SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _)
HIGHWAYMASTER COMMUNICATIONS, INC.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
43126310
(CUSIP Number)
Wayne A. Wirtz, Esq.
SBC Communications Inc.
175 E. Houston
San Antonio, TX 78205
(210) 351-3736
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 27, 1996
(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement. [x]
(Page 1 of 13 pages)
<PAGE>
- --------------------
CUSIP NO. 43126310 13D
- --------------------
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SBC Communications Inc.; 43-1301883
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7. SOLE VOTING POWER
OF SHARES
BENEFICIALLY 0
OWNED
BY EACH
REPORTING
PERSON
WITH
-------------------------------------------------------------
8. SHARED VOTING POWER
1,600,000 shares of Common Stock issuable in the
event of the conversion of 1,000 shares of Series D
Participating Convertible Preferred Stock and 5,000,000
shares of Common Stock issuable in the event of the
exercise of 5,000,000 Warrants (which, prior to receipt
of certain regulatory approvals, are exercisable only
to the extent that doing so is consistent with
restrictions contained in the Communications Act of
1934, as amended by The Telecommunications Act of 1996),
for a total beneficial ownership of 6,600,000 shares of
Common Stock in the event of such conversion and
exercise.
-------------------------------------------------------------
(Page 2 of 13 pages)
<PAGE>
-------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
0
-------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,600,000 shares of Common Stock issuable in the event
of the conversion of 1,000 shares of Series D
Participating Convertible Preferred Stock and 5,000,000
shares of Common Stock issuable in the event of the
exercise (subject to the limitation described in 7
above) of 5,000,000 Warrants, for a total beneficial
ownership of 6,600,000 shares of Common Stock in the
event of such conversion and exercise.
-------------------------------------------------------------
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,600,000 shares of Common Stock issuable in the event of the conversion of
1,000 shares of Series D Participating Convertible Preferred Stock and
5,000,000 shares of Common Stock issuable in the event of the exercise
(subject to the limitation set forth in 7 above) of 5,000,000 Warrants,
for a total beneficial ownership of 6,600,000 shares of Common Stock in the
event of such conversion and exercise.
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.1% of the outstanding shares of Common Stock in the event of the
conversion of 1,000 shares of Series D Participating Convertible Preferred
Stock and 16.8% of the outstanding shares of Common Stock in the event of
the exercise of 5,000,000 Warrants (subject to the limitation set forth in
7 above), for a total of 21.1% of the outstanding shares of Common Stock in
the event of such conversion and exercise.
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC
- --------------------------------------------------------------------------------
(Page 3 of 13 pages)
<PAGE>
- --------------------
CUSIP NO. 43126310 13D
- --------------------
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Southwestern Bell Wireless Holdings, Inc.; 75-2515769
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7. SOLE VOTING POWER
OF SHARES
BENEFICIALLY 0
OWNED
BY EACH
REPORTING
PERSON
WITH
-------------------------------------------------------------
8. SHARED VOTING POWER
1,600,000 shares of Common Stock issuable in the event
of the conversion of 1,000 shares of Series D
Participating Convertible Preferred Stock and 5,000,000
shares of Common Stock issuable in the event of the
exercise of 5,000,000 Warrants (which, prior to
receipt of certain regulatory approvals, are exercisable
only to the extent that doing so is consistent with
restrictions contained in the Communications Act of
1934, as amended by The Telecommunications Act of 1996),
for a total beneficial ownership of 6,600,000 shares of
Common Stock in the event of such conversion and
exercise.
-------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
0
-------------------------------------------------------------
(Page 4 of 13 pages)
<PAGE>
-------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,600,000 shares of Common Stock issuable in the event
of the conversion of 1,000 shares of Series D
Participating Convertible Preferred Stock and 5,000,000
shares of Common Stock issuable in the event of the
exercise (subject to the limitation described in 7
above) of 5,000,000 Warrants, for a total beneficial
ownership of 6,600,000 shares of Common Stock in the
event of such conversion and exercise.
-------------------------------------------------------------
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,600,000 shares of Common Stock issuable in the event of the conversion of
1,000 shares of Series D Participating Convertible Preferred Stock and
5,000,000 shares of Common Stock issuable in the event of the exercise
(subject to the limitation set forth in 7 above) of 5,000,000 Warrants,
for a total beneficial ownership of 6,600,000 shares of Common Stock in
the event of such conversion and exercise.
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.1% of the outstanding shares of Common Stock in the event of the
conversion of 1,000 shares of Series D Participating Convertible Preferred
Stock and 16.8% of the outstanding shares of Common Stock in the event of
the exercise of 5,000,000 Warrants (subject to the limitation set
forth in 7 above), for a total of 21.1% of the outstanding shares of
Common Stock in the event of such conversion and exercise.
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
(Page 5 of 13 pages)
<PAGE>
Item 1. SECURITY AND ISSUER.
This statement relates to the Common Stock $.01 par value (the "Common
Stock"), of HighwayMaster Communications, Inc., a Delaware corporation (the
"Issuer") with its principal executive offices at 16473 Dallas Parkway, Suite
710, Dallas, Texas 75248.
Item 2. IDENTITY AND BACKGROUND.
(a) and (b) Southwestern Bell Wireless Holdings, Inc. is a Delaware
corporation ("SBW") and a direct wholly-owned subsidiary of SBC
(as hereinafter defined), with its principal office and principal
place of business at 17330 Preston Road, Suite 100A, Dallas,
Texas 75252.
SBC Communications Inc. is a Delaware corporation ("SBC"), with
its principal office and principal place of business at 175 E.
Houston, San Antonio, Texas 78205-2233. Other than executive
officers and directors, there are no persons or corporations
controlling or ultimately in control of SBC.
The name of each executive officer and director of SBC and SBW
are set forth in Exhibit 1 hereto and incorporated herein by
reference. The business address of all of the individuals listed
on Exhibit 1 is c/o The Vice President and Secretary, SBC
Communications Inc., 175 E. Houston, 11th Floor, San Antonio,
Texas 78205.
(c) SBC is a communications holding company whose subsidiaries are
engaged principally in communications.
SBW serves as a holding company for various cellular subsidiaries
which provide cellular mobile radio telecommunications services
in various areas throughout the United States.
The present principal occupation of each executive officer and
director of SBC and SBW are set forth in Exhibit 1 hereto and
incorporated herein by reference.
(d) During the last five years, neither SBW or SBC nor, to the
best of their knowledge, any of their directors or executive
officers has been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) During the last five years, neither SBC or SBW nor, to the
best of their knowledge, any of their officers or directors have
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to
such laws, and which judgment, decree or final order was not
subsequently vacated.
(f) Each executive officer and director of SBC is a citizen of
the United States except for director Carlos Slim Helu, a citizen
of Mexico.
Each executive officer and director of SBW is a citizen of the
United States.
(Page 6 of 13 pages)
<PAGE>
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 below, SBW paid $20,000,000 as
consideration for the 1,000 shares of Series D Participating Convertible
Preferred Stock of the Issuer (the "Series D Preferred Stock") described in this
Schedule 13D. The funds used to purchase the Series D Preferred Stock came from
working capital funds of SBC. The source of funds, if any, that SBW will use to
pay the exercise price under the Warrants (as hereinafter defined) will be
determined at the time of such exercise.
Item 4. PURPOSE OF THE TRANSACTION.
The purchase by SBW of the Series D Preferred Stock and the issuance by the
Issuer to SBW of 5,000,000 Warrants to purchase Common Stock of the Issuer (the
"Warrants") were effected in connection with a series of transactions resulting
in the recapitalization of the Issuer, an investment in the capital stock of the
Issuer by SBW and the commencement of a strategic business relationship between
SBW and certain of its Affiliates, on the one hand, and the Issuer, on the other
hand. "Affiliate" means any person that directly or indirectly, through one or
more intermediaries, has control of or is controlled by, or is under common
control with, the person specified.
SBW intends to continue to review its investment in the Issuer on an
ongoing basis and based upon the results of such review, SBW's contractual
obligations entered into in connection with such investment, market and general
economic conditions, regulatory approvals and other regulatory conditions and
other factors SBW deems relevant, may seek to modify its investment in the
Issuer through any available means including, without limitation, increases or
decreases in its investment through open market purchases or sales or privately
negotiated transactions or actions of the type enumerated in clauses (a) through
(j) of Item 4 of Schedule 13D. Except as set forth herein, and subject to the
foregoing, SBW has no current plans or proposals that would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
A. SERIES D PREFERRED STOCK
The Issuer has issued 1,000 shares of Series D Preferred Stock to SBW in
exchange for a cash payment in the amount of $20,000,000 pursuant to the
Purchase Agreement, dated as of September 27, 1996, between the Issuer and SBW.
Each such share is convertible, in blocks of 250 of such shares or a larger
integral multiple thereof, at the option of SBW, into 1,600 shares of Common
Stock (subject to adjustment to prevent dilution) and, upon receipt of
Regulatory Relief, will automatically convert into a new class of common stock
of the Issuer to be designated "Class B Common Stock." "Regulatory Relief" means
that SBC or its Affiliates, in their sole judgment, have obtained all necessary
federal and state regulatory approvals to provide landline, interLATA
long-distance service pursuant to the Communications Act of 1934, as amended by
the Telecommunciations Act of 1996. The Class B Common Stock will be convertible
at the option of SBW into Common Stock; the shares of Series D Preferred Stock
will automatically convert into Common Stock on September 27, 2001 if SBC or its
Affiliates have not received Regulatory Relief on or prior to such date.
The $20,000,000 paid by SBW to the Issuer has been placed in escrow pending
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Waiting Period"). If the
Waiting Period expires on or prior to December 31, 1996, and if no order or
decree of a governmental or regulatory authority is in effect as of such time
which would prevent or restrain the purchase by SBW of the Series D Preferred
Stock, the purchase price of $20,000,000 shall be released to the Issuer. If the
Waiting Period has not expired as of December 31, 1996, or if a governmental or
regulatory authority has, as of December 31, 1996, taken action which
(Page 7 of 13 pages)
<PAGE>
would prevent or restrain the purchase by SBW of Series D Preferred Stock, SBW
shall have the option to have the purchase price returned to it and, in such
case, will return the Series D Preferred Stock, and any dividends theretofore
received by SBW in respect of the Series D Preferred Stock, to the Issuer.
The holder of each share of Series D Preferred Stock shall be entitled to
receive the dividends and distributions payable on or in respect of the number
of shares of Common Stock into which such share of Series D Preferred Stock is
then convertible. Each share of Series D Preferred Stock is entitled upon
liquidation, dissolution or winding up of the Issuer to a liquidation preference
of the greater of (i) $20,000 or (ii) the amount distributed or to be
distributed in connection with such liquidation, dissolution or winding-up to a
holder of the number of shares of Common Stock into which such holder of a share
of Series D Preferred Stock could then convert such share.
The holders of the Series D Preferred Stock will not be entitled to elect
any of the directors of the Issuer, but will be entitled to designate a
non-voting delegate to be present at all of the Issuer's board meetings. The
affirmative vote of the holders of a majority of the shares of the Series D
Preferred Stock, voting as a class, is required to approve (i) any merger or
consolidation of the Issuer with or into another entity or any sale of all or
substantially all of the assets of the Issuer, in each case if such action
requires a stockholder vote under Delaware law, (ii) any amendment, alteration
or repeal of the Issuer's Certificate of Incorporation, (iii) the dissolution of
the Issuer, (iv) the adoption of certain anti-takeover provisions that would
adversely affect the holder of the Series D Preferred Stock, (v) certain
issuances of the Issuer's capital stock and incurrence of indebtedness in excess
of $5 million in any one year, (vi) the Issuer's entrance into a new line of
business, joint venture, partnership or similar arrangement requiring the
expenditure or expenditures, individually or in the aggregate, of more than $3
million, (vii) disposal or sale of assets of the Issuer the sale or fair market
value of which exceeds $3 million, and (viii) amendment, alteration or repeal of
the terms of the Series D Preferred Stock or corporate action that would reduce
the number of shares of Common Stock into which a share of Series D Preferred
Stock is convertible.
Shares of Series D Preferred Stock are not transferable other than to SBW
or its Affiliates and are not redeemable by the Issuer.
B. CLASS B COMMON STOCK
The 1,000 shares of Class B Common Stock into which the Series D Preferred
Stock will convert upon receipt of Regulatory Relief will each be convertible,
at the option of the holder thereof, into 1,600 shares of Common Stock (subject
to adjustment to prevent dilution), provided, that no share of Series B Common
Stock may be converted unless the holders of all of the shares of Class B Common
Stock elect so to convert.
The holder of each share of Class B Common Stock will be entitled to
receive the dividends and distributions payable on or in respect of the number
of shares of Common Stock into which such share of Series B Common Stock is then
convertible.
The holders of Common Stock and Class B Common Stock shall generally have
identical voting rights and vote together as a single class, and each share of
Class B Common Stock shall have a number of votes equal to the number of shares
of Common Stock into which such share of Series B Common Stock is then
convertible. In addition to any other voting rights they may have, the shares of
Class B Common Stock will be entitled to elect one Class B Director and a second
Class B Director if SBW or its Affiliates owns more than 20% of the outstanding
Common Stock, including shares issuable upon conversion of the Class B Common
Stock, but excluding shares issuable upon the exercise of the Warrants or of
options or warrants issued by entities other than the Issuer. The following
actions by
(Page 8 of 13 pages)
<PAGE>
the Issuer will also require the approval of a majority of the outstanding
shares of Class B Common Stock: (i) approval of any annual budget or business
plan for the Issuer or any subsidiary, or the deviation from any such budget
approved by the Board of Directors by more than five percent, (ii) issuance by
the Issuer of certain equity securities and the incurrence of indebtedness in
excess of $5 million in any one year, (iii) the hiring or termination by the
Issuer of its chief executive officer, chief financial officer or chief
operating officer, (iv) entering into a new line of business, joint venture,
partnership or similar arrangement, (v) exiting its existing business or
disposing of assets with a value in excess of $500,000 or which are otherwise
material to the Issuer's operations, (vi) adoption of certain antitakeover
provisions that would adversely affect the holders of Class B Common Stock or
their Affiliates, (vii) any action that would reduce the number of shares of
Common Stock into which the shares of Class B Common Stock are convertible, or
(viii) any amendment, alteration or repeal of Article XI of the Issuer's bylaws.
The shares of Class B Common Stock may not be transferred other than to SBW
or its Affiliates.
The Issuer's bylaws have been amended to reflect the terms of the Class B
Common Stock; as described in Item 6 below, the Issuer's Certificate of
Incorporation will also be amended to reflect the terms of the Class B Common
Stock.
C. WARRANTS
The Issuer has issued to SBW 5,000,000 Warrants to purchase Common Stock.
Each Warrant entitles the holder thereof to purchase one share of Common Stock,
subject to adjustment in certain circumstances to prevent dilution. 3,000,000 of
the Warrants are exercisable at $14.00 per share of Common Stock and 2,000,000
of the Warrants are exercisable at $18.00 per share of Common Stock, and in each
such case the exercise price is subject to adjustment to account for adjustments
made in the number of shares of Common Stock that may be purchased upon exercise
of such Warrant. Warrants may be exercised for cash or, at the option of the
holder thereof, without any cash payment, for that number of shares of Common
Stock that reflects the difference between (i) the current market value of a
share of Common Stock and (ii) the exercise price per share of Common Stock
under such Warrant.
Prior to receipt of Regulatory Relief, the Warrants will be exercisable by
the holder thereof only to the extent that doing so is consistent with the
Communications Act of 1934, as amended by The Telecommunications Act of 1996.
Warrants may not be transferred other than to SBW or its Affiliates. The
Warrants expire on September 27, 2001.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The total number of shares of Common Stock that SBW would beneficially own
upon conversion of the 1,000 shares of Series D Preferred Stock that it
holds is 1,600,000, which represents 6.1% of the outstanding shares of
Common Stock of the Issuer. The total number of shares of Common Stock that
SBW would beneficially own upon exercise of the 5,000,000 Warrants that it
holds is 5,000,000, which represents 16.8% of the total outstanding shares
of Common Stock. Assuming conversion of the 1,000 shares of Series D
Preferred Stock and exercise of the 5,000,000 Warrants, the total number of
shares of outstanding Common Stock that SBW would beneficially own would be
6,600,000, representing 21.1% of the outstanding shares of Common Stock.
The foregoing calculations are (i) based on the 22,069,871 shares of the
Common Stock of the Issuer outstanding as of September 27, 1996 plus the
2,682,018 shares of Common Stock issued in recapitalization transactions
entered into by the Issuer and certain of its existing security holders on
September 27, 1996 and (ii) assume that the shares of Common Stock issuable
(Page 9 of 13 pages)
<PAGE>
upon conversion of the Series D Preferred Stock or exercise of the Warrants
or both, as the case may be, are issued and outstanding at the time of such
calculation. The Series D Preferred Stock and Warrants beneficially owned
by SBC are owned by and registered in the name of SBW.
(b) SBC and SBW share the power to vote and to dispose of the 1,000 shares of
Series D Preferred Stock and the power to dispose of the 5,000,000
Warrants. The shares of Series D Preferred Stock and the Warrants, and the
shares of Common Stock issuable upon conversion or exercise thereof,
beneficially owned by SBW are subject to certain transfer restrictions
described more fully in Items 4 and 6 of this Schedule 13D.
(c) No transactions in the Common Stock were effected by SBC or SBW in the past
sixty days.
(d) None.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
A. STOCKHOLDERS AGREEMENT
In connection with the transactions described herein, the Issuer, certain
existing stockholders of the Issuer and SBW entered into an Amended and Restated
Stockholders Agreement, dated as of September 27, 1996 (the "Stockholders
Agreement"). The following description of the Stockholders Agreement is
qualified in its entirety by reference to the complete text of such document
which is attached as Exhibit 4 hereto.
The Stockholders Agreement provides, among other things, for the following:
Subject to certain exceptions, each of the Carlyle Stockholders (as defined
in the Stockholders Agreement), the Erin Mills Stockholders (as defined in the
Stockholders Agreement), William C. Kennedy, Jr. and William S. Saunders (each,
a "First Refusal Stockholder") have agreed not to sell or to make certain
transfers of shares of capital stock of the Issuer unless such First Refusal
Stockholder has first irrevocably offered the shares that it desires to sell to
SBW.
The Issuer has agreed to grant to certain stockholders, including SBW,
"piggyback" and demand registration rights in order for them to register and
sell shares of Common Stock under the Securities Act of 1933, as amended.
Within 15 days after the execution of the Stockholders Agreement, the total
number of members of the Board of Directors of the Issuer will be initially
reduced to six and a director not employed by the Company or affiliated with a
party to the Stockholders Agreement (an "independent director") is to be added
not later than the next annual meeting of stockholders. Prior to Regulatory
Relief, the Board of Directors shall be comprised of seven members, as follows:
two directors designated by a majority in interest of the Erin Mills
Stockholders; two directors designated by a majority in interest of the ByWord
Stockholders (as defined in the Stockholders Agreement); one director designated
by a majority in interest of the Carlyle Stockholders; and two independent
directors. When the shares of Series D Preferred Stock convert into Class B
Common Stock upon receipt of Regulatory Relief, one director designated by SBW
is to be added and, in case SBW and its Affiliates beneficially own more than
20% of the outstanding shares of Common Stock, other than shares issuable under
the Warrants or under options or warrants issued by entities other than the
Issuer, SBW will have the right to appoint a second
(Page 10 of 13 pages)
<PAGE>
director. The stockholders that are parties to the Stockholders Agreement have
agreed to take all action necessary, including voting their shares of Common
Stock, to effect the governance provisions and purposes of the Stockholders
Agreement. Neither the filing of this Schedule 13D nor anything contained herein
is intended as, or should be construed as, an admission that SBC or SBW is (i) a
member of a "group" or (ii) the "beneficial owner" of any shares of Common Stock
beneficially owned by any other party to the Stockholders Agreement, in each
case for the purposes of Section 13 (d) or (g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In case any stockholder or group thereof
decreases its ownership of Common Stock, it shall lose the right to designate
directors if such ownership falls below 20% (in which case the right to
designate two directors, in the case of the Erin Mills Stockholders and the
By-Word Stockholders, shall expire) or 5% (in which case the right to designate
a director shall expire).
The Stockholders Agreement requires the affirmative vote of a majority of
the entire Board of Directors of the Issuer (not merely a quorum) to authorize,
effect or validate the following actions by the Issuer: (i) the approval of any
annual budget or business plan of the Issuer or any subsidiary, or any deviation
from any annual budget by more than five percent, (ii) any capital expenditure
or expenditures of the Issuer or a subsidiary which, individually or in the
aggregate, exceed $1 million, (iii) the hiring or termination by the Issuer or
any subsidiary of any officer or senior management employee, (iv) payments under
any stock appreciation rights or phantom stock plans or similar rights or plans,
(v) (A) sell, lease or transfer assets representing five percent or more of the
consolidated assets of the Issuer and its subsidiaries, (B) consolidate or
merge, or permit a subsidiary to consolidate or merge, with any other entity,
(C) reclassify or otherwise change any capital stock of the Issuer or any
subsidiary or (D) dissolve, liquidate or wind-up the Issuer or any subsidiary,
(vi) except in certain circumstances, authorize or issue in excess of an
aggregate of $5 million of capital stock or other equity securities, or
securities convertible or exchangeable into equity securities of the Issuer or
any subsidiary, (vii) acquire capital stock or other equity securities of any
other entity in excess of $5 million, (viii) enter into, including through a
subsidiary, any agreement, contract, lease or commitment, the fair market value
of which exceeds $1 million, (ix) make any capital expenditure, including
through a subsidiary, in excess of $1 million, (x) file with the Secretary of
State of the State of Delaware any resolutions of the Board of Directors
containing provisions that would adversely affect the rights of the holders of
Common Stock, (xi) enter, including through a subsidiary, into any agreement,
transaction, commitment or arrangement with the Issuer's or any of its or any
subsidiary's officers, directors, employees, stockholders of Affiliates or with
any individual related by blood, marriage or adoption or any entity in which any
such individual owns a more than 10% beneficial interest, except for customary
employment arrangements and benefit programs on an arm's length basis and
arrangements on arm's length terms that are approved by a majority of the
Company's disinterested directors or (xii) allow any subsidiary to do or effect
any of the foregoing.
The Stockholders Agreement also provides that after receipt of Regulatory
Relief, if SBW does not hold Series D Preferred Stock or Class B Common Stock
but does own at least 1.6 million shares of Common Stock (other than Common
Stock issuable under the Warrants or options or warrants issued by entities
other than the Issuer), the approval of SBW will be required to approve the
actions that require approval of the holders of the Class B Common Stock.
B. STOCKHOLDER APPROVAL
The holders of 68.4% of the outstanding shares of Common Stock as of
September 27, 1996 executed written consents in favor of the resolutions of the
Issuer's Board of Directors approving the issuance of the shares of Common Stock
issuable upon exercise of the Warrants and the proposed amendment of the
Issuer's Certificate of Incorporation to reflect the terms of the Class B Common
Stock to be issued upon conversion of the Series D Preferred Stock. The
stockholders that have granted such written consents have also granted to SBW an
irrevocable proxy to vote, at any annual,
(Page 11 of 13 pages)
<PAGE>
special or adjourned meeting of stockholders of the Issuer, in favor of the
adoption of the amendment to the Issuer's Certificate of Incorporation and the
issuance of the Common Stock issuable upon exercise of the Warrants, and against
any action or agreement likely to delay, impede or interfere with such actions.
A form of written consent and irrevocable proxy, together with a list of the
stockholders that executed each such instrument, are attached as Exhibits 5 and
6 hereto and incorporated herein by reference. The Certificate of Amendment to
the Issuer's Certificate of Incorporation will be filed with the Secretary of
State of the State of Delaware 20 days after an information statement has been
distributed to stockholders of the Issuer in accordance with Regulation 14C
under the Exchange Act; the Certificate of Designation setting forth the terms
of the Series D Preferred Stock was filed with the Secretary of State of the
State of Delaware on September 27, 1996, and became effective on such date.
The foregoing descriptions of the documents listed in Item 7 and filed as
exhibits hereto are qualified in their entirety by the complete texts of such
documents.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Identity of Executive Officers and Directors of SBC and SBW
Exhibit 2 Certificate of Amendment to the Certificate of Incorporation
of the Issuer (including Certificate of Designation for
Series D Preferred Stock)
Exhibit 3 Warrant Certificate, dated as of September 27, 1996, executed
by the Issuer in favor of SBW
Exhibit 4 Stockholders Agreement
Exhibit 5 Form of Written Consent, together with list of stockholders
that executed such consent
Exhibit 6 Form of Irrevocable Proxy, together with list of stockholders
that executed such proxy
(Page 12 of 13 pages)
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SBC COMMUNICATIONS INC.
By: /s/ Donald E. Kiernan
Donald E. Kiernan
Senior Vice President,
Treasurer and Chief
Financial Officer
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ Drew A. Roy
Drew A. Roy
Executive Vice President
and Chief Operating
Officer - SBC Wireless
Dated: October 7, 1996
(Page 13 of 13 pages)
<PAGE>
IDENTITY OF EXECUTIVE OFFICERS AND DIRECTORS
SBC COMMUNICATIONS INC.
- -----------------------
Officers
- --------
NAME PRINCIPAL OCCUPATION
---- --------------------
Edward E. Whitacre, Jr. Chairman of the Board and
Chief Executive Officer
Royce S. Caldwell President-Southwestern
Bell Operations
James W. Callaway Senior Vice President-
Strategic Planning
Cassandra C. Carr Senior Vice President-
Human Resources
William E. Dreyer Senior Executive Vice
President-External
Affairs
James D. Ellis Senior Executive Vice
President and General
Counsel
Charles E. Foster President-SBC Operations
James S. Kahan Senior Vice President,
Corporate Development
Donald E. Kiernan Senior Vice President
Treasurer and Chief
Financial Officer
Directors
- ---------
Edward E. Whitacre, Jr. As described above
Clarence C. Barksdale Vice Chairman, Board of
Trustees, Washington
University, St. Louis,
Missouri
<PAGE>
James E. Barnes Chairman of the Board,
President and CEO, MAPCO
Inc.
Jack S. Blanton Chairman, Houston
Endowment, Inc.;
President and Chief
Executive Officer, Eddy
Refining Company
August A. Busch, III Chairman of the Board and
President, Anheuser-Busch
Companies, Inc.
Ruben R. Cardenas Partner, Cardenas, Whitis
& Stephen, L.L.P.,
Attorneys
Martin K. Eby, Jr. Chairman of the Board and
CEO and President, The Eby
Corporation
Tom C. Frost Senior Chairman of the
Board and CEO, Cullen/
Frost Bankers, Inc.;
Senior Chairman of the
Board, Frost National
Bank
Jess T. Hay Chairman, Texas
Foundation for Higher
Education
Carlos Slim Helu Chairman of the Board,
Grupo Carso, S.A. de
C.V.; Chairman of the Board,
Telefonos de Mexico,
S.A. de C.V.
Bobby R. Inman United States Navy,
Retired
Charles F. Knight Chairman, President and
CEO, Emerson Electric Co.
Haskell M. Monroe, Jr. Professor of History, The
University of Missouri-
Columbia
Patricia P. Upton President and CEO,
Aromatique, Inc.
-2-
<PAGE>
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
- -----------------------------------------
Officers
- --------
NAME PRINCIPAL OCCUPATION
---- --------------------
Stan Sigman President-SBC Wireless
Drew A. Roy Executive Vice President and
Chief Operating Officer-SBC
Wireless
Mark Boright Vice President and Chief
Financial Officer-SBC Wireless
Charles P. Allen Treasurer
Glen A. Glass Vice President, General
Counsel and Secretary
Mary T. Manning President-Southwestern Bell
Wireless
John J. Stephens Vice President-Taxes
Carol L. Tacker Assistant Secretary
Directors
- ---------
Stan Sigman As described above
Drew A. Roy As described above
Mark Boright As described above
Mary T. Manning As described above
Royce S. Caldwell President, Southwestern Bell
Operations, SBC Communications Inc.
Cassandra C. Carr Senior Vice President - Human
Resources, SBC Communications Inc.
James W. Callaway Senior Vice President -
Strategic Planning, SBC
Communications Inc.
J. Cliff Eason President and CEO,
Southwestern Bell
Communications, Inc.
James D. Ellis Senior Executive Vice
President and General Counsel,
SBC Communications Inc.
Charles E. Foster President - SBC Operations, SBC
Communications Inc.
James S. Kahan Senior Vice President -
Corporate Development, SBC
Communications Inc.
-3-
<PAGE>
Donald E. Kiernan, Senior Vice President,
Treasurer and Chief Financial
Officer, SBC Communications Inc.
-4-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HIGHWAYMASTER COMMUNICATIONS, INC.
HighwayMaster Communications, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY
FIRST: That at a meeting of the Board of Directors of HighwayMaster
Communications, Inc. (the "corporation"), resolutions were duly adopted setting
forth proposed amendments of the Certificate of Incorporation of the
corporation, declaring such amendments to be advisable and directing that such
amendments be presented to the stockholders of the corporation for consideration
thereof. The resolutions setting forth the proposed amendments are as follows:
RESOLVED, that the second sentence of Article XII of the corporation's
Certificate of Incorporation be deleted and that Article IV of the corporation's
Certificate of Incorporation be amended in its entirety to read as follows:
The aggregate number of shares of capital stock which the corporation shall
have authority to issue is 50,021,000, consisting of 50,000,000 shares of common
stock, par value $0.01 per share (the "Common Stock"), 1,000 shares of Class B
Common Stock, par value $0.01 per share (the "Class B Common Stock"), and 20,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock").
The Common Stock and the Class B Common Stock are hereinafter collectively
referred to as the "Company Common Stock".
A. COMPANY COMMON STOCK
Except as otherwise expressly provided herein, all shares of Company Common
Stock shall be identical and shall entitle the holders thereof to the same
rights and privileges.
<PAGE>
1. Dividends
(a) Subject to the rights granted to the holders of any Preferred Stock
that may be outstanding, the holders of Common Stock shall be entitled to
receive dividends and distributions when and as declared by the Board of
Directors of the corporation out of funds legally available therefor.
(b) Subject to the rights of the holders of any Preferred Stock that may be
outstanding, the holders of shares of Class B Common Stock shall be entitled to
receive, when and as declared by the Board of Directors, but only out of funds
legally available therefor, dividends and distributions, on each date that
dividends or other distributions (other than dividends or distributions payable
in Common Stock of the corporation) are payable on or in respect of Common
Stock, in an amount per share of Class B Common Stock equal to the aggregate
amount of dividends or other distributions (other than dividends or
distributions payable in Common Stock of the corporation) that would be payable
on such date to a holder of the Reference Package (as defined below). Each such
dividend and distribution shall be paid to the holders of record of shares of
Class B Common Stock on the date, not exceeding sixty days preceding such
dividend or distribution payment date, fixed for that purpose by the Board of
Directors in advance of payment of each particular dividend or distribution,
which shall be the same record date as for the payment of dividends or
distributions on the Common Stock.
(c) The term "Reference Package" shall initially mean 1,600 shares of
Common Stock of the corporation. In the event the corporation shall at any time
after the close of business on September 27, 1996 (A) declare or pay a dividend
on or distribution in respect of any Common Stock payable in Common Stock, (B)
subdivide any Common Stock, (C) combine any Common Stock into a smaller number
of shares or (D) change or reclassify the Common Stock (whether pursuant to a
merger or consolidation or otherwise), then and in each such case the Reference
Package after such event shall be the Common Stock that a holder of the
Reference Package immediately prior to such event would hold thereafter as a
result thereof. The Board of Directors may make such adjustments in the
Reference Package, in addition to those required hereby, as shall be determined
by the Board, as evidenced by a Board resolution, to be necessary and advisable
in order to avoid taxation so far as practicable of any dividend of stock or
stock rights or any event treated as such for Federal income tax purposes to the
recipients. Whenever any adjustment is required in the Reference Package, the
corporation shall forthwith (i) file
-2-
<PAGE>
at the principal office of the corporation a statement describing in reasonable
detail the adjustment and the method of calculation used, and (ii) cause a copy
of such statement to be mailed by first class mail postage prepaid to the
holders of record of the Class B Common Stock as of the effective date of such
adjustment. The corporation may obtain the certificate of any independent firm
of public accountants of national recognition selected by the Board of Directors
which, if obtained, shall be presumptive evidence of the correctness of any
computation made under Section 1(c).
2. Voting Rights
(a) General. The holders of Common Stock and Class B Common Stock shall
have identical voting rights and vote together as a single class on all actions
to be taken by such holders, except as specified below. Each share of Common
Stock shall, when entitled to vote, have one vote and each share of Class B
Common Stock shall, when entitled to vote, have the number of votes that a
holder of the Reference Package would have.
(b) Election of Directors. There shall be two classes of directors, those
elected by the Common Stock ("Common Directors") and those elected by the Class
B Common Stock ("Class B Directors"). The rights, duties and authority of the
Common Directors and the Class B Directors shall be identical in all respects.
The number of Common Directors shall be the number to be determined by the
Nominating Committee of the Corporation. The number of Class B Directors shall
be one, except that if Southwestern Bell Wireless Holdings, Inc. ("SBW") and its
Affiliates Beneficially Own (as hereinafter defined) 20% or more of the
outstanding Common Stock, including Common Stock issuable upon conversion of
Class B Common Stock or other convertible securities or upon the exercise of any
outstanding options, warrants, rights or obligations, other than shares issuable
upon the exercise of (i) the 5,000,000 warrants issued on September 27, 1996
(the "Warrants"), and (ii) options, warrants, rights or obligations issued by
any entity other than the corporation ("Excluded Options"), there shall be two
Class B Directors. For the purposes of the foregoing calculations, the number of
outstanding shares of Common Stock shall include all shares issuable upon
conversion of outstanding convertible securities or upon exercise of outstanding
options, warrants, rights or obligations other than the Warrants, Excluded
Options and employee stock options. As used herein, an "Affiliate" of any
specified person or entity means any person or entity directly or indirectly
controlling or controlled by or under direct or
-3-
<PAGE>
indirect common control with such person. As used herein, the term "Beneficially
Own" (and correlative terms) shall mean, with respect to any shares of Common
Stock or other securities, to be entitled, directly or indirectly through one or
more intermediaries, to all material incidents of ownership with respect to such
securities, including, but not limited to, (i) the right to vote such securities
(in the case of voting securities), (ii) subject to any transfer restrictions,
the right to dispose of such securities and to receive any proceeds realized
from the disposition thereof and (iii) the right to receive any dividends and
other distributions with respect to such securities.
The Common Directors shall be elected by the holders of Common Stock by a
plurality vote and the Class B Directors shall be elected by the holders of the
Class B Common Stock by a plurality vote, in either case at an annual
stockholders meeting, except as hereinafter provided, and each director shall
hold office until his successor has been duly elected and qualified or his
earlier death, resignation or removal. Vacancies in any class of directors and
newly created directorships resulting from any increase in the authorized number
of directors of any class of Company Common Stock may be filled by the majority
of directors of such class then in office, though less than a quorum, or by a
sole remaining director so elected and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, or until their earlier death, resignation or removal. If there
are no directors in office, then an election of directors may be held in the
manner provided by law. If, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancy or newly-created
directorships, or to replace the directors chosen by the directors then in
office. Unless otherwise restricted by law, any director or the entire Board may
be removed, with or without cause, by a majority vote of the class of Company
Common Stock entitled to elect such director or directors. No decrease in the
size of the Board shall serve to shorten the term of an incumbent director.
(c) Voting Rights of Class B Common Stock. The following actions shall
require the approval of a majority
-4-
<PAGE>
of the outstanding Class B Common Stock, voting as a single class:
(i) the approval of any annual budget or business plan for the
corporation or any subsidiary of the corporation or the deviation by the
corporation or any such subsidiary from any annual budget for the corporation or
such subsidiary approved by the Board of Directors by more than five percent
(5%);
(ii) issuance by the corporation of any equity securities, including
securities convertible into equity securities (other than (A) the grant of
employee stock options (subject to the proviso set forth in (D) below), (B) the
issuance of equity securities pursuant to the Purchase Agreement, dated as of
September 27, 1996 between the corporation and SBW (the "Purchase Agreement") or
pursuant to any of the other Transaction Documents (as defined in the Purchase
Agreement), (C) the issuance of equity securities upon the exercise or
conversion of securities or employee stock options that are outstanding as of
September 27, 1996 or (D) the issuance of equity securities upon the conversion
of Class B Common Stock or upon the exercise of employee stock options granted
hereafter, provided, however, that there shall not be outstanding at any time
employee stock options for more than 1.5 million shares of Common Stock plus the
options granted to William C. Kennedy, Jr. and William C. Saunders that are
outstanding at September 27, 1996) or incurrence of any indebtedness, provided
that the corporation can incur up to $5 million in indebtedness in any year
without the approval of the Class B Common Stock;
(iii) the hiring or termination by the corporation of its chief
executive officer, chief operating officer or chief financial officer;
(iv) the corporation's entering into any line of business other than
its Existing Line of Business (as hereinafter defined) or into any joint
ventures, partnerships or similar arrangements;
(v) the corporation's exiting its Existing Line of Business or
disposing of assets (other than telecommunications equipment and other assets
sold in the ordinary course of business) in any year with a value in excess of
$500,000 or which are otherwise material to the corporation's operations;
(vi) the adoption, implementation or acceptance (including the failure
to opt out) of any Anti-Takeover Provision (as hereinafter defined) not in
effect as of
-5-
<PAGE>
September 27, 1996 that would be applicable to, and, in the reasonable
determination of SBW, adversely affect, the holders of the Class B Common Stock
and their Affiliates; or
(vii) the taking of any corporate action that would reduce the number
of shares in the Reference Package below 1,600.
"Anti-Takeover Provision" means (i) any provision of the certificate of
incorporation or bylaws of the corporation or any contract, agreement or plan to
which the corporation is a party or by which it is bound or any statutory
provision enacted after September 27, 1996 which is applicable to the
corporation which the corporation may opt out of if the effect of such provision
would be to materially delay, hinder or prevent a change in control of the
corporation or (ii) a stockholder rights plan or "poison pill," including the
provisions of any preferred stock or common stock purchase rights issued
pursuant thereto; provided, however, that such term shall not include any
customary change of control provisions contained in employment agreements
between the corporation and any of its directors, officers or other employees or
in any plans or agreements relating to stock options or other awards of equity
securities made by the corporation to any such persons.
"Existing Line of Business" means a non-facilities based, enhanced service
provider that offers fleet management and/or status or information about
vehicles and/or location capabilities through mobile communications service.
(d) Bylaws. Any alteration, amendment, repeal or replacement of Article XI
of the corporation's bylaws, or of any other Article of the bylaws that would
have a similar effect, by the stockholders of the corporation shall require the
approval of a majority of the outstanding Class B Common Stock, voting as a
separate class.
3. Conversion
(a) Optional Conversion. At the option of the holder thereof, each share of
Class B Common Stock may be converted into the Reference Package; provided,
however, that no shares of Class B Common Stock may be converted pursuant to
this Section 3(a) unless the holders of all outstanding shares of Class B Common
Stock elect to convert such shares into the Reference Package as of the same
date in accordance with the procedures set forth below.
-6-
<PAGE>
(b) Optional Conversion Procedures. Any holder of shares of Class B Common
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of Class B Common Stock, at
the principal office of the corporation or such other office as the corporation
may designate for such purpose, which certificate or certificates, if the
corporation shall so require, shall be duly endorsed to the corporation or in
blank, or accompanied by proper instruments of transfer to the corporation or in
blank, accompanied by irrevocable written notice to the corporation that the
holder elects so to convert such shares of Class B Common Stock and specifying
the name or names (with address or addresses) in which a certificate or
certificates evidencing shares of Common Stock are to be issued. The corporation
shall, as soon as practicable after such surrender of certificates evidencing
shares of Class B Common Stock accompanied by the written notice and compliance
with any other conditions herein contained, deliver by first class mail postage
prepaid to the holder that surrendered such shares of Class B Common Stock or to
such holder's nominee certificates evidencing the number of full shares of
Common Stock to which such holder shall be entitled as aforesaid, together with
a cash adjustment in respect of any fraction of a share of Common Stock as
provided below. No interest will be payable with respect to any cash adjustment
paid with respect to any fractional shares of Common Stock as provided below. On
the date shares of Class B Common Stock are surrendered for conversion,
dividends shall cease to accrue on all shares of Class B Common Stock, such
shares shall no longer be deemed outstanding, all rights of the holders thereof
as holders of Class B Common Stock shall cease (other than the right to receive
dividends declared payable to holders of record of Class B Common Stock on a
record date prior to the date of surrender) and thereupon the certificate or
certificates theretofore representing such shares of Class B Common Stock shall
represent only the right to receive the Common Stock deliverable upon conversion
in respect thereof.
(c) Fractional Shares; Taxes. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of Class B Common Stock.
If any such conversion would otherwise require the issuance of a fractional
share, an amount equal to such fraction multiplied by the Closing Price of the
Common Stock on the day of conversion shall be paid to the holder in cash by the
Corporation. The term "Closing Price" on any day shall mean the reported last
sale price per share of Common Stock regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
-7-
<PAGE>
asked prices regular way, in each case on the New York Stock Exchange, or, if
the shares of Common Stock are not listed or admitted to trading on such
Exchange, the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the closing bid and asked
prices quoted on the Nasdaq National Market, or, if not so quoted, the average
of the closing bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by the
corporation for that purpose. The corporation will pay any and all stamp taxes,
stock issuance taxes or similar taxes that may be payable in respect of the
issuance or delivery of Common Stock on conversion of shares of Class B Common
Stock; provided, however, that the corporation shall not be required to pay any
tax or other charge that may be payable in respect of any transfer involved in
the issuance and delivery of any certificate in a name other than that of the
record holder of the shares of Class B Common Stock being converted and in such
case the corporation shall not be obligated to issue or deliver any stock
certificate until such tax or charge has been paid in full or it has been
established to the satisfaction of the corporation that no such tax or charge is
due.
(d) Available Common Stock. The corporation shall at all times reserve and
keep available out of its authorized but unissued Common Stock, for the purpose
of issuance upon conversion of Class B Common Stock, the full number of Common
Stock then deliverable upon the conversion of all shares of Class B Common Stock
then outstanding.
4. Transfer
(a) Prohibited Transfers. No holder of shares of Class B Common Stock shall
Transfer any such shares or any interest therein to any Person (as hereinafter
defined) other than SBW or an Affiliate of SBW. As used herein, the term
"Transfer" means any sale, transfer, assignment, disposition or other means of
conveying legal or beneficial ownership of such shares, whether direct or
indirect and whether voluntary or involuntary, and the terms "Transferred,"
"Transferable," "Transferor" and "Transferee" have correlative meanings. As used
herein, the term "Person" means any individual, corporation, partnership, joint
stock company, joint venture, association, trust, unincorporated organization,
government or any agency, department or political subdivision thereof, or any
other entity.
-8-
<PAGE>
(b) Effect of Purported Transfers. Any attempted or purported Transfer of
shares of Class B Common Stock in violation of paragraph (a) above shall not be
effective to Transfer ownership of such shares to the purported Transferee
thereof, who shall not be entitled to any rights as a stockholder of the
corporation with respect to the shares purported to be Transferred (including,
but not limited to, the right to vote such shares or to receive dividends with
respect thereto). All rights with respect to any shares attempted or purported
to be Transferred in violation of the aforementioned provisions shall remain the
property of the stockholder who initially attempted or purported to transfer
such shares in violation thereof. Upon a determination by the Board of Directors
that there has been or is threatened an attempted or purported Transfer of
shares in violation of the aforementioned provisions, the Board of Directors may
take such action as it deems advisable, including but not limited to refusing to
give effect on the books of the corporation to such attempted or purported
Transfer or instituting legal proceedings to enjoin or rescind the same.
(c) Legend. All certificates evidencing shares of this Series shall bear a
conspicuous legend referencing the restrictions set forth in this Section 4.
B. PREFERRED STOCK
The Board of Directors of the corporation, by resolution or resolutions,
may at any time and from time to time, divide and establish any or all of the
unissued shares of Preferred Stock not then allocated to any series of Preferred
Stock into one or more series and, without limiting the generality of the
foregoing, fix and determine the designation of each such share, the number of
shares which shall constitute such series and certain powers, preferences and
relative, participating, optional or other special rights and qualifications,
limitations and restrictions and voting rights of the shares of each series so
establishing.
SERIES D PARTICIPATING CONVERTIBLE PREFERRED STOCK
1. Designation and Amount. The distinctive serial designation of this
series shall be "Series D Participating Convertible Preferred" (hereinafter
sometimes referred to as "this Series"). The number of shares in this Series
shall be 1,000, which number may be decreased (but not increased) by the Board
of Directors of the corporation (the "Board of Directors") without a vote of
stockholders; provided,
-9-
<PAGE>
however, that such number may not be decreased below the number of then
currently outstanding shares of this Series.
2. Dividends. (a) The holders of shares of this Series shall be entitled to
receive, when and as declared by the Board of Directors, but only out of funds
legally available therefor, dividends and distributions, on each date that
dividends or other distributions (other than dividends or distributions payable
in Common Stock (as defined below)) are payable on or in respect of Common Stock
in an amount per share of this Series equal to the aggregate amount of dividends
or other distributions (other than dividends or distributions payable in Common
Stock of the corporation) that would be payable on such date to a holder of the
Reference Package. Each such dividend and distribution shall be paid to the
holders of record of shares of this Series on the date, not exceeding sixty days
preceding such dividend or distribution payment date, fixed for the purpose by
the Board of Directors in advance of payment of each particular dividend or
distribution.
(b) The term "Reference Package" shall initially mean 1,600 shares of
Common Stock. In the event the corporation shall at any time after the close of
business on September 27, 1996 (A) declare or pay a dividend on any Common Stock
payable in Common Stock, (B) subdivide any Common Stock or (C) combine any
Common Stock into a smaller number of shares or (D) change or reclassify the
Common Stock (whether pursuant to a merger or consolidation or otherwise), then
and in each such case the Reference Package after such event shall be the Common
Stock, or new class of shares, that a holder of the Reference Package
immediately prior to such event would hold thereafter as a result thereof.
3. Liquidation Preference. (a) In the event of any liquidation, dissolution
or winding up of the affairs of the corporation, whether voluntary or
involuntary, the holders of shares of this Series shall be entitled, before any
distribution or payment is made on any date to the holders of the Common Stock
or any other stock of the corporation ranking junior to this Series upon
liquidation, to be paid in full an amount per share of this Series equal to the
greater of (A) $20,000 or (B) the aggregate amount distributed or to be
distributed prior to such date in connection with such liquidation, dissolution
or winding up to a holder of the Reference Package (such greater amount being
hereinafter referred to as the "Liquidation Preference"), together with accrued
dividends to such distribution or payment date, whether or not earned or
declared. If such payment shall have been made in full to
-10-
<PAGE>
all holders of shares of this Series, the holders of shares of this Series as
such shall have no right or claim to any of the remaining assets of the
corporation.
(b) In the event the assets of the corporation available for distribution
to the holders of shares of this Series upon any liquidation, dissolution or
winding up of the corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 3, no such distribution shall be made
on account of any shares of any other class or series of Preferred Stock ranking
on a parity with the shares of this Series upon such liquidation, dissolution or
winding up unless proportionate distributive amounts shall be paid on account of
the shares of this Series, ratably in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such liquidation, dissolution or winding up.
(c) For the purposes of this Section 3, the consolidation or merger of, or
binding share exchange by, the corporation with any other corporation or the
sale of all or substantially all the assets of the corporation shall not be
deemed to constitute a liquidation, dissolution or winding up of the
corporation.
4. Conversion Privilege. (a) Subject to and upon compliance with the
provisions of this Section 4, at the option of the holder of shares of this
Series, shares of this Series may be converted, in blocks of 250 shares or any
larger integral multiple thereof. Such conversion right shall commence at the
opening of business on September 30, 1996.
(b) Subject to subsection (a) hereof, each share of this Series shall be
convertible into the Reference Package.
(c) The Board of Directors may make such adjustments in the Reference
Package, in addition to those required by Section 2(b), as shall be determined
by the Board, as evidenced by a Board resolution, to be necessary and advisable
in order to avoid taxation so far as practicable of any dividend of stock or
stock rights or any event treated as such for Federal income tax purposes to the
recipients.
(d) Whenever any adjustment is required in the Reference Package, the
corporation shall forthwith (i) file at the principal office of the corporation
a statement describing in reasonable detail the adjustment and the
-11-
<PAGE>
method of calculation used, and (ii) cause a copy of such statement to be mailed
by first class mail postage prepaid to the holders of record of this Series as
of the effective date of such adjustment.
(e) The corporation shall at all times reserve and keep available out of
its authorized but unissued Common Stock, for the purpose of issuance upon
conversion of this Series, the full number of Common Stock then deliverable upon
the conversion of all shares of this Series then outstanding.
(f) The corporation will pay any and all stamp taxes, stock issuance taxes
or similar taxes that may be payable in respect of the issuance or delivery of
Common Stock on conversion of shares of this Series; provided, however, that the
corporation shall not be required to pay any tax or other charge that may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the record holder of the shares of this
Series being converted and in such case the corporation shall not be obligated
to issue or deliver any stock certificate until such tax or charge has been paid
in full or it has been established to the satisfaction of the corporation that
no such tax or charge is due.
(g) No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Series. If any such conversion would
otherwise require the issuance of a fractional share, an amount equal to such
fraction multiplied by the Closing Price of the Common Stock on the day of
conversion shall be paid to the holder in cash by the corporation. The term
"Closing Price" on any day shall mean the reported last sale price per share of
Common Stock regular way on such day or, in case no such sale takes place on
such day, the average of the reported closing bid and asked prices regular way,
in each case on the New York Stock Exchange, or, if the shares of Common Stock
are not listed or admitted to trading on such Exchange, the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if not so quoted,
the average of the closing bid and asked prices quoted on the Nasdaq National
Market, or, if not so quoted, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers, Inc.
selected from time to time by the corporation for that purpose.
-12-
<PAGE>
(h) The corporation may obtain the certificate of any independent firm of
public accountants of national recognition selected by the Board of Directors,
which, if obtained, shall be presumptive evidence of the correctness of any
computation made under Section 2(b).
(i) All shares of this Series surrendered for conversion or otherwise
acquired by the corporation shall be cancelled and thereupon restored to the
status of authorized but unissued preferred stock undesignated as to series.
5. Conversion Procedures. (a) Any holder of shares of this Series desiring
to convert such shares into Common Stock shall surrender the certificate or
certificates evidencing such shares of this Series together with instructions
setting forth the number of shares to be converted, at the principal office of
the corporation or such other office as the corporation may designate for such
purpose, which certificate or certificates, if the corporation shall so require,
shall be duly endorsed to the corporation or in blank, or accompanied by proper
instruments of transfer to the corporation or in blank, accompanied by
irrevocable written notice to the corporation that the holder elects so to
convert such shares of this Series and specifying the name or names (with
address or addresses) in which a certificate or certificates evidencing shares
of Common Stock are to be issued.
(b) The corporation shall, as soon as practicable after such surrender of
certificates evidencing shares of this Series accompanied by the written notice
and compliance with any other conditions herein contained, deliver by first
class mail postage prepaid to the Person that surrendered such shares of this
Series or to such Person's nominee certificates evidencing the number of full
shares of Common Stock to which such Person shall be entitled as aforesaid,
together with a cash adjustment in respect of any fraction of a share of Common
Stock as provided above. No interest will be payable with respect to any cash
adjustment paid with respect to any fractional shares of Common Stock as
provided above.
(c) In the event that fewer than all shares of Series D Participating
Convertible Preferred represented by a surrendered certificate are to be
converted hereunder, a new certificate shall be issued at the expense of the
corporation representing the shares of Series D Participating Convertible
Preferred not so converted.
(d) On the date shares of Series D Participating Convertible Preferred are
surrendered for conversion,
-13-
<PAGE>
dividends shall cease to accrue on any shares of this Series surrendered for
conversion, such shares shall no longer be deemed outstanding, all rights of the
holders thereof as preferred stockholders of the corporation shall cease (other
than the right to receive dividends declared payable to holders of record of
this Series on a record date prior to the date of surrender) and thereupon the
certificate or certificates theretofore representing such shares of Series D
Participating Convertible Preferred shall represent only the right to receive
the Common Stock deliverable upon conversion in respect thereof.
6. Mandatory Conversion. (a) If the Regulatory Relief Date shall not have
occurred on or before September 27, 2001, all of the then currently outstanding
shares of Series D Participating Convertible Preferred shall, at the election of
the corporation at any time after the opening of business on September 28, 2001
and after notice has been provided as set forth below, be converted into shares
of Common Stock on the basis provided in Section 4.
(b) If the corporation has elected to convert this Series into Common Stock
pursuant to this Section 6, the corporation will provide notice of mandatory
conversion of shares of Series D Participating Convertible Preferred pursuant to
this Section 6 to holders of record of the Series D Participating Convertible
Preferred to be converted not less than 15 nor more than 60 days prior to the
date fixed for conversion. Such notice shall be provided by mailing notice of
such conversion first class mail postage prepaid, to each holder of record of
the Series D Participating Convertible Preferred to be converted, at such
holder's address as it appears on the stock register of the corporation.
(c) Effective on the conversion date fixed by the corporation and notified
to the holders of Series D Participating Convertible Preferred pursuant to
subparagraph (b) of this Section 6, each outstanding share of Series D
Participating Convertible Preferred shall be converted into fully paid and
nonassessable shares of Common Stock on the basis provided in Section 4,
automatically and without any action on the part of any holder of shares of
Series D Participating Convertible Preferred, and such shares of Common Stock
shall be deemed outstanding from and after such conversion date.
(d) As of the Regulatory Relief Date, each share of this Series shall
automatically, without any action on the part of the holder thereof, convert
into one share of Class B
-14-
<PAGE>
Common Stock, and as of such date, the holders thereof shall be treated in all
respects as the holders of Class B Common Stock.
(e) Each holder of shares of Series D Participating Convertible Preferred
to be converted pursuant to Section 6(a) and 6(d) shall surrender the
certificates evidencing such shares to the corporation at the principal office
of the corporation, and shall thereupon be entitled to receive certificates
evidencing shares of Common Stock and to receive any dividends or other
distributions payable on shares of Common Stock payable following such surrender
to the holders of record after the date of such conversion and any cash payable
in lieu of fractional shares.
7. Provisions in Case of Consolidation or Merger. In case of any
consolidation of the corporation with, or merger of the corporation into, any
other Person or any merger of another Person into the corporation (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the corporation), the
Person formed by such consolidation or resulting from such merger, as the case
may be, shall provide for the conversion of each share of this Series into the
kind and amount of securities, cash and other property receivable upon such
consolidation or merger by a holder of the number of shares of Common Stock of
the corporation into which such share of this Series might have been converted
immediately prior to such consolidation or merger, assuming such holder of
Common Stock of the corporation (i) is not a Person with which the corporation
consolidated or into which the corporation merged or which merged into the
corporation, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation or merger (provided that if the kind or amount of securities,
cash and other property receivable upon such consolidation or merger is not the
same for each share of Common Stock of the corporation held immediately prior to
such consolidation or merger by others than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this Section 7 the
kind and amount of securities, cash and other property receivable upon such
consolidation or merger by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). If as a result of the provisions of this Section 7 the shares of this
Series become convertible or exchangeable into securities or assets
-15-
<PAGE>
of a Constituent Person, such Constituent Person shall provide for adjustments
which, for events subsequent to the effective date of such consolidation, merger
or sale of assets, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The above provisions of this Section 7 shall
similarly apply to successive consolidation or mergers.
8. Redemption. The shares of this Series shall not be redeemable.
9. Voting Rights. (a) Except as required by law or as provided in Section
9(b) below, the holders of shares of this Series shall not be entitled to vote
on any matter submitted to the stockholders of the corporation.
(b) In addition to any vote of this Series which may be required by law,
the affirmative vote of a majority of the outstanding shares of the Series D
Participating Convertible Preferred, voting as a class, shall be required to
approve the following:
(i) any merger or consolidation of the corporation with or into any
other Person that requires a vote of the stockholders of the corporation in
accordance with the applicable provisions of the General Corporation Law of the
State of Delaware;
(ii) any sale or transfer of all or substantially all of the assets of
the corporation that requires a vote of the stockholders of the corporation in
accordance with the applicable provisions of the General Corporation Law of the
State of Delaware;
(iii) any amendment, alteration or repeal of the corporation's
Certificate of Incorporation, as amended;
(iv) the dissolution of the corporation;
(v) the adoption, implementation or acceptance (including the failure
to opt out) of any Anti-Takeover Provision not in effect as of September 27,
1996 that would be applicable to, and, in the reasonable determination of the
holders of this Series, adversely affect, the holders of this Series and their
Affiliates;
(vi) issuance by the corporation of any equity securities, including
securities convertible into equity securities (other than (A) the grant of
employee stock options (subject to the proviso set forth in (D) below), (B) the
issuance of equity securities pursuant to the Purchase
-16-
<PAGE>
Agreement or any of the other Transaction Documents, (C) the issuance of equity
securities upon the exercise or conversion of securities or employee stock
options that are outstanding as of September 27, 1996, or upon the conversion of
shares of this Series, or (D) the issuance of equity securities upon the
exercise of employee stock options granted after September 27, 1996, provided,
however, that there shall not be outstanding at any time employee stock options
for more than 1.5 million shares of Common Stock plus the options granted to
William C. Kennedy, Jr. and William C. Saunders that are outstanding at
September 27, 1996) or incurrence of any indebtedness for borrowed money or
evidenced by bonds, notes or debentures, provided that the corporation can incur
up to $5 million in indebtedness in any one year without a vote of this Series;
(vii) the corporation's entering into any line of business other than
its Existing Line of Business or entering into joint ventures, partnerships or
similar arrangements, which, in each such case, would require expenditures,
individually or in the aggregate, of more than $3 million;
(viii) any disposal or disposition in any 12-month period of any asset
or assets of the corporation (other than telecommunications equipment and other
assets sold in the ordinary course of business) of which the sale, or fair
market value exceeds in the aggregate $3 million;
(ix) any amendment, alteration or repeal of the terms of this Series
including, without limitation, any increase in the number of authorized shares
of such series; and
(x) any corporate action that would reduce the number of shares in the
Reference Package below 1,600.
10. Transfer.
(a) Prohibited Transfers. No holder of shares of this Series shall Transfer
any such shares or any interest therein to any Person other than SBW or an
Affiliate of SBW.
(b) Effect of Purported Transfers. Any attempted or purported Transfer of
shares of this Series in violation of paragraph (a) above shall not be effective
to Transfer ownership of such shares to the purported Transferee thereof, who
shall not be entitled to any rights as a stockholder of the corporation with
respect to the shares purported to be Transferred (including, but not limited
to, the right to vote such shares or to receive dividends with
-17-
<PAGE>
respect thereto). All rights with respect to any shares attempted or purported
to be Transferred in violation of the aforementioned provisions shall remain the
property of the Person who initially attempted or purported to transfer such
shares in violation thereof. Upon a determination by the Board of Directors that
there has been or is threatened an attempted or purported Transfer of shares in
violation of the aforementioned provisions, the Board of Directors may take such
action as it deems advisable, including, but not limited to, refusing to give
effect on the books of the corporation to such attempted or purported Transfer
or instituting legal proceedings to enjoin or rescind the same.
(c) Legend. All certificates evidencing shares of this Series shall bear a
conspicuous legend referencing the restrictions set forth in this Section 10.
11. Definitions. As used herein, the following terms shall have the
following meanings unless the context otherwise requires.
"Purchase Agreement" means the Purchase Agreement, dated as of September
27, 1996, between the corporation and SBW.
"Regulatory Relief Date" shall mean that date on which SBC Communications,
Inc. or its Affiliates have, in their sole judgment, obtained all necessary
federal and state regulatory approvals to provide landline, interLATA
long-distance service pursuant to the Communications Act of 1934, as amended by
the Telecommunications Act of 1996.
SECOND: That thereafter the necessary number of shares as required by
statute were voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
-18-
<PAGE>
IN WITNESS WHEREOF, HighwayMaster Communications, Inc. has made under its
corporate seal and the hands of its President and Secretary, respectively, of
such corporation the foregoing certificate, and the said President and Secretary
have hereunto set their hands and caused the corporate seal of such corporation
to be hereunto affixed this ___th day of __________, 1996.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: ______________________________
President
ATTEST:
________________________
Secretary
-19-
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC.
WARRANTS FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF HIGHWAYMASTER COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
No. 1A 5,000,000 Warrants
FOR VALUE RECEIVED, HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), hereby certifies that Southwestern Bell Wireless
Holdings, Inc., a Delaware corporation ("SBW"), or permitted assigns (the
"Holder") is entitled, subject to the provisions of this warrant certificate
(including any substitute certificate issued pursuant to the terms hereof, this
"Warrant Certificate") representing 5,000,000 warrants ("Warrants"), to purchase
from the Company, at the times specified herein, (i) 3,000,000 fully paid and
non-assessable shares of Common Stock (as hereinafter defined) at a purchase
price per share equal to the First Exercise Price (as hereinafter defined) and
(ii) 2,000,000 fully paid and non-assessable shares of Common Stock, at a
purchase price per share equal to the Second Exercise Price (as hereinafter
defined). The number of shares of Common Stock to be received upon the exercise
of a Warrant and the price to be paid for a share of Common Stock are subject to
adjustment from time to time as hereinafter set forth.
Concurrently with the issuance of the Warrants, the Company and SBW
are entering into a Purchase Agreement, dated the date hereof ("Purchase
Agreement"), pursuant to which SBW is purchasing certain shares of Series D
Participating Convertible Preferred Stock, par value $.01 per share, of the
Company and is depositing the Purchase Price (as defined in the Purchase
Agreement) for such shares into escrow (the "Escrow Fund") pursuant to an escrow
agreement (the "Escrow Agreement").
1. Definitions. The following terms, as used herein, have the
following meanings:
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.
"Common Stock" means the common stock, $0.01 par value, of the
Company, and (in accordance with Section 8 hereof) capital stock of any class or
classes into which such Common Stock or any such other class may thereafter be
changed or reclassified.
"Exercise Prices" means the First Exercise Price and the Second
Exercise Price.
"Expiration Date" means 4:00 p.m., New York City time, on September
27, 2001; provided, however, that if such day is a day on which banking
institutions in The City of New York are authorized by law to close, the
"Expiration Date" shall be on the next succeeding day that shall not be such a
day.
"First Exercise Price" means $14.00 per share of Common Stock
purchasable upon exercise of a Warrant, such First Exercise Price to be adjusted
from time to time as provided herein.
"Person" means any individual, corporation, partnership, joint stock
company, joint venture, association, trust, unincorporated organization,
government or any agency, department or political subdivision thereof, or any
other entity.
"Regulatory Relief" means that SBC Communications, Inc. or its
Affiliates, in their sole judgment, have obtained all necessary federal and
state regulatory approvals to provide landline, interLATA long-distance service
pursuant to the Communications Act of 1934, as amended by The Telecommunications
Act of 1996.
"Second Exercise Price" means $18.00 per share of Common Stock
purchasable upon exercise of a Warrant, such Second Exercise Price to be
adjusted from time to time as provided herein.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
-2-
<PAGE>
2. Exercise and Duration of Warrants.
(a) The Holder of this Warrant Certificate shall have the right to
exercise any or all of the Warrants (but not as to a fractional share of Common
Stock and not for less than 1,000,000 Warrants in any one exercise) at any time,
or from time to time until the Expiration Date by presentation and surrender
hereof to the Company with the appropriate Exercise Subscription Form annexed
hereto (an "Exercise Subscription Form") duly executed and accompanied by proper
payment of the First Exercise Price or the Second Exercise Price, as the case
may be, multiplied by the number of shares of Common Stock specified in such
form (the "Aggregate Exercise Price"), all subject to the terms and conditions
hereof. Notwithstanding the foregoing, prior to receipt of Regulatory Relief,
the Holder may only exercise Warrants to the extent that the total equity
securities in the Company held by Holder and its Affiliates is consistent with
the restrictions contained in the Communications Act of 1934, as amended by The
Telecommunications Act of 1996. Each Warrant not exercised prior to the
Expiration Date shall become void and all rights in respect thereof shall cease
as of such time.
(b) The Aggregate Exercise Price must be paid in U.S. dollars in cash,
wire transfer of immediately available funds, bank cashier's check or bank draft
payable to the order of the Company. Upon receipt by the Company of this Warrant
Certificate and a properly executed Exercise Subscription Form, together with
the Aggregate Exercise Price at the Company's office designated for such
purpose, the Holder shall be deemed to be the holder of record of the shares of
Common Stock receivable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. The Company shall pay any and all documentary, stamp or similar
issue taxes of the United States or any state thereof payable in respect of the
issue or delivery of such shares of Common Stock; provided, however, that the
Company shall not be required to pay any tax or other charge that may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the record holder of the Warrants being
exercised and in such case the Company shall not be obligated to issue or
deliver any stock certificate until such tax or charge has been paid in full or
it has been established to the satisfaction of the Company that no such tax or
charge is due.
(c) Notwithstanding Sections 2(a) and 2(b) above, at the option of the
Holder of Warrants, Warrants may be exercised in the manner set forth in
-3-
<PAGE>
paragraph (2)(a) above, except that the Holder may, in lieu of paying
the Aggregate Exercise Price in the manner set forth in Section 2(b) above,
exercise, without making any payment in cash, Warrants for that number of shares
of Common Stock determined by dividing (i) the difference between (x) the
current market price per share of Common Stock (as defined in Section 8(d)
below) on the day of exercise multiplied by the number of shares of Common Stock
specified in the Exercise Subscription Form and (y) the Aggregate Exercise Price
by (ii) the current market price per share of Common Stock on the day of
exercise.
(d) If the Holder exercises less than all the Warrants, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new Warrant
Certificate of the same tenor and for the unexercised number of Warrants which
was not surrendered shall be executed by the Company. Subject to the provisions
hereof regarding transfer of the Warrants, the Company shall register the new
Warrant Certificate in such name or names as may be directed in writing by the
Holder and deliver the new Warrant Certificate to the person or persons entitled
to receive the same.
(e) Upon surrender of this Warrant Certificate in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this Warrant
Certificate appropriate evidence of ownership of any shares of Common Stock or
other securities or property (including any money) to which the Holder is
entitled, registered or otherwise placed in, or payable to the order of, such
name or names as may be directed in writing by the Holder, and shall deliver
such evidence of ownership and any other securities or property (including any
money) to the person or persons entitled to receive the same, together with an
amount in cash in lieu of any fraction of a share of Common Stock as provided in
Section 5 below.
(f) Notwithstanding anything to the contrary contained herein, no
Holder of these Warrants shall be entitled to exercise the same until the filing
of the Certificate of Amendment contemplated by the Purchase Agreement and
unless, at the time of exercise, (i) a registration statement under the
Securities Act, shall have been filed with, and declared effective by, the
Securities and Exchange Commission or the issuance of shares of Common Stock
upon the exercise of the Warrants is permitted pursuant to an available
exemption from the registration requirements of the Securities Act and (ii) all
applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, with respect to the issuance of shares of Common Stock upon
the exercise of the Warrants shall have been satisfied.
-4-
<PAGE>
3. Restrictive Legend. Any substitute Warrant Certificate and any
certificates evidencing shares of Common Stock issued pursuant to exercise of
Warrants shall bear the following legend, unless such securities have been
registered under the Securities Act or unless the Company determines otherwise
in compliance with applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREUNDER."
In addition, any substitute Warrant Certificate shall bear the following legend:
"NO HOLDER OF WARRANTS EVIDENCED BY THIS CERTIFICATE MAY
TRANSFER SUCH WARRANTS OR ANY INTEREST THEREIN TO ANY PERSON
OTHER THAN SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. OR AN
AFFILIATE OF SOUTHWESTERN BELL WIRELESS HOLDINGS, INC."
4. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and delivery upon exercise of the Warrants
such number of its authorized but unissued shares of its Common Stock or other
securities of the Company from time to time issuable upon exercise of the
Warrants as will be sufficient to permit the exercise in full of the Warrants.
All such shares shall be duly authorized and, when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale (other than restrictions on resale imposed under applicable law) and free
and clear of all preemptive or similar rights, except for any of the foregoing
that may be imposed by or through the Holder of the Warrants or the Person to
whom shares of Common Stock or other securities are issued upon the exercise
thereof.
5. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of any Warrant. With respect
to
-5-
<PAGE>
any fraction of a share called for upon any exercise hereof, the Company shall
pay to the Holder an amount in cash equal to such fraction multiplied by the
current market price per share of Common Stock on the day of exercise.
6. Transfer, Loss of Warrant Certificate.
(a) Subject to the provisions of this Section 6, the Company will,
from time to time, register the transfer of any outstanding Warrant Certificate
upon its records. Each taker and Holder of this Warrant Certificate by taking or
holding the same, consents and agrees that prior to any transfer of this Warrant
Certificate, the holder hereof shall give written notice to the Company of such
holder's intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail. The
Company shall register such transfer upon surrender of such Warrant Certificate
to the Company for transfer, accompanied by appropriate instruments of transfer
duly executed by the holder or the holder's duly authorized attorney. Upon any
such registration of transfer, a new Warrant Certificate shall be issued in the
name of the transferee, and the surrendered Warrant Certificate shall be
cancelled. Each Warrant Certificate evidencing the transferred Warrants shall
bear, unless the same has been registered under the Securities Act, the
restrictive legend set forth in Section 3 herein.
(b) Notwithstanding anything to the contrary contained in Section
4(a), the Company shall not be obligated to register the transfer of any
outstanding Warrant Certificate unless a registration statement under the
Securities Act, shall have been filed with, and declared effective by, the
Securities and Exchange Commission with respect to the transfer of the
applicable Warrants or such transfer is permitted pursuant to an available
exemption from the registration requirements of the Securities Act.
(c) No holder of Warrants shall Transfer any such Warrants or any
interest therein to any Person other than SBW or an Affiliate of SBW. As used
herein, the term "Transfer" means, with respect to Warrants, any sale, transfer,
assignment, disposition or other means of conveying legal or beneficial
ownership of such Warrants, whether direct or indirect and whether voluntary or
involuntary, and the terms "Transferred," "Transferable," "Transferor" and
"Transferee" have correlative meanings.
(d) Any attempted or purported Transfer of Warrants in violation of
paragraph 6(c) above shall not be effective to Transfer ownership of such
Warrants to the purported Transferee thereof, who shall not be entitled to any
rights as a Holder
-6-
<PAGE>
with respect to the Warrants purported to be Transferred. All rights with
respect to any Warrants attempted or purported to be Transferred in violation of
the aforementioned provisions shall remain the property of the Person who
initially attempted or purported to transfer such Warrants in violation thereof.
Upon a determination by the Board of Directors of the Company that there has
been or is threatened an attempted or purported Transfer of Warrants in
violation of the aforementioned provisions, the Board of Directors of the
Company may take such action as it deems advisable, including, but not limited
to, refusing to give effect on the books of the corporation to such attempted or
purported Transfer or instituting legal proceedings to enjoin or rescind the
same.
(e) Upon receipt by the Company of evidence satisfactory to it (in the
exercise of its reasonable discretion) of the loss, theft, destruction or
mutilation of this Warrant Certificate, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the Company shall
execute and deliver a new Warrant Certificate of like tenor and date. Any such
new Warrant Certificate executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not the warrant so
lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.
The provisions of this Section 6 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates.
7. Rights of the Holder. Prior to the exercise of any Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to vote, to give or
withhold consent to any corporate action of the Company, to receive dividends or
other distributions, to exercise any preemptive or similar right or to receive
any notice of meetings of stockholders or any notice of any proceedings of the
Company except as may be specifically provided for herein.
8. Anti-Dilution Provisions. The Exercise Prices in effect at any
time, and the number of shares of Common Stock which may be purchased upon the
exercise hereof, shall be subject to change or adjustment as follows:
(a) In case the Company shall (i) pay a dividend or make any other
distribution on or in respect of its Common Stock in shares of Common Stock,
(ii) subdivide its outstanding Common Stock, (iii) combine its outstanding
Common Stock into a smaller number of shares of Common Stock, or (iv) issue by
reclassification
-7-
<PAGE>
of its Common Stock (whether pursuant to a merger or consolidation or otherwise)
any other shares representing common equity of the Company, then (x) the number
of shares of Common Stock theretofore issuable upon exercise of a Warrant shall
be appropriately adjusted so that the Holder of each Warrant exercised after the
record date fixing stockholders to be affected by such event shall be entitled
to purchase at the Exercise Price, as adjusted below, the number of shares of
Common Stock (or other shares representing common equity of the Company) which
he would have owned or have been entitled to receive after the happening of any
of the events described above, had such Warrant been exercised immediately prior
to such record date and (y) the Exercise Price shall be adjusted by multiplying
the Exercise Price by a fraction, the numerator of which is equal to the number
of shares of Common Stock purchasable prior to the adjustment specified in (x)
above and the denominator of which is equal to the number of shares of Common
Stock purchasable after such adjustment. An adjustment made pursuant to this
subparagraph shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(b) In case the Company shall at any time during which the Veto
Provisions (as hereinafter defined) are not in effect issue shares of Common
Stock to any Person, or rights, options or warrants to any Persons entitling
such Persons to subscribe for or purchase shares of Common Stock, at a price per
share less than the current market price per share of Common Stock as of the
issue date of such shares of Common Stock or rights, options or warrants to any
such Person, the Exercise Prices to be in effect after such issuance or date
shall be determined by multiplying the Exercise Prices in effect immediately
prior to such issue date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on the date of issuance of such
shares of Common Stock or rights, options or warrants plus the number of shares
of Common Stock which the Aggregate Price (as hereinafter defined) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Common Stock outstanding on the date of issuance of such
shares of Common Stock or rights, options or warrants plus the number of
additional shares of Common Stock issued or issuable upon exercise of the
rights, options or warrants. Aggregate Price shall mean (x) in the case of the
issuance of shares the aggregate offering price paid for the total number of
shares of Common Stock so issued or (y) in the case of rights, options or
warrants to subscribe for or purchase shares of Common Stock, the aggregate of
any amount paid for the issuance of such rights, options or warrants plus the
aggregate exercise price payable to the Company upon exercise thereof. Such
adjustment shall be made successively
-8-
<PAGE>
whenever any such Common Stock or rights, options or warrants are issued, and
shall become effective immediately after such issue date; provided, however,
that in the case of rights, options or warrants to subscribe for or purchase
shares of Common Stock, if all of the Common Stock deliverable upon exercise or
exchange of such securities has not been issued when such securities expire or
are no longer outstanding, then the Exercise Price shall promptly be readjusted
to the Exercise Price that would have been in effect had the adjustment upon the
issuance of such rights, options or warrants been made only with respect to the
number of shares of Common Stock actually issued upon exercise of such
securities. In determining whether any shares of Common Stock or any rights,
options or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such current market price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Company for such shares of Common
Stock or such rights, options or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors. For the purposes of
this subparagraph, the issuance of rights, options or warrants to subscribe for
or purchase securities convertible into Common Stock shall be deemed to be the
issuance of rights, options or warrants to purchase the shares of Common Stock
into which such securities are convertible at an aggregate offering price equal
to the aggregate offering price of such securities plus the minimum aggregate
amount (if any) payable upon conversion of such securities into shares of Common
Stock. Notwithstanding anything to the contrary contained herein, the provisions
of this Section 8(b) shall not apply to, and no adjustment is required to be
made in respect of, any of the following: (i) the issuance of shares of Common
Stock upon the exercise of any of the Warrants or the exercise of any other
rights, options or warrants that entitle the holder to subscribe for or purchase
such shares (it being understood that the sole adjustment pursuant to this
Section 8(b) in respect of the issuance of shares of Common Stock upon exercise
of rights, options or warrants shall be made at the time of the issuance by the
Company of such rights, options or warrants); (ii) the issuance of shares of
Common Stock upon conversion or exchange of any other securities outstanding on
the date hereof after giving effect to the consummation of the transactions
contemplated by the Purchase Agreement which are convertible into or
exchangeable for shares of Common Stock; (iii) the issuance of shares of Common
Stock upon conversion of any shares of Class B Common Stock, par value $.01 per
share, that may be issued from time to time as contemplated by the Purchase
Agreement or the other Transactions Documents (as defined in the Purchase
Agreement); (iv) the issuance of shares of Common Stock to the Company's
employees, directors or consultants pursuant to bona fide benefit plans adopted
by the Company's Board of Directors if and to the extent that the issuance
thereof is
-9-
<PAGE>
permitted under the terms of the Stockholders' Agreement (as defined in the
Purchase Agreement); (v) the issuance of shares of Common Stock in a bona fide
public offering pursuant to a firm commitment offering; (vi) the issuance of
shares of Common Stock to Affiliates of the Company concurrently with an
issuance of shares described in clause (v) above if such issuance results in the
receipt by the Company of at least the same net proceeds per share as the
issuance described in such provision and if all Affiliates have the right to
participate in such issuance pro rata with their equity interest in the Company;
and (vii) the issuance of shares of Common Stock pursuant to any dividend
reinvestment or similar plan adopted by the Company's Board of Directors to the
extent that the applicable discount from the current market price for shares
issued under such plan does not exceed 5%. As used herein, the term "Veto
Provisions" means any provisions of the Transaction Documents to the effect that
the approval of SBW or any of its Affiliates is required in order for the
issuance by the Company of any equity securities, including securities
convertible into equity securities (subject to the exceptions set forth in the
applicable Transaction Documents).
(c) In case the Company shall distribute to all holders of shares of
its Common Stock (whether pursuant to a merger or consolidation or otherwise)
evidence of its indebtedness or assets (including securities issued by the
Company or by any other entity, but excluding (x) any shares referred to in
Section 8(a) above, and (y) any shares of Common Stock or rights, options or
warrants referred to in Section 8(b) above), then in each such case the Exercise
Prices to be in effect after such distribution shall be determined by
multiplying the Exercise Prices in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current market price per
share of Common Stock less the then fair market value (as determined by the
Board of Directors in good faith) of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common Stock, and the
denominator of which shall be such current market price per share of Common
Stock as of the date of such distribution. Such adjustment shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) The "current market price per share of Common Stock" at any date
shall be deemed to be the average of the daily Closing Prices (as defined below)
for 30 consecutive Trading Days (as defined below) immediately preceding the day
in question, after appropriate adjustment for stock dividends, distributions,
subdivisions, combinations or reclassifications occurring within such 30-day
period. The term "Closing Price" on any day shall mean the reported last sale
price per share of
-10-
<PAGE>
Common Stock on such day or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices, in each case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the closing bid and asked prices quoted on the
Nasdaq National Market or, if not so quoted, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose; and the term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is quoted on the Nasdaq National Market, then
the Nasdaq National Market, is open for the transaction of business or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on the Nasdaq National Market, a Monday, Tuesday, Wednesday,
Thursday, or Friday on which banking institutions in the City of New York, New
York are not authorized or obligated by law or executive order to close.
(e) In the event that at any time, as a result of an adjustment made
pursuant to Sections 8(a) or 8(b) above, the Holder shall become entitled to
receive any shares of the capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of the
Warrants shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 8(a) to 8(d), inclusive, above, and Sections
8(g) or 8(h) below, and the provisions of this Warrant Certificate with respect
to the Common Stock shall apply on like terms to any such other shares.
(f) In case:
(i) the Company shall authorize the issuance to all holders of
its Common Stock of rights or warrants to subscribe for or
purchase shares of its Common Stock or of any other
subscription rights or warrants; or
(ii) the Company shall authorize the distribution to all holders
of its Common Stock (whether pursuant to a merger or
consolidation or otherwise) of evidences of its indebtedness
or assets (other than dividends paid in or distributions of
the
-11-
<PAGE>
Company's capital stock for which the Exercise Prices shall
have been adjusted pursuant to Section 8(a) above); or
(iii) of any capital reorganization or reclassification of the
Common Stock (other than a change in par value of the Common
Stock) or of any consolidation or merger to which the
Company is a party and for which approval of any
stockholders of the Company is required (other than a
consolidation or merger in which the Company is the contin-
uing corporation and that does not result in any
reclassification or change of the Common Stock outstanding),
or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(v) the Company proposes to take any action (other than actions
of the character described in Section 8(a) above) that would
require an adjustment of the Exercise Prices pursuant to
this Section 8;
then the Company shall cause to be mailed by registered mail to the Holder, at
the earliest practicable time (and in any event not less than 20 days prior to
the applicable record or effective date hereinafter specified), a notice stating
(A) the date as of which the holders of Common Stock of record to be entitled to
receive any such rights, warrants or distributions are to be determined, or (B)
the date on which any such reorganization, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding-up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding-up.
(g) Whenever reference is made in this Section 8 to the issuance of
shares of Common Stock, the term "Common Stock" shall include any equity
securities of any class of the Company hereafter authorized (excluding the Class
B Common Stock and Series D Preferred Stock, as defined in the Purchase
Agreement) which shall not be limited to a fixed sum or percentage in respect of
the right of the
-12-
<PAGE>
holders thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding-up of the Company.
(h) Notwithstanding any provision to the contrary in this Section 8,
the Exercise Prices in effect at any time, and the number of shares of Common
Stock which may be purchased upon the exercise hereof, shall not be subject to
change or adjustment in either of the following cases:
(i) In case the Company shall issue shares of Common Stock to any
Person, or rights, options or warrants to any Persons entitling such
Persons to subscribe for or purchase shares of Common Stock, at a price per
share at least equal to or greater than the current market price per share
of Common Stock as of the issue date such shares of Common Stock or rights,
options or warrants to any such Person; or
(ii) In case the Company purchases any assets or securities (a
"Purchase") and provides all or some of the consideration for such Purchase
in shares of Common Stock; provided, however, that any assets or securities
so purchased by the Company are purchased at a price which is at or below
the fair market value of such assets or securities as determined in good
faith by the Board of Directors of the Company; and provided, further, that
any shares of Common Stock provided as consideration by the Company for any
such Purchase are issued at a price or valued at a price at least equal to
or greater than the current market price per share of Common Stock as of
the date of issuance of such shares of Common Stock as determined in good
faith by the Board of Directors of the Company.
Notwithstanding any other provision contained in this Section 8, no adjustment
to the Exercise Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Price as then in effect. Any
adjustments that are not made as a result of this Section 8(i) shall be carried
forward and taken into account in any subsequent adjustment.
9. Officers' Certificate. Whenever any adjustment in the Exercise
Prices is made, the Company (A) shall forthwith file in the custody of its
Secretary at its principal office, a statement describing the adjustment and the
method of calculation used, and may obtain the certificate of any independent
firm of public accountants of national recognition selected by the Board of
Directors of the Company which, if obtained, shall be presumptive evidence of
the correctness of any such
-13-
<PAGE>
calculation that such adjustment was properly calculated in accordance with the
provisions of Section 8 and (B) shall cause a copy of such statement to be
mailed by first class mail postage prepaid to the Holder.
10. Consolidation or Merger. In case of any consolidation of the
Company with, or merger of the Company into, any other Person or any merger of
another Person into the Company (other than a consolidation or merger in which
the Company is the continuing corporation and that does not result in any
reclassification or change of the Common Stock outstanding), the Holder of this
Warrant Certificate shall have the right thereafter to exercise the Warrants for
the kind and amount of securities, cash and other property receivable upon such
consolidation or merger by a holder of the number of shares of Common Stock of
the Company for which the Warrants may have been exercised immediately prior to
such consolidation or merger, assuming such holder of Common Stock of the
Company (i) is not a Person with which the Company consolidated or into which
the Company merged or which merged into the Company, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation or merger
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation or merger is not the same for each share of
Common Stock of the Company held immediately prior to such consolidation or
merger by other than a constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section 10 the kind and amount of
securities, cash and other property receivable upon such consolidation or merger
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the nonelecting shares). Adjustments for
events subsequent to the effective date of such a consolidation or merger shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant Certificate. In any such event, effective provisions shall be made
in the certificate or articles of incorporation of the resulting or surviving
corporation or otherwise so that the provisions set forth herein for the
protection of the rights of Warrant holders shall thereafter continue to be
applicable; and any such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon exercise, such shares of stock, other
securities, cash and property. The provisions of this Section 10 shall similarly
apply to successive consolidations or mergers.
11. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile
-14-
<PAGE>
transmission or sent by certified, registered or express mail, postage prepaid.
Any notice shall be deemed given when so delivered personally, sent by facsimile
transmission or, if mailed, three (3) business days after the date of deposit in
the United States mail, by certified mail return receipt requested, as follows:
If to the Company: HighwayMaster Communications, Inc.
16479 Dallas Parkway, Suite 710
Dallas, Texas 75248
Attention: William C. Kennedy, Jr.
Facsimile: (972) 930-7263
If to the Holder: Southwestern Bell Wireless Holdings, Inc.
17330 Preston Road
Suite 100A
Dallas, Texas 75252
Attention: President
Facsimile: (972) 733-2012
and to: SBC Communications Inc.
175 E. Houston
San Antonio, Texas 78205
Attention: General Attorney, Mergers & Acquisitions
Facsimile: (210) 351-3488
or such other address as shall have been furnished to the party giving or making
such notice, demand or delivery.
12. APPLICABLE LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAW OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
13. Amendments; Waivers. Any provision of this Warrant
Certificate may be amended or waived if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Holder and the
Company, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or
-15-
<PAGE>
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
14. Agreement of Holder. By acceptance of this Warrant
Certificate and the Warrants represented thereby the Holder hereby agrees to be
bound by the terms and conditions contained herein.
15. Termination. In the event that the Escrow Fund is released to
SBW pursuant to the terms of the Escrow Agreement, this Warrant Certificate
shall thereafter become void and have no effect, and neither the Company nor the
Holder shall have any liability to the other or its Affiliates by virtue of the
provisions of this Warrant Certificate or in connection with the transactions
contemplated hereby, and except that the Holder shall be obligated to promptly
deliver this Warrant Certificate and the certificates evidencing any shares of
Common Stock acquired upon the exercise of the Warrants to the Company for
cancellation and return any dividends received during the period it held such
shares to the Company.
-16-
<PAGE>
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed and attested by its duly authorized officers and to be
dated as of September 27, 1996.
HIGHWAYMASTER COMMUNICATIONS,
INC.
By: /s/ William C. Saunders
Name:
Title:
Attest:
By: /s/ Wesley E. Schlenker
Name: Wesley E. Schlenker
Title: Secretary
Consented to and Accepted:
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ S. Sigman
Name: Stan Sigman
Title: President & CEO
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREUNDER. NO HOLDER OF WARRANTS EVIDENCED BY THIS
CERTIFICATE MAY TRANSFER SUCH WARRANTS OR ANY INTEREST THEREIN TO ANY PERSON
OTHER THAN SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. OR AN AFFILIATE OF
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
-17-
<PAGE>
ASSIGNMENT FORM
(To be executed if Holder desires to transfer a Warrant)
For Value Received, the undersigned hereby sells, assigns and
transfers to ___________________ an Affiliate of Southwestern Bell Wireless
Holdings, Inc. in accordance with Section 6 of the Warrant Certificate.
_______________________________________________________________________________
Please insert social security or other identifying number
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address including zip code)
Warrants represented by this Warrant Certificate, and does hereby irrevocably
appoint ___________________ Attorney, to transfer such rights on the books of
the Company with full power of substitution.
Date: ________________________.
____________________________(1)
(Signature of Owner)
______________________________
(Street Address)
__________________________________
(City) (State)(Zip Code)
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
-1-
<PAGE>
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise for cash of Warrants at the First
Exercise Price)
To: HighwayMaster Communications, Inc.
The undersigned irrevocably exercises Warrants for the purchase of _______
shares of common stock, $0.01 par value, of HighwayMaster Communications, Inc.
(the "Common Stock") at the First Exercise Price and herewith makes payment of
$______________ (such payment being made in U.S. dollars in cash, wire
transfer of immediately available funds, bank cashier's check or bank draft
payable to the order of HighwayMaster Communications, Inc.), all on the terms
and conditions specified in the attached Warrant Certificate, and surrenders
this Warrant Certificate and all right, title and interest in the Warrants
exercised hereby to HighwayMaster Communications, Inc. and directs that the
shares of Common Stock deliverable upon the exercise of these Warrants be
registered or placed in the name and at the address specified below and
delivered thereto.
Date: ___________________.
___________________________(1)
(Signature of Owner)
______________________________
(Street Address)
______________________________
(City) (State)(Zip Code)
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
-1-
<PAGE>
I. Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:
[(an Affiliate of Southwestern Bell Wireless Holdings, Inc. in accordance with
Section 6 of the Warrant Certificate)]
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
-2-
<PAGE>
EXERCISE SUBSCRIPTION FORM
(To be executed only upon cashless exercise of Warrants at the First
Exercise Price)
To: HighwayMaster Communications, Inc.
The undersigned irrevocably exercises Warrants for the purchase of ________
shares of common stock, $0.01 par value, of HighwayMaster Communications, Inc.
(the "Common Stock") at the First Exercise Price without any cash payment
pursuant to Section 2(c) of the attached Warrant Certificate and on the other
terms and conditions specified therein, and surrenders this Warrant Certificate
and all right, title and interest in the Warrants exercised hereby to
HighwayMaster Communications, Inc. and directs that the shares of Common Stock
deliverable upon the exercise of these Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date: ____________________.
___________________________(1)
(Signature of Owner)
______________________________
(Street Address)
______________________________
(City) (State)(Zip Code)
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
-1-
<PAGE>
II. Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:
[(an Affiliate of Southwestern Bell
Wireless Holdings, Inc. in accordance with
Section 6 of the Warrant Certificate)]
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
-2-
<PAGE>
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise for cash of Warrants at the Second
Exercise Price)
To: HighwayMaster Communications, Inc.
The undersigned irrevocably exercises Warrants for the purchase of ______
shares of common stock, $0.01 par value, of HighwayMaster Communications, Inc.
(the "Common Stock") at the Second Exercise Price and herewith makes payment of
$ (such payment being made in U.S. dollars in cash, wire transfer of immediately
available funds, bank cashier's check or bank draft payable to the order of
HighwayMaster Communications, Inc.), all on the terms and conditions specified
in the attached Warrant Certificate, and surrenders this Warrant Certificate and
all right, title and interest in the Warrants exercised hereby to HighwayMaster
Communications, Inc. and directs that the shares of Common Stock deliverable
upon the exercise of these Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Date: ___________________.
___________________________(1)
(Signature of Owner)
______________________________
(Street Address)
______________________________
(City) (State) (Zip Code)
-1-
<PAGE>
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
-2-
<PAGE>
III. Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the
within Warrant Certificate to be
issued to:
[(an Affiliate of Southwestern Bell Wireless
Holdings, Inc. in accordance with
Section 6 of the Warrant Certificate)]
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
-3-
<PAGE>
EXERCISE SUBSCRIPTION FORM
(To be executed only upon cashless exercise of Warrants at the Second
Exercise Price)
To: HighwayMaster Communications, Inc.
The undersigned irrevocably exercises Warrants for the purchase of ______
shares of common stock, $0.01 par value, of HighwayMaster Communications, Inc.
(the "Common Stock") at the Second Exercise Price without any cash payment
pursuant to Section 2(c) of the attached Warrant Certificate and on the other
terms and conditions specified therein and surrenders this Warrant Certificate
and all right, title and interest in the Warrants exercised hereby to
HighwayMaster Communications, Inc. and directs that the shares of Common Stock
deliverable upon the exercise of these Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date: __________________.
___________________________(1)
(Signature of Owner)
______________________________
(Street Address)
______________________________
(City) (State)(Zip Code)
-1-
<PAGE>
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
-2-
<PAGE>
IV. Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:
[(an Affiliate of Southwestern Bell Wireless
Holdings, Inc. in accordance with
Section 6 of the Warrant Certificate)]
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
-3-
<PAGE>
================================================================================
HIGHWAYMASTER COMMUNICATIONS, INC.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
DATED AS OF
SEPTEMBER 27, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
Page
Section 1. Definitions................................................. 2
Section 2. The Recapitalization; Amendment of Certificate of
Incorporation............................................... 6
Section 3. Transfer of Securities...................................... 7
Section 4. Registration Rights......................................... 10
Section 5. Governance.................................................. 28
Section 6. Miscellaneous............................................... 35
ii
<PAGE>
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), dated
as of September 27, 1996, amends and restates in its entirety that Stockholders'
Agreement, dated as of February 4, 1994 (the "Original Agreement"), by and among
HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware corporation (previously named HM
HOLDING CORPORATION) (the "Company"), and the other Persons (as hereinafter
defined) identified in Appendix A hereto, as the Original Agreement has been
amended by the amendments and addenda set forth in Appendix B hereto, adds an
additional party hereto, Southwestern Bell Wireless Holdings, Inc., a Delaware
corporation ("SBW") and provides that the Persons identified in Appendix C
hereto shall no longer be parties hereto.
RECITALS:
A. Simultaneously with the execution hereof, SBW is acquiring certain
shares of Series D Preferred Stock (as hereinafter defined) of the Company
pursuant to the Purchase Agreement dated as of the date hereof, by and between
the Company and SBW (the "Purchase Agreement") and agreeing to provide certain
services to the Company pursuant to a separate technical services agreement.
B. Certain of the parties hereto have effected, or agreed to effect,
the Recapitalization reflected in Sections 2(a), (b) and (c) hereof.
C. Pursuant to Section 7(h) of the Original Agreement with respect to
the terms hereof generally and Section 4(k) of the Original Agreement with
respect to the registration rights provisions, holders of a sufficient number of
Shares (as hereinafter defined) have executed this Agreement thereby amending
and restating the Original Agreement, as amended to date, in its entirety as set
forth herein, for the purpose of regulating certain aspects of the Stockholders'
relationships with regard to each other and the Company.
D. Immediately after the execution hereof, the Stockholders (as
hereinafter defined) will consist of (i) Carlyle HighwayMaster Investors, L.P.,
Carlyle HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Mark D. Ein, Chase Manhattan Investment Holdings, Inc. and
Archery Partners (the "Carlyle Entities"), (ii) Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P. and Clipper Capital Associates, L.P. (the
"Clipper Entities"), (iii) Erin Mills International
1
<PAGE>
Investment Corporation, The Erin Mills Investment Corporation and The Erin Mills
Development Corporation (the "Erin Mills Companies"), (iv) William C. Kennedy,
Jr., Donald M. Kennedy, William C. Saunders, Robert S. Folsom and Robert T.
Hayes and (v) SBW.
E. Simultaneously with the execution hereof, the Company is issuing to
SBW a warrant certificate for warrants (the "Warrants") for 5,000,000 shares of
Common Stock (as hereinafter defined) in consideration for SBW entering into the
transactions contemplated by the Purchase Agreement and the other Transaction
Documents (as hereinafter defined).
AGREEMENT:
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the Company and
Stockholders agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following meanings:
"Affiliate" of any specified person or entity means any person or
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such person or entity.
"Anti-takeover Provision" shall have the meaning set forth in Section
5(g) hereto.
"Beneficially Own" (and correlative terms) means, with respect to any
shares of Common Stock or other securities, to be entitled, directly or
indirectly through one or more intermediaries, to all material incidents of
ownership with respect to such securities, including, but not limited to, (i)
the right to vote such securities (in the case of voting securities), (ii)
subject to any transfer restrictions, the right to dispose of such securities
and to receive any proceeds realized from the disposition thereof and (iii) the
right to receive any dividends and other distributions with respect to such
securities.
"By-Word Stockholder" means each of William C. Kennedy, Jr., Donald M.
Kennedy, William C. Saunders, Robert T. Hayes and Robert S. Folsom.
"Carlyle Entities" shall have the meaning set forth in the Recitals
hereto.
2
<PAGE>
"Carlyle Stockholder" means each of the Carlyle Entities and any
Permitted Assign (as hereinafter defined) who acquires shares of Common Stock
directly or indirectly from a Carlyle Stockholder and who executes a
supplemental agreement as contemplated in Section 6(b) hereof, in his, her or
its capacity as a holder of Common Stock.
"Class B Common Stock" means the new class of Company Common Stock,
par value $0.01 per share, to be authorized as contemplated in Section 2(e)
hereof, the terms of which are set forth on Exhibit B to the Purchase Agreement.
"Clipper Entities" shall have the meaning set forth in the Recitals
hereto.
"Clipper Stockholder" means each of the Clipper Entities.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company and any other capital stock of the Company into which such Common
Stock is reclassified or reconstituted.
"Company Common Stock" means the Common Stock and the Class B Common
Stock.
"Demand Registration" shall have the meaning set forth in Section 4(b)
hereof.
"Director" means a member of the Board of Directors of the Company.
"Erin Mills Companies" shall have the meaning set forth in the
Recitals hereto.
"Erin Mills Stockholder" means each of the Erin Mills Companies and
any Permitted Assign who acquires shares of Common Stock directly or indirectly
from an Erin Mills Company and who executes a supplemental agreement as
contemplated in Section 6(b) hereof and, solely for purposes of Section 4
hereof, Robert S. Folsom and Robert T. Hayes, in each case in his, her or its
capacity as a holder of Common Stock.
3
<PAGE>
"Excluded Options" means options, warrants, rights or obligations to
acquire Common Stock issued by any Person other than the Company.
"Excluded Related Party" means, with respect to any Stockholder, a
Related Party of such Stockholder which either (i) is a natural person or (ii)
is not an Affiliate of such Stockholder.
"Exempt Transfer" shall mean the meaning set forth in Section 3(d)
hereof.
"Existing Line of Business" shall have the meaning set forth in
Section 5(g) hereof.
"Incentive Stock Option Plan" means the HM Holding Corporation 1994
Incentive Stock Option Plan, as adopted by the Company's Board of Directors and
as amended from time to time, providing for the grant to certain management
employees of the Company and its Subsidiaries of options to purchase shares of
Common Stock.
"Majority in Interest" means, with respect to any specified group of
Stockholders, Stockholders included in such group which hold more than fifty
percent (50%) of the aggregate shares of Common Stock held collectively by such
group of Stockholders on a Fully Diluted Basis (as hereinafter defined).
"On a Fully Diluted Basis" with respect to the Company's Common Stock
means on a basis that takes into account the number of shares of Common Stock
which are issued and outstanding plus the number of shares of Common Stock
issuable upon conversion of any outstanding Series D Preferred Stock and, once
authorized and issued, Class B Common Stock or pursuant to outstanding options,
warrants, rights or obligations to purchase or subscribe for shares of Common
Stock or securities of the Company which are exchangeable or exercisable into
shares of Common Stock as of the applicable date of determination, other than
the Warrants, Excluded Options and employee stock options.
"Permitted Assign" shall have the meaning set forth in Section 6(b)
hereof.
"Person" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or department, agency or political subdivision thereof.
4
<PAGE>
"Piggyback Registration" shall have the meaning set forth in Section
4(a) hereof.
"Public Transferee" means any subsequent holder of Common Stock who
acquires Shares from a Stockholder pursuant to an effective registration
statement under the Securities Act (as hereinafter defined) or pursuant to Rule
144 promulgated thereunder.
"Recapitalization Agreement" means the Recapitalization Agreement,
dated as of the date hereof, among the Company, certain Erin Mills Stockholders,
Carlyle Stockholders and Clipper Stockholders, a copy of which is attached as
Exhibit A hereto.
"Recapitalization Shares" shall have the meaning set forth in Section
4(c) hereof.
"Regulatory Relief" means that SBC Communications, Inc. or its
Affiliates, in their sole judgment, have obtained all necessary federal and
state regulatory approvals to provide landline, interLATA long-distance service
pursuant to the Communications Act of 1934, as amended by The Telecommunications
Act of 1996.
"Related Party" with respect to any Stockholder means: (A) an
Affiliate of such Stockholder; (B) a trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, or owners, or persons holding
a controlling interest of which consist of such Stockholder and/or its
Affiliates; (C) with respect to any Stockholder who is an individual, such
Stockholder's spouse, siblings, children or parents; (D) with respect to any
Stockholder which is a partnership, such Stockholders' partners as of the date
hereof; and (E) with respect to any Stockholder which is a corporation, such
Stockholder's stockholders as of the date hereof.
"SBW Stockholder" means SBW and any Affiliate of SBW who acquires
Shares from SBW and who executes a supplemental agreement as contemplated in
Section 6(b) hereof.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
5
<PAGE>
"Series D Preferred Stock" means the Series D Participating
Convertible Preferred Stock, par value $.01 per share, of the Company, the
Certificate of Designation for which is set forth in Exhibit A to the Purchase
Agreement.
"Shares" means (i) any shares of the capital stock of the Company and
(ii) any securities convertible into, and any rights, options or warrants
exchangeable or
6
<PAGE>
exercisable for, any of the shares of the capital stock of the Company, in
either case, at any time outstanding.
"Stockholders" means the By-Word Stockholders, the Carlyle
Stockholders, the Clipper Stockholders, the Erin Mills Stockholders and the SBW
Stockholders.
"Subsidiary" of any specified person or entity means a corporation or
other entity of which a majority of the voting power of the equity securities or
other equity interests is owned, directly or indirectly, by such specified
person or entity or any Subsidiary of such specified person or entity.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
"Transfer" shall have the meaning set forth in Section 3(a) hereof.
"Warrants" shall have the meaning set forth in the Recitals hereto.
Section 2. The Recapitalization; Amendment of Certificate of
Incorporation.
(a) Erin Mills Companies.
(1) $10 Million Investment. Simultaneously with the execution
hereof, Erin Mills International Investment Corporation and one of its
affiliates are investing $10.0 million in cash in the Company in
exchange for 800,000 shares of Common Stock, as provided in the
Recapitalization Agreement.
(2) Series B Preferred Stock. Simultaneously with the execution
hereof, the Series B Preferred Stock owned by The Erin Mills
Development Corporation and certain of its affiliates and by Robert S.
Folsom and Robert T. Hayes is being exchanged for 864,000 shares of
Common Stock, as provided in the Recapitalization Agreement.
(b) Carlyle and Clipper Entities. Simultaneously with the execution
hereof, the promissory notes in the aggregate principal amount of approximately
$12.7 million held by certain Carlyle Stockholders and the Clipper Stockholders
together with accrued and unpaid interest in the amount of approximately
$63,000,
7
<PAGE>
which were issued by the Company pursuant to the Note Exchange and Amendments
Agreement, dated as of May 26, 1995, are being converted into shares of Common
Stock at a price of $12.50 per share, as provided in the Recapitalization
Agreement.
(c) Termination of Subscription Agreement. Simultaneously with the
execution hereof, the Company, certain Carlyle Stockholders and the Clipper
Stockholders are terminating certain provisions of the Subscription Agreement,
dated as of February 4, 1994, as provided in the Recapitalization Agreement.
(d) Bylaws. Simultaneously with the execution hereof, the Company has
amended the Bylaws as set forth as Exhibit B hereto.
(e) Amendment of Certificate of Incorporation. The Stockholders listed
on Appendix D have granted written consents and irrevocable proxies to SBW
covering the shares of Common Stock owned by them with respect to the amendment
of the Certificate of Incorporation as set forth on Exhibit B to the Purchase
Agreement and the issuance of the Common Stock pursuant to the exercise of the
Warrants, and SBW has delivered to the Company written consents covering such
shares, and immediately following the issuance of the Series D Preferred Stock,
will deliver to the Company a written consent covering such shares, each
approving such amendment. On the twentieth day following the mailing of an
information statement to the Company's stockholders in compliance with
Regulation 14C promulgated under the Securities Exchange Act of 1934, the
Company will cause the Certificate of Amendment to be filed with the Secretary
of State of the State of Delaware.
Section 3. Transfer of Securities
(a) General Prohibition on Transfer. None of the
Stockholders shall sell, assign, transfer, pledge, encumber
or in any way dispose of ("Transfer") any Shares unless (i)
such Stockholder shall have delivered to the Company an
opinion of counsel to such Stockholder, in form and
substance reasonably satisfactory to the Company, to the
effect that such Transfer is exempt from the registration
requirements of the Securities Act or (ii) the registration
requirements of the Securities Act have been complied with
in connection with such Transfer, provided, however, that
the Company shall be entitled in its sole discretion to
waive the requirement that an opinion of counsel be
delivered pursuant to this Section 3(a) if it determines
that a Transfer is in accordance with applicable law.
8
<PAGE>
(b) Transfer by First Refusal Stockholders. None of the
Carlyle Stockholders, the Erin Mills Stockholders (other
than Robert S. Folsom and Robert T. Hayes), William C.
Kennedy, Jr. or William C. Saunders (collectively the "First
Refusal Stockholders") shall Transfer any Shares unless (i)
such First Refusal Stockholder has complied with the
provisions of this Section 3(c) to the extent applicable to
such Transfer and (ii) the transferee (if other than a
Public Transferee or an Excluded Related Party) has agreed
to become a party to, and be bound by the terms of, Section
3 of this Agreement pursuant to a supplemental agreement
hereto in form and substance reasonably satisfactory to the
Company and SBW, executed by such transferee (provided,
however, that the requirement set forth in this clause (ii)
shall not apply to any transferee (other than a Permitted
Assign or a transferee pursuant to Section 3(d) who is not
an Excluded Related Party) acquiring Shares from a Seller
(as hereinafter defined) after the earlier of (A) the date
of Regulatory Relief and (B) September 27, 1997 pursuant to
a sale effected by such Seller in compliance with the
provisions of subsection (c) below). Notwithstanding the
foregoing, no First Refusal Stockholder shall be required to
execute a supplemental agreement.
(c) Right of First Refusal.
(i) If any First Refusal Stockholder (a "Seller")
receives a bona fide offer, which the Seller desires to
accept ("Offer") to purchase any or all of the Shares (the
"Transfer Stock") then owned by such Seller from any person
(an "Offeror"), such Seller shall notify SBW in writing of
the terms of such Offer, which notice shall identify the
Offeror, the price offered, and all the other material terms
and conditions of such Offer. In addition, if a Seller
wishes to sell to the public pursuant to a registration
statement under the Securities Act or pursuant to Rule 144
promulgated thereunder (a "Public Sale"), the Seller shall
notify SBW in writing of the proposed terms of the Public
Sale, which Public Sale shall also constitute an Offer for
the purposes hereof. The Seller shall provide a written
notice (the "Notice") of an Offer to SBW promptly, but in no
event later than five (5) business days following the
determination by the Seller that it desires to accept an
Offer which does not relate to a Public Sale. The Notice
shall contain an irrevocable offer to sell the Transfer
Stock to SBW at a price equal to the price and upon
substantially the same terms as the terms contained in such
Offer; provided, however, that (A) if such
9
<PAGE>
Offer shall relate to a proposed Public Sale, the Notice
shall offer to sell the Transfer Stock at a price determined
by the Seller (which in the case of a registered public
offering shall not be higher than the price the Seller in
good faith believes can be obtained in such offering),
minus, in the case of a registered public offering pursuant
to a firm commitment underwriting, customary underwriting
commissions, and (B) if the terms of the Offer entitle the
Offeror to purchase the Transfer Stock for securities of
such Offeror (the "Offered Securities") or other property,
SBW shall be entitled to purchase the Transfer Stock for an
amount of cash equal to the fair market value of the Offered
Securities or such other property. SBW shall have the
irrevocable right and option (the "Right of First Refusal"),
to accept such irrevocable offer as to all Shares as to
which the Offer is made (except in the event of a Public
Sale pursuant to Rule 144, in which event SBW may accept as
to any number of Shares) by providing the Seller with an
irrevocable written notice of acceptance within fifteen (15)
business days, or, in the case of a Public Sale pursuant to
Rule 144, five (5) business days, after the date the Notice
is received (the "Notice Period"). The closing of the
purchases of the Transfer Stock by SBW shall take place at
the principal office of SBW no later than the fifth (5th)
business day after the acceptance by SBW. At such closing,
SBW shall deliver a certified check or checks or wire
transfer in the appropriate amount to the Seller against
delivery of certificates representing the Transfer Stock so
purchased, duly endorsed in blank by the person or persons
in whose name a stock certificate is registered or
accompanied by a duly executed assignment separate from the
certificate with the signatures thereon guaranteed by a
commercial bank or trust company. If SBW does not elect to
purchase the Transfer Stock during the Notice Period or if
SBW fails or refuses for any reason (including, but not
limited to, the existence of any requirement that SBW obtain
any required regulatory approval) to complete the closing of
the purchase of any Transfer Stock upon the day specified
above, the Seller shall have ninety (90) days from the end
of the Notice Period (the "Sales Period") in which to
Transfer all of the Transfer Stock pursuant to the Offer to
the Offeror or in a Public Sale, it being understood that
(A) in a registered public offering the sales price may be
greater than or less than the Offer price and (B) in any
other transaction the sales price and other terms of the
Transfer may be more favorable to the Seller than those set
forth in the Notice. In addition, Seller may not knowingly
make a Public Sale to any purchaser which Seller knows to
own in
10
<PAGE>
excess of 5% of the Common Stock, provided that this
restriction shall not create any duty of inquiry on the part
of the Seller. Promptly after any sale pursuant to this
Section 3(c), the Seller shall notify SBW of the
consummation thereof and shall furnish such evidence of the
completion (including time of completion) of such sale and
of the terms thereof as SBW may reasonably request. If, at
the termination of the Sales Period, the Seller has not
completed the sale of the Transfer Stock to the Offeror or
in a Public Sale, all of the restrictions on Transfer
contained in this Section 3(c) shall again be in effect with
respect to all such Seller's Transfer Stock.
(d) Exempt Transfer. The following transactions shall
constitute "Exempt Transfers" for the purpose of Section 3
and shall be exempt from the requirements of subsection (c),
but not subsections (a) and (b): (i) a Transfer of Shares by
a First Refusal Stockholder to SBW, (ii) a Transfer by a
Stockholder of Shares by will or intestate succession to
such Stockholder's executors, administrators, testamentary
trustees, legatees or beneficiaries, (iii) a Transfer of
Shares by a Stockholder to any Related Party of such
Stockholder and (iv) a Transfer of Shares (A) by any Carlyle
Stockholder to any other Carlyle Stockholder or to any
Clipper Stockholder, (B) by any Erin Mills Stockholder to
any other Erin Mills Stockholder or (C) by William C.
Kennedy, Jr. or William C. Saunders to any By-Word
Stockholder, or (vi) a Transfer of Shares that has been
approved in writing by SBW as an Exempt Transfer.
(e) Restrictions on SBW. No SBW Stockholder shall Transfer
any Series D Preferred Stock or Class B Common Stock except
to an Affiliate of SBW.
Section 4. Registration Rights.
(a) Piggyback Registration Rights.
(1) Right to Piggyback. Subject to the last sentence of this
subsection (1), whenever the Company proposes to register
any shares of Common Stock (or securities convertible into
or exchangeable for, or options, warrants or other rights to
acquire, Common Stock) with the Securities and Exchange
Commission (the "Commission") under the Securities Act
(other than (A) registrations on Form S-4 or Form S-8
11
<PAGE>
and (B) the registration of the Recapitalization Shares (as
hereinafter defined) pursuant to subsection (c) below) and
the registration form to be used may be used for the
registration of the Registrable Securities (as defined in
subsection (k) below) (a "Piggyback Registration"), the
Company will give written notice to all Stockholders, at
least thirty-five (35) days prior to the anticipated filing
date, of its intention to effect such a registration, which
notice will specify the proposed offering price, the kind
and number of securities proposed to be registered, the
distribution arrangements and such other information that at
the time would be appropriate to include in such notice, and
will, subject to subsection (a)(2) below, include in such
Piggyback Registration all Registrable Securities with
respect to which the Company has received written requests
for inclusion therein within fifteen (15) business days
after the effectiveness of the Company's notice. Except as
may otherwise be provided in this Agreement, Registrable
Securities with respect to which such request for
registration has been timely received will be registered by
the Company and offered to the public in a Piggyback
Registration pursuant to this Section 4 on terms and
conditions at least as favorable as those applicable to the
registration of shares of Common Stock (or securities
convertible into or exchangeable or exercisable for Common
Stock) to be sold by the Company and by any other person
selling under such Piggyback Registration.
(2) Priority on Piggyback Registrations. If the managing
underwriter or underwriters, if any, advise the holders of
Registrable Securities in writing that in its or their
reasonable opinion or, in the case of a Piggyback
Registration not being underwritten, the Company shall
reasonably determine (and notify the holders of Registrable
Securities of such determination), after consultation with
an investment banker of nationally recognized standing, that
the number or kind of securities proposed to be sold in such
registration (including Registrable Securities to be
included pursuant to subsection (a)(1) above) will
materially adversely affect the success of such offering
(including, without limitation, a material impact on the
selling price), the Company will include in such
registration the number of securities, if any, which, in the
opinion of such underwriter or underwriters, or the Company,
as the case may be, can be sold, without having a material
adverse effect on the success of such offering, as follows:
(i) first, the shares the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included
in such registration by SBW, the Carlyle
12
<PAGE>
Stockholders, the Clipper Stockholders and the Erin Mills
Stockholders, pro rata among such requesting Stockholders on
the basis of their respective holdings of Common Stock on a
Fully Diluted Basis, and (iii) third, the Registrable
Securities requested to be included in such registration by
the By-Word Stockholders, pro rata among such requesting
Stockholders on the basis of their respective holdings of
Common Stock on a Fully Diluted Basis.
(3) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the Company (by action of the
Board of Directors) will select a managing underwriter or
underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized
standing and reasonably acceptable to the holders of a
majority of the Registrable Securities included therein.
(b) Demand Registration Rights.
(1) Right to Demand Registration. Each of (A) the Carlyle
Stockholders and the Clipper Stockholders as a group; (B)
the Erin Mills Stockholders as a group and (C) SBW (each
referred to herein as a "Demanding Group") shall have the
right on the number of occasions set forth in subsection
(b)(2) to make a written request of the Company for
registration with the Commission, under and in accordance
with the provisions of the Securities Act, of all or part of
their Registrable Securities (a "Demand Registration");
provided, that (x) the Company shall not effect a Demand
Registration unless such Demand Registration has been
requested by persons holding at least a majority of the
Registrable Securities held by the Demanding Group on the
date of such written request and unless the number of Shares
to be sold in such Demand Registration by the Demanding
Group is at least 1,000,000 shares of Common Stock, (y) if
the Board of Directors determines in the exercise of its
reasonable judgment that, due to a pending or contemplated
acquisition or disposition, to effect such Demand
Registration at such time would have a material adverse
effect on the Company, the Company may defer such Demand
Registration for a single period not to exceed one hundred
eighty (180) days (but if the Company elects to defer any
Demand Registration pursuant to the terms of this sentence,
no Demand Registration shall be deemed to have occurred for
purposes of this Agreement) and (z) the Company shall be
obligated to effect only the number of Demand Registrations
set forth
13
<PAGE>
in subsection 4(b)(2) below. Within ten (10) days after
receipt of the request for a Demand Registration, the
Company will send written notice (the "Notice") of such
registration request and its intention to comply therewith
to all Stockholders who are holders of Registrable
Securities and, subject to subsection (3) below, the Company
will include in such registration all Registrable Securities
of such Stockholders with respect to which the Company has
received written requests for inclusion therein within
twenty (20) business days after the effectiveness of the
Notice. All requests made pursuant to this subsection (b)(1)
will specify the aggregate number of Registrable Securities
requested to be registered and will also specify the
intended methods of disposition thereof.
(2) Number of Demand Registrations. Each Demanding Group
shall be entitled to two (2) Demand Registrations, and the
expenses of each (including the fees and expenses of a total
of one counsel for the Demanding Group in accordance with
subsection (f)(2) below) shall be borne by the Company. A
Demand Registration shall not be counted as a Demand
Registration hereunder until such Demand Registration has
been declared effective by the Commission and maintained
continuously effective for a period of at least three months
or such shorter period when all Registrable Securities
included therein have been sold in accordance with such
Demand Registration.
If the Company elects to issue and sell and ultimately sells
any equity securities pursuant to any Registration Statement
filed in connection with a Demand Registration, then such
Registration shall be deemed not to be a Demand Registration
for purposes of determining the number of Demand
Registrations granted by this Agreement.
(3) Priority on Demand Registrations. If in any Demand
Registration the managing underwriter or underwriters
thereof (or in the case of a Demand Registration not being
underwritten, the holders of a majority of the Registrable
Securities held by the Demanding Group after consultation
with an investment banker of nationally recognized
standing), advise the Company in writing that in its or
their reasonable opinion the number of securities proposed
to be sold in such Demand Registration exceeds the number
that can be sold in such offering without having a material
adverse effect on the success of the offering (including,
without limitation, an impact on the selling price), the
14
<PAGE>
Company will include in such registration only the number of
securities that, in the reasonable opinion of such
underwriter or underwriters (or such holders of Registrable
Securities held by the Demanding Group, as the case may be)
can be sold without having a material adverse effect on the
success of the offering, as follows: (i) first, the
Registrable Securities requested to be included in such
Demand Registration by the Demanding Group, pro rata, among
such Stockholders on the basis of their respective holdings
of Common Stock on a Fully Diluted Basis, (ii) second, the
Registrable Securities requested to be included in such
Demand Registration by the Erin Mills Stockholders and SBW
(if the Demanding Group is the Carlyle Stockholders and the
Clipper Stockholders), or the Carlyle Stockholders and the
Clipper Stockholders, as a group, and SBW (if the Demanding
Group is the Erin Mills Stockholders), or the Carlyle
Stockholders and the Clipper Stockholders, as a group, and
the Erin Mills Stockholders (if the Demanding Group is SBW),
in all such cases pro rata among such Stockholders on the
basis of their respective holdings of Common Stock on a
Fully Diluted Basis, (iii) third, shares to be issued and
sold by the Company and requested to be included in such
Demand Registration, and (iv) fourth, the Registrable
Securities requested to be included in such Demand
Registration by the By-Word Stockholders, pro rata among
such requesting Stockholders on the basis of their
respective holdings of Common Stock on a Fully Diluted
Basis.
(4) Selection of Underwriters. If a Demand Registration is
an underwritten offering, the holders of a majority of the
Registrable Securities to be included in such Demand
Registration held by members of the Demanding Group that
initiated such Demand Registration will select a managing
underwriter or underwriters of recognized national standing
to administer the offering, which managing underwriter or
underwriters shall be reasonably acceptable to the Company.
(c) Registration of Recapitalization Shares. Within a reasonable
period prior to each Registration Date (as hereinafter defined), the Company
shall prepare and file with the Commission a registration statement on an
appropriate form in order to register the Recapitalization Shares under the
Securities Act for sale in one or more privately negotiated transactions or in
open market transactions effected on any stock exchange on which the Common
Stock is then listed, or if not so listed, on any automated quotation system to
which the Common Stock is then admitted to trading; provided, however, that if
the Board of Directors determines in the exercise
15
<PAGE>
of its reasonable judgment that, due to a pending or contemplated acquisition
or disposition, to effect such registration at such time would have a material
adverse effect on the Company, the Company may defer such registration for a
single period not to exceed ninety (90) days. The Company shall use its
reasonable best efforts to have each such registration statement declared
effective by the Commission as promptly as reasonably practicable after the
filing thereof with the Commission; provided, however, that (i) no sales of
Recapitalization Shares shall be effected pursuant to any such registration
statement prior to March 31, 1997 and (ii) sales of an aggregate of no more
than one-half of the total number of Recapitalization Shares shall be effected
pursuant to any such registration statement prior to September 27, 1997, such
dates being referred to as the "Registration Dates". In addition, the Company
shall use its reasonable best efforts to keep such registration statement
effective for a period of at least three months after the applicable
Registration Date. As used herein, the term "Recapitalization Shares" shall
mean the shares of Common Stock issued pursuant to the Recapitalization
Agreement to Erin Mills International Investment Corporation as described in
Section 2(a)(1) hereof and to certain Carlyle Stockholders and Clipper
Stockholders as described in Section 2(b) hereof.
(d) Registration Procedures. With respect to any Piggyback
Registration or Demand Registration and (except as expressly provided in
subsection (c) above) the registration to be effected pursuant to subsection (c)
above (generically, a "Registration"), the Company will, subject to subsections
4(a)(2) and 4(b)(3), as expeditiously as practicable:
(1) prepare and file with the Commission, within 60 days
after mailing the applicable Notice, a registration
statement or registration statements (the "Registration
Statement") relating to the applicable Registration on any
appropriate form under the Securities Act, which form shall
be available for the sale of the Registrable Securities in
accordance with the intended method or methods of
distribution thereof; provided that the Company will include
in any Registration Statement on a form other than Form S-1
all information that the holders of the Registrable
Securities so to be registered shall reasonably request and
shall include all financial statements required by the
Commission to be filed therewith, cooperate and assist in
any filings required to be made with the National
Association of Securities Dealers, Inc. ("NASD") or any
securities exchange on which the Common Stock may then be
listed, and use its reasonable best efforts to cause such
Registration Statement to become effective promptly;
provided, further, that before filing a Registration
Statement or
16
<PAGE>
prospectus related thereto (a "Prospectus") or any
amendments or supplements thereto, the Company will furnish
to the holders of the Registrable Securities covered by such
Registration Statement and the underwriters, if any, copies
of all such documents proposed to be filed, which documents
will be subject to the reasonable review of such holders and
underwriters and their respective counsel, and the Company
will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which
the holders of a majority of the Registrable Securities
covered by such Registration Statement, the Demanding Group,
if a Demand Registration, or the underwriters, if any, shall
reasonably object;
(2) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep each Registration Statement
effective for the applicable period, or such shorter period
which will terminate when all Registrable Securities covered
by such Registration Statement have been sold; cause each
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with
the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or
supplement to the Prospectus, provided, that the Company
shall not be deemed to have used its reasonable best efforts
to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that
would result in selling holders of the Registrable
Securities covered thereby not being able to sell such
Registrable Securities during that period unless such action
is required under applicable law, and provided, further that
the foregoing shall not apply to actions taken by the
Company in good faith and for valid business reasons,
including without limitation the acquisition or divestiture
of assets, so long as the Company promptly thereafter
complies with the requirements of subsection (11) of this
subsection (d), if applicable;
(3) notify the selling holders of Registrable Securities
and the managing underwriters, if any, promptly, and (if
requested by any such person or entity) confirm such advice
in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment
17
<PAGE>
has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has
become effective, (B) of any request by the Commission for
amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company
contemplated by subsection (14) below cease to be true and
correct, (E) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, (F) of any other correspondence
from the Commission with respect to the Registration and (G)
of the happening of any event which makes any statement made
in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue in any
material respect or which requires the making of any changes
in the Registration Statement, the Prospectus or any
document incorporated therein by reference in order to make
the statements therein not materially misleading;
(4) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
(5) if requested by the managing underwriter or
underwriters or a holder of Registrable Securities being
sold in connection with an underwritten offering, promptly
incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and
either the holders of a majority of the Registrable
Securities being sold or the Demanding Group, if a Demand
Registration, agree should be included therein relating to
the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold
to such underwriters the purchase price being paid therefor
by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of
the Registrable Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment promptly following notification of
the matters to be
18
<PAGE>
incorporated in such Prospectus supplement or post-effective
amendment;
(6) furnish to each selling holder of Registrable
securities and each managing underwriter, without charge, at
least one signed copy of the Registration Statement and any
amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(7) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies
of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such selling
holder of Registrable Securities and underwriters may
reasonably request; the Company consents to the use in
accordance with applicable law of each Prospectus or any
amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any
amendment or supplement thereto;
(8) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and
sale under the securities or "blue sky" laws of such
jurisdictions as any seller or underwriter reasonably
requests in writing, considering the amount of Registrable
Securities proposed to be sold in each such jurisdiction,
and do any and all other acts or things necessary or
reasonably advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company will not
be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of
process in any such jurisdiction where it is not then so
subject;
(9) cooperate in all reasonable respects with the
selling holders of Registrable Securities and the managing
underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable
Securities to be sold and not bearing any
19
<PAGE>
restrictive legends and to be in such denominations and
registered in such names as the managing underwriters may
request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(10) use its reasonable best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(11) upon the occurrence of any event contemplated by
subsection (3)(F) above, prepare a supplement or post
effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein not
misleading;
(12) cause all Registrable Securities covered by any
Registration Statement to be listed on each securities
exchange on which similar securities issued by the Company
are then listed, or cause such Registrable Securities to be
authorized for trading on the Nasdaq National Market if any
similar securities issued by the Company are then so
authorized, if requested by the holders of a majority of
such Registrable Securities, the Demanding Group, if a
Demand Registration, or the managing underwriters, if any;
(13) provide a CUSIP number for all Registrable
Securities, not later than the effective date of the
applicable Registration Statement;
(14) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection
therewith in order to expedite or facilitate the disposition
of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and
whether or not the Registration is an underwritten
Registration (A) make such representations and warranties
20
<PAGE>
to the holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings; (B) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities being
sold) addressed to each selling holder and the underwriters,
if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters
as may be reasonably requested by such holders and
underwriters; (C) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be
in customary form and covering matters of the type
customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten
offerings; (D) if an underwriting agreement is entered into,
the same shall set forth in full the indemnification
provisions and procedures set forth in subsection (f) below
with respect to all parties to be indemnified pursuant to
said subsection; and (E) the Company shall deliver such
documents and certificates as may be requested by the
holders of a majority of the Registrable Securities being
sold and the managing underwriters, if any, to evidence
compliance with subsection 3(G) of this subsection (d) and
with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent
required thereunder;
(15) make available (at reasonable times and places) for
inspection by a representative of the holders of a majority
of the Registrable Securities, any underwriter participating
in any disposition pursuant to such Registration, and any
attorney or accountant retained by the sellers or
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply
all information reasonably requested by any such
representative, underwriter, attorney or accountant in
connection with such Registration Statement; provided, that
any records, information or documents that are designated by
the company in writing as confidential shall be kept
confidential by such Persons unless disclosure of such
records, information or documents is
21
<PAGE>
required by court or administrative order or any regulatory
body having jurisdiction;
(16) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission,
and make generally available to its security holders,
earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than forty-five (45)
days after the end of any twelve (12)-month period (or
ninety (90) days, if such period is a fiscal year) (A)
commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or
best efforts underwritten offering, or (B) if not sold to
underwriters in such an offering, beginning with the first
month of the Company's first fiscal quarter commencing after
the effective date of the Registration Statement, which
statements shall cover said twelve (12)-month periods; and
(17) promptly prior to the filing of any document that is
to be incorporated by reference into any Registration Statement
or Prospectus (after initial filing of the Registration
Statement), provide copies of such document to counsel to
the selling holders of Registrable Securities and to the
managing underwriters, if any, make the Company's
representatives available for discussion of such document
and make such changes in such document prior to the filing
thereof as counsel for such selling holders or underwriters
may reasonably request.
The Company may require each seller of Registrable
Securities as to which any Registration is being effected to
furnish to the Company such information regarding the
proposed distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any
notice from the Company of the happening of any event of the
kind described in subsection (3)(G) of this subsection (d),
such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration
Statement until such holder's receipt of copies of the
supplemented or amended Prospectus as contemplated by
subsection (11) of this subsection (d), or until it is
advised in writing (the "Advice") by the Company that the
use of the Prospectus may be
22
<PAGE>
resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in
the Prospectus, and, if so directed by the Company, such
holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then
in such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of
such notice. In the event the Company shall give any such
notice, the time periods referred to in subsection (2) of
this subsection (d) shall be extended by the number of days
during the period from and including the date of the giving
of such notice to and including the date when each seller of
Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented
or amended prospectus contemplated by subsection (11) of
this subsection (d) or the Advice.
(e) Restrictions on Public Sale.
(1) Public Sale by Holders of Registrable Securities. To
the extent not inconsistent with applicable law, each Stockholder,
if requested by the managing underwriter or underwriters for
any Demand Registration or Piggyback Registration, agrees
not to effect any public sale or distribution of Common
Stock (or securities convertible into or exchangeable or
exercisable for Common Stock), including a sale pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act, during the 15 business days prior to, and
during the ninety (90)-day period (or such shorter period as
may be agreed to by such holders) beginning on, the
effective date of the applicable Registration Statement
(except as part of such Registration).
(2) Public Sale by the Company and Others. If requested
by the managing underwriter or underwriters for any
underwritten Demand Registration or Piggyback Registration,
(i) the Company will not effect any public sale or
distribution of Common Stock (or securities convertible into
or exchangeable or exercisable for Common Stock) during the
fifteen (15) business days prior to, and during the ninety
(90)-day period beginning on the effective date of such
Registration and (ii) the Company will cause each holder of
Common Stock (or securities convertible into or exchangeable
or exercisable for Common Stock) purchased from the Company
at any time after the date of this Agreement (other than in
a registered public offering) to agree not to effect any
public sale or distribution of any such securities during
such
23
<PAGE>
period described in clause (i) above (except as part of such
Registration, if otherwise permitted).
(3) Other Registrations. If the Company has previously
filed a Registration Statement with respect to Registrable
Securities, and if such previous Registration has not been
withdrawn or abandoned, the Company will not file or cause
to be effected any other registration of any of its Common
Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) under the Securities Act
(except on Form S-8 or any similar successor form), whether
on its own behalf or at the request of any holder or holders
of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), until a
period of at least three (3) months has elapsed from the
effective date of such previous Registration; provided, that
if the holders of fifty percent (50%) or more of the
aggregate number of Registrable Securities included in such
previous Registration shall agree in writing, such period
may be shortened to a period specified by such holders.
(f) Registration Expenses.
(1) All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company,
including, without limitation, all registration and filing
fees, the fees and expenses of the counsel and accountants
for the Company (including the expenses of any "cold
comfort" letters and special audits required by or incident
to the performance of such persons), all other costs and
expenses of the Company incident to the preparation,
printing and filing under the Securities Act of the
Registration Statement (and all amendments and supplements
thereto) and furnishing copies thereof and of the Prospectus
included therein, the costs and expenses incurred by the
Company in connection with the qualification of the
Registrable Securities under the state securities or "blue
sky" laws of various jurisdictions, the costs and expenses
associated with filings required to be made with the NASD
(including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may
be required by the rules and regulations of the NASD), the
costs and expenses of listing the Registrable Securities for
trading on a securities exchange or authorizing them for
trading on NASDAQ and all other costs and expenses incurred
by the Company in connection with any
24
<PAGE>
Registration hereunder; provided, that, except as otherwise
provided in subsection (2) below, each Stockholder shall
bear the costs and expenses of any underwriters'
commissions, brokerage fees or transfer taxes relating to
the Registrable Securities sold by such Stockholders and the
fees and expenses of any counsel, accountants or other
representative retained by Stockholder.
(2) Notwithstanding the foregoing and except as provided
below, in connection with each Registration hereunder, the
Company will reimburse the Stockholders who are holders of
Registrable Securities being registered in any Registration
hereunder for (i) the reasonable fees and disbursements of
not more than one counsel, which counsel shall be chosen (x)
by the holders of a majority of the Registrable Securities
to be included therein that are held by the Demanding Group,
in the case of a Demand Registration and (y) otherwise, by
the holders of a majority of all Registrable Securities to
be included therein, and (ii) the reasonable out-of-pocket
expenses (including travel costs) of the holders of
Registrable Securities in connection with such Registration.
(g) Indemnification.
(1) Indemnification by the Company. The Company agrees
to indemnify, to the full extent permitted by law, each
Stockholder, its officers, directors, partners and agents
and each person who controls such Stockholder (within the
meaning of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), against all
losses, claims, damages, liabilities and expenses caused by
any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or
preliminary Prospectus or any omission or alleged omission
to state therein a material fact necessary to make the
statements therein (in the case of a Prospectus or any
preliminary Prospectus, in light of the circumstances under
which they were made) not misleading, except insofar as the
same are caused by or contained in any information with
respect to such Stockholder furnished in writing to the
Company by such Stockholder in its capacity as a selling
Stockholder expressly for use therein. The Company will also
indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in
the distribution, their officers and directors and each
person who controls such persons
25
<PAGE>
(within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification
of the holders of Registrable Securities; provided, however,
if pursuant to an underwritten public offering of
Registrable Securities, the Company and any underwriters
enter into an underwriting or purchase agreement relating to
such offering that contains provisions relating to
indemnification and contribution between the Company and
such underwriters, such provisions shall be deemed to govern
indemnification and contribution as between the Company and
such underwriters.
(2) Indemnification by Holders of Registrable Securities.
In connection with any Registration in which a Stockholder is
participating, each such Stockholder will furnish to the
Company in writing such information with respect to such
Stockholder as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and
agrees to indemnify, to the full extent permitted by law,
the Company, the directors and officers of the Company
signing the Registration Statement and each person who
controls the Company (within the meaning of the Securities
Act and the Exchange Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue
statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to
make the statements in the Registration Statement or
Prospectus or preliminary Prospectus (in the case of the
Prospectus or any preliminary Prospectus, in light of the
circumstances under which they were made) not misleading, to
the extent, but only to the extent, that such untrue
statement or omission is contained in any information with
respect to such Stockholder so furnished in writing by such
Stockholder in its capacity as a selling Stockholder
specifically for inclusion therein. In no event shall the
liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the
net proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals
participating in the distribution, to the same extent as
provided above with respect to information with respect to
such persons or entities so furnished in writing by such
persons or
26
<PAGE>
entities or their representatives specifically for inclusion
in any Prospectus or Registration Statement.
(3) Conduct of Indemnification Proceedings. Any person or
entity entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party after the
receipt by the indemnified party of a written notice of the
commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which
such indemnified party will claim indemnification or
contribution pursuant to this Agreement; provided, however,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of
its obligations under the preceding subparagraphs (1) and
(2), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice and (ii)
unless in such indemnified party's reasonable judgment a
conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party.
Whether or not such defense is assumed by the indemnifying
party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment
or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An
indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel in any one
jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel or counsels.
(4) Contribution. If for any reason the indemnification
provided for in the preceding subparagraphs (1) and (2) is
unavailable to an indemnified party as contemplated by the
preceding clauses (1) and (2), then the indemnifying party
in lieu of indemnification shall contribute to the amount
paid or payable by the indemnified party as a
27
<PAGE>
result of such loss, claim, damage, liability or expense in
such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations, provided that no
Stockholder shall be required to contribute in an amount
greater than the difference between the net proceeds
received by such Stockholder with respect to the sale of any
Shares and all amounts already contributed by such
Stockholder with respect to such claims, including amounts
paid for any legal or other fees or expenses incurred by
such Stockholder.
(h) Rule 144. The Company agrees that at all times after it has filed
a registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities of the Company, it will file in a
timely manner all reports required to be filed by it pursuant to the Securities
Act and the Exchange Act and will take such further action as any holder of
Registrable Securities may reasonably request in order that such holder may
effect sales of Common Stock pursuant to Rule 144. At any reasonable time and
upon request of any Stockholder, the Company will furnish such Stockholder and
others with such information as may be necessary to enable the Stockholder to
effect sales of Common Stock pursuant to Rule 144 under the Securities Act and
will deliver to such Stockholder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, the Company may
deregister any class of its equity securities under Section 12 of the Exchange
Act or suspend its duty to file reports with respect to any class of its
securities pursuant to Section 15(d) of the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act and the rules and regulations thereunder.
(i) Participation in Underwritten Registrations. No Stockholder may
participate in any underwritten Registration hereunder unless such Stockholder
(i) agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to select
the underwriter pursuant to subsections 4(a)(3) and (4)(b)(4) above, and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, underwriting agreements and other documents customarily required
under the terms of such underwriting arrangements.
(j) Other Registration Rights. The Company will not grant to any
person (including the Stockholders) any demand or piggyback registration rights
with respect to the Common Stock of the Company (or securities convertible into
or
28
<PAGE>
exchangeable or exercisable for Common Stock) other than piggyback registration
rights that are not inconsistent with the terms of this Section 4. To the extent
that the Company grants to any person registration rights with respect to any
securities of the Company having provisions more favorable to the holders
thereof than the provisions contained in this Agreement, the Company will confer
comparable rights to the holders of Registrable Securities under this Agreement.
Except as provided herein, the Company will not grant any registration rights
that would permit any person or entity the right to piggyback on any Demand
Registration.
(k) Definition of Registrable Securities. "Registrable Securities"
means the shares of Common Stock now owned or hereafter acquired by any
Stockholder, but with respect to any share, only until such time as such share
(i) has been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it or (ii) has been sold to
the public pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act and the Legend referred to in Section 6(a) has been removed
from the certificate representing such share (at which time such share shall
cease to be a Registrable Security).
(l) Amendments and Waivers. The provisions of this Section 4,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given unless approved by the Company in writing and the
Company has obtained the written consent of Stockholders holding at least
eighty-five percent (85%) of the then outstanding Registrable Securities
(including for such purposes all securities convertible into or exchangeable for
Registrable Securities, other than the Warrants). Notwithstanding the foregoing,
any amendment, waiver or consent that materially and adversely affects any of
the By-Word Stockholders as a group, the Erin Mills Stockholders as a group, the
Carlyle Stockholders as a group, the Clipper Stockholders as a group or SBW
differently from the other Stockholders, shall require the prior written
approval of the holders of at least a Majority in Interest of Stockholders who
are then members of the group or the entity so affected.
Section 5. Governance.
(a) Within fifteen days after the execution hereof, the total number
of members of the Board of Directors will be reduced to six, which number shall
be adjusted from time to time in order to give effect to the provisions of
subsection (b) below. The Company and the Stockholders hereby agree to take, at
any time and from time to time, all action necessary (including, without
limitation, voting the shares of Company Common Stock owned or controlled by
such Stockholder, calling special
29
<PAGE>
meetings of stockholders, executing and delivering written consents and
requiring designees to resign) to establish the number of total number of
directors as provided herein.
(b) At all times from and after fifteen days after the execution
hereof (except for the addition of a second Independent Director, which shall
occur no later than the date of the next annual meeting of the stockholders of
the Company), the Board of Directors of the Company (the "Board") shall be
composed of Directors to be designated in the manner set forth below. The
Company and each Stockholder hereby agree to take, at any time and from time to
time, all action necessary (including, without limitation, voting the shares of
the Company Common Stock owned or controlled by such Stockholder, calling
special meetings of stockholders and executing, delivering written consents and
requiring designees to resign) to elect Directors as provided herein. Prior to
the receipt of Regulatory Relief, the Board shall be composed of seven (7)
members, of which two (2) Directors shall be persons designated by a Majority in
Interest of the Erin Mills Stockholders, two (2) Directors shall be persons
designated by a Majority in Interest of the By-Word Stockholders (one of which
shall be the chief executive officer of the Company), one (1) Director shall be
a person designated by a Majority in Interest of the Carlyle Stockholders and
two (2) additional Directors (or, if determined by the Nominating Committee as
hereinafter provided, three (3) additional Directors) shall be persons who are
not employed by the Company or affiliated with any party to this Agreement
("Independent Directors"). SBW shall be entitled to designate one non-director
delegate who shall be entitled to receive notice of, in accordance with the
provisions of Section 11.6 of the Bylaws with respect to Class B Directors, and
to attend all meetings of the Board and to receive all materials received by
Directors, but who shall not be a member of the Board of Directors, shall have
no fiduciary duties to the Company, to the Board or stockholders of the Company
and shall not be entitled to vote at meetings of the Board. Upon the conversion
of the Series D Preferred Stock into Class B Common Stock, the number of
Directors shall be increased by one who shall be a person designated by SBW and
the right to a non-director delegate shall terminate. If SBW and its Affiliates
Beneficially Own 20% or more of the Common Stock (including Common Stock
issuable upon conversion of Series D Preferred Stock or Class B Common Stock or
other convertible securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than shares issuable upon exercise of the
Warrants and Excluded Options) on a Fully Diluted Basis, the number of Directors
shall further be increased by one and the additional Director shall also be a
designee of SBW. For so long as SBW or its Affiliates hold Class B Common Stock,
one or both of SBW's designees will be elected by SBW as the holder of the Class
B Common Stock and will be Class B Directors, with the rights set forth in the
30
<PAGE>
terms of such Class B Common Stock and the Bylaws, and which directors will have
the corporate authority to sign a stockholder consent of SBW on behalf of each
of the SBW Stockholders.
All Independent Directors shall be nominated by a committee consisting
of one Director designated by the Erin Mills Stockholders, one Director
designated by the By-Word Stockholders, one Director designated by the Carlyle
Stockholders and, following receipt of Regulatory Relief, one Director
designated by SBW (the "Nominating Committee"). The Nominating Committee also
shall determine whether to increase the number of Independent Directors to three
(3).
Notwithstanding the foregoing, no Stockholder or group of Stockholders
shall be entitled to designate any Director or have such designee serve on the
Nominating Committee if the percentage of Common Stock (including Common Stock
issuable upon conversion of outstanding securities or upon the exercise of any
outstanding options, warrants, rights or obligations other than the Warrants and
Excluded Options) Beneficially Owned by such Stockholder or group of
Stockholders falls below 5% (or, with respect to the Erin Mills Stockholders and
By-Word Stockholders, 20% for the right to designate two Directors and 5% for
the right to designate one Director) on a Fully Diluted Basis. If By-Word has
only one designee, it shall be the chief executive officer of the Company if the
chief executive officer is a By-Word Stockholder. Upon the failure of any
Stockholder or group of Stockholders to maintain the required percentage, the
Stockholder or group of Stockholders shall require its designee to resign and
the size of the Board may, in the determination of the Nominating Committee,
either be reduced to eliminate such the resulting vacancy on the Board or remain
the same (in which case, the resulting vacancy on the Board will be filled by a
Director nominated by the Nominating Committee), provided that the Stockholders
agree that if the chief executive officer is not a By-Word designee, in
accordance with the provisions hereof, the chief executive officer shall be
nominated by the Nominating Committee.
(c) Pursuant to Article VII of the Incentive Stock Option Plan, the
Board shall appoint a three-person Compensation Committee to administer the
Incentive Stock Option Plan. Following receipt of Regulatory Relief, a Director
designated by SBW shall serve on the Compensation Committee. The Compensation
Committee shall be comprised of only non-management Directors serving on the
Board. Each Stockholder hereby agrees to take, at any time and from time to
time, all action necessary (including, without limitation, voting the shares of
the Common Stock owned or controlled by such Stockholder, calling special
meetings of stockholders and executing and delivering written consents) to cause
the Board to
31
<PAGE>
appoint to the Compensation Committee the number of persons meeting the
requirements of this subsection.
(d) The Stockholders agree that no Director may be removed except at
the request of the holders of a majority of the shares of Common Stock entitled
to appoint such Director in accordance with Section 5(b), and each Stockholder
hereby agrees to take all action necessary (including, without limitation,
voting the shares of Common Stock owned or controlled by such Stockholder,
calling special meetings of stockholders and executing and delivering written
consents) for the purpose of accomplishing the purposes of this Agreement. If a
vacancy on the Board occurs by reason of the death, removal, resignation,
retirement or election not to serve of a designee, the remaining Directors and
the Company shall cause the vacancy thereby created to be filled by a new
designee as soon as possible (the "Replacement Director"), who is designated in
the same manner and by the same persons specified in Section 5(b) as the
Director being replaced had been, and the Company and each Stockholder hereby
agrees to take, at any time and from time to time, all actions necessary to
accomplish the same; provided, however, that if any group fails to designate a
representative in accordance with Section 5(b) above for a period of thirty (30)
consecutive days, then such vacancy shall be filled by the Nominating Committee
until such time as the Replacement Director is designated in accordance with
Section 5(b), at which time the term of the Director not elected in accordance
with Section 5(b) shall expire.
(e) In addition to any compensation to which the members of the Board
may be entitled, the Company shall reimburse each Director for the reasonable
out-of-pocket expenses incurred by such Director (including, without limitation,
reasonable fees and expenses of counsel, accountants, or representatives, if
any) involved with such Director's services as a member of the Company. In
addition, the Company shall obtain and maintain at all times during which this
Agreement remains in effect, at the cost and expense of the Company, director
liability insurance policies covering each member of the Board. Such director
liability insurance policies shall be provided by a reputable nationally
recognized insurance carrier and shall provide coverage in such amounts and on
such terms as may be reasonably acceptable to each member of the Board. Should
SBW so request, the Company will enter into contractual indemnification
arrangements with the Director reasonably satisfactory to SBW.
(f) In addition to any vote or consent of the Board of Directors or
its stockholders required by law or the Certificate of Incorporation, including
the terms of Series D Preferred Stock and the Class B Common Stock, the
affirmative vote of
32
<PAGE>
a majority of the entire Board of Directors (not merely a quorum) shall be
necessary for authorizing, effecting or validating the following actions:
(i) the approval of any annual budget or business plan
for the Company or any Subsidiary of the Company or the
deviation by the Company or any such Subsidiary from any
annual budget for the Company or such Subsidiary approved by
the Board of Directors by more than five percent (5%);
(ii) any capital expenditure or expenditures by the
Company or any Subsidiary of the Company which, individually or
in the aggregate, exceeds $1,000,000;
(iii) the hiring or termination by the Company or any
Subsidiary of the Company of any officer or senior
management employee of the Company or such Subsidiary;
(iv) directly or indirectly redeem, purchase or make any
payments with respect to any stock appreciation rights,
phantom stock plans or similar rights or plans;
(v) (A) sell, lease, transfer or otherwise convey, or
permit any Subsidiary to sell, lease, transfer or otherwise
convey, any assets representing five percent (5%) or more of the
consolidated assets of the Company and its Subsidiaries, (B)
consolidate or merge with, or permit any Subsidiary to
consolidate or merge with, any Person, (C) reclassify or
otherwise change, or permit any Subsidiary to reclassify or
otherwise change, any capital stock of the Company or any
Subsidiary or (D) dissolve, liquidate or wind-up the Company
or permit any Subsidiary to dissolve, liquidate or wind up
such Subsidiary.
(vi) except as expressly contemplated by the Purchase
Agreement or the any of the Transaction Documents,
authorize, issue or enter into any agreement providing for
the issuance, or permit any Subsidiary to authorize, issue
or enter into any agreement providing for the issuance
(contingent or otherwise) in excess of an aggregate of
$5,000,000 (A) any notes or debt securities containing
equity features (including, without limitation, any note or
debt securities convertible into or exchangeable for capital
stock or other equity securities, issued in connection with
the issuance of capital stock or other equity
33
<PAGE>
securities, or containing profit participation features) or
(B) any capital stock or other equity securities, or any
securities convertible into or exchangeable for any capital
stock or other equity securities, other than issuances
pursuant to the Incentive Stock Option Plan;
(vii) acquire, or permit any Subsidiary to acquire, in one
transaction or a series of related transactions, any capital
stock, other equity interests or assets of any Person for
aggregate consideration in excess of $5,000,000;
(viii) enter into, or permit any Subsidiary to enter into,
any agreement, contract, lease or commitment on the part of
the Company or such Subsidiary involving the payment or
provision of consideration by or to the Company or such
Subsidiary, the fair market value of which exceeds
$1,000,000;
(ix) make any capital expenditure, or permit any Subsidiary
to make any capital expenditure, in excess of $1,000,000;
(x) except as expressly contemplated by the Purchase
Agreement, amend the Certificate of Incorporation, or the
Company's bylaws or file any resolution of the board of
directors with the Secretary of State of the State of
Delaware containing any provisions which would adversely
affect or otherwise impair the rights of the holders of the
Common Stock;
(xi) enter into, or permit any Subsidiary to enter into,
any agreement, transaction, commitment or arrangement with any
of its or any Subsidiary's officers, directors, employees,
stockholders or Affiliates or with any individual related by
blood, marriage or adoption to any such individual or with
any entity in which such Person or individual own, in the
aggregate, a more than 10% beneficial interest, except for
(A) customary employment arrangements and benefit programs
on arms' length terms and (B) agreements, transactions,
commitments or arrangements on arms' length terms and
approved by a majority of the Company's disinterested
directors; or
(xii) enter into, or permit any Subsidiary to enter into,
any agreement to do or effect any of the foregoing.
34
<PAGE>
(g) Following the receipt of Regulatory Relief, if SBW does not hold
any Series D Preferred Stock or Class B Common Stock but does own at least 1.6
million shares of Common Stock (including Common Stock issuable upon conversion
of outstanding securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than the Warrants and Excluded Options)
on a Fully Diluted Basis, the approval of SBW shall be required for the
following actions:
(i) the approval of any annual budget or business plan
for the Company or any Subsidiary of the Company or the
deviation by the Company or any such Subsidiary from any
annual budget for the Company or such Subsidiary approved by
the Board of Directors by more than five percent (5%);
(ii) issuance by the Company of any equity securities,
including securities convertible into equity securities
(other than (A) the grant of employee stock options (subject
to the proviso set forth in (D) below), (B) the issuance of
equity securities in accordance with the terms of the
Purchase Agreement or any of the other Transaction
Documents), (C) the issuance of equity securities upon the
exercise or conversion of securities or employee stock
options that are outstanding as of the date hereof or (D)
the issuance of equity securities after giving effect to the
consummation of the transactions contemplated hereby or
employee stock options granted hereafter, provided, however,
that there shall not be outstanding at any time employee
stock options for more than 1.5 million shares of Common
Stock plus the options granted to William C. Kennedy, Jr.
and William C. Saunders that are outstanding at September
27, 1996) or incurrence of any indebtedness for borrowed
money or evidenced by bonds, notes or debentures, provided
that the Company can incur up to $5 million in indebtedness
in any year without the consent of SBW;
(iii) the hiring or termination by the Company of its chief
executive officer, chief operating officer or chief
financial officer;
(iv) the Company's entering into any lines of business
which is not its Existing Line of Business (as hereinafter
defined) or any joint ventures, partnerships or similar
arrangements;
(v) the Company's exiting its Existing Line of Business (as
hereinafter defined) or disposing of assets (other than
35
<PAGE>
telecommunications equipment and other assets sold in the
ordinary course of business) in any year with a value in
excess of $500,000 or which are otherwise material to the
Company's operations;
(vi) the adoption, implementation or acceptance (including
the failure to opt out) of any Anti-Takeover Provision not
in effect as of the date hereof that would be applicable to,
and, in the reasonable determination of SBW, adversely
affect, SBW and its Affiliates; or
(vii) the taking of any corporate action that would reduce
the number of Shares held by SBW and its Affiliates to fewer
than 1.6 million shares of Common Stock such that SBW no
longer has the right to approve any of the actions specified
in this subsection (g).
As used in this subsection (g), the terms set forth below shall have
the following respective meanings;
"Anti-takeover Provision" means (i) any provision of the certificate
of incorporation or bylaws of the Company or any contract, agreement or plan to
which the Company is a party or by which it is bound or any statutory provision
enacted after the date hereof which is applicable to the Company which the
Company may opt out of if the effect of such provision would be to materially
delay, hinder or prevent a change in control of the Company or (ii) a
stockholder rights plan or "poison pill," including the provisions of any
preferred stock or common stock purchase rights issued pursuant thereto;
provided, however, that such term shall not include any customary change of
control provisions contained in employment agreements between the Company and
any of its directors, officers or other employees or in any plans or agreements
relating to stock options or other awards of equity securities made by the
Company to any such persons.
"Existing Line of Business" means a non-facilities based, enhanced
service provider that offers fleet management and/or status or information about
vehicles and/or location capabilities through mobile communications service.
(h) The Board shall hold, during the term of this Agreement, regularly
scheduled, in-person meetings no less frequently than six times per year.
(i) At all times during which this Agreement remains in effect, each
Stockholder hereby agrees to take all action necessary (including, without
limitation, voting the shares of the Company's Common Stock owned or controlled
by such
36
<PAGE>
Stockholder, calling special meetings of stockholders and executing and
delivering written consents) to ensure that the By-Laws of the Company provide
that the information listed on Schedule A hereto shall be provided to each
member of the Board of Directors, at the time and in the manner required by the
provisions of Schedule A.
(j) The Company and each Stockholder agrees not to, and to cause its
designees on the Board not to, without the prior approval of SBW, alter, amend,
repeal or replace the Bylaws set forth on Exhibit B hereto or to enact any
Bylaws inconsistent therewith.
(k) For the purpose of this Section 5, Chase Manhattan Investment
Holdings, Inc., Archery Partners and their respective assigns shall not be
considered Carlyle Stockholders.
Section 6. Miscellaneous.
(a) Legend. The certificates representing the capital stock of the
Company held by each of the Stockholders shall bear the following legend
(provided that with respect to SBW and any certificates issued after the date
hereof such legend shall refer to this Agreement):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
COVERING SUCH SECURITIES OR SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY SIMILAR
REQUIREMENTS OF ANY APPLICABLE STATE SECURITIES LAW. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A
STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 4, 1994, A COPY OF WHICH IS
AVAILABLE UPON REQUEST FROM THE SECRETARY OF THE COMPANY."
If any capital stock of the Company becomes eligible for sale pursuant
to Rule 144(k) promulgated under the Securities Act, the Company shall, subject
to applicable law and upon the request of any holder of such capital stock,
remove the legend set forth in this Section 6(a) from the certificates
evidencing the shares of such capital stock held by such holder. In addition,
(i) in connection with any Transfer of
37
<PAGE>
shares of any capital stock of the Company pursuant to any public offering
registered under the Securities Act or pursuant to Rule 144 (or any similar rule
or rules then in effect promulgated under the Securities Act) if such rule is
available or (ii) if the holder of any shares of capital stock of the Company
delivers to the Company an opinion of counsel reasonably acceptable to the
Company that no subsequent Transfer of such shares shall require registration
under the Securities Act, the Company shall promptly upon such Transfer deliver
new certificates for such shares which do not bear the legend set forth in this
Section 6(a).
(b) Successors, Assigns and Transferees. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, heirs, legatees, successors and permitted assigns. The
only permitted assigns (each, a "Permitted Assign") are as follows: (i) each of
the Clipper Stockholders shall be entitled to assign any of its rights under
this Agreement to any other Clipper Stockholder; (ii) each of the Carlyle
Stockholders shall be entitled to assign any of its rights under this Agreement
to any other Carlyle Stockholder or any Related Party of a Carlyle Stockholder
(other than an Excluded Related Party); (iii) each of the By-Word Stockholders
shall be entitled to assign any of its rights under this Agreement to any other
By-Word Stockholder; (iv) each of the Erin Mills Stockholders shall be entitled
to assign any of its rights under this Agreement to any other Erin Mills
Stockholder or any Related Party of an Erin Mills Stockholder (other than an
Excluded Related Party) and (v) SBW shall be entitled to assign any of its
rights under this Agreement to any of its Affiliates. No party hereto shall be
entitled to assign any of its rights under this Agreement to any Person which is
otherwise a Permitted Assign hereunder unless, concurrently with such
assignment, such party is Transferring all or a portion of the Shares owned by
it to such Person in compliance with the terms and provisions set forth herein
and such Person executes a supplemental agreement hereto in form and substance
reasonably satisfactory to the Company pursuant to which such Person agrees to
become a party to, and be bound by, this Agreement.
(c) Specific Performance, Etc. The Company and each Stockholder, in
addition to being entitled to exercise all rights provided herein, in the
Company's Certificate of Incorporation or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Stockholder agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
38
<PAGE>
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal law of the State of Delaware without giving
effect to the conflict of laws provisions thereof.
(e) Interpretation. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
(f) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. SBW agrees to give the Company written notice when Regulatory Relief
has been obtained. Any such notice shall be deemed given when so delivered
personally, sent by facsimile transmission or, if mailed, three (3) business
days after the date of deposit in the United States mail, by certified mail
return receipt requested, as follows:
(i) If to the Company to:
HighwayMaster Communications, Inc.
16479 Dallas Parkway, Suite 710
Dallas, Texas 75248
Attention: William Kennedy
Telecopier: (972) 930-7263
with a copy (which shall not constitute notice) to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Geoffrey L. Newton
Telecopier: (214) 953-6503
(ii) If to any of the Carlyle Entitles, to
c/o The Carlyle Group, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004-2505
Attention: Mark D. Ein
Telecopier: (202) 347-1818
39
<PAGE>
with a copy (which shall not constitute notice) to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Attention: Bruce E. Rosenblum, Esq.
Telecopier: (202) 637-2201
(iii) If to any of the Clipper Entities, to
The Clipper Group, L.P.
12 East 49th Street
New York, N.Y. 10017
Attention: Daniel V. Cahillane
Telecopier: (212) 318-1360
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, N.Y. 10153
Attention: Howard Chatzinoff
Telecopier: (212) 310-8007
40
<PAGE>
(iv) If to any of the Erin Mills Companies, to
Erin Mills International
Trident House, Suite 204(a)
Broad Street
Bridgetown, Barbados
West Indies Attention: Stephen Greaves
Telecopier: (809) 436-2120
with a copy (which shall not constitute notice) to:
7501 Keele Street, Suite 500
Concord, Ontario L4K 1Y2
Canada
Attention: Gerry C. Quinn
Telecopier: (416) 736-8373
(v) If to any of the By-Word Stockholders, to:
HighwayMaster Communications, Inc.
16479 Dallas Parkway
Suite 710
Dallas, Texas 75248
Attention: William Kennedy
Telecopier: (972) 930-7263
41
<PAGE>
(vi) If to Chase Manhattan Investment Holdings, Inc. or Archery
Partners:
The Chase Manhattan Bank
One Chase Plaza
New York, NY 10081
Attention: William K. Luby
Telecopier: (212) 552-2958
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Emile Karafiol
Telecopier: (312) 861-2200
42
<PAGE>
(vii) If to Southwestern Bell Wireless Holdings, Inc.
Southwestern Bell Wireless Holdings, Inc.
17330 Preston Road
Suite 100A
Dallas, Texas 75252
Attention: President
Telecopier: (972) 733-2012
and to:
SBC Communications, Inc.
175 E. Houston
San Antonio, Texas 78205
Attention: General Attorney, Mergers & Acquisitions
Telecopier: (210) 351-3488
with a copy (which shall not constitute notice) to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Janet T. Geldzahler
Telecopier: (212) 558-3588
Any party may change its address for notice by written notice to the other
parties in accordance with this provision.
(g) Termination. This Agreement will terminate and the Original
Agreement, as in effect on the date prior to the date hereof, will be deemed to
be in effect if the Purchase Agreement is terminated pursuant to Section 2(c)
thereof. Sections 3(b) and (c) hereof shall terminate at that time that SBW and
its Affiliates cease to own at least 1.6 million shares of Common Stock
(including Common Stock issuable upon conversion of outstanding securities or
upon the exercise of any outstanding options, warrants, rights or obligations,
other than the Warrants and Excluded Options).
43
<PAGE>
(h) Inspection and Compliance with Law. Copies of this Agreement will
be available for inspection or copying by any Stockholder at the offices of the
Company through the Secretary of the Company.
(i) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this paragraph (h), may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given, except by a written instrument executed by (i) the
Company, (ii) a Majority in Interest of the By-Word Stockholders, (iii) a
Majority in Interest of the Carlyle Stockholders and the Clipper Stockholders
acting as a group, (iv) a Majority in Interest of the Erin Mills Stockholders
and (v) SBW; provided, however, that amendments of or modification to Section 4
will be subject to the requirements of Section 4(k). No action taken pursuant to
this Agreement, including, without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as waiver of any preceding or
succeeding breach and no failure by any party to exercise any right or privilege
hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder.
(j) Transfer Void. Any Transfer of any security of the Company in
violation of this Agreement shall be null and void and the Company covenants and
agrees that it will not register or otherwise recognize a Transfer (whether for
the purposes of shareholder voting or in connection with the distribution of
dividends or other corporate assets) of any securities which it has reason to
believe was effected in violation of this Agreement.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, by the original parties hereto and any successor in interest, each
of which shall be deemed to be an original and all of which together shall be
deemed to constitute one and the same agreement.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(m) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid,
44
<PAGE>
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby.
45
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HIGHWAYMASTER COMMUNICATIONS, INC.
By: /s/ William C. Saunders
Name: William C. Saunders
Title:
SOUTHWESTERN BELL WIRELESS HOLDINGS,
INC.
By: /s/ S. Sigman
Name: Stan Sigman
Title: President & CEO
CARLYLE-HIGHWAYMASTER INVESTORS, L.P.
By: TC Group, L.L.C., its General
Partner
By: /s/ M.D. Ein
Name:
Title:
CARLYLE-HIGHWAYMASTER INVESTORS
II, L.P.
By: TC Group, L.L.C., its General
Partner
By: /s/ M.D. Ein
Name:
Title:
46
<PAGE>
H.M. RANA INVESTMENTS LIMITED
By:
By: /s/ F.A. Almubarak
Name: Fahad A. Almubarak
Title: President
TC GROUP, L.L.C.
By: /s/ M.D. Ein
Name:
Title:
/s/ M.D. Ein
CHASE MANHATTAN INVESTMENT HOLDINGS,
INC.
By:
Name:
Title:
ARCHERY PARTNERS
By:
its General Partner
By:
Name:
Title:
47
<PAGE>
CLIPPER CAPITAL ASSOCIATES, L.P.
By: Clipper Capital Associates, Inc.,
its General Partner
By: /s/ Daniel V. Cahillane
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CLIPPER/MERCHANT PARTNERS, L.P.
By: Clipper Capital Associates, L.P.
its General Partner
By: Clipper Capital Associates,
Inc.
its General Partner
By: /s/ Daniel V. Cahillane
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
CLIPPER/MERBAN, L.P.
By: Clipper Capital Associates, L.P.
its General Partner
By: Clipper Capital Associates, Inc.
its General Partner
By: /s/ Daniel V. Cahillane
Name: Daniel V. Cahillane
Title: Treasurer & Secretary
ERIN MILLS INTERNATIONAL INVESTMENT
CORPORATION
By: /s/ S.L. Greaves
Name: Stephen L. Greaves
Title: General Manager
48
<PAGE>
THE ERIN MILLS DEVELOPMENT
CORPORATION
By: /s/ G.C. Quinn
Name: G.C. Quinn
Title: Executive Vice President
THE ERIN MILLS INVESTMENT
CORPORATION
By: /s/ G.C. Quinn
Name: G.C. Quinn
Title: President
/s/ William C. Kennedy, Jr.
William C. Kennedy, Jr.
Donald M. Kennedy
/s/ William C. Saunders
William C. Saunders
/s/Robert T. Hayes, by Douglas
Dunlop, Attorney-in-Fact
Robert T. Hayes
/s/Hoddard Dinchlen, Attorney-in-
Fact, for Robert S. Folsom
Robert S. Folsom
49
<PAGE>
The undersigned are executing this Agreement solely for the purpose of
evidencing their approval of the amendment and restatement of the Original
Agreement (as amended from time to time) in its entirety as set forth herein, it
being understood that the undersigned shall not be deemed Stockholders for
purposes of this Agreement and shall not have any rights or obligations
hereunder.
/s/ Margaret D. Folsom
Margaret D. Folsom
/s/ R. Stephen Folsom
R. Stephen Folsom
Joann Hayes
/s/ Cynthia Ann Hayes
Cynthia Ann Hayes
/s/ Alicia Ellen Hayes
Alicia Ellen Hayes
50
<PAGE>
APPENDIX A
ORIGINAL PARTIES
Carlyle-HighwayMaster Investors, L.P.
Carlyle-HighwayMaster Investors II, L.P.
Chase Manhattan Investment Holdings, Inc.
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
Clipper Capital Associates, L.P.
Erin Mills International Investment Corporation
FU Enterprises Ltd.
By-Word Technologies, Inc.
Robert S. Folsom
Robert T. Hayes
A-1
<PAGE>
APPENDIX B
AMENDMENTS AND ADDENDA
1. Addendum No. 1 to Subscription Agreement and Stockholders Agreement
by and among HM Holding Corporation, Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Chase Manhattan Investment Holdings, Inc., Clipper/Merban, L.P.,
Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Erin Mills
International Investment Corporation, FU Enterprises Ltd., By-Word Technologies,
Inc., Robert S. Folsom and Robert T. Hayes.
2. Consent of Security Holders of HM Holding Corporation and Second
Amendment to Stockholders' Agreement, dated November, 1994, among HM Holding
Corporation, By-Word Technologies, Inc., the former shareholders of By-Word
Technologies, Inc. listed on Exhibit A, Clipper/Merban, L.P., Clipper Merchant
Partners, L.P., Clipper Capital Associates, L.P., Carlyle-HighwayMaster
Investors, L.P., CarlyleHighwayMaster Investors II, L.P., TC Group, L.L.C., H.M.
Rana Investments Limited, Chase Manhattan Investment Holdings, Inc., Erin Mills
International Investment Corporation, Robert S. Folsom and Robert T. Hayes.
3. Joinder Agreement to Stockholders Agreement executed as of January
3, 1995 by Mark D. Ein.
4. Third Amendment to Stockholders Agreement, dated as of April 28,
1995, among HighwayMaster Communications, Inc., Archery Partners, Chase
Manhattan Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper
Capital Associates, L.P., Erin Mills International Investment Corporation,
Robert S. Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes,
Cynthia Ann Hayes, Alicia Ellen Hayes, Joann Hayes, William C. Saunders, William
C. Kennedy, Jr. and Donald M. Kennedy.
5. Note Exchange and Amendments Agreement, dated as of May 26, 1995,
among HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan
Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC
Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper
Capital Associates, L.P., Erin Mills International Investment Corporation,
Robert S. Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes,
Cynthia Ann Hayes, Alicia Ellen Hayes, Joann Hayes, William
B-1
<PAGE>
C. Saunders, William C. Kennedy, Jr., Donald M. Kennedy, Mark D. Ein and The
Erin Mills Investment Corporation.
B-2
<PAGE>
APPENDIX C
FORMER PARTIES
Margaret D. Folsom
R. Stephen Folsom
Joann Hayes
Cynthia Ann Hayes
Alicia Ellen Hayes
C-1
<PAGE>
APPENDIX D
CERTAIN STOCKHOLDERS NUMBER OF SHARES
Erin Mills International Investment Corporation 8,141,706
William C. Kennedy, Jr. 2,029,318
Carlyle-HighwayMaster Investors, L.P. 1,805,727
William C. Saunders 892,015
Clipper/Merban, L.P. 530,930
Clipper/Merchant Partners, L.P. 524,209
H.M. Rana Investments Limited 423,802
T.C. Group, L.L.C. 291,315
Robert S. Folsom 280,000
Carlyle-HighwayMaster Investors II, L.P. 170,071
D-1
<PAGE>
FORM OF CONSENT OF STOCKHOLDER
OF
HIGHWAYMASTER COMMUNICATIONS, INC.
The undersigned being the holder of _________ shares of Common Stock,
par value $0.01 per share, of HighwayMaster Communications, Inc., on September
30, 1996 does hereby consent to the adoption of and hereby adopts the resolution
attached as Annex A hereto and directs that this consent be delivered to the
officer or agent having custody of the books in which proceedings of meetings of
the stockholders are kept.
IN WITNESS WHEREOF, the undersigned has signed this consent this ____
day of September, 1996.
STOCKHOLDER
By:______________________________________
By:___________________________________
Name:______________________________
Title:_____________________________
Consented to and Accepted:
HIGHWAYMASTER COMMUNICATIONS, INC.
By:_______________________________
Name:__________________________
Title:_________________________
<PAGE>
Annex A
STOCKHOLDER RESOLUTIONS
CHARTER AMENDMENT
WHEREAS, attached as Exhibit A hereto is a Certificate of Amendment
(the "Certificate of Amendment") which sets forth a proposed amendment (the
"Proposed Charter Amendment") to the Certificate of Incorporation of
HighwayMaster Communications, Inc. (the "Company") for the purpose of, among
other things, creating a new class of common stock of the Company designated as
Class B Common Stock, par value $.01 per share ("Class B Common Stock");
NOW THEREFORE BE IT RESOLVED, that the form, terms and provisions of
the Certificate of Amendment are hereby approved in all respects, and the
Proposed Charter Amendment is hereby adopted and approved.
WARRANTS
WHEREAS, attached as Exhibit B hereto is a Warrant Certificate (the
"Warrant Certificate") evidencing warrants (the "Warrants") to purchase
5,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), of
the Company to be executed by the Company in favor of Southwestern Bell Wireless
Holdings, Inc.;
NOW THEREFORE BE IT RESOLVED, that the Corporation is hereby
authorized, empowered and directed to issue and deliver up to 5,000,000 shares
of Common Stock upon the exercise of the Warrants in accordance with the terms
and subject to the conditions set forth in the Warrant Certificate.
<PAGE>
Appendix to Exhibit 5
Erin Mills International Investment Corporation
William C. Kennedy, Jr.
Carlyle-HighwayMaster Investors, L.P.
William C. Saunders
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
H.M. Rana Investments Limited
T.C. Group, L.L.C.
Robert S. Folsom
Carlyle-HighwayMaster Investors II, L.P.
<PAGE>
FORM OF IRREVOCABLE PROXY
The undersigned stockholder of HighwayMaster Communications, Inc., a
Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent
provided by law) appoints Southwestern Bell Wireless Holdings, Inc., a Delaware
corporation ("SBW"), or its nominee, the attorney and proxy of the undersigned,
with full power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the _____________ shares of Common Stock,
par value $0.01 per share ("Common Stock"), of the Company owned beneficially or
of record by the undersigned (the "Shares"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof, to
exercise the voting and other rights specified below in accordance with the
provisions and subject to the limitations set forth herein. Upon the execution
hereof, all prior proxies given by the undersigned with respect to the Shares
and any and all other shares or securities issued or issuable in respect thereof
on or after the date hereof as to matters covered hereby are hereby revoked and
no subsequent proxies will be given as to the matters covered hereby. This proxy
is irrevocable (to the fullest extent provided by law), coupled with an
interest, and is granted in connection with the Amended and Restated
Stockholders' Agreement, dated the date hereof, among the Company and the
stockholders party thereto, including the undersigned stockholder (the
"Stockholders' Agreement"), and is granted in consideration of SBW entering into
the Purchase Agreement, dated the date hereof (the "Purchase Agreement"),
between the Company and SBW.
The attorney and proxy named above will be empowered to exercise all
voting and other rights (including, without limitation, the power to execute and
deliver written consents with respect to the Shares) of the undersigned at every
annual, special or adjourned meeting of stockholders of the Company and in every
written consent in lieu of such a meeting, or otherwise, (i) in favor of
approval of the adoption of the Certificate of Amendment attached hereto as
Exhibit A (the "Certificate of Amendment"), (ii) in favor of the approval of the
issuance by the Company to SBW of shares of Common Stock upon the exercise of
the Warrants to purchase an aggregate of up to 5,000,000 shares of Common Stock
evidenced by the Warrant Certificate, dated the date hereof, executed by the
Company in favor of SBW and (iii) against any action or agreement that, directly
or indirectly, is inconsistent with or that is reasonably likely to impede,
interfere with, delay or postpone the transactions referred to in clause (i) or
(ii) above.
<PAGE>
The attorney and proxy named above may only exercise this proxy to
vote the Shares subject hereto at any annual, special or adjourned meeting of
the stockholders of the Company, and in any written consent in lieu of such
meeting, with respect to the matters specified in clauses (i), (ii) and (iii) of
the immediately preceding paragraph, and may not exercise this proxy in respect
of any other matter. The undersigned stockholder may vote the Shares (or grant
one or more proxies to vote the Shares) on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
The undersigned stockholder shall perform such further acts and
execute such further documents as may reasonably be required to vest in SBW the
power to vote the Shares in accordance with the provisions and subject to the
limitations set forth herein and to otherwise carry out the provisions of this
proxy.
This power of attorney and proxy shall terminate upon the earlier of
the filing of the Certificate of Amendment with the Secretary of State of the
State of Delaware and the termination of the Purchase Agreement pursuant to
Section 2 thereof.
Date: September ___, 1996
STOCKHOLDER
By:__________________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
Appendix to Exhibit 6
Erin Mills International Investment Corporation
William C. Kennedy, Jr.
Carlyle-HighwayMaster Investors, L.P.
William C. Saunders
Clipper/Merban, L.P.
Clipper/Merchant Partners, L.P.
H.M. Rana Investments Limited
T.C. Group, L.L.C.
Robert S. Folsom
Carlyle-HighwayMaster Investors II, L.P.
