SENIOR SECURED NOTE AND CLASS A WARRANT
PURCHASE AGREEMENT
among
TELETRAC, INC.
and
THE SEVERAL PURCHASERS NAMED IN SCHEDULE I HERETO
Dated as of [__], 1999
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE.....................2
SECTION 1.1 Definitions..................................................2
ARTICLE II. PURCHASE AND SALE OF THE SECURITIES...........................13
SECTION 2.1 Purchase and Sale of Securities.............................13
SECTION 2.2 Closing Dates...............................................13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................13
SECTION 3.1 Organization, Qualifications and Corporate Power............13
SECTION 3.2 Authorization of Agreements, Etc............................14
SECTION 3.3 Validity....................................................14
SECTION 3.4 Post-Restructuring Authorized Capital Stock.................14
SECTION 3.5 Government Approvals........................................15
SECTION 3.6 Offering of the Securities..................................15
SECTION 3.7 Brokers.....................................................15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............16
SECTION 4.1 Validity....................................................16
SECTION 4.2 Investment Representations..................................16
SECTION 4.3 Brokers.....................................................16
ARTICLE V. CONDITIONS....................................................16
SECTION 5.1 Conditions to the Obligations of the Purchasers.............16
SECTION 5.2 Conditions to the Obligations of the Company and
Reorganized Teletrac......................................17
ARTICLE VI. COVENANTS.....................................................18
SECTION 6.1 Rights of Inspection........................................18
SECTION 6.2 Notice of Certain Events....................................18
SECTION 6.3 Use of Proceeds.............................................18
SECTION 6.4 Merger, Sale of Assets, Etc.................................18
SECTION 6.5 Retirement of Senior Secured Notes..........................18
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PAGE
SECTION 6.6 Corporate Existence.........................................19
SECTION 6.7 Reports.....................................................19
SECTION 6.8 Waiver of Stay, Extension or Usury Laws.....................19
SECTION 6.9 Restricted Payments.........................................19
SECTION 6.10 Dividend and Other Payment Restrictions
Affecting Subsidiaries....................................21
SECTION 6.11 Incurrence of Indebtedness or Issuance of
Disqualified Stock........................................23
SECTION 6.12 Transactions with Affiliates................................24
SECTION 6.13 Liens.......................................................25
SECTION 6.14 Additional Guarantees.......................................25
SECTION 6.15 Offer to Purchase Upon Change of Control....................26
SECTION 6.16 Maintenance of Properties and Insurance.....................28
SECTION 6.17 Limitation on Issuances and Sales of Capital Stock
of Subsidiaries...........................................28
SECTION 6.18 Business Activities.........................................28
SECTION 6.19 Limitation on Sales of Assets and Subsidiary Interests......28
ARTICLE VII. PREPAYMENT OF SENIOR NOTES....................................29
SECTION 7.1 Optional Prepayments........................................29
SECTION 7.2 Notice of Prepayments.......................................29
SECTION 7.3 Allocation of Payments......................................30
SECTION 7.4 Notation of Partial Payments................................30
SECTION 7.5 Direct Payment..............................................30
ARTICLE VIII. EVENTS OF DEFAULT.............................................31
SECTION 8.1 Events of Default...........................................31
SECTION 8.2 Remedies on and Notices of Default..........................32
ARTICLE IX. EXCHANGE OF SENIOR SECURED NOTES..............................32
SECTION 9.1 New Senior Secured Notes....................................32
SECTION 9.2 Replacement of Senior Secured Notes.........................33
ARTICLE X. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION..................33
SECTION 10.1 Survival of Agreements.....................................33
SECTION 10.2 General Indemnity..........................................33
SECTION 10.3 Conditions of Indemnification..............................33
SECTION 10.4 Remedies Cumulative........................................34
ii
PAGE
ARTICLE XI. MISCELLANEOUS.................................................35
SECTION 11.1 Expenses, Etc..............................................35
SECTION 11.2 Notices....................................................35
SECTION 11.3 Brokerage..................................................35
SECTION 11.4 Parties in Interest........................................36
SECTION 11.5 Entire Agreement; Waiver; Assignment.......................36
SECTION 11.6 Counterparts...............................................36
SECTION 11.7 Governing Law..............................................36
TESTIMONIUM...................................................................16
iii
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Plan of Reorganization
Exhibit B Form of 10% Senior Secured Note due [____, 2000]
Exhibit C Form of Class A Warrant
Exhibit D Security Agreement
Exhibit E Subscription Agreement
Exhibit F Agency Agreement
iv
SENIOR SECURED NOTE AND CLASS A WARRANT PURCHASE AGREEMENT, dated as
of ________, 1999, among TELETRAC, INC., a Delaware corporation (the "Company"),
and the several purchasers named in Schedule 1 hereto (the "Purchasers").
WHEREAS, each of the Purchasers is either (i) a holder of an Old Note
Claim (as such term is defined in the Plan of Reorganization annexed hereto as
Exhibit A (the "Plan"), (ii) a Miscellaneous Unsecured Claim (as such term is
defined in the Plan), (iii) a holder of a Category A Convenience Claim (as such
term is defined in the Plan), or (iv) the beneficial owner of shares of common
or preferred stock ("Stock") of Teletrac Holdings, Inc., a Delaware corporation
and the parent corporation of the Company;
WHEREAS, the Company and the Purchasers have engaged in negotiations
towards a consensual reorganization of the Company's financial affairs;
WHEREAS, the Company has filed a petition pursuant to Chapter 11 of
the United States Bankruptcy Code (the "Bankruptcy Code"), 11 U.S.C. Sections
101 ET SEQ., commencing proceedings (the "Chapter 11 Proceedings") in a United
States Bankruptcy Court (the "Bankruptcy Court");
WHEREAS, the Company has filed, and is seeking confirmation pursuant
to Section 1129 of the Bankruptcy Code, 11 U.S.C. Section 1129, of a Plan;
WHEREAS, the Plan provides, among other things, that on the Effective
Date (as defined in the Plan) certain distributions will be made to creditors,
and the Company's business and assets immediately prior to such Effective Date
will vest in Reorganized Teletrac (as defined in the Plan) to be known as
Teletrac, Inc.;
WHEREAS, subject to and on the terms and conditions set forth herein,
the Purchasers wish to purchase from Reorganized Teletrac, and Reorganized
Teletrac shall issue and sell to the Purchasers, the 10% Senior Secured Notes to
be due one year from the Effective Date (the "Maturity Date") in an aggregate
principal amount of up to $3 million (the "Senior Secured Notes") in
substantially the form of Exhibit B hereto and (ii) up to 3 million Class A
Warrants (the "Class A Warrants") to purchase shares of new common stock
("Warrant Shares") to be issued by Reorganized Teletrac pursuant to the Plan
(the Senior Secured Notes and Class A Warrants being hereafter referred to
collectively as the "Securities");
WHEREAS, each of the Purchasers has previously executed and delivered
a Subscription Agreement annexed hereto as Exhibit E which sets forth their
Maximum Commitment (as such term is defined in the Plan);
WHEREAS, the Purchasers, severally and not jointly, wish to purchase
the Securities, all on the terms and subject to the conditions set forth herein;
WHEREAS, the Purchasers, severally and jointly, wish to enter into an
Agency Agreement by and among the Purchasers and [_____________] (the "Agent")
in substantially the form of Exhibit F hereto, whereby the Agent will exercise
certain rights and satisfy certain obligations of the Purchasers;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary of such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"AFFILIATE" of a Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AFFILIATE TRANSACTION" has the meaning ascribed to it in Section 6.12
hereto.
"AGENT" has the meaning ascribed to it in the recitals hereof.
"ASSET SALE" means:
(i) the sale, lease, conveyance or other disposition (collectively
"dispositions") of any assets (including, without limitation, byway of
a sale and leaseback) in one or a series of related transactions; and
2
(ii) the issuance by any of Reorganized Teletrac's Subsidiaries of
Equity Interests or the disposition by Reorganized Teletrac or any of
its Subsidiaries of Equity Interests of any of their Subsidiaries,
in the case of either clause (i) or (ii) above, whether in a single transaction
or a series of related transactions: (a) that have a Fair Market Value in excess
of $5 million; or (b) for net proceeds in excess of $5 million. Notwithstanding
the foregoing: (i) the sale of inventory in the ordinary course of business;
(ii) a disposition of assets by Reorganized Teletrac to a wholly owned
Subsidiary or by a Subsidiary of Reorganized Teletrac to Reorganized Teletrac or
to a wholly owned Subsidiary of Reorganized Teletrac; (iii) an issuance of
Equity Interests by a Subsidiary of Reorganized Teletrac to Reorganized Teletrac
or to a wholly owned Subsidiary of Reorganized Teletrac; (iv) a Restricted
Payment that is permitted by Section 6.09; (v) the sale of assets that have
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of Reorganized Teletrac; and (vi) any sales of
assets to Ituran Location and Control, Ltd. or any Affiliates of Ituran Location
and Control, Ltd. shall not be deemed to be Asset Sales.
"BOARD OF DIRECTORS" means the Board of Directors of Reorganized
Teletrac or any authorized committee of the Board of Directors.
"BUSINESS DAY" means any day not a Legal Holiday.
"CAPITAL STOCK" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, and any all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(iii) in the case of a partnership, partnership interests (whether
general or limited); and
(iv) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(i) U.S. dollars;
(ii) Government Securities;
(iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
3
bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any Eligible Institution;
(iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and
(iii)above entered into with any Eligible Institution;
(v) commercial paper having the highest rating obtainable from ▇▇▇▇▇'▇
or S&P and in each case maturing within six months after the date of
acquisition; and
(vi) shares of any mutual funds or other pooled investment vehicles,
in each case having assets of $500 million, investing solely in
investments of the types described in (i) through (v) above.
"CHANGE OF CONTROL" means:
(i) the sale, lease, transfer, conveyance or other disposition, in one
transaction or a series of related transactions, directly or
indirectly, including through a liquidation or dissolution, of all or
substantially all of the assets of Reorganized Teletrac and its
Subsidiaries to any Person or group (as such term is used in Section
13 (d) of the Exchange Act);
(ii) the adoption of a plan relating to the liquidation or dissolution
of Reorganized Teletrac; or
(iii) any Person or group (as such term is used in Section 13(d) of
the Exchange Act), other than any of the Existing Stockholders or
their respective Affiliates, becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of more than 75% of the total voting power of the
Voting Equity Interests of Reorganized Teletrac, including by way of
merger, consolidation or otherwise.
"CHANGE OF CONTROL DATE" has the meaning ascribed to such term in
Section 6.15 hereto.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus, to the
extent deducted or otherwise excluded in computing such Consolidated Net Income;
4
(i) an amount equal to any extraordinary loss plus any net loss
realized in connection with a sale of assets;
(ii) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period;
(iii) Consolidated Interest Expense less consolidated interest income
of such Person and its Subsidiaries for such period; and
(iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges
(excluding any such non-cash charge to the extent that it represents
an accrual of or cash charges in any future period or amortization of
a prepaid cash expense that was paid in a prior period) of such Person
and its Subsidiaries for such period;
in each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash charges of a
Subsidiary shall be added to Consolidated Net Income to compute Consolidated
Cash Flow only to the extent (and in the same proportion) that the Net Income of
such Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be distributed by dividend to such Person by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its stockholders.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the consolidated interest expense of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount noncash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commission, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financing, and net payments (if any) pursuant
to Hedging Obligations).
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that:
(i) the Net Income of any Person that is accounted for by the equity
method of accounting shall be included, but only to the extent of the
5
amount of dividends or distributions actually paid in cash to the
relevant Person or a wholly owned Subsidiary thereof;
(ii) the Net Income of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions
by such Subsidiary of such Net Income is not at the date of
determination permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(iv) the cumulative effect of a change in accounting principles shall
be excluded; and
(v) the Net Income of any Subsidiary shall be included only to the
extent of the amount of dividends or distributions actually paid in
cash to the relevant Person or a Subsidiary thereof.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital
Stock that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event:
(i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise; or
(ii) is redeemable or is convertible or exchangeable for Indebtedness
at the option of the Purchaser thereof, in whole or in part, on or
prior to the date on which the Senior Secured Notes mature.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EVENT OF DEFAULT" has the meaning assigned to it in Section 8.1
hereof.
6
"EXISTING INDEBTEDNESS" means the Indebtedness of Reorganized Teletrac
in existence on the Issue Date until such amounts are repaid.
"FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that the Fair Market Value of
any such asset or assets shall be determined by the Board of Directors of
Reorganized Teletrac, acting in good faith, and which determination shall be
evidenced by an Officers' Certificate delivered to the Agent.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession and which are in effect on the Issue Date.
"GUARANTEE" or "GUARANTEE" means a guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without limitation,
letters of credit and reimbursement agreements in respect thereof), of all or
any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under:
(i) interest rate swap agreements;
(ii) foreign currency hedge obligations; and
(iii) other agreements or arrangements designed to protect such Person
against fluctuations in interest and foreign currency rates.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable to
the extent that any such accrued expense or trade payable is not more than 90
days overdue or is otherwise being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, if and to the extent
any of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
7
prepared in accordance with GAAP, as well as all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person and, in the event such indebtedness is not assumed by,
and is otherwise non-recourse to, such Person, the amount of such indebtedness
shall be deemed to equal the greater of the book value or Fair Market Value of
such asset).
"INDEBTEDNESS TO CASH FLOW RATIO" means, with respect to any Person as
of any date of determination, the ratio of:
(i) total Indebtedness of such Person and its Subsidiaries as of such
date to;
(ii) four times Consolidated Cash Flow of such Person and its
Subsidiaries for the most recently ended fiscal quarter for which
financial statements of such Person are available (the "Measurement
Period");
provided, however, that: (a) in making such computation, the total Indebtedness
of such Person and its Subsidiaries shall include the total amount of funds
outstanding and available under any credit facilities; and (b) in the event such
Person or any of its Subsidiaries consummates a material acquisition or sale of
assets subsequent to the commencement of the Measurement Period, then the
Indebtedness to Cash Flow Ratio shall be calculated giving PRO FORMA effect to
such material acquisition or sale of assets as if the same had occurred at the
beginning of the Measurement Period.
"ISSUE DATE" means the date on which the Senior Secured Notes are
first delivered under this Agreement.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"NET INCOME" means, with respect to any Person, the net income (or
loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with: (a)
any sale of assets (including, without limitation, dispositions
pursuant to sale and leaseback transactions); or (b) the disposition
of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its
Subsidiaries; and
8
(ii) any extraordinary or nonrecurring gain (but not loss), together
with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash consideration received by
Reorganized Teletrac or any of its Subsidiaries in respect of any Asset Sale in
the form of cash or Cash Equivalents (including, without limitation, any cash
received upon the sale or other disposition of any noncash consideration
received in any Asset Sale), net of the direct costs relating to such Asset sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred, as a result
thereof, taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
provided that any such amount not so required to be paid for taxes shall be
deemed to constitute Net Proceeds at the time such amount is not retained for
such purpose), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets (including Equity Interests) that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or asset (including Equity Interests) established in
accordance with GAAP (provided that the amount of any such reserve shall be
deemed to constitute Net Proceeds at the time such reserve shall have been
released or is not otherwise required to be retained for such purpose).
"9% NOTE INDENTURE" means the Indenture, dated as of ____________
between Teletrac, Inc. and __________________ for $15,000,000 of the 9% Notes
Due 2004.
"NON-RECOURSE DEBT" means Indebtedness:
(i) as to which neither Reorganized Teletrac nor any of its
Subsidiaries: (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness); (b) is directly or indirectly liable (as a guarantor or
otherwise); or (c) constitutes the lender;
(ii) no default with respect to which would permit (upon notice, lapse
of time or both) any holder of any other Indebtedness of Reorganized
Teletrac or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of Reorganized
Teletrac or any of its Subsidiaries.
"OFFICER" means the Chairman of the Board, the Vice Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Secretary or the Controller of Reorganized
Teletrac.
9
"OFFICERS' CERTIFICATE" means a certificate signed (a) by the Chairman
or Vice Chairman of the Board of Directors, President or a Vice President, and
(b) by the Treasurer, Secretary, or an Assistant Treasurer or an Assistant
Secretary of Reorganized Teletrac and delivered to the Agent as required by the
terms of this Indenture; provided that, in the event an Officer of Reorganized
Teletrac holds a position set forth in both (a) and (b), such Officer may sign
an Officers' Certificate only in his capacity as an Officer under Clause (a) or
Clause (b), but not both.
"PERMITTED BANK REFINANCING" means (a) any refinancing, renewal,
extension, refunding or amendment of the Senior Credit Agreement (or any prior
such refinancing, renewal, extension, refunding or amendment) which does not
increase, or thereafter permit the increase of, the aggregate principal amount
of such Indebtedness beyond the maximum aggregate principal amount of
Indebtedness then outstanding or permitted to be incurred under the Senior
Credit Agreement (or such prior refinancing, renewal, extension or refunding
thereof or amendment thereto), and (b) any other Indebtedness of Reorganized
Teletrac or any Subsidiary of Reorganized Teletrac, to banks and/or other
financial institutions, up to an aggregate principal amount at any time
outstanding of $20 million and where the proceeds of such Indebtedness are used
to pay, prepay or redeem all (but not less than all) of the principal and
interest outstanding on the Senior Secured Notes.
"PERMITTED INVESTMENT" means:
(i) any Investment in Reorganized Teletrac or in any wholly owned
Subsidiary of Reorganized Teletrac;
(ii) any Investment in Cash Equivalents;
(iii) Investments by Reorganized Teletrac or any of its Subsidiaries
in a Person if, as a result of such Investment: (a) such Person
becomes a wholly owned Subsidiary of Reorganized Teletrac; (b) such
Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Reorganized Teletrac or any wholly owned Subsidiary
of Reorganized Teletrac;
(iv) any Investments made solely as a result of the receipt of
non-Cash Consideration from an Asset Sale that was made pursuant to
and in compliance with Section 6.19; and
(v) any Investment made by Reorganized Teletrac or any of its
Subsidiaries in a Related Business;
10
provided that, at any time any such Investment is made, such Investment will not
cause the aggregate amount of Investments at any one time outstanding under this
clause (v) to exceed $6 million.
"PERMITTED LIENS" means:
(i) Liens securing the Senior Secured Notes;
(ii) Liens in favor of Reorganized Teletrac;
(iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with Reorganized Teletrac or any of its
Subsidiaries, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
Reorganized Teletrac or such Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof by
Reorganized Teletrac or any of its Subsidiaries, provided that such
Liens were in existence prior to the contemplation of such
acquisition;
(v) Liens to secure the performance of statutory obligations, surety,
appeal or performance bonds or other obligations of a like nature or
mechanics' or purchase money Liens incurred in the ordinary course of
business;
(vi) Liens existing on the Issue Date;
(vii) Liens on inventory or accounts receivable securing Indebtedness
incurred in accordance with Section 6.11(vi) hereof or securing
Permitted Refinancing Indebtedness incurred pursuant hereto to
refinance Indebtedness in accordance with Section 6.11(vi) hereof;
(viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made
therefor;
(ix) Liens on assets of Subsidiaries that secure Non-Recourse Debt of
Subsidiaries;
(x) Liens securing Indebtedness under the Senior Credit Agreement;
11
(xi) Liens securing Indebtedness incurred pursuant to Section
6.11(viii) hereof; and
(xii) Liens securing Indebtedness described in Section 6.10(iv)(h) or
Section 6.11(ix) hereof.
"PERMITTED REFINANCING INDEBTEDNESS" has the meaning set forth in
Section 6.11 hereof.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity of
any kind.
"PREFERRED EQUITY INTEREST" in any Person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"REFINANCED INDEBTEDNESS" has the meaning assigned to it in Section
6.11 hereof.
"RELATED ASSETS" means all assets used in connection with the design,
development, procurement, installation, operation or marketing of location or
related two-way messaging systems and any activities or assets ancillary
thereto.
"RELATED BUSINESS" means any business relating to the design,
procurement, installation and operation of location, fleet management or related
two-way messaging systems and business and reasonably related extensions
thereof.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"SUBSIDIARY" means, with respect to a Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any other Person (other than a corporation) in which such
Person, one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries, directly or indirectly, at the date of determination thereof, has
at least a majority ownership interest.
"U.S." OR "UNITED STATES" means the United States of America.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
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of the products obtained by multiplying: (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
of such Indebtedness.
ARTICLE II.
PURCHASE AND SALE OF THE SECURITIES
SECTION 2.1 PURCHASE AND SALE OF SECURITIES. (a) Reorganized Teletrac
has notified each of the Purchasers, in writing, that it wishes to issue and
sell ___% (hereafter, the "Specified Percentage") of Senior Secured Notes and
Class A Warrants.
(b) On the Effective Date, (A) each Purchaser shall deliver payment,
to Reorganized Teletrac, by wire transfer of immediately available funds in
amounts equal to the Specified Percentage multiplied by the Commitment Amount
listed beside such Purchaser's name on Schedule 1 hereto (the "Commitment
Amount"), as determined in accordance with the Plan; and (B) in exchange for
payment by each Purchaser of the Specified Percentage of its Commitment Amount,
Reorganized Teletrac shall issue and sell to each Purchaser Senior Secured Notes
in the principal amount of its Commitment Amount (as set forth in Schedule 1)
multiplied by the Specified Percentage and Class A Warrants in the amount of its
Commitment Amount multiplied by the Specified Percentage.
(c) Notwithstanding anything in this Section 2.1 to the contrary, in
the event that any Purchaser shall have an outstanding loan to the Company
constituting a DIP Loan (as defined in the Plan), then, on the Effective Date,
Reorganized Teletrac shall apply the outstanding principal amount and any
accrued interest due to such Purchaser in respect of such loan to payment of the
amounts due from the Purchaser pursuant to Section 2.1(c) hereof, and Purchaser
shall, on the Closing Date, remit to Reorganized Teletrac the balance, if any,
of the amounts due by Purchaser hereunder in accordance with the provisions of
Section 2.1(c).
SECTION 2.2 CLOSING DATES. The Closing Date shall be subject to all of
the conditions specified in Article IV of this Agreement having been met and
shall occur on the Effective Date (as defined in the Plan).
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to and conditioned upon the Bankruptcy Court Approval (as
hereafter defined), the Company represents and warrants to each Purchaser, and
Reorganized Teletrac shall be deemed to have represented and warranted to each
Purchaser, that, as of the Effective Date:
SECTION 3.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER.
Reorganized Teletrac shall be a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
licensed or qualified to do business as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership of its
properties makes such licensing or qualification necessary and where the failure
to be so licensed or qualified would have a material adverse effect on the
business, operations or financial condition of the Company (a "Material Adverse
Effect"); shall have the corporate power and authority (i) to own and hold its
properties and to carry on its business as currently conducted, (ii) to execute,
deliver and perform this Agreement and the Security Agreement, substantially in
the form of Exhibit "D" attached hereto (the "Security Agreement"), (iii) to
issue, sell and deliver the Securities hereunder, and (iv) to issue and deliver
the shares of Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares").
SECTION 3.2 AUTHORIZATION OF AGREEMENTS, ETC. (a) The execution and
delivery by the Company of this Agreement and the Security Agreement, the
performance by Reorganized Teletrac of its obligations hereunder and thereunder,
the issuance, sale and delivery of the Securities and the issuance and delivery
of the Warrant Shares upon exercise of the Warrants shall have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, the Articles of
Incorporation or By-laws of Reorganized Teletrac, or any provision of any
indenture, agreement or other instrument to which it is a party or by which any
of its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of Reorganized Teletrac.
(b) The Warrant Shares shall have been duly reserved by Reorganized
Teletrac for issuance upon exercise of the Warrants, and, when so issued and
delivered, will be duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock of Reorganized Teletrac.
SECTION 3.3 VALIDITY. This Agreement shall have been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company and Reorganized Teletrac, enforceable against Reorganized
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Teletrac in accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency and similar laws and to moratorium laws from time to
time in effect). The Security Agreement, when executed and delivered in
accordance with this Agreement, will constitute a legal, valid and binding
obligation of Reorganized Teletrac, enforceable against Reorganized Teletrac in
accordance with its terms (subject as aforesaid).
SECTION 3.4 POST-RESTRUCTURING AUTHORIZED CAPITAL STOCK. (a) The
authorized capital stock of Reorganized Teletrac on the Effective Date shall
consist of 20,000,000 shares of Common Stock, $.01 par value.
(b) Except for the Class A Warrants issued pursuant to this Securities
Purchase Agreement, and the Class B Warrants and Incentive Options (each as
defined in the Plan), there shall be no subscription, warrant, option,
convertible security or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of Reorganized Teletrac, and, except as
contemplated by the Plan, there shall not be any commitment of Reorganized
Teletrac to issue any shares, warrants, options or other such rights or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets, or any obligation on the part of Reorganized Teletrac
(contingent or other) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
SECTION 3.5 GOVERNMENT APPROVALS. Except for the approvals of the
Bankruptcy Court, no registration or filing with, or consent or approval of, or
other action by, any federal, state or other governmental agency or
instrumentality is or will be necessary for (i) the valid execution, delivery
and performance of this Agreement or the Security Agreement, or (ii) the
issuance, sale and delivery of the Securities hereunder or the issuance and
delivery of the Warrant Shares upon exercise of the Class A Warrants.
SECTION 3.6 OFFERING OF THE SECURITIES. Neither the Company,
Reorganized Teletrac nor any person authorized or employed by the Company or
Reorganized Teletrac as agent, broker, dealer or otherwise in connection with
the offering or sale of the Senior Secured Notes, the Class A Warrants or any
similar securities of Reorganized Teletrac shall have offered any such
securities for sale to, or solicited any offers to buy any such securities from,
or otherwise approached or negotiated with respect thereto with any person or
persons under circumstances that involved the use of any form of general
advertising or solicitation as such terms are defined in Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), and neither the
Company, Reorganized Teletrac nor any person acting on the Company's or
Reorganized Teletrac's behalf shall have taken or will take any action
(including, without limitation, any offer, issuance, sale or delivery of any
securities of Reorganized Teletrac under circumstances which might require the
integration of such transactions with the placement of the Secured Senior Notes
or the Class A Warrants under the Securities Act or the rules and regulations of
the Securities and Exchange Commission thereunder) which might subject the
15
offering, issuance, sale or delivery of the Senior Secured Notes or the Warrants
hereunder to the registration provisions of the Securities Act.
SECTION 3.7 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Company
directly with the Purchasers, without the intervention of any other person on
behalf of the Company in such manner as to give rise to any valid claim by any
other person against the Purchasers for a finder's fee, brokerage commission or
similar payment.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company as follows:
SECTION 4.1 VALIDITY. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable in accordance with its terms (subject
to applicable bankruptcy, reorganization, insolvency and similar laws and to
moratorium laws from time to time in effect).
SECTION 4.2 INVESTMENT REPRESENTATIONS. Such Purchaser is an
"accredited investor" as such term is defined in Regulation D under the
Securities Act and is acquiring the Securities, and, upon exercise of the
Warrants, will acquire the Warrant Shares, for his or its own account for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof. Each Purchaser further represents that he or it
understands that (i) the Senior Secured Notes, the Class A Warrants and the
Warrant Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof, (ii) such securities must be
held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration, (iii) such securities
will bear a legend to such effect and (iv) Reorganized Teletrac will make a
notation on its transfer books to such effect. Each Purchaser further
understands that the exemption from registration afforded by Rule 144 under the
Securities Act depends on the satisfaction of various conditions and that, if
applicable, Rule 144 affords the basis of sales of the Senior Secured Notes, the
Class A Warrants and/or the Warrant Shares, as the case may be, in limited
amounts under certain conditions.
SECTION 4.3 BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by such Purchaser
directly with the Company, without the intervention of any other person on
behalf of such Purchaser in such manner as to give rise to any valid claim by
any other person against the Company for a finder's fee, brokerage commission or
similar payment.
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ARTICLE V.
CONDITIONS
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS. The
obligation of each Purchaser to purchase and pay for the Securities being
purchased by such Purchaser on the Effective Date is, at the option of such
Purchaser, subject to the satisfaction, on or before such date, of each of the
following conditions:
(a) BANKRUPTCY APPROVAL. An order shall have been entered by the
Bankruptcy Court confirming the Plan of Reorganization pursuant to Section 1129
of the Bankruptcy Code, 11 U.S.C. Section 1129, and approving this Agreement and
the transactions contemplated hereby, and there shall not be a stay or
injunction in effect with respect thereto (hereinafter, the "Bankruptcy Court
Approval").
(b) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company and Reorganized Teletrac contained
in Article III of this Agreement shall be true and correct on and as of the
Effective Date, with the same force and effect as though such representations
and warranties had been made on and as of such date, and the Company and
Reorganized Teletrac shall have certified to such effect to the Purchasers in
writing.
(c) PERFORMANCE. The Company and Reorganized Teletrac shall have
performed and complied with all agreements and conditions contained herein
required to be per formed or complied with by it prior to or at the Effective
Date, and the Company shall have certified to such effect to the Purchasers in
writing.
(d) SECURITY AGREEMENT. The Security Agreement shall have been
executed and delivered by the Company and Reorganized Teletrac and the security
interests granted thereby shall have been perfected.
SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
REORGANIZED TELETRAC. The obligation of Reorganized Teletrac to issue, sell and
deliver the Securities on the Initial Closing Date is, at its option, subject to
the satisfaction, on or before such date, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The repre
sentations and warranties of each Purchaser contained in Article IV of this
Agreement shall be true and correct on and as of the Effective Date, with the
same force and effect as though such representations and warranties had been
made on and as of such date.
17
(b) PERFORMANCE. Each Purchaser shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by such Purchaser prior to or at the Effective Date.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate, partnership or
other proceedings to be taken by any Purchaser in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to the Company and Reorganized Teletrac and
its counsel.
ARTICLE VI.
COVENANTS
SECTION 6.1 RIGHTS OF INSPECTION. So long as any Senior Secured Notes
shall remain outstanding, Reorganized Teletrac Company shall permit authorized
representatives of any Purchaser to visit and inspect any of the properties of
Reorganized Teletrac and examine and make abstracts of any of its books and
records, upon reasonable notice, at any time during normal business hours and as
often as may be reasonably requested. Each Purchaser agrees that any such
inspection shall be conducted in a manner that does not unreasonably disrupt or
interfere with Reorganized Teletrac's operations and that such Purchaser will
keep confidential any confidential business information or trade secrets that
may be disclosed or provided to it by Reorganized Teletrac pursuant to this
Agreement.
SECTION 6.2 NOTICE OF CERTAIN EVENTS. So long as any Senior Secured
Notes shall remain outstanding, Reorganized Teletrac shall give the Purchasers
prompt notice of (i) any event of default under any agreement with respect to
indebtedness for borrowed money or a purchase money obligation, and any event
which, upon notice or lapse of time or both, would constitute such an event of
default, that would permit the holder of such indebtedness or obligation to
accelerate the maturity thereof, and (ii) any action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or agency which,
if adversely determined, would materially impair the right of Reorganized
Teletrac to carry on its business substantially as now or then conducted, or
would have a Material Adverse Effect.
SECTION 6.3 USE OF PROCEEDS. Reorganized Teletrac shall apply the
proceeds from the sale of the Securities hereunder to fund (i) the payment of
any DIP Loan and (ii) other general corporate purposes.
SECTION 6.4 MERGER, SALE OF ASSETS, ETC. So long as any Senior Secured
Notes shall remain outstanding, Reorganized Teletrac shall not, and shall not
permit any of its subsidiaries to, (i) merge or consolidate with or into any
other corporation (other than the consolidation or merger of a wholly owned
subsidiary with or into the Company) or (ii) sell, lease or otherwise dispose of
all or a substantial portion of its assets and properties, without the
18
consent, in writing, of holders of at least 75% in amount of the outstanding
principal amount of the Senior Secured Notes, unless such notes and all accrued
interest thereon shall be paid in full at the closing of any such transaction.
SECTION 6.5 RETIREMENT OF SENIOR SECURED NOTES. Upon the sale of the
Miami Business as such term is defined in and pursuant to the Asset Purchase and
Option Agreement dated as of June 9, 1999, among the Company, Teletrac
Licensing, Inc., Ituran U.S.A., Inc. and Ituran Location and Control Ltd.,
Reorganized Teletrac covenants and agrees that, it shall apply any proceeds
received from such sale to prepay the Senior Secured Notes as provided in
Article VII hereto.
SECTION 6.6 CORPORATE EXISTENCE. Subject to the provisions of Section
6.4, Reorganized Teletrac shall preserve and keep in full force and effect its
corporate existence and the corporate existence of each of its Subsidiaries in
accordance with the respective organizational documents of each and their
respective rights (charter and statutory), licenses and franchises, PROVIDED
THAT Reorganized Teletrac shall not be required to preserve any such right,
license or franchise, or the corporate existence of any Subsidiary, if the loss
thereof, in the good faith judgment of the Board of Directors of Reorganized
Teletrac is not, and will not be, adverse in any material respect to the
Purchasers.
SECTION 6.7 REPORTS. So long as any Senior Secured Notes are
outstanding, Reorganized Teletrac will furnish to the Purchasers of Senior
Secured Notes all periodic reports required to be filed by the rules and
regulations of the Securities and Exchange Commission.
SECTION 6.8 WAIVER OF STAY, EXTENSION OR USURY LAWS. Reorganized
Teletrac covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive Reorganized Teletrac from paying all or any
portion of the principal of and/or interest on the Senior Secured Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Agreement; and (to the
extent that it may lawfully do so) Reorganized Teletrac hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Agent, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 6.9 RESTRICTED PAYMENTS. (a) Reorganized Teletrac shall not,
and shall not permit any of its Subsidiaries, to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on
account of any Equity Interests of Reorganized Teletrac (including,
without limitation, any payment in connection with any merger or
consolidation involving Reorganized Teletrac or any of its
Subsidiaries), other than dividends or distributions payable (a) in
19
Equity Interests (other than Disqualified Stock) of Reorganized
Teletrac or (b) to Reorganized Teletrac or to any Subsidiary of
Reorganized Teletrac;
(ii) purchase, redeem, defease, retire or otherwise acquire or
retire for value any Equity Interests of Reorganized Teletrac or any
Affiliate of Reorganized Teletrac, other than any such Equity
Interests owned by Reorganized Teletrac or any Subsidiary of
Reorganized Teletrac;
(iii) voluntarily purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness that is expressly subordinated in
right of payment to the Senior Secured Notes, except in accordance
with the scheduled mandatory redemption or repayment provisions set
forth in the original documentation governing such Indebtedness; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as"Restricted Payments"), unless, at the time of and after
giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) Reorganized Teletrac would, at the time of such Restricted
Payment and after giving PRO FORMA effect thereto as if such
Restricted Payment had been made at the beginning of the
immediately preceding fiscal quarter, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Indebtedness to Cash Flow Ratio test set forth in the first
paragraph of Section 6.11 hereof; and
(3) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by Reorganized Teletrac and its
Subsidiaries after the Issue Date (excluding Restricted Payments
permitted by clause (iii) of the next succeeding paragraph), is
less than the sum (without duplication) of:
(A) 50% of the Consolidated Net Income of Reorganized
Teletrac (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the Issue Date
to the end of Reorganized Teletrac's most recently ended
fiscal quarter for which financial statements are available
at the time of such Restricted Payment (or, if such
aggregate Consolidated Net Income for such period is a
deficit, less 100% of such deficit); plus
(B) 100% of the aggregate net cash proceeds received by
Reorganized Teletrac from the issue or sale, since the Issue
Date, of Equity Interests of Reorganized Teletrac or of debt
securities of Reorganized Teletrac that have been converted
into such Equity Interests (other than (x) Equity Interests
(or convertible debt securities) sold to a Subsidiary of
20
Reorganized Teletrac and (y) Disqualified Stock or debt
securities that have been converted into Disqualified Stock;
plus
(C) to the extent that any Restricted Investment that was
made after the Issue Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (x) the cash
return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (y) the initial
amount of such Restricted Investment.
(b) The provisions set forth in paragraph (a) above shall not
prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Agreement;
(ii) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of Reorganized Teletrac in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than
to a Subsidiary of Reorganized Teletrac) of other Equity Interests of
Reorganized Teletrac (other than any Disqualified Stock); provided
that the amount of any such proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be
excluded from clause (3)(B) of paragraph (a) above;
(iii) the repayment, defeasance, redemption or repurchase of
Intercompany Indebtedness or Indebtedness with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of
Reorganized Teletrac) of Equity Interests of Reorganized Teletrac
(other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such repayment,
defeasance, redemption or repurchase shall be excluded from clause
(3)(B) of paragraph (a) above; and
(iv) the purchase of employee stock or incentive options, or
capital stock issued pursuant to the exercise of employee stock or
incentive options or pursuant to employee restricted stock purchase
plans in an aggregate amount not to exceed $500,000 in any calendar
year and in an aggregate amount not to exceed $2.0 million since the
date of this Agreement, provided, however, that at the time of, and
after giving effect to, any Restricted Payment permitted under clauses
(i), (ii) and (iv), no Default or Event of Default shall have occurred
and be continuing.
(c) The amount of all Restricted Payments, if not made in cash, shall
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
proposed to be transferred by Reorganized Teletrac or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, Reorganized Teletrac shall deliver to the Agent
21
an Officers's Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this covenant
were computed, which calculations may be based upon the latest available
financial statements of Reorganized Teletrac.
SECTION 6.10 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. Reorganized Teletrac shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to:
(i) pay dividends or make any other distributions to Reorganized
Teletrac or any of its Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its profits;
(ii) pay any Indebtedness owed to Reorganized Teletrac or any of its
Subsidiaries;
(iii) make loans or advances to Reorganized Teletrac or any of its
Subsidiaries; or
(iv) transfer any of its properties or assets to Reorganized Teletrac
or any of its Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) this Agreement and the Senior Secured Notes;
(b) Existing Indebtedness;
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by Reorganized Teletrac or any of its
Subsidiaries as in effect at the time of such acquisition (except
to the extent such Indebtedness was incurred in connection with
or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or
assets of the Person, so acquired;
(e) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past
practice;
(f) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature described in clause (iv) above on the property so
acquired;
(g) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
22
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Refinanced
Indebtedness;
(h) Indebtedness of a Subsidiary of Reorganized Teletrac
representing loans or Indebtedness which is (A) incurred on the
basis of a pledge of accounts receivable due for the sale or
lease of equipment, air time, or maintenance services to
customers and (B) is without recourse to the assets of the
Company or such Subsidiary except those assets set forth in
subsection (A); or
(i) in the case of clause (a), (b), (d), (e), (f), (g) and (h)
above, any amendments, modifications, restatements, renewals,
increases, supplements, modifications, restatements or
refinancings thereof, provided that such amendments,
modifications, restatements or refinancings are not materially
more restrictive with respect to such dividend and other payment
restrictions than those contained in such instruments as in
effect on the date of their incurrence.
SECTION 6.11 INCURRENCE OF INDEBTEDNESS OR ISSUANCE OF DISQUALIFIED
STOCK. Reorganized Teletrac shall not, and Reorganized Teletrac shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, "incur") any Indebtedness
(including, without limitation, Acquired Debt) and Reorganized Teletrac and its
Subsidiaries shall not, issue any Disqualified Stock and will not permit any of
their respective Subsidiaries to issue any shares of Preferred Equity Interest;
provided, however, that, Reorganized Teletrac may incur Indebtedness (including,
without limitation, Acquired Debt) or issue Disqualified Stock if, after giving
PRO FORMA effect to the incurrence of such Indebtedness or the issuance of such
Disqualified Stock and the use of proceeds thereof, the aggregate Indebtedness
to Cash Flow Ratio of Reorganized Teletrac does not exceed 5.0 to 1. The
foregoing limitations will not apply to:
(i) Indebtedness represented by the Senior Secured Notes and this
Agreement;
(ii) Existing Indebtedness;
(iii) Indebtedness incurred by Reorganized Teletrac under (A) Hedging
Obligations, provided that (1) the notional principal amount of any
interest rate protection agreement does not significantly exceed the
principal amount of the Indebtedness to which such interest rate protection
agreement relates and (2) any agreements related to fluctuations in
currency rates do not increase the outstanding Indebtedness other than as a
result of fluctuations in foreign currency exchange rates, and (B)
performance, surety and workers' compensation bonds or other obligations of
a like nature incurred in the ordinary course of business consistent with
past practice;
23
(iv) Indebtedness of Reorganized Teletrac owed to and held by any of
its Subsidiaries and Indebtedness of any Subsidiaries of Reorganized
Teletrac owed to and held by Reorganized Teletrac or any of its
Subsidiaries (the Indebtedness incurred pursuant to this clause (iv) being
hereafter referred to as "Intercompany Indebtedness"); provided that an
incurrence of Indebtedness shall be deemed to have occurred upon any sale
or other disposition of Intercompany Indebtedness to a Person other than
Reorganized Teletrac or any of its Subsidiaries;
(v) Non-Recourse Debt by Reorganized Teletrac incurred to finance
purchase money obligations;
(vi) Indebtedness incurred by Reorganized Teletrac under the 9% Note
Indenture, provided that the aggregate principal amount at any time
outstanding under this clause (vi) does not exceed $15 million less the
amount of any such Indebtedness retired with the Net Cash Proceeds from any
Asset Sale (or less the permanent reduction of any commitments under the 9%
Note Indenture), and less the aggregate principal amount of Indebtedness
under this clause (vi) which is refinanced under clause (vii) below;
(vii) Indebtedness incurred by Reorganized Teletrac ("Permitted
Refinancing Indebtedness") incurred to refinance, replace or refund
Indebtedness ("Refinanced Indebtedness") incurred pursuant to the
Indebtedness to Cash Flow Ratio test set forth in the first paragraph of
this covenant or pursuant to clauses (i), (ii) or (vi) of this covenant
provided that:
(a) the aggregate principal amount of such Permitted Refinancing
Indebtedness does not exceed the aggregate principal amount of the
Refinanced Indebtedness (including accrued and unpaid interest
thereon) plus the amount of fees and reasonable expenses incurred in
connection therewith;
(b) such Permitted Refinancing Indebtedness shall have final
maturity equal to or greater than, and a Weighted Average Life to
Maturity equal to or greater than, the final maturity and Weighted
Average Life to Maturity of the Refinanced Indebtedness, respectively;
and
(c) such Permitted Refinancing Indebtedness shall rank no higher
relative to the Senior Secured Notes than the Refinanced Indebtedness
and in no event may any Indebtedness of Reorganized Teletrac be
refinanced with Indebtedness of any Subsidiary under this clause
(vii); and
(viii) any Indebtedness of Reorganized Teletrac in an aggregate
principal amount (including the amounts outstanding pursuant to this
Agreement not to exceed $10.0 million at any one time outstanding.
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(ix) Indebtedness of a Subsidiary of Reorganized Teletrac representing
loans or Indebtedness which is (A) incurred on the basis of a pledge of
accounts receivable due for the sale or lease of equipment, air time or
maintenance services to customers and (B) is without recourse to the assets
of the Company or such Subsidiary except those assets set forth in
subsection (A).
SECTION 6.12 TRANSACTIONS WITH AFFILIATES. Reorganized Teletrac shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell, lease, license, transfer or otherwise dispose of any of its properties or
assets to, or purchase any properly or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless: (i) such Affiliate Transaction is on terms that are no less favorable to
Reorganized Teletrac or such Subsidiary than those that would have been obtained
in a comparable arm's length transaction by Reorganized Teletrac or such
Subsidiary with an unrelated Person; and (ii) Reorganized Teletrac delivers to
the Agent: (a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $2.0 million, a resolution of the Board of Directors
of Reorganized Teletrac set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (i) above and such Affiliate
Transaction is approved by a majority of the disinterested members of the Board
of Directors; and (b) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
of such Affiliate Transaction to Reorganized Teletrac or Subsidiary involved in
such Affiliate Transaction from a financial point of view issued by an
Independent Financial Advisor or, with respect to communications-related
matters, a recognized expert in the communications industry; provided, that the
following shall be deemed not to be Affiliate Transactions: (1) any reasonable
employment agreement or stock option agreement entered into by Reorganized
Teletrac or any of its Subsidiaries with any of their respective employees in
the ordinary course of business; (2) transactions between or among Reorganized
Teletrac and its Subsidiaries; (3) Restricted Payments permitted by clauses (i)
and (ii) of the second paragraph of Section 6.9 hereof and Permitted Investments
of a type referred to in clauses (i) and (iii) of the definition of Permitted
Investments; (4) the payment of reasonable fees to directors of Reorganized
Teletrac or any of its Subsidiaries; and (5) Affiliate Transactions pursuant to
agreements in effect on the date of this Indenture and described in the
Disclosure Statement and renewals and extensions of such agreements on terms no
less favorable to the Purchasers than the terms of such original agreements and
transactions. Notwithstanding the foregoing, no transactions with, or for the
benefit of the Purchasers, shall be deemed an Affiliate Transaction pursuant to
this Section 6.12.
SECTION 6.13 LIENS. Reorganized Teletrac shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom, or assign or convey any right to receive income
therefrom, except Permitted Liens. Notwithstanding the foregoing, Reorganized
Teletrac shall not, and shall not permit any of its Subsidiaries to directly or
indirectly create, incur, assume or suffer to exit any Liens or any of the
Collateral (as such term is defined in the Security Agreement) (other than the
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Liens incurred pursuant to this Agreement in favor of the Purchasers) and shall
not, and shall not permit any of its Subsidiaries directly or indirectly impair
the effectiveness of the Liens incurred pursuant to this Agreement in favor of
the Purchasers.
SECTION 6.14 ADDITIONAL GUARANTEES. Reorganized Teletrac will not
permit any Subsidiary, directly or indirectly, to Guarantee any Indebtedness
(other than Permitted Indebtedness) of Reorganized Teletrac ("Guaranteed
Indebtedness"), unless (i) such Subsidiary simultaneously executes and delivers
to the Agent an amendment to this Agreement pursuant to Section ____ hereto
providing for a Guarantee ("Subsidiary Guarantee") of payment by such Subsidiary
of all of Reorganized Teletrac's obligations under the Senior Secured Notes and
this Agreement on the terms set forth in this Agreement and (ii) such Subsidiary
waives, and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against Reorganized Teletrac or any other Subsidiary as a result of any
payment by such Subsidiary under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to any Guarantee of any Subsidiary that
existed at the time such Person became a Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary. If
the Guaranteed Indebtedness is (a) PARI PASSU with the Senior Secured Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Senior
Secured Notes, then the Guarantee of such Guaranteed Indebtedness shall be
subordinated to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated to the Senior Secured Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of Reorganized Teletrac, of all of Reorganized
Teletrac's and each Subsidiary's Capital Stock in, or all or substantially all
the assets of, such Subsidiary (which sale, exchange or transfer is not
prohibited under the terms of this Agreement) or (ii) the release or discharge
of the Guarantee that resulted in the creation of such Subsidiary guarantee,
except a discharge or release by or as a result of payment under such Guarantee.
SECTION 6.15 OFFER TO PURCHASE UPON CHANGE OF CONTROL. (a) Upon the
occurrence of a Change of Control, each Purchaser shall have a right to require
Reorganized Teletrac to repurchase all or any part of such Purchaser's Senior
Secured Notes pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 100% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon to the date of purchase
(the"Change of Control Payment"). Within 20 days following the date upon which
the Change of Control occurred (the "Change of Control Date"), Reorganized
Teletrac shall send, by first class mail, a notice to each Purchaser, with a
copy to the Agent, which notice shall govern the terms of the Change of Control
Offer. The notice to the Purchasers shall contain all instructions and materials
necessary to enable such Purchasers to tender Senior Secured Notes pursuant to
the Change of Control Offer. Such notice shall state:
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(i) that the Change of Control Offer is being made pursuant to this
Section 6.15 and that all Senior Secured Notes tendered and not withdrawn
shall be accepted for payment;
(ii) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 45
days from the date such notice is mailed, other than as may be required by
law) (the "Change of Control Payment Date");
(iii) that any Senior Secured Note not tendered will continue to
accrue interest;
(iv) that, unless Reorganized Teletrac defaults in making payment
therefor, any Senior Secured Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Purchasers electing to have a Senior Secured Note purchased
pursuant to a Change of Control Offer will be required to surrender the
Senior Secured Note, with the form entitled "Option of Purchaser to Elect
Purchase" on the reverse of the Senior Secured Note completed, to the Agent
at the address specified in the notice prior to the close of business on
the third Business Day prior to the Change of Control Payment Date;
(vi) that Purchasers will be entitled to withdraw their election if
the Agent receives, not later than five Business Days prior to the Change
of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Purchaser, the principal amount of the
Senior Secured Notes the Purchaser delivered for purchase and a statement
that such Purchaser is withdrawing such Purchaser's election to have such
Senior Secured Notes purchased;
(vii) that Purchasers whose Senior Secured Notes are purchased only in
part will be issued new Senior Secured Notes in a principal amount equal to
the unpurchased portion of the Senior Secured Notes surrendered; and
(viii) the circumstances and relevant facts regarding such Change of
Control.
(b) On or before the Change of Control Payment Date, Reorganized
Teletrac shall to the extent lawful (i) accept for payment all Senior Secured
Notes or portions thereof property tendered pursuant to the Change of Control
Offer, (ii) deposit with the Agent in U.S. dollars, an amount equal to the
Change of Control Payment in respect of all Senior Secured Notes or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Agent the
Senior Secured Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Senior Secured Notes or portions thereof being
purchased by Reorganized Teletrac. The Agent shall promptly mail to each
Purchaser of Senior Secured Notes so accepted the Change of Control Payment for
27
such Senior Secured Notes, and the Agent shall promptly authenticate and mail
(or cause to be transferred by book entry) to such Purchasers a new Note equal
in principal amount to any unpurchased portion of the Senior Secured Notes
surrendered. Any Senior Secured Notes not so accepted shall be promptly mailed
by Reorganized Teletrac to the Purchaser thereof. Any amounts remaining after
the purchase of Senior Secured Notes pursuant to a Change of Control Offer shall
be returned by the Agent to Reorganized Teletrac. To the extent the provisions
of any securities laws or regulations conflict with the provisions under this
Section 6.15, Reorganized Teletrac shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 6.15 by virtue thereof.
(c) The provisions of Subsections (a) and (b) above shall not apply if
a third party makes the Change of Control Offer in the manner, at the time and
otherwise in compliance with the requirements set forth in this Agreement
applicable to a Change of Control Offer made by Reorganized Teletrac and
purchases all Senior Secured Notes validly tendered and not withdrawn under such
Change of Control Offer.
SECTION 6.16 MAINTENANCE OF PROPERTIES AND INSURANCE. Reorganized
Teletrac shall, and shall cause each of its Subsidiaries to, maintain its
properties in good working order and condition (subject to ordinary wear and
tear) and make all reasonably necessary repairs, renewals, replacements,
additions and improvements required for it to actively conduct and carry on its
business; PROVIDED, HOWEVER, that nothing in this Section 6.16 shall prevent
Reorganized Teletrac or any of its Subsidiaries from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the good
faith judgment of the Board of Directors or other governing body of Reorganized
Teletrac desirable in the conduct of its businesses and is not disadvantageous
in any material respect to the Purchasers.
SECTION 6.17 LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
SUBSIDIARIES. Reorganized Teletrac shall not, and shall not permit any
Subsidiary to, issue, transfer, convey, sell or otherwise dispose of any shares
of Capital Stock of a Subsidiary or securities convertible or exchangeable into,
or options, warrants, rights or any other interest with respect to, Capital
Stock of a Subsidiary to any person other than Reorganized Teletrac or a
Subsidiary except (i) in a transaction consisting of a sale of all other Capital
Stock of such Subsidiary and that complies with the provisions of Section 6.19
hereof, to the extent such provisions apply; (ii) if required, the issuance,
transfer, conveyance, sale or other disposition of directors' qualifying shares;
and (iii) in a transaction in which, or in connection with which, Reorganized
Teletrac or a Subsidiary acquires at the same time sufficient Capital Stock of
such Subsidiary to at least maintain the same percentage ownership it had prior
to such transaction (and provided that the terms of such Capital Stock, and
under which such Capital Stock is held are not more disadvantageous to
Reorganized Teletrac); or (iv) as may be made in connection with a loan of the
type described in Sections 6.10 (h) and 6.11 (ix).
SECTION 6.18 BUSINESS ACTIVITIES. Reorganized Teletrac will not, and
will not permit any of its Subsidiaries to, engage in any business other than
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that which is related to the design, development, procurement, installation,
operation or marketing of location, fleet management or related two-way
messaging systems and businesses and reasonably related extensions thereof.
SECTION 6.19 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY INTERESTS.
Reorganized Teletrac shall not, and shall not permit any of its Subsidiaries to,
engage in an Asset Sale unless:
(i) Reorganized Teletrac or such Subsidiary, as the case may be,
engaging in such Asset Sale receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets sold or
otherwise disposed of; and
(ii) at least 80% of the consideration therefor received by
Reorganized Teletrac or such Subsidiary is in the form of cash or Cash
Equivalents;
PROVIDED, HOWEVER, that any notes or similar obligations received by any of
Reorganized Teletrac or such Subsidiaries from such transferees that are
immediately converted by Reorganized Teletrac or such Subsidiaries into cash,
shall be deemed to be cash (to the extent of the net cash received) for purposes
of this clause (ii). Within 180 days after the receipt of any Net Proceeds,
Reorganized Teletrac may apply such Net Proceeds to:
(i) repay, and thereby permanently reduce the commitments or amounts
under this Agreement, or
(ii) repay, and thereby permanently reduce the commitments or amounts
available to be borrowed under the 9% Note Indenture pursuant to clause
(vi) of the covenant set forth in Section 6.11 hereof, or
(iii) an investment in Related Assets or a Related Business. Pending
the final application of any such Net Proceeds, Reorganized Teletrac may
temporarily invest such Net Proceeds in any manner that is not prohibited
by this Agreement.
ARTICLE VII.
PREPAYMENT OF SENIOR NOTES
SECTION 7.1 OPTIONAL PREPAYMENTS. The Senior Secured Notes shall be
subject to prepayment in a whole or in part at any time or from time to time in
part, at the option of Reorganized Teletrac, at the unpaid principal amount
thereof plus accrued interest thereon through the date fixed for prepayment,
without penalty or premium.
29
SECTION 7.2 NOTICE OF PREPAYMENTS. Any call for prepayment of the
Senior Secured Notes pursuant to Section 7.1 shall be made by giving written
notice to the holders of the Senior Secured Notes to be prepaid not less than
five days prior to the date fixed for prepayment, which notice shall specify the
principal amount to be prepaid. If all the outstanding Senior Secured Notes are
to be prepaid, the notice of prepayment shall so state. If less than all the
Senior Secured Notes are to be prepaid, the notice of prepayment shall identify
the Senior Secured Notes to be prepaid. In case any Senior Secured Note is to be
prepaid in part only, the notice of prepayment shall state the portion of the
principal amount thereof to be prepaid and shall refer to the option available
under Section 7.4 hereof to the holder of a Senior Secured Note which is
partially prepaid. Notice of call for prepayment having been given as aforesaid,
the principal amount to be prepaid, together with interest thereon to the date
of prepayment, shall on the date designated in such notice become due and
payable. From and after the date fixed for prepayment, unless Reorganized
Teletrac shall default in payment of such principal amount when so due and
payable, together with interest as aforesaid, interest on such principal amount
shall cease to accrue.
SECTION 7.3 ALLOCATION OF PAYMENTS. In the case of the prepayment of
less than all the Senior Secured Notes at the time outstanding, the aggregate
principal amount to be prepaid shall be allocated among the holders of all the
Senior Secured Notes at the time outstanding in proportion, as nearly as
practicable to the nearest dollar, to the respective aggregate unpaid principal
amounts of the Senior Secured Notes (not theretofore called for prepayment) then
held by them, respectively.
SECTION 7.4 NOTATION OF PARTIAL PAYMENTS. Except as otherwise provided
in Section 7.5 hereof, upon any partial prepayment of any Senior Secured Note,
such Senior Secured Note shall be, at the option of the holder thereof, either
(i) surrendered to Reorganized Teletrac in exchange for a new Senior Secured
Note in a principal amount equal to the principal amount remaining unpaid on the
Senior Secured Note surrendered and otherwise having the same terms and
provisions as the Senior Secured Note surrendered or (ii) made available to
Reorganized Teletrac at its office herein provided for notation thereon of the
portion of the principal so prepaid.
SECTION 7.5 DIRECT PAYMENT. So long as any Purchaser shall hold any of
the Senior Secured Notes, Reorganized Teletrac shall pay to such Purchaser the
interest on such Senior Secured Note without any presentment thereof and without
notation of such payment being made thereon, notwithstanding any provision to
the contrary herein or in the Senior Secured Notes with respect to place of
payment, (i) by check in New York Clearing House funds duly mailed to such
Purchaser at the address designated in Schedule I hereto or in accordance with
any unrevoked written direction from such Purchaser to Reorganized Teletrac or
(ii) if a bank account is designated for such Purchaser on Schedule I hereto or
in any written notice to Reorganized Teletrac from such Purchaser, Reorganized
Teletrac shall make such payments to such bank account by wire transfer in
immediately available funds, marked for attention as indicated, or in such other
manner or to such other account of such Purchaser in any bank in the United
30
States as such Purchaser may from time to time direct in writing. Each Purchaser
agrees that prior to the sale or transfer of any Senior Secured Note by it, it
shall either (i) surrender the same to Reorganized Teletrac in exchange for a
new Senior Secured Note in a principal amount equal to the principal amount
remaining unpaid on the Senior Secured Note surrendered and otherwise having the
same terms and provisions as the Senior Secured Note surrendered or (ii) make
the same available to Reorganized Teletrac, at its office designated as herein
provided, for notation thereon of the extent to which any payment has been made
on account of the principal thereof. Each Purchaser further agrees that it will,
at any time during regular business hours, permit Reorganized Teletrac to make
appropriate notation on any Senior Secured Note then held by it of the amount of
principal which has been paid thereon, if Reorganized Teletrac, at least seven
days prior to the date upon which such notation is to be made, shall have in
writing requested permission to make such notation, specifying the date when
the same is to be made.
ARTICLE VIII.
EVENTS OF DEFAULT
SECTION 8.1 EVENTS OF DEFAULT. If any of the following events (herein
called "Events of Default") shall occur:
(i) Reorganized Teletrac shall default in the payment of any part of
the principal of any Senior Secured Note when and the same shall be due and
payable and such default shall not have been remedied within five days of
written notice thereof to Reorganized Teletrac;
(ii) Reorganized Teletrac shall default in the payment of any
installment of interest on any Senior Secured Note for more than three days
after the same shall become due and payable and such default shall not have
been remedied within five days of written notice thereof to Reorganized
Teletrac;
(iii) Reorganized Teletrac or any subsidiary shall default (as
principal or guarantor or other surety) either in the payment of the
principal of, or premium, if any, or interest on any indebtedness for
borrowed money (other than the Senior Secured Notes) or with respect to any
of the provisions of any evidence of indebtedness for borrowed money (other
than the Senior Secured Notes) or which represents a purchase money
obligation, or any agreement relating to either thereof, and the effect of
such default is to accelerate the maturity of such indebtedness or the
holder thereof shall cause such indebtedness to become due prior to the
stated maturity thereof, or the Company or any subsidiary shall not pay
such indebtedness at maturity;
(iv) Reorganized Teletrac shall default in the performance of or
compliance with the provisions of Article V hereof and such default shall
not have been cured within 10 days of written notice thereof;
31
(v) Reorganized Teletrac shall default in the performance of or
compliance with any agreement, condition or term contained herein (other
than those referred to above) or in the Security Agreement, and such
default shall not have been remedied within 20 days after written notice
thereof shall have been given to Reorganized Teletrac by the holder of any
Senior Secured Note;
(vi) any representation or warranty made to the Purchasers by or on
behalf of Reorganized Teletrac pursuant to Article II hereof shall prove to
have been false or incorrect in any material respect on the date as of
which made;
(vii) any final judgment for the payment of money shall be rendered
against the Company and the same shall remain undischarged for a period of
60 consecutive days during which (A) execution shall not be stayed or (B)
such liability shall not be bonded and the aggregate amount of such final
judgment for the payment of money shall exceed $200,000, net of any
insurance proceeds received by Reorganized Teletrac; or
(viii) Reorganized Teletrac shall default in the performance of or
compliance with the Security Agreement;
then and in any such event the holder of any Senior Secured Note may at any time
(unless all defaults theretofore or thereupon shall have been remedied) at its
option, by written notice to the Company, declare all the Senior Secured Notes
held by such holder to be due and payable, whereupon the same shall forthwith
mature and become due and payable without presentment, demand, protest or other
notice, all of which are hereby waived.
SECTION 8.2 REMEDIES ON AND NOTICES OF DEFAULT. In case any one or
more Events of Default shall occur, the holder of any Senior Secured Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
a suit in equity, action at law or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in such Senior Secured
Note, or for an injunction against a violation of any of the terms or provisions
hereof or thereof, or in aid of the exercise of any power granted hereby or
thereby or by law. In case of a default under this Agreement or the Security
Agreement, Reorganized Teletrac shall pay to the holder of any Senior Secured
Note such further amount as shall be sufficient to cover the reasonable cost and
expense of enforcement, including, without limitation, reasonable attorneys'
fees. If the holder of any Senior Secured Note shall give any notice or take any
other action in respect of a claimed default, Reorganized Teletrac shall
forthwith give written notice thereof to all other holders of the Senior Secured
Notes at the time outstanding, describing the notice or action and the nature of
the claimed default. No course of dealing and no delay on the part of any holder
of any Senior Secured Note in exercising any right shall operate as a waiver
thereof or otherwise prejudice such holder's rights or the rights of the holder
of any other Senior Secured Note. No remedy conferred hereby or by any Senior
Secured Note upon any holder thereof shall be exclusive of any other remedy
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise.
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ARTICLE IX.
EXCHANGE OF SENIOR SECURED NOTES
SECTION 9.1 NEW SENIOR SECURED NOTES. Reorganized Teletrac shall cause
to be kept at its principal office a register for the registration and transfer
of the Senior Secured Notes as hereinafter provided. Subject to the restrictions
on transfer under the Securities Act, Reorganized Teletrac will at any time, at
its expense, at the request of the holder of any Senior Secured Note, and upon
surrender of such Senior Secured Note for such purpose, issue new Senior Secured
Notes in exchange therefor, registered in the name of the holder or such person
or persons as may be designated by such holder, dated the date to which interest
has been paid on the surrendered Senior Secured Note, in an aggregate principal
amount equal to the unpaid principal amount of such Senior Secured Note and
substantially in the form of such Senior Secured Note with appropriate
variations.
SECTION 9.2 REPLACEMENT OF SENIOR SECURED NOTES. Upon receipt of
evidence satisfactory to Reorganized Teletrac of the loss, theft, destruction or
mutilation of any Senior Secured Note and, in the case of any such loss, theft
or destruction, upon delivery of indemnity satisfactory to Reorganized Teletrac,
or, in the case of any such mutilation, upon surrender and cancellation of such
Senior Secured Note, Reorganized Teletrac will issue a new Senior Secured Note,
of like tenor, in lieu of, and dated the date to which interest has been paid
on, such lost, stolen, destroyed or mutilated Senior Secured Note.
ARTICLE X.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 10.1 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
SECTION 10.2 GENERAL INDEMNITY. (a) Subject to the other terms and
conditions of this Article X, Reorganized Teletrac hereby agrees to and shall
indemnify, defend and hold the Purchasers harmless from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and the
reasonable fees and expenses of counsel (collectively, "Damages"), asserted
against, resulting to, imposed upon or incurred by Reorganized Teletrac or the
Purchasers by reason of or resulting from a breach of any representation,
warranty, covenant or agreement of the Reorganized Teletrac contained in or made
pursuant to this Agreement, or any facts or circumstances constituting such a
breach.
33
(b) Subject to the terms and conditions of this Article X, the
Purchasers, severally and not jointly, agree to and shall indemnify, defend and
hold Reorganized Teletrac harmless from and against all Damages asserted
against, resulting to, imposed upon or incurred by the Reorganized Teletrac by
reason of or resulting from or arising out of a breach of any representation,
warranty, covenant or agreement of such Purchaser contained in or made pursuant
to this Agreement, or any facts or circumstances constituting such a breach.
SECTION 10.3 CONDITIONS OF INDEMNIFICATION. The respective obligations
and liabilities of Reorganized Teletrac, on the one hand, and the Purchasers, on
the other hand (herein sometimes called the "indemnifying party"), to the other
(herein sometimes called the "party to be indemnified") under Section 10.2
hereof with respect to claims resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
(a) within 20 days after receipt of notice of commencement of any
action or the assertion in writing of any claim by a third party, the party
to be indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading
(PROVIDED, HOWEVER, that failure to give such notice shall not affect the
obligations of the indemnifying party under this Article X unless and to
the extent that such failure shall be prejudicial to the defense of such
claim by the indemnifying party), and the indemnifying party shall have the
right to undertake the defense thereof by representatives of its own
choosing;
(b) in the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the tenth day
preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party, subject
to the right of the indemnifying party to assume the defense of such claim
at any time prior to settlement, compromise or final determination thereof,
provided that the indemnifying party shall be given at least 15 days prior
written notice of the effectiveness of any such proposed settlement or
compromise;
(c) anything in this Section 10.3 to the contrary notwithstanding, (i)
if there is a reasonable probability that a claim may materially and
adversely affect the indemnifying party other than as a result of money
damages or other money payments, the indemnifying party shall have the
right, at its own cost and expense, to compromise or settle such claim, but
(ii) the indemnifying party shall not, without the prior written consent of
the party to be indemnified, settle or compromise any claim or consent to
the entry of any judgment that does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the party to be
indemnified a release from all liability in respect of such claim; and
34
(d) in connection with any such indemnification, the indemnified party
will cooperate in all reasonable requests of the indemnifying party.
SECTION 10.4 REMEDIES CUMULATIVE. The remedies provided herein shall
be cumulative and shall not preclude assertion by any party hereto of any other
rights or the seeking of any other remedies against the other parties hereto.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1 EXPENSES, ETC. The parties shall pay their own expenses
in connection with the transactions contemplated hereby.
SECTION 11.2 NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by national overnight courier
service or first class certified mail, postage prepaid, or by telecopy addressed
to such party at the address or telecopy number set forth below:
(1) if to the Company or Reorganized Teletrac, to it at:
Teletrac, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(2) if to any Purchaser, to it at his or its address appearing on
Schedule I hereto;
35
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices and other
communications shall be deemed to have been received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of national overnight
courier service, on the first business day following delivery to such service,
(c) in the case of mailing, on the fifth business day following the date of such
mailing and (d) in the case of telecopy, when received.
SECTION 11.3 BROKERAGE. Each party hereto shall indemnify and hold
harmless the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 11.4 PARTIES IN INTEREST. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
SECTION 11.5 ENTIRE AGREEMENT; WAIVER; ASSIGNMENT. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified nor any provisions waived
except in a writing signed by the parties hereto or, in the case of Article V or
Article VII hereof, by the holders of a majority of outstanding Senior Secured
Notes. This Agreement may not be assigned by any party without the prior written
consent of the others.
SECTION 11.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 11.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
TELETRAC, INC.
By_________________________
Name:
Title:
PURCHASERS:
37
SCHEDULE I
PURCHASERS
NAME AND ADDRESS CLASS SENIOR SECURED NOTES
OF PURCHASER COMMITMENT AMOUNT A WARRANTS (PRINCIPAL AMOUNT)
