellectual
property rights of the Company set forth in the Offering Memorandum under the
captions "Risk Factors--AT&T Litigation," "Risk Factors--Uncertainty Regarding
Patents and Proprietary Rights," "Business--Patents and Proprietary Rights" and
"Business--Legal Proceedings" (to the extent that the information set forth
therein summarizes legal matters) is accurate in all material respects.
19. After giving effect to the sale of the Units and the
application of the net proceeds therefrom as described under the caption "Use
of Proceeds" in the Offering Memorandum, neither the Company nor HMC is an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act.
20. No registration under the Act of the Units is required for the
sale of the Units to the Initial Purchasers as contemplated by the Purchase
Agreement or for the Exempt Resales assuming (a) that the Initial Purchasers
are QIBs, (b) that the purchasers who buy the Units in the Exempt Resales are
Eligible Purchasers, (c) the accuracy of the Initial Purchasers'
representations as set forth in Section 6 of the Purchase Agreement, (d) the
accuracy of the Company's representations contained in the Purchase Agreement
as to factual matters, (e) receipt by the purchasers to whom the Initial
Purchasers initially resell the Units of a copy of the Offering Memorandum at
or prior to the delivery of confirmation of sale, and (f) that the certificates
representing the Series A Notes bear the legends contemplated by the Indenture
and the certificates representing the Warrants bear the legends contemplated by
the Warrant Agreement.
21. The Securities, the Indenture, the Pledge Agreement, the
Warrant Agreement, the Note Registration Rights Agreement, and the Warrant
Registration Rights Agreement, conform in all material respects to the
descriptions thereof contained in the Offering Memorandum.
22. The information set forth in the Offering Memorandum under the
caption "Business--Strategic Service Alliances of the Company" (to the extent
that the information set forth thereunder summarizes contractual arrangements
between the Company and certain third parties), under the caption
"Business--Legal Proceedings" (to the extent that the information set forth
thereunder summarizes legal documents or proceedings), and under the caption
"Certain U.S. Federal Tax Consequences" (to the extent that the information set
forth therein summarizes legal matters) has been reviewed by counsel and is
accurate in all material respects.
In addition, such counsel shall also have furnished to the Initial
Purchasers a written statement, in form and substance reasonably satisfactory
to the Initial Purchasers, to the effect that such counsel has participated in
conferences with officers and other
C-5
47
representatives of the Company and HMC, representatives of the Initial
Purchasers, counsel to the Initial Purchasers and representatives of the
independent certified public accountants of the Company and HMC at which the
contents of the Offering Memorandum and related matters were discussed and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum, on the basis of the foregoing (relying as
to materiality to a large extent upon the statements of officers and other
representatives of the Company), no facts have come to such counsel's attention
that caused such counsel to believe that the Offering Memorandum (other than
the financial statements and related notes and other financial, accounting and
statistical data included therein, as to which no statement need be made), as
of its date or the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel shall opine as to the General
Corporation Law of the State of Delaware, the laws of the State of New York,
the laws of the State of Texas and the federal laws of the United States,
provided that such counsel need not express any opinion regarding the laws of
any other jurisdiction or the Communications Act or the Other
Telecommunications Laws.
C-6
48
EXHIBIT D
Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
1. The Company and HMC do not hold any licenses for the use of
frequencies and neither of them has sought any other regulatory approval from
the FCC or any State Telecommunications Agency to conduct its business because
of its belief that it is not a common carrier. Even if the Company's or HMC's
belief as to its status were determined to be incorrect, such counsel knows of
no reason why the Company and HMC would be unable to comply with the
requirements of the FCC and of those states regulating such carriers. Counsel
is not herein providing any opinion as to whether either the Company or HMC are
or are not subject to regulation as a common carrier.
2. No authorization, approval or consent of, or registration or
filing with, the FCC is required for execution, delivery or performance by the
Company and HMC of the Purchase Agreement, the Indenture, the Pledge Agreement,
the Note Registration Rights Agreement, the Warrant Agreement or the Warrant
Registration Rights Agreement, or the consummation by the Company and HMC of
the transactions contemplated therein.
3. The execution, delivery and performance by the Company of the
Purchase Agreement and the consummation by the Company of the transactions
contemplated therein will not conflict with or constitute a breach or violation
of any term or provision of the Communications Act or any Other
Telecommunications Law.
4. The execution, delivery and performance by HMC of the Purchase
Agreement and the consummation by HMC of the transactions contemplated therein
will not conflict with or constitute a breach or violation of any term or
provision of the Communications Act or any Other Telecommunications Law
administered by the FCC.
5. Subject to paragraph 1 above, and except as disclosed in the
Offering Memorandum, to the best of counsel's knowledge, neither the Company
nor HMC has violated the Communications Act or any Other Telecommunications
Law.
6. No proceeding has been instituted or is pending, or to the
best knowledge of such counsel after reasonable inquiry and investigation, is
threatened or contemplated before the FCC against the Company or HMC and, to
the best knowledge of such counsel, no proceeding has been instituted or is
pending, threatened or contemplated before any State Telecommunications Agency
against the Company or HMC, which in each case, if the subject of an
unfavorable ruling, decision or finding, would have a Material Adverse Effect.
7. All statements in the Offering Memorandum under the captions
"Risk Factors--Uncertainty of Government Regulation" and "Business--Regulation"
(except those related to the Company's Canadian operations, as to which such
counsel need not express any opinion) are accurate in all material respects and
fairly present the information required to be set forth therein regarding the
Communications Act and Other
49
Telecommunications Laws. Without limiting the generality of the foregoing, the
statements under such captions regarding the uncertain status of the Company as
a common carrier or a private carrier or enhanced services provider are
accurate and fairly presented.
D-2
50
EXHIBIT E
Form of Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
1. To the knowledge of such counsel, the Company is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect.
2. To the knowledge of such counsel, HMC is duly qualified and in
good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse Effect.
3. Except as described in the Offering Memorandum, neither the
Company nor HMC is (a) in violation of its charter or bylaws, (b) to the
knowledge of such counsel, in default of the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or HMC is a party or by which the Company or
HMC is bound or to which any of their respective properties is subject, or (c)
to the knowledge of such counsel, in violation of any local, state, federal or
foreign law, statute, ordinance, rule, regulation, judgment or court decree
applicable to it or any of its assets or properties (whether owned or leased),
provided that such counsel need not inquire concerning the substantive laws of
any jurisdiction except the federal laws of the United States, the law of the
State of Texas and the General Corporation Law of the State of Delaware when
rendering the opinion set forth in clause (c), and except in the case of
clauses (a), (b), and (c), for any such default or violation that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as described in the Offering Memorandum, to the
knowledge of such counsel, there exists no condition that, with notice or the
passage of time or both, would constitute such a default under any such
document or instrument except for any such default that could not, individually
or in the aggregate with other defaults, reasonably be expected to have a
Material Adverse Effect.
4. All of the issued and outstanding shares of capital stock of
HMC have been duly authorized, validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. To the knowledge of such counsel, all of the issued and outstanding
shares of capital stock of HMC are owned by the Company free and clear of any
lien, encumbrance, claim, security interest, restriction on transfer,
stockholders' agreement, voting trust or other restrictions, except for
restrictions on transfer imposed by applicable law and the Amended
Stockholders' Agreement (as defined in the Offering Memorandum).
▇-▇
▇▇
▇. All of the issued and outstanding shares of capital stock of
the Company have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. To the knowledge of such counsel, on June 30, 1997, the Company had
authorized and outstanding capital stock as set forth in the Offering
Memorandum under the caption "Capitalization," subject to the notes and
assumptions included therein.
6. To the knowledge of such counsel, except as disclosed in the
Offering Memorandum, there is (a) no statute, rule, regulation or order that
has been enacted, adopted or issued by any governmental agency or that has been
proposed by any governmental body, and (b) no injunction, restraining order or
order of any nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or HMC is subject or to which the business,
assets, or property of the Company or HMC is subject, that could, individually
or in the aggregate, reasonably be expect to have a Material Adverse Effect.
7. If all material facts and issues of laws were properly
presented and argued, a court called upon to consider the issue should conclude
that the provisions of the agreement between ▇▇▇▇▇▇▇ Transfer Corporation and
HMC, dated August 14, 1996 (together with the related agreements between
▇▇▇▇▇▇▇ Transfer Corporation and HMC), and the Addendum to Lease and Options to
Purchase Agreement between Contract Freighters, Inc. and HMC, effective as of
June 1, 1996 do not violate or create a price matching event under the Most
Favored Nation Pricing Provisions in any respect that could reasonably be
expected to result in the imposition of a material liability upon the Company
or HMC under any of the following agreements: (a) the Equipment Agreement
dated April 25, 1997 between Burlington Motor Carriers, Inc. and HMC, (b) the
Equipment Agreement dated April 10, 1997 between Wal-Mart Stores East, Inc. and
HMC, (c) the Purchase Agreement dated January 20, 1995 between Ryder Automotive
Carrier Group and HMC and Rider thereto, (d) the Equipment Agreement dated
October 18, 1996 between AmeriTruck Distribution Corporation and HMC, and (e)
the Lease and Options to Purchase Agreement dated May 31, 1994 between Contract
Freighters, Inc. and HMC including Addendum to Lease and Options to Purchase
Agreement between CFI and the HMC effective as of June 1, 1996.
In addition, such counsel shall also have furnished to the Initial
Purchasers a written statement, in form and substance reasonably satisfactory
to the Initial Purchasers, to the effect that such counsel has participated in
conferences with other officers and other representatives of the Company and
HMC, representatives of the Initial Purchasers, counsel to the Initial
Purchasers and representatives of the independent certified public accountants
of the Company and HMC at which the contents of the Offering Memorandum and
related matters were discussed, and although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum, on the basis
of the foregoing (relying as to materiality to a large extent upon the
statements of officers and other representatives
E-2
52
of the Company), no facts have come to such counsel's attention that caused
such counsel to believe that the Offering Memorandum (other than the financial
statements and related notes and other financial, accounting and statistical
data included therein, as to which no statement need be made), as of its date
or the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
The opinion of such counsel shall state that it is limited to the
General Corporation Law of the State of Delaware, the laws of the State of
Texas and the federal laws of the United States. To the extent such opinions
relate to the laws of any jurisdiction other than the United States, the State
of Texas, or the State of Delaware (with respect to the Delaware General
Corporation Law), such counsel shall state that he has assumed that such laws
are identical to the laws of the State of Texas. In addition, such counsel
need not express any opinion regarding the Communications Act or the Other
Telecommunications Laws.
E-3
