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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/X/ Definitive Information Statement
HIGHWAYMASTER COMMUNICATIONS, INC.
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(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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[HighwayMaster Logo]
November 22, 1996
Dear Stockholders:
We are pleased to inform you that the Board of Directors of
HighwayMaster Communications, Inc. (the "Company") has approved, and ten of the
Company's stockholders (the "Designated Stockholders"), who in the aggregate
hold approximately 68.4% of the outstanding shares of its common stock, par
value $.01 per share ("Common Stock"), have consented in writing to, the
following matters (the "Approved Matters"):
(i) an amendment (the "Amendment") to the Certificate of
Incorporation of the Company in order, among other things, to
authorize a new class of common stock of the Company to be
designated as Class B Common Stock, par value $.01 per share
("Class B Common Stock"), into which the shares of Series D
Preferred Stock (as defined below) held by Southwestern Bell
Wireless Holdings, Inc. ("SBW") may be converted; and
(ii) the issuance of shares of Common Stock upon the exercise
of certain warrants (the "Warrants") held by SBW.
As more fully described in the accompanying Information Statement, on
September 27, 1996, the Company and SBW, which is a wholly owned subsidiary of
SBC Communications Inc. ("SBC"), consummated certain transactions, including,
but not limited to, (a) the issuance to SBW of 1,000 shares of a new series of
preferred stock, par value $.01 per share, of the Company designated as Series D
Participating Convertible Preferred Stock ("Series D Preferred Stock") in
consideration of a cash payment in the amount of $20.0 million and (b) the
issuance to SBW of the Warrants. These transactions represent the start of a
strategic relationship between the Company and SBC, which the Company believes
will strengthen the wireless telecommunications capabilities of both companies.
Each share of Series D Preferred Stock issued to SBW is convertible
into 1,600 shares of Common Stock (subject to adjustment to prevent dilution)
at the option of
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SBW. In addition, when the Amendment becomes effective, it will provide that,
at such time as SBC or its affiliates 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 ("Regulatory Relief"), all of the outstanding shares of Series D
Preferred Stock will automatically be converted into an equal number of shares
of Class B Common Stock.
Under the terms of the Amendment, each outstanding share of Class B
Common Stock will be convertible into 1,600 shares of Common Stock at the
option of SBW. The holders of Class B Common Stock will be entitled to
receive dividends and liquidating distributions in an amount equal to the
dividends and liquidating distributions payable on the number of shares of
Common Stock into which such shares of Class B Common Stock are then
convertible. The holders of Common Stock and Class B Common Stock will
generally have identical voting rights and will vote together as a single
class, with the holders of Class B Common Stock being entitled to a number of
votes equal to the number of shares of Common Stock into which the shares of
Class B Common Stock held by them are then convertible. In addition, the
holders of Class B Common Stock will be entitled to elect one director of the
Company (or two directors if SBW and its affiliates beneficially own at least
20% of the outstanding shares of Common Stock on a fully diluted basis) and
will have the right to approve certain actions on the part of the Company,
which are described in the accompanying Information Statement.
The Warrants issued to SBW entitle the holder thereof to purchase (i)
3,000,000 shares of Common Stock at an exercise price of $14.00 per share and
(ii) 2,000,000 shares of Common Stock at an exercise price of $18.00 per share.
The Warrants may be exercised for the cash exercise prices specified above or,
at the option of SBW, may be exercised without any cash payment for a number of
shares of Common Stock with a current market value equal to the excess of (i)
the current market value of the shares of Common Stock to be purchased upon
exercise over (ii) the exercise price of such shares of Common Stock. Prior to
receipt of Regulatory Relief, the Warrants may be exercised only to the extent
that doing so is consistent with the Communications Act of 1934, as amended by
the Telecommunications Act of 1996. The Warrants will expire on September 27,
2001.
THE COMPANY IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY. The Approved Matters have been approved by the Board of
Directors of the Company and have been consented to in writing by the Designated
Holders. Under Section 228 of the DGCL and the applicable provisions of the
Company's Certificate of Incorporation and Bylaws, because written consents
covering more than a majority of the
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outstanding Common Stock have been executed and delivered to the Company by the
Designated Holders, no further action by stockholders is required.
WE ENCOURAGE YOU TO READ THE ACCOMPANYING INFORMATION STATEMENT AND
THE APPENDICES IN THEIR ENTIRETY.
Sincerely,
William C. Saunders
President and Chief
Executive Officer
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HIGHWAYMASTER COMMUNICATIONS, INC.
16479 DALLAS PARKWAY
SUITE 710
DALLAS, TEXAS 75248
----------------------------------------------------
INFORMATION STATEMENT
----------------------------------------------------
NOTICE OF ACTIONS TAKEN BY WRITTEN CONSENT
OF STOCKHOLDERS IN LIEU OF A MEETING
This Information Statement is being furnished to holders of common
stock, par value $.01 per share (the "Common Stock"), of HighwayMaster
Communications, Inc. (the "Company") in connection with (i) the adoption of a
Certificate of Amendment (the "Certificate of Amendment") to the Certificate of
Incorporation of the Company, as amended (the "Certificate of Incorporation"),
in order, among other things, to authorize a new class of common stock of the
Company to be designated as Class B Common Stock, par value $.01 per share
("Class B Common Stock"), into which the shares of Series D Preferred Stock (as
defined below) held by Southwestern Bell Wireless Holdings, Inc. ("SBW") may be
converted and (ii) the issuance (the "Warrant Share Issuance") of shares of
Common Stock upon the exercise of warrants (the "Warrants") held by SBW, which
are evidenced by a Warrant Certificate, dated September 27, 1996 (the "Warrant
Certificate"). The Certificate of Amendment and the Warrant Share Issuance are
hereinafter collectively referred to as the "Approved Matters." For a
description of the Approved Matters, see "The Amendment" and "The Warrant Share
Issuance." In addition, the full text of the Certificate of Amendment and the
Warrant Certificate are attached as Appendices A and B to this Information
Statement, respectively.
Pursuant to the General Corporation Law of the State of Delaware
(the "DGCL") and the Certificate of Incorporation and Bylaws of the Company,
the affirmative vote or consent of the holders of a majority of the
outstanding shares of Common Stock is required for approval of the Approved
Matters. Each outstanding share of Common Stock is entitled to one vote on
each matter submitted to the stockholders of the Company. Pursuant to the
applicable provisions of the DGCL, the close of business on September 27,
1996
(COVER PAGE CONTINUED ON NEXT PAGE)
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is the record date (the "Record Date"), established in accordance with the
applicable provisions of the DGCL for purposes of determining stockholders
entitled to consent to such matters. As of the Record Date, there were
22,069,871 shares of Common Stock outstanding. As of the same date, the
Designated Holders (as defined below) held an aggregate of 15,089,093 shares of
Common Stock, representing approximately 68.4% of the outstanding shares of
such class. At the request of SBW, each of the Designated Holders has executed
and delivered a written consent with respect to the Approved Matters. BECAUSE
THE APPROVED MATTERS HAVE BEEN CONSENTED TO IN WRITING BY THE HOLDERS OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK, NO FURTHER AUTHORIZATION OR
APPROVAL IS REQUIRED FROM THE STOCKHOLDERS OF THE COMPANY IN CONNECTION
THEREWITH.
This Information Statement is first being sent to the stockholders of
the Company on or about November 22, 1996.
THIS IS NOT A NOTICE OF A MEETING OF THE STOCKHOLDERS
AND NO STOCKHOLDER MEETING WILL BE HELD TO
CONSIDER ANY MATTER DESCRIBED HEREIN.
THE COMPANY IS NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
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TABLE OF CONTENTS
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
APPROVED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Warrant Share Issuance . . . . . . . . . . . . . . . . . . . . . . 4
CERTAIN RECENT TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . 5
SBW Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Sale of Series D Preferred Stock. . . . . . . . . . . . . . . . . 5
Authorization of Class B Common Stock;
Certificate of Amendment . . . . . . . . . . . . . . . . . . 7
Issuance of Warrants. . . . . . . . . . . . . . . . . . . . . . . 7
Amended Stockholders' Agreement . . . . . . . . . . . . . . . . . 7
Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 9
Bylaw Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 9
Recapitalization Transactions. . . . . . . . . . . . . . . . . . . . . 9
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certain Interested Parties. . . . . . . . . . . . . . . . . . . . 10
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . 11
List of Appendices
Appendix A: Certificate of Amendment
Appendix B: Warrant Certificate
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GENERAL
On September 27, 1996, the Company and SBW, which is a wholly owned
subsidiary of SBC Communications Inc. ("SBC"), consummated certain transactions
(the "SBW Transactions"), including, but not limited to, (a) the issuance to SBW
of 1,000 shares of a new series of preferred stock, par value $.01 per share, of
the Company designated as Series D Participating Convertible Preferred Stock
("Series D Preferred Stock") in consideration of a cash payment in the amount of
$20.0 million (the "Purchase Price") and (b) the issuance to SBW of the
Warrants. The issuance of shares of Series D Preferred Stock by the Company was
effected pursuant to a Purchase Agreement, dated September 27, 1996 (the
"Purchase Agreement"), between the Company and SBW. The foregoing transactions
represent the start of a strategic relationship between the Company and SBC,
which the Company believes will strengthen the wireless telecommunications
capabilities of both companies.
Prior to the execution and delivery of the Purchase Agreement, SBW
solicited certain proxies and consents from the Designated Holders with respect
to the Approved Matters, which consist of (i) the adoption of the Certificate of
Amendment and (ii) the Warrant Share Issuance. At the request of SBW, each of
the Designated Holders executed and delivered to SBW (a) an irrevocable proxy
pursuant to which SBW was empowered to exercise all voting and other rights
(including, without limitation, the power to execute and deliver written
consents covering the shares of Common Stock owned by them) in favor of the
Approved Matters and 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 actions to which they relate and (b)
written consents (the "Designated Stockholder Consents") with respect to the
Approved Matters. On September 27, 1996, SBW delivered the Designated
Stockholder Consents to the Company. The "Designated Holders," who in the
aggregate own 15,089,093 shares of Common Stock, representing approximately
68.4% of the outstanding shares of such class, are 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 and Carlyle-HighwayMaster Investors II, L.P.
Under the terms of the Purchase Agreement, the Company is obligated
to take all action necessary in connection with the Designated Stockholder
Consents in accordance with and subject to the applicable provisions of the
DGCL and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Certificate of Incorporation and Bylaws of the Company to
notify the holders of the Company's shares as promptly as practicable
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of the approval of the Approved Matters. The Company is distributing this
Information Statement to its stockholders in order to comply with this
requirement. As required pursuant to Regulation 14C under the Exchange Act, no
corporate action will be taken by the Company in respect of the Approved Matters
until 20 days after this Information Statement has been sent or given to its
stockholders.
Holders of Common Stock who did not consent to the Approved Matters
will not be entitled to any appraisal rights in connection therewith.
APPROVED MATTERS
THE AMENDMENT
At a meeting held on September 27, 1996 (the "September Board
Meeting"), the Board of Directors of the Company adopted a resolution declaring
the advisability of adopting the Certificate of Amendment. The following is a
summary of certain of the principal provisions of the Certificate of Amendment.
This summary does not purport to be complete and is qualified in its entirety by
reference to the Certificate of Amendment, a copy of which is attached as
Appendix A hereto.
The Certificate of Amendment will provide that the authorized capital
stock of the Company will include 1,000 shares of Class B Common Stock. Upon
the receipt of Regulatory Relief (as defined below), each outstanding share of
Series D Preferred Stock will automatically be converted into one share of Class
B Common Stock. As used herein, the term "Regulatory Relief" means that SBC 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.
Under the terms of the Certificate of Amendment, each outstanding
share of Class B Common Stock will be convertible into 1,600 shares of Common
Stock (subject to adjustment to prevent dilution) at the option of SBW, provided
that no such shares may be converted into Common Stock unless the holders of all
outstanding shares of Class B Common Stock elect so to convert their shares.
The holders of Class B Common Stock will be entitled to receive
dividends and distributions equal to the dividends and distributions payable on
or in respect of the
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number of shares of Common Stock into which such shares of Class B Common Stock
are then convertible.
The holders of Common Stock and Class B Common Stock will generally
have identical voting rights and will vote together as a single class, with the
holders of Class B Common Stock being entitled to a number of votes equal to the
number of shares of Common Stock into which the shares of Class B Common Stock
held by them are then convertible. Under the terms of the Certificate of
Amendment, there will be two classes of directors of the Company, those elected
by the holders of Common Stock (the "Common Directors") and those elected by
the holders of Class B Common Stock (the "Class B Directors"). The rights,
duties and authority of the Common Directors and the Class B Directors will be
identical in all respects. The holders of Class B Common Stock will be entitled
to elect one Class B Director (or two Class B Directors if SBW and its
affiliates beneficially own at least 20% of the outstanding shares of Common
Stock, including shares issuable upon conversion of Class B Common Stock or
other convertible securities or upon the exercise of outstanding options,
warrants or rights, but excluding shares issuable upon the exercise of the
Warrants or any options, warrants or rights issued by any person other than the
Company (the "Excluded Options")). The holders of Class B Common Stock will also
be entitled to approve certain actions on the part of Company, including (i) the
approval of any annual budget or business plan for the Company or any deviation
from any annual budget by more than 5%, (ii) the issuance by the Company of
equity securities, including securities convertible into equity securities
(subject to specified exceptions), and the incurrence by the Company of debt
obligations in an amount exceeding $5.0 million in any year, (iii) the hiring or
termination by the Company of its chief executive officer, chief operating
officer or chief financial officer, (iv) the Company entering into any line of
business other than its Existing Line of Business (as defined below) or entering
into any joint ventures, partnerships or similar arrangements, (v) the Company
exiting its Existing Line of Business or disposing of assets (other than 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 by the Company of any Anti-Takeover
Provisions (as defined below) and (vii) any corporate action that would reduce
the number of shares of Common Stock into which a share of Class B Common Stock
is convertible to less than 1,600.
As used in the Certificate of Amendment, the terms set forth below
have the following 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
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Company is a party or by which it is bound or any statutory provision enacted
after September 27, 1996 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 does 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.
No holder of shares of Class B Common Stock will be entitled to
Transfer (as defined below) any such shares or any interest therein to any
person or entity 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, whether direct or indirect and
whether voluntary or involuntary.
THE WARRANT SHARE ISSUANCE
At the September Board Meeting, the Board of Directors of the Company
approved the issuance of the Warrants to SBW and the Warrant Share Issuance.
The following is a summary of certain provisions of the Warrant Certificate
which relate to the Warrant Share Issuance. This summary does not purport to be
complete and is qualified in its entirety by reference to the Warrant
Certificate, a copy of which is attached as Appendix B hereto.
The Warrants entitle SBW to purchase from the Company, upon the terms
and subject to the conditions set forth in the Warrant Certificate, (i)
3,000,000 shares of Common Stock at an exercise price of $14.00 per share and
(ii) 2,000,000 shares of Common Stock at an exercise price of $18.00 per share,
in each case subject to adjustment to prevent dilution. The Warrants may be
exercised for the cash exercise prices specified above or, at the option of SBW,
may be exercised without any cash payment for a number of shares of Common Stock
with a current market value equal to the excess of (i) the current market value
of the shares of Common Stock to be purchased upon exercise over (ii) the
exercise price of such shares of Common Stock. Prior to receipt of Regulatory
Relief, the Warrants may be exercised only to the extent that doing so is
consistent with the
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Communications Act of 1934, as amended by the Telecommunications Act of 1996.
The Warrants will expire on September 27, 2001.
No holder of Warrants will be entitled to Transfer any Warrants or any
interest therein to any person or entity other than SBW or an affiliate of SBW.
CERTAIN RECENT TRANSACTIONS
The following is a summary of (i) the SBW Transactions and (ii)
certain related transactions (the "Recapitalization Transactions") consummated
on the same date by the Company, the Erin Mills Stockholders (as defined below),
the Carlyle Stockholders (as defined below) and certain other holders of its
outstanding securities. For additional information regarding the SBW
Transactions and the Recapitalization Transactions, see the Company's Current
Report on Form 8-K dated September 27, 1996, which was filed by the Company with
the Securities and Exchange Commission (the "Commission") on October 7, 1996,
including the various exhibits to such Current Report.
SBW TRANSACTIONS
SALE OF SERIES D PREFERRED STOCK
On September 27, 1996, in accordance with the terms and conditions
set forth in the Purchase Agreement, the Company sold 1,000 shares of Series
D Preferred Stock to SBW in exchange for the Purchase Price. Immediately
upon receipt of the Purchase Price from SBW, the Company delivered the
Purchase Price to Texas Commerce Bank, N.A., as escrow agent (the "Escrow
Agent"), to be held pursuant to an Escrow Agreement, dated as of September
27, 1996, pending the expiration or early termination of the waiting period
applicable to the conversion of shares of Series D Preferred Stock into Class
B Common Stock under the Hart-Scott-Rodino Antitrust Improvements Act of
1974, as amended (the "HSR Act"). On October 18, 1996, the early termination
was granted with respect to the aforementioned waiting period. Accordingly,
on October 21, 1996, the Escrow Agent released the Purchase Price to the
Company.
Each share of Series D Preferred Stock issued to SBW pursuant to the
Purchase Agreement is convertible into 1,600 shares of Common Stock (subject to
adjustment to prevent dilution) at the option of SBW, provided, that shares of
Series D Preferred Stock may only be converted into Common Stock in blocks of
250 shares. In addition, at such time as Regulatory Relief is obtained, all of
the outstanding shares of
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Series D Preferred Stock will automatically convert into an equal number of
shares of Class B Common Stock. If Regulatory Relief is not obtained on or
before September 27, 2001, all of the outstanding shares of Series D Preferred
Stock will be converted into shares of Common Stock at the election of the
Company on the same basis as if they had been voluntarily converted by SBW.
The holders of shares of Series D Preferred Stock will be entitled to
receive dividends and distributions equal to the aggregate amount of dividends
and distributions payable on or in respect of the number of shares of Common
Stock into which such shares of Series D Preferred Stock are then convertible.
In the event of a liquidation of the Company, the holders of shares of Series D
Preferred Stock will be entitled to an aggregate liquidation preference in an
amount equal to the greater of (i) $20.0 million or (ii) the amount of
distributions payable in connection with such liquidation on or in respect of
the number of shares of Common Stock into which such shares of Series D
Preferred Stock are then convertible.
Except as required by law or as described below, the holders of
Series D Preferred Stock will not be entitled to vote on any matters
submitted to the stockholders of the Company. However, the holders of
Series D Preferred Stock will be entitled to approve certain actions on the
part of the Company, including (i) mergers or consolidations involving the
Company that require stockholder approval under the DGCL, (ii) sales of all
or substantially all of the assets of the Company that require stockholder
approval under the DGCL, (iii) amendments to the Company's Certificate of
Incorporation, (iv) the dissolution of the Company, (v) the adoption,
implementation or acceptance by the Company of any Anti-Takeover Provisions,
(vi) the issuance by the Company of equity securities, including securities
convertible into equity securities (subject to specified exceptions), and the
incurrence by the Company of debt obligations in an amount exceeding $5.0
million in any year, (vii) the Company entering into any line of business
other than its Existing Line of Business or entering into joint ventures,
partnerships or similar arrangements which would require expenditures of more
than $3.0 million, (viii) the disposition by the Company in any 12-month
period of assets (other than assets sold in the ordinary course of business)
of which the value exceeds $3.0 million, (ix) any amendment, alteration or
repeal of the terms of the Series D Preferred Stock or (x) any corporate
action that would reduce the number of shares of Common Stock into which a
share of Series D Preferred Stock is convertible to less than 1,600.
Shares of Series D Preferred Stock are not redeemable at the option of
the Company.
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AUTHORIZATION OF CLASS B COMMON STOCK; CERTIFICATE OF AMENDMENT
As described above, at the September Board Meeting, the Board of
Directors of the Company adopted a resolution declaring the advisability of
adopting the Certificate of Amendment, which would amend the Certificate of
Incorporation of the Company in order, among other things, to authorize the
Class B Common Stock into which shares of Series D Common Stock will
automatically be converted upon receipt of Regulatory Relief. For a description
of certain provisions of the Certificate of Amendment, see "The Amendment."
ISSUANCE OF WARRANTS
As described above, on September 27, 1996, the Company issued the
Warrants to SBW in connection with the transactions contemplated by the Purchase
Agreement and the other agreements and instruments relating to the SBW
Transactions. For a description of certain provisions of the Warrants, see "The
Warrant Share Issuance."
AMENDED STOCKHOLDERS' AGREEMENT
As of February 4, 1994, the Company, the Erin Mills Stockholders, the
Carlyle Stockholders, the By-Word Stockholders (as defined below) and certain
other parties entered into a Stockholders' Agreement. In connection with the
SBW Transactions, such agreement was amended and restated (as amended and
restated, the "Amended Stockholders' Agreement") in order, among other things
to add SBW as a party thereto. The Amended Stockholders' Agreement contains
provisions relating to, among other things, (i) the transfer of shares of
Common Stock by certain of the stockholders who are parties thereto, (ii) the
grant of registration rights by the Company to the stockholders who are parties
thereto and (iii) the election of members of the Company's Board of Directors.
As used herein, (a) the term "Erin Mills Stockholders" means Erin Mills
International Investment Corporation, The Erin Mills Development Corporation and
The Erin Mills Investment Corporation, (b) the term "Carlyle Stockholders" means
(except as otherwise provided under "Security Ownership of Certain Beneficial
Owners and Management") the Clipper Stockholders (as defined below),
Carlyle-HighwayMaster Investors, L.P., Carlyle-HighwayMaster Investors II, L.P.,
TC Group, L.L.C., Mark D. Ein, Chase Manhattan Investment Holdings, Inc., H.M.
Rana Investments Limited, Archery Partners, (c) the term "Clipper Stockholders"
means Clipper Capital Associates, L.P., Clipper/Merban, L.P. and
Clipper/Merchant Partners, L.P. and (d) the term "By-Word Stockholders" means
William C. Kennedy, Jr., Donald M. Kennedy, William C. Saunders, Robert S.
Folsom and Robert T. Hayes.
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The Amended Stockholders' Agreement provides that the parties will
take all action (including the voting of shares of Common Stock owned by them)
necessary to ensure that the Board of Directors of the Company consists of (i)
two directors designated by the Erin Mills Stockholders, (ii) one director
designated by the Carlyle Stockholders (other than the Clipper Stockholders),
(iii) two directors designated by the By-Word Stockholders (one of which will be
the chief executive officer of the Company) and (iv) two independent directors
(except that the addition of a second independent director to the Board of
Directors need not occur until the date of the next annual meeting of the
stockholders of the Company). Prior to the receipt of Regulatory Relief, SBW
will not be entitled to designate a director, but will have the right to
designate a non-voting delegate who will attend all meetings of the Board of
Directors and receive all materials distributed to directors of the Company.
Upon the conversion of Series D Preferred Stock into Class B Common Stock (which
will occur upon receipt of Regulatory Relief), SBW will be entitled to designate
one member of the Board of Directors of the Company. In addition, if at any
time after the conversion of Series D Preferred Stock into Class B Common Stock
SBW and its affiliates beneficially own 20% or more of the outstanding Common
Stock (including shares issuable upon conversion of Series D Preferred Stock or
Class B Common Stock or other convertible securities or upon the exercise of
outstanding options, warrants or rights, but excluding shares issuable upon the
exercise of the Warrants or any Excluded Options) on a fully diluted basis, SBW
will be entitled to designate a second member of the Board of Directors. No
stockholder or group of stockholders will be entitled to designate any director
if the percentage of the outstanding Common Stock (including shares issuable
upon conversion of outstanding securities or upon the exercise of outstanding
options, warrants or rights, but excluding shares issuable upon the exercise of
the Warrants or any 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.
Under the terms of the Amended Stockholders' Agreement, the Carlyle
Stockholders (other than the Clipper Stockholders), the Erin Mills Stockholders,
William C. Kennedy, Jr. and William C. Saunders (the "First Refusal
Stockholders") granted a right of first refusal to SBW with respect to all
shares of Common Stock owned by them. Subject to certain exceptions, such right
of first refusal requires that, prior to selling any shares of Common Stock, a
First Refusal Stockholder must offer such shares for sale to SBW in accordance
with the terms of the Amended Stockholders' Agreement.
The Amended Stockholders' Agreement also provides for the grant of
certain demand, piggyback or other registration rights to the stockholders who
are parties
-8-
<PAGE>
thereto. Among other things, such agreement provides that, with respect to
an aggregate of 1,818,018 shares of Common Stock issued to the Erin Mills
Stockholders and certain of the Carlyle Stockholders in connection with the
Recapitalization Transactions, the Company will register one-half of such
shares under the Securities Act of 1933, as amended (the "Securities Act"),
for sale on or after March 31, 1997 and will register the remainder of such
shares under the Securities Act for sale on or after September 27, 1997.
OTHER AGREEMENTS
HighwayMaster Corporation, a wholly owned subsidiary of the Company
("HM Corporation"), entered into a Technical Services Agreement, dated September
27, 1996 (the "Technical Services Agreement"), with SBW pursuant to which SBW or
one or more of its affiliates will provide HM Corporation with certain technical
and advisory services in connection with, among other things, the operation and
improvement of its communications transmission system.
In addition, under the terms of the Purchase Agreement, promptly after
Regulatory Relief is obtained, the Company will cause HM Corporation to enter
into a Voice and Data Services Agreement (the "Voice and Data Services
Agreement") with an affiliate of SBW. The Voice and Data Services Agreement, if
entered into by the parties, will provide that HM Corporation will purchase long
distance and other voice and data services from such affiliate of SBW.
BYLAW AMENDMENTS
At the September Meeting, the Board of Directors of the Company
approved certain amendments to the Company's Bylaws (the "Bylaw Amendments") in
connection with the SBW Transactions, including certain amendments relating to
the authorization by the Company of Class B Common Stock.
RECAPITALIZATION TRANSACTIONS
GENERAL
On September 27, 1996, the Company, the Erin Mills Stockholders,
certain of the Carlyle Stockholders and certain other holders of outstanding
securities of the Company entered into a Recapitalization Agreement (the
"Recapitalization Agreement") and consummated the Recapitalization
Transactions contemplated thereby. In particular, upon the terms and
conditions set forth in the Recapitalization Agreement, (i) the Company
-9-
<PAGE>
repaid in full the principal amount of and interest accrued on certain
promissory notes in the aggregate principal amount of $5.0 million executed in
favor of an Erin Mills Stockholder in order to evidence the Company's obligation
to repay certain advances made by such Erin Mills Stockholder in August and
September 1996 to enable the Company to meet its short-term working capital and
other requirements, (ii) the Company issued an aggregate of 800,000 shares of
Common Stock to two Erin Mills Stockholders in exchange for aggregate cash
payments in the amount of $10.0 million, (iii) the Company issued an aggregate
of 864,000 shares of Common Stock to three Erin Mills Stockholders and two
other persons in exchange for the surrender to the Company for cancellation of
all outstanding shares of Series B Preferred Stock, par value $.01 per share, of
the Company, (iv) the Company paid to certain of the Carlyle Stockholders a
portion of the accrued and unpaid interest on certain promissory notes in the
aggregate principal amount of approximately $12.7 million (the "Carlyle
Notes") executed in favor of the Carlyle Stockholders and (v) the Company
issued an aggregate of 1,018,018 shares of Common Stock in exchange for the
surrender of the Carlyle Notes for cancellation.
CERTAIN INTERESTED PARTIES
Certain of the directors of the Company are officers or employees of
one or more of the Erin Mills Stockholders or Carlyle Stockholders. In
particular, (i) Mr. Robert B. Calhoun, Jr. serves as President of Clipper Asset
Management Corporation and Clipper Capital Corporation, which are private equity
investment firms and affiliates of certain of the Carlyle Stockholders; (ii) Mr.
William E. Conway, Jr. serves as a Managing Director of The Carlyle Group, a
private equity investment firm and an affiliate of certain of the Carlyle
Stockholders; (iii) Mr. Richard D. Darman serves as a Managing Director of The
Carlyle Group, a private equity investment firm and an affiliate of certain of
the Carlyle Stockholders; (iv) Mr. Mark D. Ein serves as a Vice President of The
Carlyle Group, a private equity investment firm and an affiliate of certain of
the Carlyle Stockholders; (v) Mr. Stephen L. Greaves serves as General Manager
of Erin Mills International Investment Corporation, a private venture capital
fund and one of the Erin Mills Stockholders; (vi) Mr. Gerry C. Quinn serves as
President of The Erin Mills Investment Corporation, a private venture capital
fund and one of the Erin Mills Stockholders, and as Executive Vice President of
The Erin Mills Development Corporation, a private venture capital fund and one
of the Erin Mills Stockholders. For additional information regarding the
interests of certain directors in the Recapitalization Transactions, see
"Security Ownership of Certain Beneficial Owners and Management."
-10-
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding shares of Common Stock as of the Record Date. Unless
otherwise noted, the persons named below have sole voting and investment power
with respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENT OF CLASS
STOCK BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------------------- ----------------------------------
PRIOR TO AFTER PRIOR TO AFTER
NAME AND ADDRESS OF HOLDER TRANSACTIONS(1) TRANSACTIONS(2) TRANSACTIONS(1) TRANSACTIONS(2)
- -------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Erin Mills Stockholders(3) 8,289,922(4) 9,833,206(5) 37.6% 31.4%
7501 Keele Street
Suite 500
Concord, Ontario L4K1YZ, Canada
Carlyle Stockholders (6) 2,295,724(7) 2,752,079(8) 10.4% 8.8%
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004-2505
Southwestern Bell Wireless -- 6,600,000(9) -- 21.0%
Holdings, Inc.
17330 Preston Road
Suite 100A
Dallas, Texas 75252
William C. Kennedy, Jr. 2,622,796(10) 2,622,796(10) 11.9% 8.4%
16479 Dallas Parkway
Suite 710
Dallas, Texas 75248
William C. Saunders 1,485,493(11) 1,485,493(11) 6.7% 4.7%
16479 Dallas Parkway
Dallas, Texas 75248
</TABLE>
------------
(1) Reflects beneficial ownership of shares of Common Stock prior to
giving effect to the consummation of the SBW Transactions and the
Recapitalization Transactions (collectively, the "Transactions").
(2) Reflects beneficial ownership of shares of Common Stock after
giving effect to the consummation of the Transactions.
(3) For purposes of the table set forth above, the Erin Mills
Stockholders consist of Erin Mills International Investment
Corporation, The Erin Mills Development Corporation and The Erin
Mills
-11-
<PAGE>
Investment Corporation. Information relating to beneficial ownership
of shares of Common Stock by the Erin Mills Stockholders is based in
part on the most recent Schedule 13G filed with the Commission by Erin
Mills Investment Corporation, which reflected ownership of Common
Stock as of December 31, 1995.
(4) Represents 8,141,706 shares owned by Erin Mills International
Investment Corporation and 148,216 shares owned by The Erin Mills
Investment Corporation.
(5) Represents 9,061,310 shares owned by Erin Mills International
Investment Corporation, 244,216 shares owned by The Erin Mills
Investment Corporation and 527,680 shares owned by The Erin Mills
Development Corporation.
(6) For purposes of the table set forth above, the "Carlyle Stockholders"
consist of Carlyle-HighwayMaster Investors, L.P.,
Carlyle-HighwayMaster Investors II, L.P., TC Group, L.L.C., TCG
Holdings L.L.C., TC Group Investment Holdings, L.L.C. and Mark D. Ein.
TC Group, L.L.C. is the sole general partner of Carlyle-HighwayMaster
Investors, L.P. and Carlyle-HighwayMaster Investors II, L.P., in which
capacity TC Group, L.L.C. may be deemed to be the beneficial owner of
shares owned by Carlyle-HighwayMaster Investors, L.P. and
Carlyle-HighwayMaster Investors II, L.P. TC Group Investment
Holdings, L.L.C. is the beneficial owner of 291,315 shares including
291,315 shares owned of record by TC Group, L.L.C., for the benefit of
TC Group Investment Holdings, L.L.C. TCG Holdings, L.L.C. is the
managing member and holder of a controlling interest in each of each
of the TC Group, L.L.C. and TC Group Investment Holdings, L.L.C., in
which capacity TCG Holdings, L.L.C. may be deemed the beneficial owner
of shares owned by TC Group, L.L.C., Carlyle-HighwayMaster Investors,
L.P., Carlyle-HighwayMaster Investors II, L.P. and TC Group Investment
Holdings, L.L.C. Mark D. Ein is the sole beneficial owner of 28,611
shares of Common Stock, with sole power to direct the disposition of
such shares. Information regarding beneficial ownership of shares of
Common Stock by the Carlyle Stockholders is based on the most recent
Schedule 13D filed with the Commission by the beneficial owners named
above, which reflected ownership of Common Stock as of September 27,
1996.
(7) Represents 1,805,727 shares owned of record by Carlyle-HighwayMaster
Investors, L.P., 170,071 shares owned of record by
Carlyle-HighwayMaster Investors II, L.P., 291,315 shares owned of
record by TC Group, L.L.C. and 28,611 shares owned of record by Mark
D. Ein.
(8) Represents 2,222,799 shares owned of record by Carlyle-HighwayMaster
Investors, L.P., 209,354 shares owned of record by
Carlyle-HighwayMaster Investors II, L.P., 291,315 shares owned of
record by TC Group, L.L.C. and 28,611 shares owned of record by Mark
D. Ein.
(9) Represents (i) 1,600,000 shares of Common Stock issuable to SBW upon
the conversion of shares of Series D Preferred Stock and (ii)
5,000,000 shares of Common Stock issuable to SBW upon the exercise of
the Warrants. SBW may be deemed to share voting and dispositive
power with respect to the foregoing shares of Common Stock with SBC.
Information regarding beneficial ownership of shares of Common Stock
by SBW and SBC is based on the most recent Schedule 13D filed with
the Commission by the beneficial owners named above, which reflected
ownership of Common Stock as of September 27, 1996.
(10) Includes 593,478 shares of Common Stock that may be acquired by
Mr. Kennedy upon exercise of currently exercisable options granted
under the Stock Option Plan.
(11) Includes 593,478 shares of Common Stock that may be acquired by
Mr. Saunders upon exercise of currently exercisable options granted
under the Stock Option Plan.
-12-
<PAGE>
The following table sets forth certain information regarding the
beneficial ownership of shares of Common Stock by each director and executive
officers of the Company and the directors and named executive officers of the
Company as a group as of the Record Date.
<TABLE>
<CAPTION>
PERCENT OF CLASS
BENEFICIALLY OWNED
----------------------------------------------
NUMBER OF SHARES OF COMMON PRIOR TO AFTER
NAME OF HOLDER STOCK BENEFICIALLY OWNED TRANSACTIONS(1) TRANSACTIONS(2)
- -------------- -------------------------- --------------- ---------------
<S> <C> <C> <C>
William C. Kennedy, Jr. (3) 2,622,796 11.9% 8.4%
William C. Saunders (4) 1,485,493 6.7% 4.7%
Gerry C. Quinn (5) 1,000 * *
Stephen Greaves (5) -- - -
John H. Daniels (5) -- - -
Elly H. Reisman (5) -- - -
Mark D. Ein (6) 28,611 * *
William E. Conway, Jr. (7) -- - -
Richard G. Darman (7) -- - -
Robert B. Calhoun, Jr. -- - -
Terry S. Parker (8) 3,798 * *
All directors and executive
officers as a group (18 persons) (9) 4,306,248 19.6% 13.7%
</TABLE>
------------
* Less than 1%
(1) Reflects beneficial ownership of shares of Common Stock prior to giving
effect to the consummation of the Transactions.
(2) Reflects beneficial ownership of shares of Common Stock after giving
effect to the consummation of the Transactions.
(3) Includes 593,478 shares of Common Stock that may be acquired by Mr.
Kennedy upon exercise of currently exercisable options granted under the
Stock Option Plan.
(4) Includes 593,478 of such shares that may be acquired by Mr. Saunders
upon exercise of currently exercisable options granted under the Stock
Option Plan.
(5) Messrs. Quinn, Daniels, Reisman and Greaves are affiliates of the Erin
Mills Stockholders. Pursuant to an employment agreement entered into
with The Erin Mills Development Corporation, Mr. Quinn has a right to
acquire up to 3% of the interest in the Company held by The Erin Mills
Investment Corporation and Erin Mills International Investment
Corporation.
(6) 2,267,113 shares are beneficially owned by the other Carlyle
Stockholders before giving effect to the Transactions, which Mr. Ein
may be deemed to beneficially own as a result of his position as an
officer of TC Group, L.L.C. Mr. Ein disclaims beneficial ownership of
such shares. Mr. Ein is, however, the beneficial owner of 28,611
shares. Mr. Ein also holds a limited partnership interest in Carlyle-
HighwayMaster Investors II, L.P. Information regarding beneficial
ownership of shares of Common Stock by the Carlyle Stockholders is based
on the most recent Schedule 13D filed with the Commission by the such
stockholders, which reflected ownership of Common Stock as of September
27, 1996.
-13-
<PAGE>
(7) 2,267,113 shares are beneficially owned by the Carlyle Stockholders, which
Mr. Conway and Mr. Darman may be deemed to beneficially own in their
capacity as Managing Directors of TC Group, L.L.C., TC Group Investment
Holdings, L.L.C. and TCG Holdings, L.L.C. and members of TCG Holdings,
L.L.C. Mr. Conway and Mr. Darman disclaim beneficial ownership of such
shares. Mr. Conway and a corporation controlled by Mr. Darman each hold a
limited partnership interest in Carlyle-HighwayMaster Investors II, L.P.
Information regarding beneficial ownership of shares of Common Stock by the
Carlyle Stockholders is based on the most recent Schedule 13D filed with
the Commission by such stockholders, which reflected ownership of Common
Stock as of September 27, 1996.
(8) Represents 3,798 shares subject to stock options.
(9) Includes 1,355,204 shares subject to options granted under the Stock Option
Plan or otherwise that are exercisable within 60 days of the Record Date by
a total of 18 directors and executive officers.
As previously noted, the Company is a party to the Amended
Stockholders' Agreement with SBW, the Erin Mills Stockholders, the Carlyle
Stockholders, the By-Word Stockholders and certain other persons. The parties
to the Amended Stockholders' Agreement have agreed to vote the shares of Common
Stock held by them with respect to certain matters as specified therein, and
accordingly, may be deemed to beneficially own all the shares of Common Stock
subject to the terms of the Amended Stockholders' Agreement. As of the Record
Date, after giving effect to the Transactions, an aggregate of 17,325,821 shares
of Common Stock, representing approximately 78.5% of the outstanding shares of
Common Stock, are held by the parties to the Amended Stockholders' Agreement.
All of the parties to the Stockholders Agreement who have filed a Schedule 13G
or Schedule 13D with the Commission have disclaimed beneficial ownership to any
shares of Common Stock held by any other party to the Amended Stockholders'
Agreement as a result of the voting and other provisions of such agreement.
By Order of the Board of Directors,
Wesley E. Schlenker
Secretary
-14-
<PAGE>
APPENDIX A
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.
A-1
<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 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).
A-2
<PAGE>
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 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
A-3
<PAGE>
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 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
A-4
<PAGE>
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 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.
(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
A-5
<PAGE>
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 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
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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.
(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
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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, HOWEVER, that such number may not be decreased below the
number of then currently outstanding shares of this Series.
2. DIVIDENDS. 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.
(a) 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. 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
divi-
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dends to such distribution or payment date, whether or not earned or declared.
If such payment shall have been made in full to 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.
(a) 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.
(b) 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. 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.
(a) Subject to subsection (a) hereof, each share of this Series shall
be convertible into the Reference Package.
(b) 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.
(c) 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 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.
(d) 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.
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(e) 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.
(f) 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.
(g) 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).
(h) 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. 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.
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(a) 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.
(b) 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.
(c) On the date shares of Series D Participating Convertible
Preferred are surrendered for conversion, 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. 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.
(a) 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.
(b) 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
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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.
(c) 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 Common Stock, and as of such date, the holders thereof
shall be treated in all respects as the holders of Class B Common Stock.
(d) 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 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.
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8. REDEMPTION. The shares of this Series shall not be redeemable.
9. VOTING RIGHTS. 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.
(a) 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 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;
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(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
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.
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"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.
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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
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APPENDIX B
HIGHWAYMASTER COMMUNICATIONS, INC.
WARRANTS FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF HIGHWAYMASTER COMMUNICATIONS, INC.
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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:
"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.
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"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. 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
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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
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.
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
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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 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.
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<PAGE>
(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 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 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
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<PAGE>
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 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
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<PAGE>
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
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 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
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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 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
continuing 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
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<PAGE>
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.
(f) 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 holders thereof to participate in dividends or distributions of
assets upon the voluntary or involuntary liquidation, dissolution or winding-up
of the Company.
(g) 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 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
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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 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 752248
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
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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 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.
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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: William C. Saunders
--------------------------------
Title: President
-------------------------------
Attest:
By: /s/ Wesley E. Schlenker
-------------------------------------
Name: Wesley E. Schlenker
-----------------------------------------
Title: Secretary
----------------------------------------
Consented to and Accepted:
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ Stan Sigman
-------------------------------------
Name: Stan Sigman
------------------------------------------
Title: President & Chief Executive Officer
-----------------------------------------
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.
B-12
<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.
B-13
<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.
B-14
<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:
B-15
<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.
B-16
<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:
B-17
<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) 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.
B-18
<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:
B-19
<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) 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.
B-20
<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:
B-21
<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 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
2
<PAGE>
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 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
3
<PAGE>
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 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)
4
<PAGE>
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 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.
5
<PAGE>
"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.
(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
6
<PAGE>
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 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
7
<PAGE>
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.
(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.
8
<PAGE>
(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, 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
9
<PAGE>
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 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
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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 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
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<PAGE>
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.
(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.
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(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, 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.
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<PAGE>
(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 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 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
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<PAGE>
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 Agreement or any of the other Transaction Documents, (C)
the issuance of
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<PAGE>
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
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<PAGE>
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 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.
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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
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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
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
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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.
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:
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<PAGE>
"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 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.
5
<PAGE>
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 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
6
<PAGE>
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 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
7
<PAGE>
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 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
8
<PAGE>
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 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
9
<PAGE>
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 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
10
<PAGE>
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 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
continuing 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
11
<PAGE>
(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 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
12
<PAGE>
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 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
13
<PAGE>
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 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 752248
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
14
<PAGE>
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 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.
15
<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: William C. Saunders
------------------------------
Title: President
------------------------------
Attest:
By: /s/ Wesley E. Schlenker
-------------------------------------------
Name: Wesley E. Schlenker
---------------------------------------
Title: Secretary
--------------------------------------
Consented to and Accepted:
SOUTHWESTERN BELL WIRELESS HOLDINGS, INC.
By: /s/ Stan Sigman
-------------------------------------------
Name: Stan Sigman
----------------------------------------
Title: President & Chief Executive Officer
---------------------------------------
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.
16
<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) 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>
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:
2
<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) 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>
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:
2
