-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCJB41HSDBa6TNRvZPCo5AVR7m8yTc519pWRmqBu4dhn/Rr89CUCobt6UjrRdGQz 3wLcfPc85jv6wyM1MJXseQ== 0000891836-96-000264.txt : 19961008 0000891836-96-000264.hdr.sgml : 19961008 ACCESSION NUMBER: 0000891836-96-000264 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19961007 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HIGHWAYMASTER COMMUNICATIONS INC CENTRAL INDEX KEY: 0000944400 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 510352879 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47033 FILM NUMBER: 96640345 BUSINESS ADDRESS: STREET 1: 16479 DALLAS PARKWAY STREET 2: STE 710 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 2147322500 MAIL ADDRESS: STREET 1: 16479 DALLAS PARKWAY STREET 2: STE 710 CITY: DALLAS STATE: TX ZIP: 75248 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SBC COMMUNICATIONS INC CENTRAL INDEX KEY: 0000732717 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 431301883 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-4 CITY: SAN ANTONIO STATE: TX ZIP: 78205 BUSINESS PHONE: 2103513048 MAIL ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-4 CITY: SAN ANTONIO STATE: TX ZIP: 78205 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHWESTERN BELL CORP DATE OF NAME CHANGE: 19920703 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. _) HIGHWAYMASTER COMMUNICATIONS, INC. (Name of Issuer) Common Stock, $0.01 par value (Title of Class of Securities) 43126310 (CUSIP Number) Wayne A. Wirtz, Esq. SBC Communications Inc. 175 E. Houston San Antonio, TX 78205 (210) 351-3736 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 27, 1996 (Date of Event which Requires Filing of this Statement) If a filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement. [x] (Page 1 of 13 pages) - -------------------- CUSIP NO. 43126310 13D - -------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON SBC Communications Inc.; 43-1301883 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER 7. SOLE VOTING POWER OF SHARES BENEFICIALLY 0 OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------------------- 8. SHARED VOTING POWER 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise of 5,000,000 Warrants (which, prior to receipt of certain regulatory approvals, are exercisable only to the extent that doing so is consistent with restrictions contained in the Communications Act of 1934, as amended by The Telecommunications Act of 1996), for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. ------------------------------------------------------------- (Page 2 of 13 pages) ------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise (subject to the limitation described in 7 above) of 5,000,000 Warrants, for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. ------------------------------------------------------------- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise (subject to the limitation set forth in 7 above) of 5,000,000 Warrants, for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.1% of the outstanding shares of Common Stock in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 16.8% of the outstanding shares of Common Stock in the event of the exercise of 5,000,000 Warrants (subject to the limitation set forth in 7 above), for a total of 21.1% of the outstanding shares of Common Stock in the event of such conversion and exercise. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON HC - -------------------------------------------------------------------------------- (Page 3 of 13 pages) - -------------------- CUSIP NO. 43126310 13D - -------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Southwestern Bell Wireless Holdings, Inc.; 75-2515769 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER 7. SOLE VOTING POWER OF SHARES BENEFICIALLY 0 OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------------------- 8. SHARED VOTING POWER 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise of 5,000,000 Warrants (which, prior to receipt of certain regulatory approvals, are exercisable only to the extent that doing so is consistent with restrictions contained in the Communications Act of 1934, as amended by The Telecommunications Act of 1996), for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. ------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------- (Page 4 of 13 pages) ------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise (subject to the limitation described in 7 above) of 5,000,000 Warrants, for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. ------------------------------------------------------------- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,600,000 shares of Common Stock issuable in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 5,000,000 shares of Common Stock issuable in the event of the exercise (subject to the limitation set forth in 7 above) of 5,000,000 Warrants, for a total beneficial ownership of 6,600,000 shares of Common Stock in the event of such conversion and exercise. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.1% of the outstanding shares of Common Stock in the event of the conversion of 1,000 shares of Series D Participating Convertible Preferred Stock and 16.8% of the outstanding shares of Common Stock in the event of the exercise of 5,000,000 Warrants (subject to the limitation set forth in 7 above), for a total of 21.1% of the outstanding shares of Common Stock in the event of such conversion and exercise. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (Page 5 of 13 pages) Item 1. SECURITY AND ISSUER. This statement relates to the Common Stock $.01 par value (the "Common Stock"), of HighwayMaster Communications, Inc., a Delaware corporation (the "Issuer") with its principal executive offices at 16473 Dallas Parkway, Suite 710, Dallas, Texas 75248. Item 2. IDENTITY AND BACKGROUND. (a) and (b) Southwestern Bell Wireless Holdings, Inc. is a Delaware corporation ("SBW") and a direct wholly-owned subsidiary of SBC (as hereinafter defined), with its principal office and principal place of business at 17330 Preston Road, Suite 100A, Dallas, Texas 75252. SBC Communications Inc. is a Delaware corporation ("SBC"), with its principal office and principal place of business at 175 E. Houston, San Antonio, Texas 78205-2233. Other than executive officers and directors, there are no persons or corporations controlling or ultimately in control of SBC. The name of each executive officer and director of SBC and SBW are set forth in Exhibit 1 hereto and incorporated herein by reference. The business address of all of the individuals listed on Exhibit 1 is c/o The Vice President and Secretary, SBC Communications Inc., 175 E. Houston, 11th Floor, San Antonio, Texas 78205. (c) SBC is a communications holding company whose subsidiaries are engaged principally in communications. SBW serves as a holding company for various cellular subsidiaries which provide cellular mobile radio telecommunications services in various areas throughout the United States. The present principal occupation of each executive officer and director of SBC and SBW are set forth in Exhibit 1 hereto and incorporated herein by reference. (d) During the last five years, neither SBW or SBC nor, to the best of their knowledge, any of their directors or executive officers has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, neither SBC or SBW nor, to the best of their knowledge, any of their officers or directors have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws, and which judgment, decree or final order was not subsequently vacated. (f) Each executive officer and director of SBC is a citizen of the United States except for director Carlos Slim Helu, a citizen of Mexico. Each executive officer and director of SBW is a citizen of the United States. (Page 6 of 13 pages) Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. As more fully described in Item 4 below, SBW paid $20,000,000 as consideration for the 1,000 shares of Series D Participating Convertible Preferred Stock of the Issuer (the "Series D Preferred Stock") described in this Schedule 13D. The funds used to purchase the Series D Preferred Stock came from working capital funds of SBC. The source of funds, if any, that SBW will use to pay the exercise price under the Warrants (as hereinafter defined) will be determined at the time of such exercise. Item 4. PURPOSE OF THE TRANSACTION. The purchase by SBW of the Series D Preferred Stock and the issuance by the Issuer to SBW of 5,000,000 Warrants to purchase Common Stock of the Issuer (the "Warrants") were effected in connection with a series of transactions resulting in the recapitalization of the Issuer, an investment in the capital stock of the Issuer by SBW and the commencement of a strategic business relationship between SBW and certain of its Affiliates, on the one hand, and the Issuer, on the other hand. "Affiliate" means any person that directly or indirectly, through one or more intermediaries, has control of or is controlled by, or is under common control with, the person specified. SBW intends to continue to review its investment in the Issuer on an ongoing basis and based upon the results of such review, SBW's contractual obligations entered into in connection with such investment, market and general economic conditions, regulatory approvals and other regulatory conditions and other factors SBW deems relevant, may seek to modify its investment in the Issuer through any available means including, without limitation, increases or decreases in its investment through open market purchases or sales or privately negotiated transactions or actions of the type enumerated in clauses (a) through (j) of Item 4 of Schedule 13D. Except as set forth herein, and subject to the foregoing, SBW has no current plans or proposals that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. A. SERIES D PREFERRED STOCK The Issuer has issued 1,000 shares of Series D Preferred Stock to SBW in exchange for a cash payment in the amount of $20,000,000 pursuant to the Purchase Agreement, dated as of September 27, 1996, between the Issuer and SBW. Each such share is convertible, in blocks of 250 of such shares or a larger integral multiple thereof, at the option of SBW, into 1,600 shares of Common Stock (subject to adjustment to prevent dilution) and, upon receipt of Regulatory Relief, will automatically convert into a new class of common stock of the Issuer to be designated "Class B Common Stock." "Regulatory Relief" means that SBC or its Affiliates, in their sole judgment, have obtained all necessary federal and state regulatory approvals to provide landline, interLATA long-distance service pursuant to the Communications Act of 1934, as amended by the Telecommunciations Act of 1996. The Class B Common Stock will be convertible at the option of SBW into Common Stock; the shares of Series D Preferred Stock will automatically convert into Common Stock on September 27, 2001 if SBC or its Affiliates have not received Regulatory Relief on or prior to such date. The $20,000,000 paid by SBW to the Issuer has been placed in escrow pending expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "Waiting Period"). If the Waiting Period expires on or prior to December 31, 1996, and if no order or decree of a governmental or regulatory authority is in effect as of such time which would prevent or restrain the purchase by SBW of the Series D Preferred Stock, the purchase price of $20,000,000 shall be released to the Issuer. If the Waiting Period has not expired as of December 31, 1996, or if a governmental or regulatory authority has, as of December 31, 1996, taken action which (Page 7 of 13 pages) would prevent or restrain the purchase by SBW of Series D Preferred Stock, SBW shall have the option to have the purchase price returned to it and, in such case, will return the Series D Preferred Stock, and any dividends theretofore received by SBW in respect of the Series D Preferred Stock, to the Issuer. The holder of each share of Series D Preferred Stock shall be entitled to receive the dividends and distributions payable on or in respect of the number of shares of Common Stock into which such share of Series D Preferred Stock is then convertible. Each share of Series D Preferred Stock is entitled upon liquidation, dissolution or winding up of the Issuer to a liquidation preference of the greater of (i) $20,000 or (ii) the amount distributed or to be distributed in connection with such liquidation, dissolution or winding-up to a holder of the number of shares of Common Stock into which such holder of a share of Series D Preferred Stock could then convert such share. The holders of the Series D Preferred Stock will not be entitled to elect any of the directors of the Issuer, but will be entitled to designate a non-voting delegate to be present at all of the Issuer's board meetings. The affirmative vote of the holders of a majority of the shares of the Series D Preferred Stock, voting as a class, is required to approve (i) any merger or consolidation of the Issuer with or into another entity or any sale of all or substantially all of the assets of the Issuer, in each case if such action requires a stockholder vote under Delaware law, (ii) any amendment, alteration or repeal of the Issuer's Certificate of Incorporation, (iii) the dissolution of the Issuer, (iv) the adoption of certain anti-takeover provisions that would adversely affect the holder of the Series D Preferred Stock, (v) certain issuances of the Issuer's capital stock and incurrence of indebtedness in excess of $5 million in any one year, (vi) the Issuer's entrance into a new line of business, joint venture, partnership or similar arrangement requiring the expenditure or expenditures, individually or in the aggregate, of more than $3 million, (vii) disposal or sale of assets of the Issuer the sale or fair market value of which exceeds $3 million, and (viii) amendment, alteration or repeal of the terms of the Series D Preferred Stock or corporate action that would reduce the number of shares of Common Stock into which a share of Series D Preferred Stock is convertible. Shares of Series D Preferred Stock are not transferable other than to SBW or its Affiliates and are not redeemable by the Issuer. B. CLASS B COMMON STOCK The 1,000 shares of Class B Common Stock into which the Series D Preferred Stock will convert upon receipt of Regulatory Relief will each be convertible, at the option of the holder thereof, into 1,600 shares of Common Stock (subject to adjustment to prevent dilution), provided, that no share of Series B Common Stock may be converted unless the holders of all of the shares of Class B Common Stock elect so to convert. The holder of each share of Class B Common Stock will be entitled to receive the dividends and distributions payable on or in respect of the number of shares of Common Stock into which such share of Series B Common Stock is then convertible. The holders of Common Stock and Class B Common Stock shall generally have identical voting rights and vote together as a single class, and each share of Class B Common Stock shall have a number of votes equal to the number of shares of Common Stock into which such share of Series B Common Stock is then convertible. In addition to any other voting rights they may have, the shares of Class B Common Stock will be entitled to elect one Class B Director and a second Class B Director if SBW or its Affiliates owns more than 20% of the outstanding Common Stock, including shares issuable upon conversion of the Class B Common Stock, but excluding shares issuable upon the exercise of the Warrants or of options or warrants issued by entities other than the Issuer. The following actions by (Page 8 of 13 pages) the Issuer will also require the approval of a majority of the outstanding shares of Class B Common Stock: (i) approval of any annual budget or business plan for the Issuer or any subsidiary, or the deviation from any such budget approved by the Board of Directors by more than five percent, (ii) issuance by the Issuer of certain equity securities and the incurrence of indebtedness in excess of $5 million in any one year, (iii) the hiring or termination by the Issuer of its chief executive officer, chief financial officer or chief operating officer, (iv) entering into a new line of business, joint venture, partnership or similar arrangement, (v) exiting its existing business or disposing of assets with a value in excess of $500,000 or which are otherwise material to the Issuer's operations, (vi) adoption of certain antitakeover provisions that would adversely affect the holders of Class B Common Stock or their Affiliates, (vii) any action that would reduce the number of shares of Common Stock into which the shares of Class B Common Stock are convertible, or (viii) any amendment, alteration or repeal of Article XI of the Issuer's bylaws. The shares of Class B Common Stock may not be transferred other than to SBW or its Affiliates. The Issuer's bylaws have been amended to reflect the terms of the Class B Common Stock; as described in Item 6 below, the Issuer's Certificate of Incorporation will also be amended to reflect the terms of the Class B Common Stock. C. WARRANTS The Issuer has issued to SBW 5,000,000 Warrants to purchase Common Stock. Each Warrant entitles the holder thereof to purchase one share of Common Stock, subject to adjustment in certain circumstances to prevent dilution. 3,000,000 of the Warrants are exercisable at $14.00 per share of Common Stock and 2,000,000 of the Warrants are exercisable at $18.00 per share of Common Stock, and in each such case the exercise price is subject to adjustment to account for adjustments made in the number of shares of Common Stock that may be purchased upon exercise of such Warrant. Warrants may be exercised for cash or, at the option of the holder thereof, without any cash payment, for that number of shares of Common Stock that reflects the difference between (i) the current market value of a share of Common Stock and (ii) the exercise price per share of Common Stock under such Warrant. Prior to receipt of Regulatory Relief, the Warrants will be exercisable by the holder thereof only to the extent that doing so is consistent with the Communications Act of 1934, as amended by The Telecommunications Act of 1996. Warrants may not be transferred other than to SBW or its Affiliates. The Warrants expire on September 27, 2001. Item 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The total number of shares of Common Stock that SBW would beneficially own upon conversion of the 1,000 shares of Series D Preferred Stock that it holds is 1,600,000, which represents 6.1% of the outstanding shares of Common Stock of the Issuer. The total number of shares of Common Stock that SBW would beneficially own upon exercise of the 5,000,000 Warrants that it holds is 5,000,000, which represents 16.8% of the total outstanding shares of Common Stock. Assuming conversion of the 1,000 shares of Series D Preferred Stock and exercise of the 5,000,000 Warrants, the total number of shares of outstanding Common Stock that SBW would beneficially own would be 6,600,000, representing 21.1% of the outstanding shares of Common Stock. The foregoing calculations are (i) based on the 22,069,871 shares of the Common Stock of the Issuer outstanding as of September 27, 1996 plus the 2,682,018 shares of Common Stock issued in recapitalization transactions entered into by the Issuer and certain of its existing security holders on September 27, 1996 and (ii) assume that the shares of Common Stock issuable (Page 9 of 13 pages) upon conversion of the Series D Preferred Stock or exercise of the Warrants or both, as the case may be, are issued and outstanding at the time of such calculation. The Series D Preferred Stock and Warrants beneficially owned by SBC are owned by and registered in the name of SBW. (b) SBC and SBW share the power to vote and to dispose of the 1,000 shares of Series D Preferred Stock and the power to dispose of the 5,000,000 Warrants. The shares of Series D Preferred Stock and the Warrants, and the shares of Common Stock issuable upon conversion or exercise thereof, beneficially owned by SBW are subject to certain transfer restrictions described more fully in Items 4 and 6 of this Schedule 13D. (c) No transactions in the Common Stock were effected by SBC or SBW in the past sixty days. (d) None. (e) Not applicable. Item 6. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. A. STOCKHOLDERS AGREEMENT In connection with the transactions described herein, the Issuer, certain existing stockholders of the Issuer and SBW entered into an Amended and Restated Stockholders Agreement, dated as of September 27, 1996 (the "Stockholders Agreement"). The following description of the Stockholders Agreement is qualified in its entirety by reference to the complete text of such document which is attached as Exhibit 4 hereto. The Stockholders Agreement provides, among other things, for the following: Subject to certain exceptions, each of the Carlyle Stockholders (as defined in the Stockholders Agreement), the Erin Mills Stockholders (as defined in the Stockholders Agreement), William C. Kennedy, Jr. and William S. Saunders (each, a "First Refusal Stockholder") have agreed not to sell or to make certain transfers of shares of capital stock of the Issuer unless such First Refusal Stockholder has first irrevocably offered the shares that it desires to sell to SBW. The Issuer has agreed to grant to certain stockholders, including SBW, "piggyback" and demand registration rights in order for them to register and sell shares of Common Stock under the Securities Act of 1933, as amended. Within 15 days after the execution of the Stockholders Agreement, the total number of members of the Board of Directors of the Issuer will be initially reduced to six and a director not employed by the Company or affiliated with a party to the Stockholders Agreement (an "independent director") is to be added not later than the next annual meeting of stockholders. Prior to Regulatory Relief, the Board of Directors shall be comprised of seven members, as follows: two directors designated by a majority in interest of the Erin Mills Stockholders; two directors designated by a majority in interest of the ByWord Stockholders (as defined in the Stockholders Agreement); one director designated by a majority in interest of the Carlyle Stockholders; and two independent directors. When the shares of Series D Preferred Stock convert into Class B Common Stock upon receipt of Regulatory Relief, one director designated by SBW is to be added and, in case SBW and its Affiliates beneficially own more than 20% of the outstanding shares of Common Stock, other than shares issuable under the Warrants or under options or warrants issued by entities other than the Issuer, SBW will have the right to appoint a second (Page 10 of 13 pages) director. The stockholders that are parties to the Stockholders Agreement have agreed to take all action necessary, including voting their shares of Common Stock, to effect the governance provisions and purposes of the Stockholders Agreement. Neither the filing of this Schedule 13D nor anything contained herein is intended as, or should be construed as, an admission that SBC or SBW is (i) a member of a "group" or (ii) the "beneficial owner" of any shares of Common Stock beneficially owned by any other party to the Stockholders Agreement, in each case for the purposes of Section 13 (d) or (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In case any stockholder or group thereof decreases its ownership of Common Stock, it shall lose the right to designate directors if such ownership falls below 20% (in which case the right to designate two directors, in the case of the Erin Mills Stockholders and the By-Word Stockholders, shall expire) or 5% (in which case the right to designate a director shall expire). The Stockholders Agreement requires the affirmative vote of a majority of the entire Board of Directors of the Issuer (not merely a quorum) to authorize, effect or validate the following actions by the Issuer: (i) the approval of any annual budget or business plan of the Issuer or any subsidiary, or any deviation from any annual budget by more than five percent, (ii) any capital expenditure or expenditures of the Issuer or a subsidiary which, individually or in the aggregate, exceed $1 million, (iii) the hiring or termination by the Issuer or any subsidiary of any officer or senior management employee, (iv) payments under any stock appreciation rights or phantom stock plans or similar rights or plans, (v) (A) sell, lease or transfer assets representing five percent or more of the consolidated assets of the Issuer and its subsidiaries, (B) consolidate or merge, or permit a subsidiary to consolidate or merge, with any other entity, (C) reclassify or otherwise change any capital stock of the Issuer or any subsidiary or (D) dissolve, liquidate or wind-up the Issuer or any subsidiary, (vi) except in certain circumstances, authorize or issue in excess of an aggregate of $5 million of capital stock or other equity securities, or securities convertible or exchangeable into equity securities of the Issuer or any subsidiary, (vii) acquire capital stock or other equity securities of any other entity in excess of $5 million, (viii) enter into, including through a subsidiary, any agreement, contract, lease or commitment, the fair market value of which exceeds $1 million, (ix) make any capital expenditure, including through a subsidiary, in excess of $1 million, (x) file with the Secretary of State of the State of Delaware any resolutions of the Board of Directors containing provisions that would adversely affect the rights of the holders of Common Stock, (xi) enter, including through a subsidiary, into any agreement, transaction, commitment or arrangement with the Issuer's or any of its or any subsidiary's officers, directors, employees, stockholders of Affiliates or with any individual related by blood, marriage or adoption or any entity in which any such individual owns a more than 10% beneficial interest, except for customary employment arrangements and benefit programs on an arm's length basis and arrangements on arm's length terms that are approved by a majority of the Company's disinterested directors or (xii) allow any subsidiary to do or effect any of the foregoing. The Stockholders Agreement also provides that after receipt of Regulatory Relief, if SBW does not hold Series D Preferred Stock or Class B Common Stock but does own at least 1.6 million shares of Common Stock (other than Common Stock issuable under the Warrants or options or warrants issued by entities other than the Issuer), the approval of SBW will be required to approve the actions that require approval of the holders of the Class B Common Stock. B. STOCKHOLDER APPROVAL The holders of 68.4% of the outstanding shares of Common Stock as of September 27, 1996 executed written consents in favor of the resolutions of the Issuer's Board of Directors approving the issuance of the shares of Common Stock issuable upon exercise of the Warrants and the proposed amendment of the Issuer's Certificate of Incorporation to reflect the terms of the Class B Common Stock to be issued upon conversion of the Series D Preferred Stock. The stockholders that have granted such written consents have also granted to SBW an irrevocable proxy to vote, at any annual, (Page 11 of 13 pages) special or adjourned meeting of stockholders of the Issuer, in favor of the adoption of the amendment to the Issuer's Certificate of Incorporation and the issuance of the Common Stock issuable upon exercise of the Warrants, and against any action or agreement likely to delay, impede or interfere with such actions. A form of written consent and irrevocable proxy, together with a list of the stockholders that executed each such instrument, are attached as Exhibits 5 and 6 hereto and incorporated herein by reference. The Certificate of Amendment to the Issuer's Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware 20 days after an information statement has been distributed to stockholders of the Issuer in accordance with Regulation 14C under the Exchange Act; the Certificate of Designation setting forth the terms of the Series D Preferred Stock was filed with the Secretary of State of the State of Delaware on September 27, 1996, and became effective on such date. The foregoing descriptions of the documents listed in Item 7 and filed as exhibits hereto are qualified in their entirety by the complete texts of such documents. Item 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Identity of Executive Officers and Directors of SBC and SBW Exhibit 2 Certificate of Amendment to the Certificate of Incorporation of the Issuer (including Certificate of Designation for Series D Preferred Stock) Exhibit 3 Warrant Certificate, dated as of September 27, 1996, executed by the Issuer in favor of SBW Exhibit 4 Stockholders Agreement Exhibit 5 Form of Written Consent, together with list of stockholders that executed such consent Exhibit 6 Form of Irrevocable Proxy, together with list of stockholders that executed such proxy (Page 12 of 13 pages) SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SBC COMMUNICATIONS INC. By: /s/ Donald E. Kiernan Donald E. Kiernan Senior Vice President, Treasurer and Chief Financial Officer SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. By: /s/ Drew A. Roy Drew A. Roy Executive Vice President and Chief Operating Officer - SBC Wireless Dated: October 7, 1996 (Page 13 of 13 pages) EX-1 2 EXHIBIT 1 IDENTITY OF EXECUTIVE OFFICERS AND DIRECTORS SBC COMMUNICATIONS INC. - ----------------------- Officers - -------- NAME PRINCIPAL OCCUPATION ---- -------------------- Edward E. Whitacre, Jr. Chairman of the Board and Chief Executive Officer Royce S. Caldwell President-Southwestern Bell Operations James W. Callaway Senior Vice President- Strategic Planning Cassandra C. Carr Senior Vice President- Human Resources William E. Dreyer Senior Executive Vice President-External Affairs James D. Ellis Senior Executive Vice President and General Counsel Charles E. Foster President-SBC Operations James S. Kahan Senior Vice President, Corporate Development Donald E. Kiernan Senior Vice President Treasurer and Chief Financial Officer Directors - --------- Edward E. Whitacre, Jr. As described above Clarence C. Barksdale Vice Chairman, Board of Trustees, Washington University, St. Louis, Missouri James E. Barnes Chairman of the Board, President and CEO, MAPCO Inc. Jack S. Blanton Chairman, Houston Endowment, Inc.; President and Chief Executive Officer, Eddy Refining Company August A. Busch, III Chairman of the Board and President, Anheuser-Busch Companies, Inc. Ruben R. Cardenas Partner, Cardenas, Whitis & Stephen, L.L.P., Attorneys Martin K. Eby, Jr. Chairman of the Board and CEO and President, The Eby Corporation Tom C. Frost Senior Chairman of the Board and CEO, Cullen/ Frost Bankers, Inc.; Senior Chairman of the Board, Frost National Bank Jess T. Hay Chairman, Texas Foundation for Higher Education Carlos Slim Helu Chairman of the Board, Grupo Carso, S.A. de C.V.; Chairman of the Board, Telefonos de Mexico, S.A. de C.V. Bobby R. Inman United States Navy, Retired Charles F. Knight Chairman, President and CEO, Emerson Electric Co. Haskell M. Monroe, Jr. Professor of History, The University of Missouri- Columbia Patricia P. Upton President and CEO, Aromatique, Inc. -2- SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. - ----------------------------------------- Officers - -------- NAME PRINCIPAL OCCUPATION ---- -------------------- Stan Sigman President-SBC Wireless Drew A. Roy Executive Vice President and Chief Operating Officer-SBC Wireless Mark Boright Vice President and Chief Financial Officer-SBC Wireless Charles P. Allen Treasurer Glen A. Glass Vice President, General Counsel and Secretary Mary T. Manning President-Southwestern Bell Wireless John J. Stephens Vice President-Taxes Carol L. Tacker Assistant Secretary Directors - --------- Stan Sigman As described above Drew A. Roy As described above Mark Boright As described above Mary T. Manning As described above Royce S. Caldwell President, Southwestern Bell Operations, SBC Communications Inc. Cassandra C. Carr Senior Vice President - Human Resources, SBC Communications Inc. James W. Callaway Senior Vice President - Strategic Planning, SBC Communications Inc. J. Cliff Eason President and CEO, Southwestern Bell Communications, Inc. James D. Ellis Senior Executive Vice President and General Counsel, SBC Communications Inc. Charles E. Foster President - SBC Operations, SBC Communications Inc. James S. Kahan Senior Vice President - Corporate Development, SBC Communications Inc. -3- Donald E. Kiernan, Senior Vice President, Treasurer and Chief Financial Officer, SBC Communications Inc. -4- EX-2 3 EXHIBIT 2 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. 1. Dividends (a) Subject to the rights granted to the holders of any Preferred Stock that may be outstanding, the holders of Common Stock shall be entitled to receive dividends and distributions when and as declared by the Board of Directors of the corporation out of funds legally available therefor. (b) Subject to the rights of the holders of any Preferred Stock that may be outstanding, the holders of shares of Class B Common Stock shall be entitled to receive, when and as declared by the Board of Directors, but only out of funds legally available therefor, dividends and distributions, on each date that dividends or other distributions (other than dividends or distributions payable in Common Stock of the corporation) are payable on or in respect of Common Stock, in an amount per share of Class B Common Stock equal to the aggregate amount of dividends or other distributions (other than dividends or distributions payable in Common Stock of the corporation) that would be payable on such date to a holder of the Reference Package (as defined below). Each such dividend and distribution shall be paid to the holders of record of shares of Class B Common Stock on the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for that purpose by the Board of Directors in advance of payment of each particular dividend or distribution, which shall be the same record date as for the payment of dividends or distributions on the Common Stock. (c) The term "Reference Package" shall initially mean 1,600 shares of Common Stock of the corporation. In the event the corporation shall at any time after the close of business on September 27, 1996 (A) declare or pay a dividend on or distribution in respect of any Common Stock payable in Common Stock, (B) subdivide any Common Stock, (C) combine any Common Stock into a smaller number of shares or (D) change or reclassify the Common Stock (whether pursuant to a merger or consolidation or otherwise), then and in each such case the Reference Package after such event shall be the Common Stock that a holder of the Reference Package immediately prior to such event would hold thereafter as a result thereof. The Board of Directors may make such adjustments in the Reference Package, in addition to those required hereby, as shall be determined by the Board, as evidenced by a Board resolution, to be necessary and advisable in order to avoid taxation so far as practicable of any dividend of stock or stock rights or any event treated as such for Federal income tax purposes to the recipients. Whenever any adjustment is required in the Reference Package, the corporation shall forthwith (i) file -2- at the principal office of the corporation a statement describing in reasonable detail the adjustment and the method of calculation used, and (ii) cause a copy of such statement to be mailed by first class mail postage prepaid to the holders of record of the Class B Common Stock as of the effective date of such adjustment. The corporation may obtain the certificate of any independent firm of public accountants of national recognition selected by the Board of Directors which, if obtained, shall be presumptive evidence of the correctness of any computation made under Section 1(c). 2. Voting Rights (a) General. The holders of Common Stock and Class B Common Stock shall have identical voting rights and vote together as a single class on all actions to be taken by such holders, except as specified below. Each share of Common Stock shall, when entitled to vote, have one vote and each share of Class B Common Stock shall, when entitled to vote, have the number of votes that a holder of the Reference Package would have. (b) Election of Directors. There shall be two classes of directors, those elected by the Common Stock ("Common Directors") and those elected by the Class B Common Stock ("Class B Directors"). The rights, duties and authority of the Common Directors and the Class B Directors shall be identical in all respects. The number of Common Directors shall be the number to be determined by the Nominating Committee of the Corporation. The number of Class B Directors shall be one, except that if Southwestern Bell Wireless Holdings, Inc. ("SBW") and its Affiliates Beneficially Own (as hereinafter defined) 20% or more of the outstanding Common Stock, including Common Stock issuable upon conversion of Class B Common Stock or other convertible securities or upon the exercise of any outstanding options, warrants, rights or obligations, other than shares issuable upon the exercise of (i) the 5,000,000 warrants issued on September 27, 1996 (the "Warrants"), and (ii) options, warrants, rights or obligations issued by any entity other than the corporation ("Excluded Options"), there shall be two Class B Directors. For the purposes of the foregoing calculations, the number of outstanding shares of Common Stock shall include all shares issuable upon conversion of outstanding convertible securities or upon exercise of outstanding options, warrants, rights or obligations other than the Warrants, Excluded Options and employee stock options. As used herein, an "Affiliate" of any specified person or entity means any person or entity directly or indirectly controlling or controlled by or under direct or -3- indirect common control with such person. As used herein, the term "Beneficially Own" (and correlative terms) shall mean, with respect to any shares of Common Stock or other securities, to be entitled, directly or indirectly through one or more intermediaries, to all material incidents of ownership with respect to such securities, including, but not limited to, (i) the right to vote such securities (in the case of voting securities), (ii) subject to any transfer restrictions, the right to dispose of such securities and to receive any proceeds realized from the disposition thereof and (iii) the right to receive any dividends and other distributions with respect to such securities. The Common Directors shall be elected by the holders of Common Stock by a plurality vote and the Class B Directors shall be elected by the holders of the Class B Common Stock by a plurality vote, in either case at an annual stockholders meeting, except as hereinafter provided, and each director shall hold office until his successor has been duly elected and qualified or his earlier death, resignation or removal. Vacancies in any class of directors and newly created directorships resulting from any increase in the authorized number of directors of any class of Company Common Stock may be filled by the majority of directors of such class then in office, though less than a quorum, or by a sole remaining director so elected and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, or until their earlier death, resignation or removal. If there are no directors in office, then an election of directors may be held in the manner provided by law. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancy or newly-created directorships, or to replace the directors chosen by the directors then in office. Unless otherwise restricted by law, any director or the entire Board may be removed, with or without cause, by a majority vote of the class of Company Common Stock entitled to elect such director or directors. No decrease in the size of the Board shall serve to shorten the term of an incumbent director. (c) Voting Rights of Class B Common Stock. The following actions shall require the approval of a majority -4- of the outstanding Class B Common Stock, voting as a single class: (i) the approval of any annual budget or business plan for the corporation or any subsidiary of the corporation or the deviation by the corporation or any such subsidiary from any annual budget for the corporation or such subsidiary approved by the Board of Directors by more than five percent (5%); (ii) issuance by the corporation of any equity securities, including securities convertible into equity securities (other than (A) the grant of employee stock options (subject to the proviso set forth in (D) below), (B) the issuance of equity securities pursuant to the Purchase Agreement, dated as of September 27, 1996 between the corporation and SBW (the "Purchase Agreement") or pursuant to any of the other Transaction Documents (as defined in the Purchase Agreement), (C) the issuance of equity securities upon the exercise or conversion of securities or employee stock options that are outstanding as of September 27, 1996 or (D) the issuance of equity securities upon the conversion of Class B Common Stock or upon the exercise of employee stock options granted hereafter, provided, however, that there shall not be outstanding at any time employee stock options for more than 1.5 million shares of Common Stock plus the options granted to William C. Kennedy, Jr. and William C. Saunders that are outstanding at September 27, 1996) or incurrence of any indebtedness, provided that the corporation can incur up to $5 million in indebtedness in any year without the approval of the Class B Common Stock; (iii) the hiring or termination by the corporation of its chief executive officer, chief operating officer or chief financial officer; (iv) the corporation's entering into any line of business other than its Existing Line of Business (as hereinafter defined) or into any joint ventures, partnerships or similar arrangements; (v) the corporation's exiting its Existing Line of Business or disposing of assets (other than telecommunications equipment and other assets sold in the ordinary course of business) in any year with a value in excess of $500,000 or which are otherwise material to the corporation's operations; (vi) the adoption, implementation or acceptance (including the failure to opt out) of any Anti-Takeover Provision (as hereinafter defined) not in effect as of -5- September 27, 1996 that would be applicable to, and, in the reasonable determination of SBW, adversely affect, the holders of the Class B Common Stock and their Affiliates; or (vii) the taking of any corporate action that would reduce the number of shares in the Reference Package below 1,600. "Anti-Takeover Provision" means (i) any provision of the certificate of incorporation or bylaws of the corporation or any contract, agreement or plan to which the corporation is a party or by which it is bound or any statutory provision enacted after September 27, 1996 which is applicable to the corporation which the corporation may opt out of if the effect of such provision would be to materially delay, hinder or prevent a change in control of the corporation or (ii) a stockholder rights plan or "poison pill," including the provisions of any preferred stock or common stock purchase rights issued pursuant thereto; provided, however, that such term shall not include any customary change of control provisions contained in employment agreements between the corporation and any of its directors, officers or other employees or in any plans or agreements relating to stock options or other awards of equity securities made by the corporation to any such persons. "Existing Line of Business" means a non-facilities based, enhanced service provider that offers fleet management and/or status or information about vehicles and/or location capabilities through mobile communications service. (d) Bylaws. Any alteration, amendment, repeal or replacement of Article XI of the corporation's bylaws, or of any other Article of the bylaws that would have a similar effect, by the stockholders of the corporation shall require the approval of a majority of the outstanding Class B Common Stock, voting as a separate class. 3. Conversion (a) Optional Conversion. At the option of the holder thereof, each share of Class B Common Stock may be converted into the Reference Package; provided, however, that no shares of Class B Common Stock may be converted pursuant to this Section 3(a) unless the holders of all outstanding shares of Class B Common Stock elect to convert such shares into the Reference Package as of the same date in accordance with the procedures set forth below. -6- (b) Optional Conversion Procedures. Any holder of shares of Class B Common Stock desiring to convert such shares into Common Stock shall surrender the certificate or certificates evidencing such shares of Class B Common Stock, at the principal office of the corporation or such other office as the corporation may designate for such purpose, which certificate or certificates, if the corporation shall so require, shall be duly endorsed to the corporation or in blank, or accompanied by proper instruments of transfer to the corporation or in blank, accompanied by irrevocable written notice to the corporation that the holder elects so to convert such shares of Class B Common Stock and specifying the name or names (with address or addresses) in which a certificate or certificates evidencing shares of Common Stock are to be issued. The corporation shall, as soon as practicable after such surrender of certificates evidencing shares of Class B Common Stock accompanied by the written notice and compliance with any other conditions herein contained, deliver by first class mail postage prepaid to the holder that surrendered such shares of Class B Common Stock or to such holder's nominee certificates evidencing the number of full shares of Common Stock to which such holder shall be entitled as aforesaid, together with a cash adjustment in respect of any fraction of a share of Common Stock as provided below. No interest will be payable with respect to any cash adjustment paid with respect to any fractional shares of Common Stock as provided below. On the date shares of Class B Common Stock are surrendered for conversion, dividends shall cease to accrue on all shares of Class B Common Stock, such shares shall no longer be deemed outstanding, all rights of the holders thereof as holders of Class B Common Stock shall cease (other than the right to receive dividends declared payable to holders of record of Class B Common Stock on a record date prior to the date of surrender) and thereupon the certificate or certificates theretofore representing such shares of Class B Common Stock shall represent only the right to receive the Common Stock deliverable upon conversion in respect thereof. (c) Fractional Shares; Taxes. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of Class B Common Stock. If any such conversion would otherwise require the issuance of a fractional share, an amount equal to such fraction multiplied by the Closing Price of the Common Stock on the day of conversion shall be paid to the holder in cash by the Corporation. The term "Closing Price" on any day shall mean the reported last sale price per share of Common Stock regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and -7- asked prices regular way, in each case on the New York Stock Exchange, or, if the shares of Common Stock are not listed or admitted to trading on such Exchange, the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the closing bid and asked prices quoted on the Nasdaq National Market, or, if not so quoted, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the corporation for that purpose. The corporation will pay any and all stamp taxes, stock issuance taxes or similar taxes that may be payable in respect of the issuance or delivery of Common Stock on conversion of shares of Class B Common Stock; provided, however, that the corporation shall not be required to pay any tax or other charge that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the record holder of the shares of Class B Common Stock being converted and in such case the corporation shall not be obligated to issue or deliver any stock certificate until such tax or charge has been paid in full or it has been established to the satisfaction of the corporation that no such tax or charge is due. (d) Available Common Stock. The corporation shall at all times reserve and keep available out of its authorized but unissued Common Stock, for the purpose of issuance upon conversion of Class B Common Stock, the full number of Common Stock then deliverable upon the conversion of all shares of Class B Common Stock then outstanding. 4. Transfer (a) Prohibited Transfers. No holder of shares of Class B Common Stock shall Transfer any such shares or any interest therein to any Person (as hereinafter defined) other than SBW or an Affiliate of SBW. As used herein, the term "Transfer" means any sale, transfer, assignment, disposition or other means of conveying legal or beneficial ownership of such shares, whether direct or indirect and whether voluntary or involuntary, and the terms "Transferred," "Transferable," "Transferor" and "Transferee" have correlative meanings. As used herein, the term "Person" means any individual, corporation, partnership, joint stock company, joint venture, association, trust, unincorporated organization, government or any agency, department or political subdivision thereof, or any other entity. -8- (b) Effect of Purported Transfers. Any attempted or purported Transfer of shares of Class B Common Stock in violation of paragraph (a) above shall not be effective to Transfer ownership of such shares to the purported Transferee thereof, who shall not be entitled to any rights as a stockholder of the corporation with respect to the shares purported to be Transferred (including, but not limited to, the right to vote such shares or to receive dividends with respect thereto). All rights with respect to any shares attempted or purported to be Transferred in violation of the aforementioned provisions shall remain the property of the stockholder who initially attempted or purported to transfer such shares in violation thereof. Upon a determination by the Board of Directors that there has been or is threatened an attempted or purported Transfer of shares in violation of the aforementioned provisions, the Board of Directors may take such action as it deems advisable, including but not limited to refusing to give effect on the books of the corporation to such attempted or purported Transfer or instituting legal proceedings to enjoin or rescind the same. (c) Legend. All certificates evidencing shares of this Series shall bear a conspicuous legend referencing the restrictions set forth in this Section 4. B. PREFERRED STOCK The Board of Directors of the corporation, by resolution or resolutions, may at any time and from time to time, divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock into one or more series and, without limiting the generality of the foregoing, fix and determine the designation of each such share, the number of shares which shall constitute such series and certain powers, preferences and relative, participating, optional or other special rights and qualifications, limitations and restrictions and voting rights of the shares of each series so establishing. SERIES D PARTICIPATING CONVERTIBLE PREFERRED STOCK 1. Designation and Amount. The distinctive serial designation of this series shall be "Series D Participating Convertible Preferred" (hereinafter sometimes referred to as "this Series"). The number of shares in this Series shall be 1,000, which number may be decreased (but not increased) by the Board of Directors of the corporation (the "Board of Directors") without a vote of stockholders; provided, -9- however, that such number may not be decreased below the number of then currently outstanding shares of this Series. 2. Dividends. (a) The holders of shares of this Series shall be entitled to receive, when and as declared by the Board of Directors, but only out of funds legally available therefor, dividends and distributions, on each date that dividends or other distributions (other than dividends or distributions payable in Common Stock (as defined below)) are payable on or in respect of Common Stock in an amount per share of this Series equal to the aggregate amount of dividends or other distributions (other than dividends or distributions payable in Common Stock of the corporation) that would be payable on such date to a holder of the Reference Package. Each such dividend and distribution shall be paid to the holders of record of shares of this Series on the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for the purpose by the Board of Directors in advance of payment of each particular dividend or distribution. (b) The term "Reference Package" shall initially mean 1,600 shares of Common Stock. In the event the corporation shall at any time after the close of business on September 27, 1996 (A) declare or pay a dividend on any Common Stock payable in Common Stock, (B) subdivide any Common Stock or (C) combine any Common Stock into a smaller number of shares or (D) change or reclassify the Common Stock (whether pursuant to a merger or consolidation or otherwise), then and in each such case the Reference Package after such event shall be the Common Stock, or new class of shares, that a holder of the Reference Package immediately prior to such event would hold thereafter as a result thereof. 3. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the affairs of the corporation, whether voluntary or involuntary, the holders of shares of this Series shall be entitled, before any distribution or payment is made on any date to the holders of the Common Stock or any other stock of the corporation ranking junior to this Series upon liquidation, to be paid in full an amount per share of this Series equal to the greater of (A) $20,000 or (B) the aggregate amount distributed or to be distributed prior to such date in connection with such liquidation, dissolution or winding up to a holder of the Reference Package (such greater amount being hereinafter referred to as the "Liquidation Preference"), together with accrued dividends to such distribution or payment date, whether or not earned or declared. If such payment shall have been made in full to -10- all holders of shares of this Series, the holders of shares of this Series as such shall have no right or claim to any of the remaining assets of the corporation. (b) In the event the assets of the corporation available for distribution to the holders of shares of this Series upon any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 3, no such distribution shall be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series upon such liquidation, dissolution or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series, ratably in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation, dissolution or winding up. (c) For the purposes of this Section 3, the consolidation or merger of, or binding share exchange by, the corporation with any other corporation or the sale of all or substantially all the assets of the corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the corporation. 4. Conversion Privilege. (a) Subject to and upon compliance with the provisions of this Section 4, at the option of the holder of shares of this Series, shares of this Series may be converted, in blocks of 250 shares or any larger integral multiple thereof. Such conversion right shall commence at the opening of business on September 30, 1996. (b) Subject to subsection (a) hereof, each share of this Series shall be convertible into the Reference Package. (c) The Board of Directors may make such adjustments in the Reference Package, in addition to those required by Section 2(b), as shall be determined by the Board, as evidenced by a Board resolution, to be necessary and advisable in order to avoid taxation so far as practicable of any dividend of stock or stock rights or any event treated as such for Federal income tax purposes to the recipients. (d) Whenever any adjustment is required in the Reference Package, the corporation shall forthwith (i) file at the principal office of the corporation a statement describing in reasonable detail the adjustment and the -11- method of calculation used, and (ii) cause a copy of such statement to be mailed by first class mail postage prepaid to the holders of record of this Series as of the effective date of such adjustment. (e) The corporation shall at all times reserve and keep available out of its authorized but unissued Common Stock, for the purpose of issuance upon conversion of this Series, the full number of Common Stock then deliverable upon the conversion of all shares of this Series then outstanding. (f) The corporation will pay any and all stamp taxes, stock issuance taxes or similar taxes that may be payable in respect of the issuance or delivery of Common Stock on conversion of shares of this Series; provided, however, that the corporation shall not be required to pay any tax or other charge that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the record holder of the shares of this Series being converted and in such case the corporation shall not be obligated to issue or deliver any stock certificate until such tax or charge has been paid in full or it has been established to the satisfaction of the corporation that no such tax or charge is due. (g) No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Series. If any such conversion would otherwise require the issuance of a fractional share, an amount equal to such fraction multiplied by the Closing Price of the Common Stock on the day of conversion shall be paid to the holder in cash by the corporation. The term "Closing Price" on any day shall mean the reported last sale price per share of Common Stock regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way, in each case on the New York Stock Exchange, or, if the shares of Common Stock are not listed or admitted to trading on such Exchange, the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the closing bid and asked prices quoted on the Nasdaq National Market, or, if not so quoted, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the corporation for that purpose. -12- (h) The corporation may obtain the certificate of any independent firm of public accountants of national recognition selected by the Board of Directors, which, if obtained, shall be presumptive evidence of the correctness of any computation made under Section 2(b). (i) All shares of this Series surrendered for conversion or otherwise acquired by the corporation shall be cancelled and thereupon restored to the status of authorized but unissued preferred stock undesignated as to series. 5. Conversion Procedures. (a) Any holder of shares of this Series desiring to convert such shares into Common Stock shall surrender the certificate or certificates evidencing such shares of this Series together with instructions setting forth the number of shares to be converted, at the principal office of the corporation or such other office as the corporation may designate for such purpose, which certificate or certificates, if the corporation shall so require, shall be duly endorsed to the corporation or in blank, or accompanied by proper instruments of transfer to the corporation or in blank, accompanied by irrevocable written notice to the corporation that the holder elects so to convert such shares of this Series and specifying the name or names (with address or addresses) in which a certificate or certificates evidencing shares of Common Stock are to be issued. (b) The corporation shall, as soon as practicable after such surrender of certificates evidencing shares of this Series accompanied by the written notice and compliance with any other conditions herein contained, deliver by first class mail postage prepaid to the Person that surrendered such shares of this Series or to such Person's nominee certificates evidencing the number of full shares of Common Stock to which such Person shall be entitled as aforesaid, together with a cash adjustment in respect of any fraction of a share of Common Stock as provided above. No interest will be payable with respect to any cash adjustment paid with respect to any fractional shares of Common Stock as provided above. (c) In the event that fewer than all shares of Series D Participating Convertible Preferred represented by a surrendered certificate are to be converted hereunder, a new certificate shall be issued at the expense of the corporation representing the shares of Series D Participating Convertible Preferred not so converted. (d) On the date shares of Series D Participating Convertible Preferred are surrendered for conversion, -13- dividends shall cease to accrue on any shares of this Series surrendered for conversion, such shares shall no longer be deemed outstanding, all rights of the holders thereof as preferred stockholders of the corporation shall cease (other than the right to receive dividends declared payable to holders of record of this Series on a record date prior to the date of surrender) and thereupon the certificate or certificates theretofore representing such shares of Series D Participating Convertible Preferred shall represent only the right to receive the Common Stock deliverable upon conversion in respect thereof. 6. Mandatory Conversion. (a) If the Regulatory Relief Date shall not have occurred on or before September 27, 2001, all of the then currently outstanding shares of Series D Participating Convertible Preferred shall, at the election of the corporation at any time after the opening of business on September 28, 2001 and after notice has been provided as set forth below, be converted into shares of Common Stock on the basis provided in Section 4. (b) If the corporation has elected to convert this Series into Common Stock pursuant to this Section 6, the corporation will provide notice of mandatory conversion of shares of Series D Participating Convertible Preferred pursuant to this Section 6 to holders of record of the Series D Participating Convertible Preferred to be converted not less than 15 nor more than 60 days prior to the date fixed for conversion. Such notice shall be provided by mailing notice of such conversion first class mail postage prepaid, to each holder of record of the Series D Participating Convertible Preferred to be converted, at such holder's address as it appears on the stock register of the corporation. (c) Effective on the conversion date fixed by the corporation and notified to the holders of Series D Participating Convertible Preferred pursuant to subparagraph (b) of this Section 6, each outstanding share of Series D Participating Convertible Preferred shall be converted into fully paid and nonassessable shares of Common Stock on the basis provided in Section 4, automatically and without any action on the part of any holder of shares of Series D Participating Convertible Preferred, and such shares of Common Stock shall be deemed outstanding from and after such conversion date. (d) As of the Regulatory Relief Date, each share of this Series shall automatically, without any action on the part of the holder thereof, convert into one share of Class B -14- Common Stock, and as of such date, the holders thereof shall be treated in all respects as the holders of Class B Common Stock. (e) Each holder of shares of Series D Participating Convertible Preferred to be converted pursuant to Section 6(a) and 6(d) shall surrender the certificates evidencing such shares to the corporation at the principal office of the corporation, and shall thereupon be entitled to receive certificates evidencing shares of Common Stock and to receive any dividends or other distributions payable on shares of Common Stock payable following such surrender to the holders of record after the date of such conversion and any cash payable in lieu of fractional shares. 7. Provisions in Case of Consolidation or Merger. In case of any consolidation of the corporation with, or merger of the corporation into, any other Person or any merger of another Person into the corporation (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the corporation), the Person formed by such consolidation or resulting from such merger, as the case may be, shall provide for the conversion of each share of this Series into the kind and amount of securities, cash and other property receivable upon such consolidation or merger by a holder of the number of shares of Common Stock of the corporation into which such share of this Series might have been converted immediately prior to such consolidation or merger, assuming such holder of Common Stock of the corporation (i) is not a Person with which the corporation consolidated or into which the corporation merged or which merged into the corporation, as the case may be ("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation or merger (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation or merger is not the same for each share of Common Stock of the corporation held immediately prior to such consolidation or merger by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this Section 7 the kind and amount of securities, cash and other property receivable upon such consolidation or merger by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). If as a result of the provisions of this Section 7 the shares of this Series become convertible or exchangeable into securities or assets -15- of a Constituent Person, such Constituent Person shall provide for adjustments which, for events subsequent to the effective date of such consolidation, merger or sale of assets, shall be as nearly equivalent as may be practicable to the adjustments provided for herein. The above provisions of this Section 7 shall similarly apply to successive consolidation or mergers. 8. Redemption. The shares of this Series shall not be redeemable. 9. Voting Rights. (a) Except as required by law or as provided in Section 9(b) below, the holders of shares of this Series shall not be entitled to vote on any matter submitted to the stockholders of the corporation. (b) In addition to any vote of this Series which may be required by law, the affirmative vote of a majority of the outstanding shares of the Series D Participating Convertible Preferred, voting as a class, shall be required to approve the following: (i) any merger or consolidation of the corporation with or into any other Person that requires a vote of the stockholders of the corporation in accordance with the applicable provisions of the General Corporation Law of the State of Delaware; (ii) any sale or transfer of all or substantially all of the assets of the corporation that requires a vote of the stockholders of the corporation in accordance with the applicable provisions of the General Corporation Law of the State of Delaware; (iii) any amendment, alteration or repeal of the corporation's Certificate of Incorporation, as amended; (iv) the dissolution of the corporation; (v) the adoption, implementation or acceptance (including the failure to opt out) of any Anti-Takeover Provision not in effect as of September 27, 1996 that would be applicable to, and, in the reasonable determination of the holders of this Series, adversely affect, the holders of this Series and their Affiliates; (vi) issuance by the corporation of any equity securities, including securities convertible into equity securities (other than (A) the grant of employee stock options (subject to the proviso set forth in (D) below), (B) the issuance of equity securities pursuant to the Purchase -16- Agreement or any of the other Transaction Documents, (C) the issuance of equity securities upon the exercise or conversion of securities or employee stock options that are outstanding as of September 27, 1996, or upon the conversion of shares of this Series, or (D) the issuance of equity securities upon the exercise of employee stock options granted after September 27, 1996, provided, however, that there shall not be outstanding at any time employee stock options for more than 1.5 million shares of Common Stock plus the options granted to William C. Kennedy, Jr. and William C. Saunders that are outstanding at September 27, 1996) or incurrence of any indebtedness for borrowed money or evidenced by bonds, notes or debentures, provided that the corporation can incur up to $5 million in indebtedness in any one year without a vote of this Series; (vii) the corporation's entering into any line of business other than its Existing Line of Business or entering into joint ventures, partnerships or similar arrangements, which, in each such case, would require expenditures, individually or in the aggregate, of more than $3 million; (viii) any disposal or disposition in any 12-month period of any asset or assets of the corporation (other than telecommunications equipment and other assets sold in the ordinary course of business) of which the sale, or fair market value exceeds in the aggregate $3 million; (ix) any amendment, alteration or repeal of the terms of this Series including, without limitation, any increase in the number of authorized shares of such series; and (x) any corporate action that would reduce the number of shares in the Reference Package below 1,600. 10. Transfer. (a) Prohibited Transfers. No holder of shares of this Series shall Transfer any such shares or any interest therein to any Person other than SBW or an Affiliate of SBW. (b) Effect of Purported Transfers. Any attempted or purported Transfer of shares of this Series in violation of paragraph (a) above shall not be effective to Transfer ownership of such shares to the purported Transferee thereof, who shall not be entitled to any rights as a stockholder of the corporation with respect to the shares purported to be Transferred (including, but not limited to, the right to vote such shares or to receive dividends with -17- respect thereto). All rights with respect to any shares attempted or purported to be Transferred in violation of the aforementioned provisions shall remain the property of the Person who initially attempted or purported to transfer such shares in violation thereof. Upon a determination by the Board of Directors that there has been or is threatened an attempted or purported Transfer of shares in violation of the aforementioned provisions, the Board of Directors may take such action as it deems advisable, including, but not limited to, refusing to give effect on the books of the corporation to such attempted or purported Transfer or instituting legal proceedings to enjoin or rescind the same. (c) Legend. All certificates evidencing shares of this Series shall bear a conspicuous legend referencing the restrictions set forth in this Section 10. 11. Definitions. As used herein, the following terms shall have the following meanings unless the context otherwise requires. "Purchase Agreement" means the Purchase Agreement, dated as of September 27, 1996, between the corporation and SBW. "Regulatory Relief Date" shall mean that date on which SBC Communications, Inc. or its Affiliates have, in their sole judgment, obtained all necessary federal and state regulatory approvals to provide landline, interLATA long-distance service pursuant to the Communications Act of 1934, as amended by the Telecommunications Act of 1996. SECOND: That thereafter the necessary number of shares as required by statute were voted in favor of the amendments. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. -18- IN WITNESS WHEREOF, HighwayMaster Communications, Inc. has made under its corporate seal and the hands of its President and Secretary, respectively, of such corporation the foregoing certificate, and the said President and Secretary have hereunto set their hands and caused the corporate seal of such corporation to be hereunto affixed this ___th day of __________, 1996. HIGHWAYMASTER COMMUNICATIONS, INC. By: ______________________________ President ATTEST: ________________________ Secretary -19- EX-3 4 EXHIBIT 3 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: "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- 2. Exercise and Duration of Warrants. (a) The Holder of this Warrant Certificate shall have the right to exercise any or all of the Warrants (but not as to a fractional share of Common Stock and not for less than 1,000,000 Warrants in any one exercise) at any time, or from time to time until the Expiration Date by presentation and surrender hereof to the Company with the appropriate Exercise Subscription Form annexed hereto (an "Exercise Subscription Form") duly executed and accompanied by proper payment of the First Exercise Price or the Second Exercise Price, as the case may be, multiplied by the number of shares of Common Stock specified in such form (the "Aggregate Exercise Price"), all subject to the terms and conditions hereof. Notwithstanding the foregoing, prior to receipt of Regulatory Relief, the Holder may only exercise Warrants to the extent that the total equity securities in the Company held by Holder and its Affiliates is consistent with the restrictions contained in the Communications Act of 1934, as amended by The Telecommunications Act of 1996. Each Warrant not exercised prior to the Expiration Date shall become void and all rights in respect thereof shall cease as of such time. (b) The Aggregate Exercise Price must be paid in U.S. dollars in cash, wire transfer of immediately available funds, bank cashier's check or bank draft payable to the order of the Company. Upon receipt by the Company of this Warrant Certificate and a properly executed Exercise Subscription Form, together with the Aggregate Exercise Price at the Company's office designated for such purpose, the Holder shall be deemed to be the holder of record of the shares of Common Stock receivable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay any and all documentary, stamp or similar issue taxes of the United States or any state thereof payable in respect of the issue or delivery of such shares of Common Stock; provided, however, that the Company shall not be required to pay any tax or other charge that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the record holder of the Warrants being exercised and in such case the Company shall not be obligated to issue or deliver any stock certificate until such tax or charge has been paid in full or it has been established to the satisfaction of the Company that no such tax or charge is due. (c) Notwithstanding Sections 2(a) and 2(b) above, at the option of the Holder of Warrants, Warrants may be exercised in the manner set forth in -3- paragraph (2)(a) above, except that the Holder may, in lieu of paying the Aggregate Exercise Price in the manner set forth in Section 2(b) above, exercise, without making any payment in cash, Warrants for that number of shares of Common Stock determined by dividing (i) the difference between (x) the current market price per share of Common Stock (as defined in Section 8(d) below) on the day of exercise multiplied by the number of shares of Common Stock specified in the Exercise Subscription Form and (y) the Aggregate Exercise Price by (ii) the current market price per share of Common Stock on the day of exercise. (d) If the Holder exercises less than all the Warrants, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrants which was not surrendered shall be executed by the Company. Subject to the provisions hereof regarding transfer of the Warrants, the Company shall register the new Warrant Certificate in such name or names as may be directed in writing by the Holder and deliver the new Warrant Certificate to the person or persons entitled to receive the same. (e) Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of any shares of Common Stock or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the person or persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share of Common Stock as provided in Section 5 below. (f) Notwithstanding anything to the contrary contained herein, no Holder of these Warrants shall be entitled to exercise the same until the filing of the Certificate of Amendment contemplated by the Purchase Agreement and unless, at the time of exercise, (i) a registration statement under the Securities Act, shall have been filed with, and declared effective by, the Securities and Exchange Commission or the issuance of shares of Common Stock upon the exercise of the Warrants is permitted pursuant to an available exemption from the registration requirements of the Securities Act and (ii) all applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the issuance of shares of Common Stock upon the exercise of the Warrants shall have been satisfied. -4- 3. Restrictive Legend. Any substitute Warrant Certificate and any certificates evidencing shares of Common Stock issued pursuant to exercise of Warrants shall bear the following legend, unless such securities have been registered under the Securities Act or unless the Company determines otherwise in compliance with applicable law: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREUNDER." In addition, any substitute Warrant Certificate shall bear the following legend: "NO HOLDER OF WARRANTS EVIDENCED BY THIS CERTIFICATE MAY TRANSFER SUCH WARRANTS OR ANY INTEREST THEREIN TO ANY PERSON OTHER THAN SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. OR AN AFFILIATE OF SOUTHWESTERN BELL WIRELESS HOLDINGS, INC." 4. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of the Warrants such number of its authorized but unissued shares of its Common Stock or other securities of the Company from time to time issuable upon exercise of the Warrants as will be sufficient to permit the exercise in full of the Warrants. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale (other than restrictions on resale imposed under applicable law) and free and clear of all preemptive or similar rights, except for any of the foregoing that may be imposed by or through the Holder of the Warrants or the Person to whom shares of Common Stock or other securities are issued upon the exercise thereof. 5. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of any Warrant. With respect to -5- any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market price per share of Common Stock on the day of exercise. 6. Transfer, Loss of Warrant Certificate. (a) Subject to the provisions of this Section 6, the Company will, from time to time, register the transfer of any outstanding Warrant Certificate upon its records. Each taker and Holder of this Warrant Certificate by taking or holding the same, consents and agrees that prior to any transfer of this Warrant Certificate, the holder hereof shall give written notice to the Company of such holder's intention to effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail. The Company shall register such transfer upon surrender of such Warrant Certificate to the Company for transfer, accompanied by appropriate instruments of transfer duly executed by the holder or the holder's duly authorized attorney. Upon any such registration of transfer, a new Warrant Certificate shall be issued in the name of the transferee, and the surrendered Warrant Certificate shall be cancelled. Each Warrant Certificate evidencing the transferred Warrants shall bear, unless the same has been registered under the Securities Act, the restrictive legend set forth in Section 3 herein. (b) Notwithstanding anything to the contrary contained in Section 4(a), the Company shall not be obligated to register the transfer of any outstanding Warrant Certificate unless a registration statement under the Securities Act, shall have been filed with, and declared effective by, the Securities and Exchange Commission with respect to the transfer of the applicable Warrants or such transfer is permitted pursuant to an available exemption from the registration requirements of the Securities Act. (c) No holder of Warrants shall Transfer any such Warrants or any interest therein to any Person other than SBW or an Affiliate of SBW. As used herein, the term "Transfer" means, with respect to Warrants, any sale, transfer, assignment, disposition or other means of conveying legal or beneficial ownership of such Warrants, whether direct or indirect and whether voluntary or involuntary, and the terms "Transferred," "Transferable," "Transferor" and "Transferee" have correlative meanings. (d) Any attempted or purported Transfer of Warrants in violation of paragraph 6(c) above shall not be effective to Transfer ownership of such Warrants to the purported Transferee thereof, who shall not be entitled to any rights as a Holder -6- with respect to the Warrants purported to be Transferred. All rights with respect to any Warrants attempted or purported to be Transferred in violation of the aforementioned provisions shall remain the property of the Person who initially attempted or purported to transfer such Warrants in violation thereof. Upon a determination by the Board of Directors of the Company that there has been or is threatened an attempted or purported Transfer of Warrants in violation of the aforementioned provisions, the Board of Directors of the Company may take such action as it deems advisable, including, but not limited to, refusing to give effect on the books of the corporation to such attempted or purported Transfer or instituting legal proceedings to enjoin or rescind the same. (e) Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date. Any such new Warrant Certificate executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not the warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone. The provisions of this Section 6 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, lost, stolen, or destroyed Warrant Certificates. 7. Rights of the Holder. Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote, to give or withhold consent to any corporate action of the Company, to receive dividends or other distributions, to exercise any preemptive or similar right or to receive any notice of meetings of stockholders or any notice of any proceedings of the Company except as may be specifically provided for herein. 8. Anti-Dilution Provisions. The Exercise Prices in effect at any time, and the number of shares of Common Stock which may be purchased upon the exercise hereof, shall be subject to change or adjustment as follows: (a) In case the Company shall (i) pay a dividend or make any other distribution on or in respect of its Common Stock in shares of Common Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its outstanding Common Stock into a smaller number of shares of Common Stock, or (iv) issue by reclassification -7- of its Common Stock (whether pursuant to a merger or consolidation or otherwise) any other shares representing common equity of the Company, then (x) the number of shares of Common Stock theretofore issuable upon exercise of a Warrant shall be appropriately adjusted so that the Holder of each Warrant exercised after the record date fixing stockholders to be affected by such event shall be entitled to purchase at the Exercise Price, as adjusted below, the number of shares of Common Stock (or other shares representing common equity of the Company) which he would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrant been exercised immediately prior to such record date and (y) the Exercise Price shall be adjusted by multiplying the Exercise Price by a fraction, the numerator of which is equal to the number of shares of Common Stock purchasable prior to the adjustment specified in (x) above and the denominator of which is equal to the number of shares of Common Stock purchasable after such adjustment. An adjustment made pursuant to this subparagraph shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. (b) In case the Company shall at any time during which the Veto Provisions (as hereinafter defined) are not in effect issue shares of Common Stock to any Person, or rights, options or warrants to any Persons entitling such Persons to subscribe for or purchase shares of Common Stock, at a price per share less than the current market price per share of Common Stock as of the issue date of such shares of Common Stock or rights, options or warrants to any such Person, the Exercise Prices to be in effect after such issuance or date shall be determined by multiplying the Exercise Prices in effect immediately prior to such issue date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such shares of Common Stock or rights, options or warrants plus the number of shares of Common Stock which the Aggregate Price (as hereinafter defined) would purchase at such current market price, and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such shares of Common Stock or rights, options or warrants plus the number of additional shares of Common Stock issued or issuable upon exercise of the rights, options or warrants. Aggregate Price shall mean (x) in the case of the issuance of shares the aggregate offering price paid for the total number of shares of Common Stock so issued or (y) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock, the aggregate of any amount paid for the issuance of such rights, options or warrants plus the aggregate exercise price payable to the Company upon exercise thereof. Such adjustment shall be made successively -8- whenever any such Common Stock or rights, options or warrants are issued, and shall become effective immediately after such issue date; provided, however, that in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock, if all of the Common Stock deliverable upon exercise or exchange of such securities has not been issued when such securities expire or are no longer outstanding, then the Exercise Price shall promptly be readjusted to the Exercise Price that would have been in effect had the adjustment upon the issuance of such rights, options or warrants been made only with respect to the number of shares of Common Stock actually issued upon exercise of such securities. In determining whether any shares of Common Stock or any rights, options or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such shares of Common Stock or such rights, options or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. For the purposes of this subparagraph, the issuance of rights, options or warrants to subscribe for or purchase securities convertible into Common Stock shall be deemed to be the issuance of rights, options or warrants to purchase the shares of Common Stock into which such securities are convertible at an aggregate offering price equal to the aggregate offering price of such securities plus the minimum aggregate amount (if any) payable upon conversion of such securities into shares of Common Stock. Notwithstanding anything to the contrary contained herein, the provisions of this Section 8(b) shall not apply to, and no adjustment is required to be made in respect of, any of the following: (i) the issuance of shares of Common Stock upon the exercise of any of the Warrants or the exercise of any other rights, options or warrants that entitle the holder to subscribe for or purchase such shares (it being understood that the sole adjustment pursuant to this Section 8(b) in respect of the issuance of shares of Common Stock upon exercise of rights, options or warrants shall be made at the time of the issuance by the Company of such rights, options or warrants); (ii) the issuance of shares of Common Stock upon conversion or exchange of any other securities outstanding on the date hereof after giving effect to the consummation of the transactions contemplated by the Purchase Agreement which are convertible into or exchangeable for shares of Common Stock; (iii) the issuance of shares of Common Stock upon conversion of any shares of Class B Common Stock, par value $.01 per share, that may be issued from time to time as contemplated by the Purchase Agreement or the other Transactions Documents (as defined in the Purchase Agreement); (iv) the issuance of shares of Common Stock to the Company's employees, directors or consultants pursuant to bona fide benefit plans adopted by the Company's Board of Directors if and to the extent that the issuance thereof is -9- permitted under the terms of the Stockholders' Agreement (as defined in the Purchase Agreement); (v) the issuance of shares of Common Stock in a bona fide public offering pursuant to a firm commitment offering; (vi) the issuance of shares of Common Stock to Affiliates of the Company concurrently with an issuance of shares described in clause (v) above if such issuance results in the receipt by the Company of at least the same net proceeds per share as the issuance described in such provision and if all Affiliates have the right to participate in such issuance pro rata with their equity interest in the Company; and (vii) the issuance of shares of Common Stock pursuant to any dividend reinvestment or similar plan adopted by the Company's Board of Directors to the extent that the applicable discount from the current market price for shares issued under such plan does not exceed 5%. As used herein, the term "Veto Provisions" means any provisions of the Transaction Documents to the effect that the approval of SBW or any of its Affiliates is required in order for the issuance by the Company of any equity securities, including securities convertible into equity securities (subject to the exceptions set forth in the applicable Transaction Documents). (c) In case the Company shall distribute to all holders of shares of its Common Stock (whether pursuant to a merger or consolidation or otherwise) evidence of its indebtedness or assets (including securities issued by the Company or by any other entity, but excluding (x) any shares referred to in Section 8(a) above, and (y) any shares of Common Stock or rights, options or warrants referred to in Section 8(b) above), then in each such case the Exercise Prices to be in effect after such distribution shall be determined by multiplying the Exercise Prices in effect immediately prior to such record date by a fraction, the numerator of which shall be the current market price per share of Common Stock less the then fair market value (as determined by the Board of Directors in good faith) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock, and the denominator of which shall be such current market price per share of Common Stock as of the date of such distribution. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (d) The "current market price per share of Common Stock" at any date shall be deemed to be the average of the daily Closing Prices (as defined below) for 30 consecutive Trading Days (as defined below) immediately preceding the day in question, after appropriate adjustment for stock dividends, distributions, subdivisions, combinations or reclassifications occurring within such 30-day period. The term "Closing Price" on any day shall mean the reported last sale price per share of -10- Common Stock on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, in each case on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the closing bid and asked prices quoted on the Nasdaq National Market or, if not so quoted, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose; and the term "Trading Day" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is quoted on the Nasdaq National Market, then the Nasdaq National Market, is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the Nasdaq National Market, a Monday, Tuesday, Wednesday, Thursday, or Friday on which banking institutions in the City of New York, New York are not authorized or obligated by law or executive order to close. (e) In the event that at any time, as a result of an adjustment made pursuant to Sections 8(a) or 8(b) above, the Holder shall become entitled to receive any shares of the capital stock of the Company other than Common Stock, thereafter the number of such other shares so receivable upon exercise of the Warrants shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Section 8(a) to 8(d), inclusive, above, and Sections 8(g) or 8(h) below, and the provisions of this Warrant Certificate with respect to the Common Stock shall apply on like terms to any such other shares. (f) In case: (i) the Company shall authorize the issuance to all holders of its Common Stock of rights or warrants to subscribe for or purchase shares of its Common Stock or of any other subscription rights or warrants; or (ii) the Company shall authorize the distribution to all holders of its Common Stock (whether pursuant to a merger or consolidation or otherwise) of evidences of its indebtedness or assets (other than dividends paid in or distributions of the -11- Company's capital stock for which the Exercise Prices shall have been adjusted pursuant to Section 8(a) above); or (iii) of any capital reorganization or reclassification of the Common Stock (other than a change in par value of the Common Stock) or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required (other than a consolidation or merger in which the Company is the contin- uing corporation and that does not result in any reclassification or change of the Common Stock outstanding), or of the conveyance or transfer of the properties and assets of the Company substantially as an entirety; or (iv) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (v) the Company proposes to take any action (other than actions of the character described in Section 8(a) above) that would require an adjustment of the Exercise Prices pursuant to this Section 8; then the Company shall cause to be mailed by registered mail to the Holder, at the earliest practicable time (and in any event not less than 20 days prior to the applicable record or effective date hereinafter specified), a notice stating (A) the date as of which the holders of Common Stock of record to be entitled to receive any such rights, warrants or distributions are to be determined, or (B) the date on which any such reorganization, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding-up. (g) Whenever reference is made in this Section 8 to the issuance of shares of Common Stock, the term "Common Stock" shall include any equity securities of any class of the Company hereafter authorized (excluding the Class B Common Stock and Series D Preferred Stock, as defined in the Purchase Agreement) which shall not be limited to a fixed sum or percentage in respect of the right of the -12- holders thereof to participate in dividends or distributions of assets upon the voluntary or involuntary liquidation, dissolution or winding-up of the Company. (h) Notwithstanding any provision to the contrary in this Section 8, the Exercise Prices in effect at any time, and the number of shares of Common Stock which may be purchased upon the exercise hereof, shall not be subject to change or adjustment in either of the following cases: (i) In case the Company shall issue shares of Common Stock to any Person, or rights, options or warrants to any Persons entitling such Persons to subscribe for or purchase shares of Common Stock, at a price per share at least equal to or greater than the current market price per share of Common Stock as of the issue date such shares of Common Stock or rights, options or warrants to any such Person; or (ii) In case the Company purchases any assets or securities (a "Purchase") and provides all or some of the consideration for such Purchase in shares of Common Stock; provided, however, that any assets or securities so purchased by the Company are purchased at a price which is at or below the fair market value of such assets or securities as determined in good faith by the Board of Directors of the Company; and provided, further, that any shares of Common Stock provided as consideration by the Company for any such Purchase are issued at a price or valued at a price at least equal to or greater than the current market price per share of Common Stock as of the date of issuance of such shares of Common Stock as determined in good faith by the Board of Directors of the Company. Notwithstanding any other provision contained in this Section 8, no adjustment to the Exercise Price need be made unless the adjustment would require an increase or decrease of at least 1% in the Exercise Price as then in effect. Any adjustments that are not made as a result of this Section 8(i) shall be carried forward and taken into account in any subsequent adjustment. 9. Officers' Certificate. Whenever any adjustment in the Exercise Prices is made, the Company (A) shall forthwith file in the custody of its Secretary at its principal office, a statement describing the adjustment and the method of calculation used, and may obtain the certificate of any independent firm of public accountants of national recognition selected by the Board of Directors of the Company which, if obtained, shall be presumptive evidence of the correctness of any such -13- calculation that such adjustment was properly calculated in accordance with the provisions of Section 8 and (B) shall cause a copy of such statement to be mailed by first class mail postage prepaid to the Holder. 10. Consolidation or Merger. In case of any consolidation of the Company with, or merger of the Company into, any other Person or any merger of another Person into the Company (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or change of the Common Stock outstanding), the Holder of this Warrant Certificate shall have the right thereafter to exercise the Warrants for the kind and amount of securities, cash and other property receivable upon such consolidation or merger by a holder of the number of shares of Common Stock of the Company for which the Warrants may have been exercised immediately prior to such consolidation or merger, assuming such holder of Common Stock of the Company (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company, as the case may be ("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation or merger (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation or merger is not the same for each share of Common Stock of the Company held immediately prior to such consolidation or merger by other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this Section 10 the kind and amount of securities, cash and other property receivable upon such consolidation or merger by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares). Adjustments for events subsequent to the effective date of such a consolidation or merger shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant Certificate. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation or otherwise so that the provisions set forth herein for the protection of the rights of Warrant holders shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this Section 10 shall similarly apply to successive consolidations or mergers. 11. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by facsimile -14- transmission or sent by certified, registered or express mail, postage prepaid. Any notice shall be deemed given when so delivered personally, sent by facsimile transmission or, if mailed, three (3) business days after the date of deposit in the United States mail, by certified mail return receipt requested, as follows: If to the Company: HighwayMaster Communications, Inc. 16479 Dallas Parkway, Suite 710 Dallas, Texas 75248 Attention: William C. Kennedy, Jr. Facsimile: (972) 930-7263 If to the Holder: Southwestern Bell Wireless Holdings, Inc. 17330 Preston Road Suite 100A Dallas, Texas 75252 Attention: President Facsimile: (972) 733-2012 and to: SBC Communications Inc. 175 E. Houston San Antonio, Texas 78205 Attention: General Attorney, Mergers & Acquisitions Facsimile: (210) 351-3488 or such other address as shall have been furnished to the party giving or making such notice, demand or delivery. 12. APPLICABLE LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF. 13. Amendments; Waivers. Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or -15- privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 14. Agreement of Holder. By acceptance of this Warrant Certificate and the Warrants represented thereby the Holder hereby agrees to be bound by the terms and conditions contained herein. 15. Termination. In the event that the Escrow Fund is released to SBW pursuant to the terms of the Escrow Agreement, this Warrant Certificate shall thereafter become void and have no effect, and neither the Company nor the Holder shall have any liability to the other or its Affiliates by virtue of the provisions of this Warrant Certificate or in connection with the transactions contemplated hereby, and except that the Holder shall be obligated to promptly deliver this Warrant Certificate and the certificates evidencing any shares of Common Stock acquired upon the exercise of the Warrants to the Company for cancellation and return any dividends received during the period it held such shares to the Company. -16- IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed and attested by its duly authorized officers and to be dated as of September 27, 1996. HIGHWAYMASTER COMMUNICATIONS, INC. By: /s/ William C. Saunders Name: Title: Attest: By: /s/ Wesley E. Schlenker Name: Wesley E. Schlenker Title: Secretary Consented to and Accepted: SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. By: /s/ S. Sigman Name: Stan Sigman Title: President & CEO THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREUNDER. NO HOLDER OF WARRANTS EVIDENCED BY THIS CERTIFICATE MAY TRANSFER SUCH WARRANTS OR ANY INTEREST THEREIN TO ANY PERSON OTHER THAN SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. OR AN AFFILIATE OF SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. -17- 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- 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- 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- 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- 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- 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- (1) The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever. -2- III. Securities and/or check to be issued to: Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: Any unexercised Warrants evidenced by the within Warrant Certificate to be issued to: [(an Affiliate of Southwestern Bell Wireless Holdings, Inc. in accordance with Section 6 of the Warrant Certificate)] Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: -3- 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- (1) The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever. -2- IV. Securities and/or check to be issued to: Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: Any unexercised Warrants evidenced by the within Warrant Certificate to be issued to: [(an Affiliate of Southwestern Bell Wireless Holdings, Inc. in accordance with Section 6 of the Warrant Certificate)] Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: -3- EX-4 5 EXHIBIT 4 ================================================================================ HIGHWAYMASTER COMMUNICATIONS, INC. AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF SEPTEMBER 27, 1996 ================================================================================ TABLE OF CONTENTS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT Page Section 1. Definitions................................................. 2 Section 2. The Recapitalization; Amendment of Certificate of Incorporation............................................... 6 Section 3. Transfer of Securities...................................... 7 Section 4. Registration Rights......................................... 10 Section 5. Governance.................................................. 28 Section 6. Miscellaneous............................................... 35 ii AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), dated as of September 27, 1996, amends and restates in its entirety that Stockholders' Agreement, dated as of February 4, 1994 (the "Original Agreement"), by and among HIGHWAYMASTER COMMUNICATIONS, INC., a Delaware corporation (previously named HM HOLDING CORPORATION) (the "Company"), and the other Persons (as hereinafter defined) identified in Appendix A hereto, as the Original Agreement has been amended by the amendments and addenda set forth in Appendix B hereto, adds an additional party hereto, Southwestern Bell Wireless Holdings, Inc., a Delaware corporation ("SBW") and provides that the Persons identified in Appendix C hereto shall no longer be parties hereto. RECITALS: A. Simultaneously with the execution hereof, SBW is acquiring certain shares of Series D Preferred Stock (as hereinafter defined) of the Company pursuant to the Purchase Agreement dated as of the date hereof, by and between the Company and SBW (the "Purchase Agreement") and agreeing to provide certain services to the Company pursuant to a separate technical services agreement. B. Certain of the parties hereto have effected, or agreed to effect, the Recapitalization reflected in Sections 2(a), (b) and (c) hereof. C. Pursuant to Section 7(h) of the Original Agreement with respect to the terms hereof generally and Section 4(k) of the Original Agreement with respect to the registration rights provisions, holders of a sufficient number of Shares (as hereinafter defined) have executed this Agreement thereby amending and restating the Original Agreement, as amended to date, in its entirety as set forth herein, for the purpose of regulating certain aspects of the Stockholders' relationships with regard to each other and the Company. D. Immediately after the execution hereof, the Stockholders (as hereinafter defined) will consist of (i) Carlyle HighwayMaster Investors, L.P., Carlyle HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC Group, L.L.C., Mark D. Ein, Chase Manhattan Investment Holdings, Inc. and Archery Partners (the "Carlyle Entities"), (ii) Clipper/Merban, L.P., Clipper/Merchant Partners, L.P. and Clipper Capital Associates, L.P. (the "Clipper Entities"), (iii) Erin Mills International 1 Investment Corporation, The Erin Mills Investment Corporation and The Erin Mills Development Corporation (the "Erin Mills Companies"), (iv) William C. Kennedy, Jr., Donald M. Kennedy, William C. Saunders, Robert S. Folsom and Robert T. Hayes and (v) SBW. E. Simultaneously with the execution hereof, the Company is issuing to SBW a warrant certificate for warrants (the "Warrants") for 5,000,000 shares of Common Stock (as hereinafter defined) in consideration for SBW entering into the transactions contemplated by the Purchase Agreement and the other Transaction Documents (as hereinafter defined). AGREEMENT: NOW THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the Company and Stockholders agree as follows: Section 1. Definitions. As used herein, the following terms shall have the following meanings: "Affiliate" of any specified person or entity means any person or entity directly or indirectly controlling or controlled by or under direct or indirect common control with such person or entity. "Anti-takeover Provision" shall have the meaning set forth in Section 5(g) hereto. "Beneficially Own" (and correlative terms) means, with respect to any shares of Common Stock or other securities, to be entitled, directly or indirectly through one or more intermediaries, to all material incidents of ownership with respect to such securities, including, but not limited to, (i) the right to vote such securities (in the case of voting securities), (ii) subject to any transfer restrictions, the right to dispose of such securities and to receive any proceeds realized from the disposition thereof and (iii) the right to receive any dividends and other distributions with respect to such securities. "By-Word Stockholder" means each of William C. Kennedy, Jr., Donald M. Kennedy, William C. Saunders, Robert T. Hayes and Robert S. Folsom. "Carlyle Entities" shall have the meaning set forth in the Recitals hereto. 2 "Carlyle Stockholder" means each of the Carlyle Entities and any Permitted Assign (as hereinafter defined) who acquires shares of Common Stock directly or indirectly from a Carlyle Stockholder and who executes a supplemental agreement as contemplated in Section 6(b) hereof, in his, her or its capacity as a holder of Common Stock. "Class B Common Stock" means the new class of Company Common Stock, par value $0.01 per share, to be authorized as contemplated in Section 2(e) hereof, the terms of which are set forth on Exhibit B to the Purchase Agreement. "Clipper Entities" shall have the meaning set forth in the Recitals hereto. "Clipper Stockholder" means each of the Clipper Entities. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Common Stock, par value $.01 per share, of the Company and any other capital stock of the Company into which such Common Stock is reclassified or reconstituted. "Company Common Stock" means the Common Stock and the Class B Common Stock. "Demand Registration" shall have the meaning set forth in Section 4(b) hereof. "Director" means a member of the Board of Directors of the Company. "Erin Mills Companies" shall have the meaning set forth in the Recitals hereto. "Erin Mills Stockholder" means each of the Erin Mills Companies and any Permitted Assign who acquires shares of Common Stock directly or indirectly from an Erin Mills Company and who executes a supplemental agreement as contemplated in Section 6(b) hereof and, solely for purposes of Section 4 hereof, Robert S. Folsom and Robert T. Hayes, in each case in his, her or its capacity as a holder of Common Stock. 3 "Excluded Options" means options, warrants, rights or obligations to acquire Common Stock issued by any Person other than the Company. "Excluded Related Party" means, with respect to any Stockholder, a Related Party of such Stockholder which either (i) is a natural person or (ii) is not an Affiliate of such Stockholder. "Exempt Transfer" shall mean the meaning set forth in Section 3(d) hereof. "Existing Line of Business" shall have the meaning set forth in Section 5(g) hereof. "Incentive Stock Option Plan" means the HM Holding Corporation 1994 Incentive Stock Option Plan, as adopted by the Company's Board of Directors and as amended from time to time, providing for the grant to certain management employees of the Company and its Subsidiaries of options to purchase shares of Common Stock. "Majority in Interest" means, with respect to any specified group of Stockholders, Stockholders included in such group which hold more than fifty percent (50%) of the aggregate shares of Common Stock held collectively by such group of Stockholders on a Fully Diluted Basis (as hereinafter defined). "On a Fully Diluted Basis" with respect to the Company's Common Stock means on a basis that takes into account the number of shares of Common Stock which are issued and outstanding plus the number of shares of Common Stock issuable upon conversion of any outstanding Series D Preferred Stock and, once authorized and issued, Class B Common Stock or pursuant to outstanding options, warrants, rights or obligations to purchase or subscribe for shares of Common Stock or securities of the Company which are exchangeable or exercisable into shares of Common Stock as of the applicable date of determination, other than the Warrants, Excluded Options and employee stock options. "Permitted Assign" shall have the meaning set forth in Section 6(b) hereof. "Person" means any individual, partnership, corporation, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity or department, agency or political subdivision thereof. 4 "Piggyback Registration" shall have the meaning set forth in Section 4(a) hereof. "Public Transferee" means any subsequent holder of Common Stock who acquires Shares from a Stockholder pursuant to an effective registration statement under the Securities Act (as hereinafter defined) or pursuant to Rule 144 promulgated thereunder. "Recapitalization Agreement" means the Recapitalization Agreement, dated as of the date hereof, among the Company, certain Erin Mills Stockholders, Carlyle Stockholders and Clipper Stockholders, a copy of which is attached as Exhibit A hereto. "Recapitalization Shares" shall have the meaning set forth in Section 4(c) hereof. "Regulatory Relief" means that SBC Communications, Inc. or its Affiliates, in their sole judgment, have obtained all necessary federal and state regulatory approvals to provide landline, interLATA long-distance service pursuant to the Communications Act of 1934, as amended by The Telecommunications Act of 1996. "Related Party" with respect to any Stockholder means: (A) an Affiliate of such Stockholder; (B) a trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, or owners, or persons holding a controlling interest of which consist of such Stockholder and/or its Affiliates; (C) with respect to any Stockholder who is an individual, such Stockholder's spouse, siblings, children or parents; (D) with respect to any Stockholder which is a partnership, such Stockholders' partners as of the date hereof; and (E) with respect to any Stockholder which is a corporation, such Stockholder's stockholders as of the date hereof. "SBW Stockholder" means SBW and any Affiliate of SBW who acquires Shares from SBW and who executes a supplemental agreement as contemplated in Section 6(b) hereof. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. 5 "Series D Preferred Stock" means the Series D Participating Convertible Preferred Stock, par value $.01 per share, of the Company, the Certificate of Designation for which is set forth in Exhibit A to the Purchase Agreement. "Shares" means (i) any shares of the capital stock of the Company and (ii) any securities convertible into, and any rights, options or warrants exchangeable or 6 exercisable for, any of the shares of the capital stock of the Company, in either case, at any time outstanding. "Stockholders" means the By-Word Stockholders, the Carlyle Stockholders, the Clipper Stockholders, the Erin Mills Stockholders and the SBW Stockholders. "Subsidiary" of any specified person or entity means a corporation or other entity of which a majority of the voting power of the equity securities or other equity interests is owned, directly or indirectly, by such specified person or entity or any Subsidiary of such specified person or entity. "Transaction Documents" shall have the meaning set forth in the Purchase Agreement. "Transfer" shall have the meaning set forth in Section 3(a) hereof. "Warrants" shall have the meaning set forth in the Recitals hereto. Section 2. The Recapitalization; Amendment of Certificate of Incorporation. (a) Erin Mills Companies. (1) $10 Million Investment. Simultaneously with the execution hereof, Erin Mills International Investment Corporation and one of its affiliates are investing $10.0 million in cash in the Company in exchange for 800,000 shares of Common Stock, as provided in the Recapitalization Agreement. (2) Series B Preferred Stock. Simultaneously with the execution hereof, the Series B Preferred Stock owned by The Erin Mills Development Corporation and certain of its affiliates and by Robert S. Folsom and Robert T. Hayes is being exchanged for 864,000 shares of Common Stock, as provided in the Recapitalization Agreement. (b) Carlyle and Clipper Entities. Simultaneously with the execution hereof, the promissory notes in the aggregate principal amount of approximately $12.7 million held by certain Carlyle Stockholders and the Clipper Stockholders together with accrued and unpaid interest in the amount of approximately $63,000, 7 which were issued by the Company pursuant to the Note Exchange and Amendments Agreement, dated as of May 26, 1995, are being converted into shares of Common Stock at a price of $12.50 per share, as provided in the Recapitalization Agreement. (c) Termination of Subscription Agreement. Simultaneously with the execution hereof, the Company, certain Carlyle Stockholders and the Clipper Stockholders are terminating certain provisions of the Subscription Agreement, dated as of February 4, 1994, as provided in the Recapitalization Agreement. (d) Bylaws. Simultaneously with the execution hereof, the Company has amended the Bylaws as set forth as Exhibit B hereto. (e) Amendment of Certificate of Incorporation. The Stockholders listed on Appendix D have granted written consents and irrevocable proxies to SBW covering the shares of Common Stock owned by them with respect to the amendment of the Certificate of Incorporation as set forth on Exhibit B to the Purchase Agreement and the issuance of the Common Stock pursuant to the exercise of the Warrants, and SBW has delivered to the Company written consents covering such shares, and immediately following the issuance of the Series D Preferred Stock, will deliver to the Company a written consent covering such shares, each approving such amendment. On the twentieth day following the mailing of an information statement to the Company's stockholders in compliance with Regulation 14C promulgated under the Securities Exchange Act of 1934, the Company will cause the Certificate of Amendment to be filed with the Secretary of State of the State of Delaware. Section 3. Transfer of Securities (a) General Prohibition on Transfer. None of the Stockholders shall sell, assign, transfer, pledge, encumber or in any way dispose of ("Transfer") any Shares unless (i) such Stockholder shall have delivered to the Company an opinion of counsel to such Stockholder, in form and substance reasonably satisfactory to the Company, to the effect that such Transfer is exempt from the registration requirements of the Securities Act or (ii) the registration requirements of the Securities Act have been complied with in connection with such Transfer, provided, however, that the Company shall be entitled in its sole discretion to waive the requirement that an opinion of counsel be delivered pursuant to this Section 3(a) if it determines that a Transfer is in accordance with applicable law. 8 (b) Transfer by First Refusal Stockholders. None of the Carlyle Stockholders, the Erin Mills Stockholders (other than Robert S. Folsom and Robert T. Hayes), William C. Kennedy, Jr. or William C. Saunders (collectively the "First Refusal Stockholders") shall Transfer any Shares unless (i) such First Refusal Stockholder has complied with the provisions of this Section 3(c) to the extent applicable to such Transfer and (ii) the transferee (if other than a Public Transferee or an Excluded Related Party) has agreed to become a party to, and be bound by the terms of, Section 3 of this Agreement pursuant to a supplemental agreement hereto in form and substance reasonably satisfactory to the Company and SBW, executed by such transferee (provided, however, that the requirement set forth in this clause (ii) shall not apply to any transferee (other than a Permitted Assign or a transferee pursuant to Section 3(d) who is not an Excluded Related Party) acquiring Shares from a Seller (as hereinafter defined) after the earlier of (A) the date of Regulatory Relief and (B) September 27, 1997 pursuant to a sale effected by such Seller in compliance with the provisions of subsection (c) below). Notwithstanding the foregoing, no First Refusal Stockholder shall be required to execute a supplemental agreement. (c) Right of First Refusal. (i) If any First Refusal Stockholder (a "Seller") receives a bona fide offer, which the Seller desires to accept ("Offer") to purchase any or all of the Shares (the "Transfer Stock") then owned by such Seller from any person (an "Offeror"), such Seller shall notify SBW in writing of the terms of such Offer, which notice shall identify the Offeror, the price offered, and all the other material terms and conditions of such Offer. In addition, if a Seller wishes to sell to the public pursuant to a registration statement under the Securities Act or pursuant to Rule 144 promulgated thereunder (a "Public Sale"), the Seller shall notify SBW in writing of the proposed terms of the Public Sale, which Public Sale shall also constitute an Offer for the purposes hereof. The Seller shall provide a written notice (the "Notice") of an Offer to SBW promptly, but in no event later than five (5) business days following the determination by the Seller that it desires to accept an Offer which does not relate to a Public Sale. The Notice shall contain an irrevocable offer to sell the Transfer Stock to SBW at a price equal to the price and upon substantially the same terms as the terms contained in such Offer; provided, however, that (A) if such 9 Offer shall relate to a proposed Public Sale, the Notice shall offer to sell the Transfer Stock at a price determined by the Seller (which in the case of a registered public offering shall not be higher than the price the Seller in good faith believes can be obtained in such offering), minus, in the case of a registered public offering pursuant to a firm commitment underwriting, customary underwriting commissions, and (B) if the terms of the Offer entitle the Offeror to purchase the Transfer Stock for securities of such Offeror (the "Offered Securities") or other property, SBW shall be entitled to purchase the Transfer Stock for an amount of cash equal to the fair market value of the Offered Securities or such other property. SBW shall have the irrevocable right and option (the "Right of First Refusal"), to accept such irrevocable offer as to all Shares as to which the Offer is made (except in the event of a Public Sale pursuant to Rule 144, in which event SBW may accept as to any number of Shares) by providing the Seller with an irrevocable written notice of acceptance within fifteen (15) business days, or, in the case of a Public Sale pursuant to Rule 144, five (5) business days, after the date the Notice is received (the "Notice Period"). The closing of the purchases of the Transfer Stock by SBW shall take place at the principal office of SBW no later than the fifth (5th) business day after the acceptance by SBW. At such closing, SBW shall deliver a certified check or checks or wire transfer in the appropriate amount to the Seller against delivery of certificates representing the Transfer Stock so purchased, duly endorsed in blank by the person or persons in whose name a stock certificate is registered or accompanied by a duly executed assignment separate from the certificate with the signatures thereon guaranteed by a commercial bank or trust company. If SBW does not elect to purchase the Transfer Stock during the Notice Period or if SBW fails or refuses for any reason (including, but not limited to, the existence of any requirement that SBW obtain any required regulatory approval) to complete the closing of the purchase of any Transfer Stock upon the day specified above, the Seller shall have ninety (90) days from the end of the Notice Period (the "Sales Period") in which to Transfer all of the Transfer Stock pursuant to the Offer to the Offeror or in a Public Sale, it being understood that (A) in a registered public offering the sales price may be greater than or less than the Offer price and (B) in any other transaction the sales price and other terms of the Transfer may be more favorable to the Seller than those set forth in the Notice. In addition, Seller may not knowingly make a Public Sale to any purchaser which Seller knows to own in 10 excess of 5% of the Common Stock, provided that this restriction shall not create any duty of inquiry on the part of the Seller. Promptly after any sale pursuant to this Section 3(c), the Seller shall notify SBW of the consummation thereof and shall furnish such evidence of the completion (including time of completion) of such sale and of the terms thereof as SBW may reasonably request. If, at the termination of the Sales Period, the Seller has not completed the sale of the Transfer Stock to the Offeror or in a Public Sale, all of the restrictions on Transfer contained in this Section 3(c) shall again be in effect with respect to all such Seller's Transfer Stock. (d) Exempt Transfer. The following transactions shall constitute "Exempt Transfers" for the purpose of Section 3 and shall be exempt from the requirements of subsection (c), but not subsections (a) and (b): (i) a Transfer of Shares by a First Refusal Stockholder to SBW, (ii) a Transfer by a Stockholder of Shares by will or intestate succession to such Stockholder's executors, administrators, testamentary trustees, legatees or beneficiaries, (iii) a Transfer of Shares by a Stockholder to any Related Party of such Stockholder and (iv) a Transfer of Shares (A) by any Carlyle Stockholder to any other Carlyle Stockholder or to any Clipper Stockholder, (B) by any Erin Mills Stockholder to any other Erin Mills Stockholder or (C) by William C. Kennedy, Jr. or William C. Saunders to any By-Word Stockholder, or (vi) a Transfer of Shares that has been approved in writing by SBW as an Exempt Transfer. (e) Restrictions on SBW. No SBW Stockholder shall Transfer any Series D Preferred Stock or Class B Common Stock except to an Affiliate of SBW. Section 4. Registration Rights. (a) Piggyback Registration Rights. (1) Right to Piggyback. Subject to the last sentence of this subsection (1), whenever the Company proposes to register any shares of Common Stock (or securities convertible into or exchangeable for, or options, warrants or other rights to acquire, Common Stock) with the Securities and Exchange Commission (the "Commission") under the Securities Act (other than (A) registrations on Form S-4 or Form S-8 11 and (B) the registration of the Recapitalization Shares (as hereinafter defined) pursuant to subsection (c) below) and the registration form to be used may be used for the registration of the Registrable Securities (as defined in subsection (k) below) (a "Piggyback Registration"), the Company will give written notice to all Stockholders, at least thirty-five (35) days prior to the anticipated filing date, of its intention to effect such a registration, which notice will specify the proposed offering price, the kind and number of securities proposed to be registered, the distribution arrangements and such other information that at the time would be appropriate to include in such notice, and will, subject to subsection (a)(2) below, include in such Piggyback Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) business days after the effectiveness of the Company's notice. Except as may otherwise be provided in this Agreement, Registrable Securities with respect to which such request for registration has been timely received will be registered by the Company and offered to the public in a Piggyback Registration pursuant to this Section 4 on terms and conditions at least as favorable as those applicable to the registration of shares of Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock) to be sold by the Company and by any other person selling under such Piggyback Registration. (2) Priority on Piggyback Registrations. If the managing underwriter or underwriters, if any, advise the holders of Registrable Securities in writing that in its or their reasonable opinion or, in the case of a Piggyback Registration not being underwritten, the Company shall reasonably determine (and notify the holders of Registrable Securities of such determination), after consultation with an investment banker of nationally recognized standing, that the number or kind of securities proposed to be sold in such registration (including Registrable Securities to be included pursuant to subsection (a)(1) above) will materially adversely affect the success of such offering (including, without limitation, a material impact on the selling price), the Company will include in such registration the number of securities, if any, which, in the opinion of such underwriter or underwriters, or the Company, as the case may be, can be sold, without having a material adverse effect on the success of such offering, as follows: (i) first, the shares the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration by SBW, the Carlyle 12 Stockholders, the Clipper Stockholders and the Erin Mills Stockholders, pro rata among such requesting Stockholders on the basis of their respective holdings of Common Stock on a Fully Diluted Basis, and (iii) third, the Registrable Securities requested to be included in such registration by the By-Word Stockholders, pro rata among such requesting Stockholders on the basis of their respective holdings of Common Stock on a Fully Diluted Basis. (3) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the Company (by action of the Board of Directors) will select a managing underwriter or underwriters to administer the offering, which managing underwriter or underwriters will be of nationally recognized standing and reasonably acceptable to the holders of a majority of the Registrable Securities included therein. (b) Demand Registration Rights. (1) Right to Demand Registration. Each of (A) the Carlyle Stockholders and the Clipper Stockholders as a group; (B) the Erin Mills Stockholders as a group and (C) SBW (each referred to herein as a "Demanding Group") shall have the right on the number of occasions set forth in subsection (b)(2) to make a written request of the Company for registration with the Commission, under and in accordance with the provisions of the Securities Act, of all or part of their Registrable Securities (a "Demand Registration"); provided, that (x) the Company shall not effect a Demand Registration unless such Demand Registration has been requested by persons holding at least a majority of the Registrable Securities held by the Demanding Group on the date of such written request and unless the number of Shares to be sold in such Demand Registration by the Demanding Group is at least 1,000,000 shares of Common Stock, (y) if the Board of Directors determines in the exercise of its reasonable judgment that, due to a pending or contemplated acquisition or disposition, to effect such Demand Registration at such time would have a material adverse effect on the Company, the Company may defer such Demand Registration for a single period not to exceed one hundred eighty (180) days (but if the Company elects to defer any Demand Registration pursuant to the terms of this sentence, no Demand Registration shall be deemed to have occurred for purposes of this Agreement) and (z) the Company shall be obligated to effect only the number of Demand Registrations set forth 13 in subsection 4(b)(2) below. Within ten (10) days after receipt of the request for a Demand Registration, the Company will send written notice (the "Notice") of such registration request and its intention to comply therewith to all Stockholders who are holders of Registrable Securities and, subject to subsection (3) below, the Company will include in such registration all Registrable Securities of such Stockholders with respect to which the Company has received written requests for inclusion therein within twenty (20) business days after the effectiveness of the Notice. All requests made pursuant to this subsection (b)(1) will specify the aggregate number of Registrable Securities requested to be registered and will also specify the intended methods of disposition thereof. (2) Number of Demand Registrations. Each Demanding Group shall be entitled to two (2) Demand Registrations, and the expenses of each (including the fees and expenses of a total of one counsel for the Demanding Group in accordance with subsection (f)(2) below) shall be borne by the Company. A Demand Registration shall not be counted as a Demand Registration hereunder until such Demand Registration has been declared effective by the Commission and maintained continuously effective for a period of at least three months or such shorter period when all Registrable Securities included therein have been sold in accordance with such Demand Registration. If the Company elects to issue and sell and ultimately sells any equity securities pursuant to any Registration Statement filed in connection with a Demand Registration, then such Registration shall be deemed not to be a Demand Registration for purposes of determining the number of Demand Registrations granted by this Agreement. (3) Priority on Demand Registrations. If in any Demand Registration the managing underwriter or underwriters thereof (or in the case of a Demand Registration not being underwritten, the holders of a majority of the Registrable Securities held by the Demanding Group after consultation with an investment banker of nationally recognized standing), advise the Company in writing that in its or their reasonable opinion the number of securities proposed to be sold in such Demand Registration exceeds the number that can be sold in such offering without having a material adverse effect on the success of the offering (including, without limitation, an impact on the selling price), the 14 Company will include in such registration only the number of securities that, in the reasonable opinion of such underwriter or underwriters (or such holders of Registrable Securities held by the Demanding Group, as the case may be) can be sold without having a material adverse effect on the success of the offering, as follows: (i) first, the Registrable Securities requested to be included in such Demand Registration by the Demanding Group, pro rata, among such Stockholders on the basis of their respective holdings of Common Stock on a Fully Diluted Basis, (ii) second, the Registrable Securities requested to be included in such Demand Registration by the Erin Mills Stockholders and SBW (if the Demanding Group is the Carlyle Stockholders and the Clipper Stockholders), or the Carlyle Stockholders and the Clipper Stockholders, as a group, and SBW (if the Demanding Group is the Erin Mills Stockholders), or the Carlyle Stockholders and the Clipper Stockholders, as a group, and the Erin Mills Stockholders (if the Demanding Group is SBW), in all such cases pro rata among such Stockholders on the basis of their respective holdings of Common Stock on a Fully Diluted Basis, (iii) third, shares to be issued and sold by the Company and requested to be included in such Demand Registration, and (iv) fourth, the Registrable Securities requested to be included in such Demand Registration by the By-Word Stockholders, pro rata among such requesting Stockholders on the basis of their respective holdings of Common Stock on a Fully Diluted Basis. (4) Selection of Underwriters. If a Demand Registration is an underwritten offering, the holders of a majority of the Registrable Securities to be included in such Demand Registration held by members of the Demanding Group that initiated such Demand Registration will select a managing underwriter or underwriters of recognized national standing to administer the offering, which managing underwriter or underwriters shall be reasonably acceptable to the Company. (c) Registration of Recapitalization Shares. Within a reasonable period prior to each Registration Date (as hereinafter defined), the Company shall prepare and file with the Commission a registration statement on an appropriate form in order to register the Recapitalization Shares under the Securities Act for sale in one or more privately negotiated transactions or in open market transactions effected on any stock exchange on which the Common Stock is then listed, or if not so listed, on any automated quotation system to which the Common Stock is then admitted to trading; provided, however, that if the Board of Directors determines in the exercise 15 of its reasonable judgment that, due to a pending or contemplated acquisition or disposition, to effect such registration at such time would have a material adverse effect on the Company, the Company may defer such registration for a single period not to exceed ninety (90) days. The Company shall use its reasonable best efforts to have each such registration statement declared effective by the Commission as promptly as reasonably practicable after the filing thereof with the Commission; provided, however, that (i) no sales of Recapitalization Shares shall be effected pursuant to any such registration statement prior to March 31, 1997 and (ii) sales of an aggregate of no more than one-half of the total number of Recapitalization Shares shall be effected pursuant to any such registration statement prior to September 27, 1997, such dates being referred to as the "Registration Dates". In addition, the Company shall use its reasonable best efforts to keep such registration statement effective for a period of at least three months after the applicable Registration Date. As used herein, the term "Recapitalization Shares" shall mean the shares of Common Stock issued pursuant to the Recapitalization Agreement to Erin Mills International Investment Corporation as described in Section 2(a)(1) hereof and to certain Carlyle Stockholders and Clipper Stockholders as described in Section 2(b) hereof. (d) Registration Procedures. With respect to any Piggyback Registration or Demand Registration and (except as expressly provided in subsection (c) above) the registration to be effected pursuant to subsection (c) above (generically, a "Registration"), the Company will, subject to subsections 4(a)(2) and 4(b)(3), as expeditiously as practicable: (1) prepare and file with the Commission, within 60 days after mailing the applicable Notice, a registration statement or registration statements (the "Registration Statement") relating to the applicable Registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Registrable Securities in accordance with the intended method or methods of distribution thereof; provided that the Company will include in any Registration Statement on a form other than Form S-1 all information that the holders of the Registrable Securities so to be registered shall reasonably request and shall include all financial statements required by the Commission to be filed therewith, cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD") or any securities exchange on which the Common Stock may then be listed, and use its reasonable best efforts to cause such Registration Statement to become effective promptly; provided, further, that before filing a Registration Statement or 16 prospectus related thereto (a "Prospectus") or any amendments or supplements thereto, the Company will furnish to the holders of the Registrable Securities covered by such Registration Statement and the underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review of such holders and underwriters and their respective counsel, and the Company will not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which the holders of a majority of the Registrable Securities covered by such Registration Statement, the Demanding Group, if a Demand Registration, or the underwriters, if any, shall reasonably object; (2) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep each Registration Statement effective for the applicable period, or such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold; cause each Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus, provided, that the Company shall not be deemed to have used its reasonable best efforts to keep a Registration Statement effective during the applicable period if it voluntarily takes any action that would result in selling holders of the Registrable Securities covered thereby not being able to sell such Registrable Securities during that period unless such action is required under applicable law, and provided, further that the foregoing shall not apply to actions taken by the Company in good faith and for valid business reasons, including without limitation the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with the requirements of subsection (11) of this subsection (d), if applicable; (3) notify the selling holders of Registrable Securities and the managing underwriters, if any, promptly, and (if requested by any such person or entity) confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment 17 has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (D) if at any time the representations and warranties of the Company contemplated by subsection (14) below cease to be true and correct, (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (F) of any other correspondence from the Commission with respect to the Registration and (G) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not materially misleading; (4) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment; (5) if requested by the managing underwriter or underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and either the holders of a majority of the Registrable Securities being sold or the Demanding Group, if a Demand Registration, agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment promptly following notification of the matters to be 18 incorporated in such Prospectus supplement or post-effective amendment; (6) furnish to each selling holder of Registrable securities and each managing underwriter, without charge, at least one signed copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (7) deliver to each selling holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such selling holder of Registrable Securities and underwriters may reasonably request; the Company consents to the use in accordance with applicable law of each Prospectus or any amendment or supplement thereto by each of the selling holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto; (8) prior to any public offering of Registrable Securities, register or qualify or cooperate with the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions as any seller or underwriter reasonably requests in writing, considering the amount of Registrable Securities proposed to be sold in each such jurisdiction, and do any and all other acts or things necessary or reasonably advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject; (9) cooperate in all reasonable respects with the selling holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any 19 restrictive legends and to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of Registrable Securities to the underwriters; (10) use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities; (11) upon the occurrence of any event contemplated by subsection (3)(F) above, prepare a supplement or post effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (12) cause all Registrable Securities covered by any Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed, or cause such Registrable Securities to be authorized for trading on the Nasdaq National Market if any similar securities issued by the Company are then so authorized, if requested by the holders of a majority of such Registrable Securities, the Demanding Group, if a Demand Registration, or the managing underwriters, if any; (13) provide a CUSIP number for all Registrable Securities, not later than the effective date of the applicable Registration Statement; (14) enter into such agreements (including an underwriting agreement) and take all such other actions in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the Registration is an underwritten Registration (A) make such representations and warranties 20 to the holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings; (B) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the holders of a majority of the Registrable Securities being sold) addressed to each selling holder and the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such holders and underwriters; (C) obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the selling holders of Registrable Securities and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by underwriters in connection with primary underwritten offerings; (D) if an underwriting agreement is entered into, the same shall set forth in full the indemnification provisions and procedures set forth in subsection (f) below with respect to all parties to be indemnified pursuant to said subsection; and (E) the Company shall deliver such documents and certificates as may be requested by the holders of a majority of the Registrable Securities being sold and the managing underwriters, if any, to evidence compliance with subsection 3(G) of this subsection (d) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement or as and to the extent required thereunder; (15) make available (at reasonable times and places) for inspection by a representative of the holders of a majority of the Registrable Securities, any underwriter participating in any disposition pursuant to such Registration, and any attorney or accountant retained by the sellers or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, that any records, information or documents that are designated by the company in writing as confidential shall be kept confidential by such Persons unless disclosure of such records, information or documents is 21 required by court or administrative order or any regulatory body having jurisdiction; (16) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than forty-five (45) days after the end of any twelve (12)-month period (or ninety (90) days, if such period is a fiscal year) (A) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm or best efforts underwritten offering, or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said twelve (12)-month periods; and (17) promptly prior to the filing of any document that is to be incorporated by reference into any Registration Statement or Prospectus (after initial filing of the Registration Statement), provide copies of such document to counsel to the selling holders of Registrable Securities and to the managing underwriters, if any, make the Company's representatives available for discussion of such document and make such changes in such document prior to the filing thereof as counsel for such selling holders or underwriters may reasonably request. The Company may require each seller of Registrable Securities as to which any Registration is being effected to furnish to the Company such information regarding the proposed distribution of such securities as the Company may from time to time reasonably request in writing. Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in subsection (3)(G) of this subsection (d), such holder will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement until such holder's receipt of copies of the supplemented or amended Prospectus as contemplated by subsection (11) of this subsection (d), or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be 22 resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus, and, if so directed by the Company, such holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the time periods referred to in subsection (2) of this subsection (d) shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by subsection (11) of this subsection (d) or the Advice. (e) Restrictions on Public Sale. (1) Public Sale by Holders of Registrable Securities. To the extent not inconsistent with applicable law, each Stockholder, if requested by the managing underwriter or underwriters for any Demand Registration or Piggyback Registration, agrees not to effect any public sale or distribution of Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock), including a sale pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, during the 15 business days prior to, and during the ninety (90)-day period (or such shorter period as may be agreed to by such holders) beginning on, the effective date of the applicable Registration Statement (except as part of such Registration). (2) Public Sale by the Company and Others. If requested by the managing underwriter or underwriters for any underwritten Demand Registration or Piggyback Registration, (i) the Company will not effect any public sale or distribution of Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock) during the fifteen (15) business days prior to, and during the ninety (90)-day period beginning on the effective date of such Registration and (ii) the Company will cause each holder of Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock) purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution of any such securities during such 23 period described in clause (i) above (except as part of such Registration, if otherwise permitted). (3) Other Registrations. If the Company has previously filed a Registration Statement with respect to Registrable Securities, and if such previous Registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock) under the Securities Act (except on Form S-8 or any similar successor form), whether on its own behalf or at the request of any holder or holders of Common Stock (or securities convertible into or exchangeable or exercisable for Common Stock), until a period of at least three (3) months has elapsed from the effective date of such previous Registration; provided, that if the holders of fifty percent (50%) or more of the aggregate number of Registrable Securities included in such previous Registration shall agree in writing, such period may be shortened to a period specified by such holders. (f) Registration Expenses. (1) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, including, without limitation, all registration and filing fees, the fees and expenses of the counsel and accountants for the Company (including the expenses of any "cold comfort" letters and special audits required by or incident to the performance of such persons), all other costs and expenses of the Company incident to the preparation, printing and filing under the Securities Act of the Registration Statement (and all amendments and supplements thereto) and furnishing copies thereof and of the Prospectus included therein, the costs and expenses incurred by the Company in connection with the qualification of the Registrable Securities under the state securities or "blue sky" laws of various jurisdictions, the costs and expenses associated with filings required to be made with the NASD (including, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules and regulations of the NASD), the costs and expenses of listing the Registrable Securities for trading on a securities exchange or authorizing them for trading on NASDAQ and all other costs and expenses incurred by the Company in connection with any 24 Registration hereunder; provided, that, except as otherwise provided in subsection (2) below, each Stockholder shall bear the costs and expenses of any underwriters' commissions, brokerage fees or transfer taxes relating to the Registrable Securities sold by such Stockholders and the fees and expenses of any counsel, accountants or other representative retained by Stockholder. (2) Notwithstanding the foregoing and except as provided below, in connection with each Registration hereunder, the Company will reimburse the Stockholders who are holders of Registrable Securities being registered in any Registration hereunder for (i) the reasonable fees and disbursements of not more than one counsel, which counsel shall be chosen (x) by the holders of a majority of the Registrable Securities to be included therein that are held by the Demanding Group, in the case of a Demand Registration and (y) otherwise, by the holders of a majority of all Registrable Securities to be included therein, and (ii) the reasonable out-of-pocket expenses (including travel costs) of the holders of Registrable Securities in connection with such Registration. (g) Indemnification. (1) Indemnification by the Company. The Company agrees to indemnify, to the full extent permitted by law, each Stockholder, its officers, directors, partners and agents and each person who controls such Stockholder (within the meaning of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act")), against all losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any omission or alleged omission to state therein a material fact necessary to make the statements therein (in the case of a Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information with respect to such Stockholder furnished in writing to the Company by such Stockholder in its capacity as a selling Stockholder expressly for use therein. The Company will also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each person who controls such persons 25 (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities; provided, however, if pursuant to an underwritten public offering of Registrable Securities, the Company and any underwriters enter into an underwriting or purchase agreement relating to such offering that contains provisions relating to indemnification and contribution between the Company and such underwriters, such provisions shall be deemed to govern indemnification and contribution as between the Company and such underwriters. (2) Indemnification by Holders of Registrable Securities. In connection with any Registration in which a Stockholder is participating, each such Stockholder will furnish to the Company in writing such information with respect to such Stockholder as the Company reasonably requests for use in connection with any Registration Statement or Prospectus and agrees to indemnify, to the full extent permitted by law, the Company, the directors and officers of the Company signing the Registration Statement and each person who controls the Company (within the meaning of the Securities Act and the Exchange Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements in the Registration Statement or Prospectus or preliminary Prospectus (in the case of the Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information with respect to such Stockholder so furnished in writing by such Stockholder in its capacity as a selling Stockholder specifically for inclusion therein. In no event shall the liability of any selling holder of Registrable Securities hereunder be greater in amount than the dollar amount of the net proceeds received by such holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information with respect to such persons or entities so furnished in writing by such persons or 26 entities or their representatives specifically for inclusion in any Prospectus or Registration Statement. (3) Conduct of Indemnification Proceedings. Any person or entity entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party after the receipt by the indemnified party of a written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party will claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subparagraphs (1) and (2), except to the extent that the indemnifying party is actually prejudiced by such failure to give notice and (ii) unless in such indemnified party's reasonable judgment a conflict of interest may exist between such indemnified and indemnifying parties with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. Whether or not such defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party will consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel in any one jurisdiction for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. (4) Contribution. If for any reason the indemnification provided for in the preceding subparagraphs (1) and (2) is unavailable to an indemnified party as contemplated by the preceding clauses (1) and (2), then the indemnifying party in lieu of indemnification shall contribute to the amount paid or payable by the indemnified party as a 27 result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that no Stockholder shall be required to contribute in an amount greater than the difference between the net proceeds received by such Stockholder with respect to the sale of any Shares and all amounts already contributed by such Stockholder with respect to such claims, including amounts paid for any legal or other fees or expenses incurred by such Stockholder. (h) Rule 144. The Company agrees that at all times after it has filed a registration statement pursuant to the requirements of the Securities Act relating to any class of equity securities of the Company, it will file in a timely manner all reports required to be filed by it pursuant to the Securities Act and the Exchange Act and will take such further action as any holder of Registrable Securities may reasonably request in order that such holder may effect sales of Common Stock pursuant to Rule 144. At any reasonable time and upon request of any Stockholder, the Company will furnish such Stockholder and others with such information as may be necessary to enable the Stockholder to effect sales of Common Stock pursuant to Rule 144 under the Securities Act and will deliver to such Stockholder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, the Company may deregister any class of its equity securities under Section 12 of the Exchange Act or suspend its duty to file reports with respect to any class of its securities pursuant to Section 15(d) of the Exchange Act if it is then permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder. (i) Participation in Underwritten Registrations. No Stockholder may participate in any underwritten Registration hereunder unless such Stockholder (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to select the underwriter pursuant to subsections 4(a)(3) and (4)(b)(4) above, and (ii) accurately completes in a timely manner and executes all questionnaires, powers of attorney, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements. (j) Other Registration Rights. The Company will not grant to any person (including the Stockholders) any demand or piggyback registration rights with respect to the Common Stock of the Company (or securities convertible into or 28 exchangeable or exercisable for Common Stock) other than piggyback registration rights that are not inconsistent with the terms of this Section 4. To the extent that the Company grants to any person registration rights with respect to any securities of the Company having provisions more favorable to the holders thereof than the provisions contained in this Agreement, the Company will confer comparable rights to the holders of Registrable Securities under this Agreement. Except as provided herein, the Company will not grant any registration rights that would permit any person or entity the right to piggyback on any Demand Registration. (k) Definition of Registrable Securities. "Registrable Securities" means the shares of Common Stock now owned or hereafter acquired by any Stockholder, but with respect to any share, only until such time as such share (i) has been effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering it or (ii) has been sold to the public pursuant to Rule 144 (or any similar provision then in force) under the Securities Act and the Legend referred to in Section 6(a) has been removed from the certificate representing such share (at which time such share shall cease to be a Registrable Security). (l) Amendments and Waivers. The provisions of this Section 4, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers of or consents to departures from the provisions hereof may not be given unless approved by the Company in writing and the Company has obtained the written consent of Stockholders holding at least eighty-five percent (85%) of the then outstanding Registrable Securities (including for such purposes all securities convertible into or exchangeable for Registrable Securities, other than the Warrants). Notwithstanding the foregoing, any amendment, waiver or consent that materially and adversely affects any of the By-Word Stockholders as a group, the Erin Mills Stockholders as a group, the Carlyle Stockholders as a group, the Clipper Stockholders as a group or SBW differently from the other Stockholders, shall require the prior written approval of the holders of at least a Majority in Interest of Stockholders who are then members of the group or the entity so affected. Section 5. Governance. (a) Within fifteen days after the execution hereof, the total number of members of the Board of Directors will be reduced to six, which number shall be adjusted from time to time in order to give effect to the provisions of subsection (b) below. The Company and the Stockholders hereby agree to take, at any time and from time to time, all action necessary (including, without limitation, voting the shares of Company Common Stock owned or controlled by such Stockholder, calling special 29 meetings of stockholders, executing and delivering written consents and requiring designees to resign) to establish the number of total number of directors as provided herein. (b) At all times from and after fifteen days after the execution hereof (except for the addition of a second Independent Director, which shall occur no later than the date of the next annual meeting of the stockholders of the Company), the Board of Directors of the Company (the "Board") shall be composed of Directors to be designated in the manner set forth below. The Company and each Stockholder hereby agree to take, at any time and from time to time, all action necessary (including, without limitation, voting the shares of the Company Common Stock owned or controlled by such Stockholder, calling special meetings of stockholders and executing, delivering written consents and requiring designees to resign) to elect Directors as provided herein. Prior to the receipt of Regulatory Relief, the Board shall be composed of seven (7) members, of which two (2) Directors shall be persons designated by a Majority in Interest of the Erin Mills Stockholders, two (2) Directors shall be persons designated by a Majority in Interest of the By-Word Stockholders (one of which shall be the chief executive officer of the Company), one (1) Director shall be a person designated by a Majority in Interest of the Carlyle Stockholders and two (2) additional Directors (or, if determined by the Nominating Committee as hereinafter provided, three (3) additional Directors) shall be persons who are not employed by the Company or affiliated with any party to this Agreement ("Independent Directors"). SBW shall be entitled to designate one non-director delegate who shall be entitled to receive notice of, in accordance with the provisions of Section 11.6 of the Bylaws with respect to Class B Directors, and to attend all meetings of the Board and to receive all materials received by Directors, but who shall not be a member of the Board of Directors, shall have no fiduciary duties to the Company, to the Board or stockholders of the Company and shall not be entitled to vote at meetings of the Board. Upon the conversion of the Series D Preferred Stock into Class B Common Stock, the number of Directors shall be increased by one who shall be a person designated by SBW and the right to a non-director delegate shall terminate. If SBW and its Affiliates Beneficially Own 20% or more of the Common Stock (including Common Stock issuable upon conversion of Series D Preferred Stock or Class B Common Stock or other convertible securities or upon the exercise of any outstanding options, warrants, rights or obligations, other than shares issuable upon exercise of the Warrants and Excluded Options) on a Fully Diluted Basis, the number of Directors shall further be increased by one and the additional Director shall also be a designee of SBW. For so long as SBW or its Affiliates hold Class B Common Stock, one or both of SBW's designees will be elected by SBW as the holder of the Class B Common Stock and will be Class B Directors, with the rights set forth in the 30 terms of such Class B Common Stock and the Bylaws, and which directors will have the corporate authority to sign a stockholder consent of SBW on behalf of each of the SBW Stockholders. All Independent Directors shall be nominated by a committee consisting of one Director designated by the Erin Mills Stockholders, one Director designated by the By-Word Stockholders, one Director designated by the Carlyle Stockholders and, following receipt of Regulatory Relief, one Director designated by SBW (the "Nominating Committee"). The Nominating Committee also shall determine whether to increase the number of Independent Directors to three (3). Notwithstanding the foregoing, no Stockholder or group of Stockholders shall be entitled to designate any Director or have such designee serve on the Nominating Committee if the percentage of Common Stock (including Common Stock issuable upon conversion of outstanding securities or upon the exercise of any outstanding options, warrants, rights or obligations other than the Warrants and Excluded Options) Beneficially Owned by such Stockholder or group of Stockholders falls below 5% (or, with respect to the Erin Mills Stockholders and By-Word Stockholders, 20% for the right to designate two Directors and 5% for the right to designate one Director) on a Fully Diluted Basis. If By-Word has only one designee, it shall be the chief executive officer of the Company if the chief executive officer is a By-Word Stockholder. Upon the failure of any Stockholder or group of Stockholders to maintain the required percentage, the Stockholder or group of Stockholders shall require its designee to resign and the size of the Board may, in the determination of the Nominating Committee, either be reduced to eliminate such the resulting vacancy on the Board or remain the same (in which case, the resulting vacancy on the Board will be filled by a Director nominated by the Nominating Committee), provided that the Stockholders agree that if the chief executive officer is not a By-Word designee, in accordance with the provisions hereof, the chief executive officer shall be nominated by the Nominating Committee. (c) Pursuant to Article VII of the Incentive Stock Option Plan, the Board shall appoint a three-person Compensation Committee to administer the Incentive Stock Option Plan. Following receipt of Regulatory Relief, a Director designated by SBW shall serve on the Compensation Committee. The Compensation Committee shall be comprised of only non-management Directors serving on the Board. Each Stockholder hereby agrees to take, at any time and from time to time, all action necessary (including, without limitation, voting the shares of the Common Stock owned or controlled by such Stockholder, calling special meetings of stockholders and executing and delivering written consents) to cause the Board to 31 appoint to the Compensation Committee the number of persons meeting the requirements of this subsection. (d) The Stockholders agree that no Director may be removed except at the request of the holders of a majority of the shares of Common Stock entitled to appoint such Director in accordance with Section 5(b), and each Stockholder hereby agrees to take all action necessary (including, without limitation, voting the shares of Common Stock owned or controlled by such Stockholder, calling special meetings of stockholders and executing and delivering written consents) for the purpose of accomplishing the purposes of this Agreement. If a vacancy on the Board occurs by reason of the death, removal, resignation, retirement or election not to serve of a designee, the remaining Directors and the Company shall cause the vacancy thereby created to be filled by a new designee as soon as possible (the "Replacement Director"), who is designated in the same manner and by the same persons specified in Section 5(b) as the Director being replaced had been, and the Company and each Stockholder hereby agrees to take, at any time and from time to time, all actions necessary to accomplish the same; provided, however, that if any group fails to designate a representative in accordance with Section 5(b) above for a period of thirty (30) consecutive days, then such vacancy shall be filled by the Nominating Committee until such time as the Replacement Director is designated in accordance with Section 5(b), at which time the term of the Director not elected in accordance with Section 5(b) shall expire. (e) In addition to any compensation to which the members of the Board may be entitled, the Company shall reimburse each Director for the reasonable out-of-pocket expenses incurred by such Director (including, without limitation, reasonable fees and expenses of counsel, accountants, or representatives, if any) involved with such Director's services as a member of the Company. In addition, the Company shall obtain and maintain at all times during which this Agreement remains in effect, at the cost and expense of the Company, director liability insurance policies covering each member of the Board. Such director liability insurance policies shall be provided by a reputable nationally recognized insurance carrier and shall provide coverage in such amounts and on such terms as may be reasonably acceptable to each member of the Board. Should SBW so request, the Company will enter into contractual indemnification arrangements with the Director reasonably satisfactory to SBW. (f) In addition to any vote or consent of the Board of Directors or its stockholders required by law or the Certificate of Incorporation, including the terms of Series D Preferred Stock and the Class B Common Stock, the affirmative vote of 32 a majority of the entire Board of Directors (not merely a quorum) shall be necessary for authorizing, effecting or validating the following actions: (i) the approval of any annual budget or business plan for the Company or any Subsidiary of the Company or the deviation by the Company or any such Subsidiary from any annual budget for the Company or such Subsidiary approved by the Board of Directors by more than five percent (5%); (ii) any capital expenditure or expenditures by the Company or any Subsidiary of the Company which, individually or in the aggregate, exceeds $1,000,000; (iii) the hiring or termination by the Company or any Subsidiary of the Company of any officer or senior management employee of the Company or such Subsidiary; (iv) directly or indirectly redeem, purchase or make any payments with respect to any stock appreciation rights, phantom stock plans or similar rights or plans; (v) (A) sell, lease, transfer or otherwise convey, or permit any Subsidiary to sell, lease, transfer or otherwise convey, any assets representing five percent (5%) or more of the consolidated assets of the Company and its Subsidiaries, (B) consolidate or merge with, or permit any Subsidiary to consolidate or merge with, any Person, (C) reclassify or otherwise change, or permit any Subsidiary to reclassify or otherwise change, any capital stock of the Company or any Subsidiary or (D) dissolve, liquidate or wind-up the Company or permit any Subsidiary to dissolve, liquidate or wind up such Subsidiary. (vi) except as expressly contemplated by the Purchase Agreement or the any of the Transaction Documents, authorize, issue or enter into any agreement providing for the issuance, or permit any Subsidiary to authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) in excess of an aggregate of $5,000,000 (A) any notes or debt securities containing equity features (including, without limitation, any note or debt securities convertible into or exchangeable for capital stock or other equity securities, issued in connection with the issuance of capital stock or other equity 33 securities, or containing profit participation features) or (B) any capital stock or other equity securities, or any securities convertible into or exchangeable for any capital stock or other equity securities, other than issuances pursuant to the Incentive Stock Option Plan; (vii) acquire, or permit any Subsidiary to acquire, in one transaction or a series of related transactions, any capital stock, other equity interests or assets of any Person for aggregate consideration in excess of $5,000,000; (viii) enter into, or permit any Subsidiary to enter into, any agreement, contract, lease or commitment on the part of the Company or such Subsidiary involving the payment or provision of consideration by or to the Company or such Subsidiary, the fair market value of which exceeds $1,000,000; (ix) make any capital expenditure, or permit any Subsidiary to make any capital expenditure, in excess of $1,000,000; (x) except as expressly contemplated by the Purchase Agreement, amend the Certificate of Incorporation, or the Company's bylaws or file any resolution of the board of directors with the Secretary of State of the State of Delaware containing any provisions which would adversely affect or otherwise impair the rights of the holders of the Common Stock; (xi) enter into, or permit any Subsidiary to enter into, any agreement, transaction, commitment or arrangement with any of its or any Subsidiary's officers, directors, employees, stockholders or Affiliates or with any individual related by blood, marriage or adoption to any such individual or with any entity in which such Person or individual own, in the aggregate, a more than 10% beneficial interest, except for (A) customary employment arrangements and benefit programs on arms' length terms and (B) agreements, transactions, commitments or arrangements on arms' length terms and approved by a majority of the Company's disinterested directors; or (xii) enter into, or permit any Subsidiary to enter into, any agreement to do or effect any of the foregoing. 34 (g) Following the receipt of Regulatory Relief, if SBW does not hold any Series D Preferred Stock or Class B Common Stock but does own at least 1.6 million shares of Common Stock (including Common Stock issuable upon conversion of outstanding securities or upon the exercise of any outstanding options, warrants, rights or obligations, other than the Warrants and Excluded Options) on a Fully Diluted Basis, the approval of SBW shall be required for the following actions: (i) the approval of any annual budget or business plan for the Company or any Subsidiary of the Company or the deviation by the Company or any such Subsidiary from any annual budget for the Company or such Subsidiary approved by the Board of Directors by more than five percent (5%); (ii) issuance by the Company of any equity securities, including securities convertible into equity securities (other than (A) the grant of employee stock options (subject to the proviso set forth in (D) below), (B) the issuance of equity securities in accordance with the terms of the Purchase Agreement or any of the other Transaction Documents), (C) the issuance of equity securities upon the exercise or conversion of securities or employee stock options that are outstanding as of the date hereof or (D) the issuance of equity securities after giving effect to the consummation of the transactions contemplated hereby or employee stock options granted hereafter, provided, however, that there shall not be outstanding at any time employee stock options for more than 1.5 million shares of Common Stock plus the options granted to William C. Kennedy, Jr. and William C. Saunders that are outstanding at September 27, 1996) or incurrence of any indebtedness for borrowed money or evidenced by bonds, notes or debentures, provided that the Company can incur up to $5 million in indebtedness in any year without the consent of SBW; (iii) the hiring or termination by the Company of its chief executive officer, chief operating officer or chief financial officer; (iv) the Company's entering into any lines of business which is not its Existing Line of Business (as hereinafter defined) or any joint ventures, partnerships or similar arrangements; (v) the Company's exiting its Existing Line of Business (as hereinafter defined) or disposing of assets (other than 35 telecommunications equipment and other assets sold in the ordinary course of business) in any year with a value in excess of $500,000 or which are otherwise material to the Company's operations; (vi) the adoption, implementation or acceptance (including the failure to opt out) of any Anti-Takeover Provision not in effect as of the date hereof that would be applicable to, and, in the reasonable determination of SBW, adversely affect, SBW and its Affiliates; or (vii) the taking of any corporate action that would reduce the number of Shares held by SBW and its Affiliates to fewer than 1.6 million shares of Common Stock such that SBW no longer has the right to approve any of the actions specified in this subsection (g). As used in this subsection (g), the terms set forth below shall have the following respective meanings; "Anti-takeover Provision" means (i) any provision of the certificate of incorporation or bylaws of the Company or any contract, agreement or plan to which the Company is a party or by which it is bound or any statutory provision enacted after the date hereof which is applicable to the Company which the Company may opt out of if the effect of such provision would be to materially delay, hinder or prevent a change in control of the Company or (ii) a stockholder rights plan or "poison pill," including the provisions of any preferred stock or common stock purchase rights issued pursuant thereto; provided, however, that such term shall not include any customary change of control provisions contained in employment agreements between the Company and any of its directors, officers or other employees or in any plans or agreements relating to stock options or other awards of equity securities made by the Company to any such persons. "Existing Line of Business" means a non-facilities based, enhanced service provider that offers fleet management and/or status or information about vehicles and/or location capabilities through mobile communications service. (h) The Board shall hold, during the term of this Agreement, regularly scheduled, in-person meetings no less frequently than six times per year. (i) At all times during which this Agreement remains in effect, each Stockholder hereby agrees to take all action necessary (including, without limitation, voting the shares of the Company's Common Stock owned or controlled by such 36 Stockholder, calling special meetings of stockholders and executing and delivering written consents) to ensure that the By-Laws of the Company provide that the information listed on Schedule A hereto shall be provided to each member of the Board of Directors, at the time and in the manner required by the provisions of Schedule A. (j) The Company and each Stockholder agrees not to, and to cause its designees on the Board not to, without the prior approval of SBW, alter, amend, repeal or replace the Bylaws set forth on Exhibit B hereto or to enact any Bylaws inconsistent therewith. (k) For the purpose of this Section 5, Chase Manhattan Investment Holdings, Inc., Archery Partners and their respective assigns shall not be considered Carlyle Stockholders. Section 6. Miscellaneous. (a) Legend. The certificates representing the capital stock of the Company held by each of the Stockholders shall bear the following legend (provided that with respect to SBW and any certificates issued after the date hereof such legend shall refer to this Agreement): "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES OR SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY SIMILAR REQUIREMENTS OF ANY APPLICABLE STATE SECURITIES LAW. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 4, 1994, A COPY OF WHICH IS AVAILABLE UPON REQUEST FROM THE SECRETARY OF THE COMPANY." If any capital stock of the Company becomes eligible for sale pursuant to Rule 144(k) promulgated under the Securities Act, the Company shall, subject to applicable law and upon the request of any holder of such capital stock, remove the legend set forth in this Section 6(a) from the certificates evidencing the shares of such capital stock held by such holder. In addition, (i) in connection with any Transfer of 37 shares of any capital stock of the Company pursuant to any public offering registered under the Securities Act or pursuant to Rule 144 (or any similar rule or rules then in effect promulgated under the Securities Act) if such rule is available or (ii) if the holder of any shares of capital stock of the Company delivers to the Company an opinion of counsel reasonably acceptable to the Company that no subsequent Transfer of such shares shall require registration under the Securities Act, the Company shall promptly upon such Transfer deliver new certificates for such shares which do not bear the legend set forth in this Section 6(a). (b) Successors, Assigns and Transferees. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective legal representatives, heirs, legatees, successors and permitted assigns. The only permitted assigns (each, a "Permitted Assign") are as follows: (i) each of the Clipper Stockholders shall be entitled to assign any of its rights under this Agreement to any other Clipper Stockholder; (ii) each of the Carlyle Stockholders shall be entitled to assign any of its rights under this Agreement to any other Carlyle Stockholder or any Related Party of a Carlyle Stockholder (other than an Excluded Related Party); (iii) each of the By-Word Stockholders shall be entitled to assign any of its rights under this Agreement to any other By-Word Stockholder; (iv) each of the Erin Mills Stockholders shall be entitled to assign any of its rights under this Agreement to any other Erin Mills Stockholder or any Related Party of an Erin Mills Stockholder (other than an Excluded Related Party) and (v) SBW shall be entitled to assign any of its rights under this Agreement to any of its Affiliates. No party hereto shall be entitled to assign any of its rights under this Agreement to any Person which is otherwise a Permitted Assign hereunder unless, concurrently with such assignment, such party is Transferring all or a portion of the Shares owned by it to such Person in compliance with the terms and provisions set forth herein and such Person executes a supplemental agreement hereto in form and substance reasonably satisfactory to the Company pursuant to which such Person agrees to become a party to, and be bound by, this Agreement. (c) Specific Performance, Etc. The Company and each Stockholder, in addition to being entitled to exercise all rights provided herein, in the Company's Certificate of Incorporation or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Stockholder agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 38 (d) Governing Law. This Agreement shall be governed by and construed in accordance with the internal law of the State of Delaware without giving effect to the conflict of laws provisions thereof. (e) Interpretation. The headings of the sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. (f) Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. SBW agrees to give the Company written notice when Regulatory Relief has been obtained. Any such notice shall be deemed given when so delivered personally, sent by facsimile transmission or, if mailed, three (3) business days after the date of deposit in the United States mail, by certified mail return receipt requested, as follows: (i) If to the Company to: HighwayMaster Communications, Inc. 16479 Dallas Parkway, Suite 710 Dallas, Texas 75248 Attention: William Kennedy Telecopier: (972) 930-7263 with a copy (which shall not constitute notice) to: Baker & Botts, L.L.P. 2001 Ross Avenue Dallas, Texas 75201 Attention: Geoffrey L. Newton Telecopier: (214) 953-6503 (ii) If to any of the Carlyle Entitles, to c/o The Carlyle Group, L.P. 1001 Pennsylvania Avenue, N.W. Suite 220 South Washington, D.C. 20004-2505 Attention: Mark D. Ein Telecopier: (202) 347-1818 39 with a copy (which shall not constitute notice) to: Latham & Watkins 1001 Pennsylvania Avenue, N.W. Suite 1300 Washington, D.C. 20004-2505 Attention: Bruce E. Rosenblum, Esq. Telecopier: (202) 637-2201 (iii) If to any of the Clipper Entities, to The Clipper Group, L.P. 12 East 49th Street New York, N.Y. 10017 Attention: Daniel V. Cahillane Telecopier: (212) 318-1360 with a copy (which shall not constitute notice) to: Weil, Gotshal & Manges, LLP 767 Fifth Avenue New York, N.Y. 10153 Attention: Howard Chatzinoff Telecopier: (212) 310-8007 40 (iv) If to any of the Erin Mills Companies, to Erin Mills International Trident House, Suite 204(a) Broad Street Bridgetown, Barbados West Indies Attention: Stephen Greaves Telecopier: (809) 436-2120 with a copy (which shall not constitute notice) to: 7501 Keele Street, Suite 500 Concord, Ontario L4K 1Y2 Canada Attention: Gerry C. Quinn Telecopier: (416) 736-8373 (v) If to any of the By-Word Stockholders, to: HighwayMaster Communications, Inc. 16479 Dallas Parkway Suite 710 Dallas, Texas 75248 Attention: William Kennedy Telecopier: (972) 930-7263 41 (vi) If to Chase Manhattan Investment Holdings, Inc. or Archery Partners: The Chase Manhattan Bank One Chase Plaza New York, NY 10081 Attention: William K. Luby Telecopier: (212) 552-2958 with a copy (which shall not constitute notice) to: Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attention: Emile Karafiol Telecopier: (312) 861-2200 42 (vii) If to Southwestern Bell Wireless Holdings, Inc. Southwestern Bell Wireless Holdings, Inc. 17330 Preston Road Suite 100A Dallas, Texas 75252 Attention: President Telecopier: (972) 733-2012 and to: SBC Communications, Inc. 175 E. Houston San Antonio, Texas 78205 Attention: General Attorney, Mergers & Acquisitions Telecopier: (210) 351-3488 with a copy (which shall not constitute notice) to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Janet T. Geldzahler Telecopier: (212) 558-3588 Any party may change its address for notice by written notice to the other parties in accordance with this provision. (g) Termination. This Agreement will terminate and the Original Agreement, as in effect on the date prior to the date hereof, will be deemed to be in effect if the Purchase Agreement is terminated pursuant to Section 2(c) thereof. Sections 3(b) and (c) hereof shall terminate at that time that SBW and its Affiliates cease to own at least 1.6 million shares of Common Stock (including Common Stock issuable upon conversion of outstanding securities or upon the exercise of any outstanding options, warrants, rights or obligations, other than the Warrants and Excluded Options). 43 (h) Inspection and Compliance with Law. Copies of this Agreement will be available for inspection or copying by any Stockholder at the offices of the Company through the Secretary of the Company. (i) Amendments and Waivers. The provisions of this Agreement, including the provisions of this paragraph (h), may not be amended, modified or supplemented, and waivers of or consents to departures from the provisions hereof may not be given, except by a written instrument executed by (i) the Company, (ii) a Majority in Interest of the By-Word Stockholders, (iii) a Majority in Interest of the Carlyle Stockholders and the Clipper Stockholders acting as a group, (iv) a Majority in Interest of the Erin Mills Stockholders and (v) SBW; provided, however, that amendments of or modification to Section 4 will be subject to the requirements of Section 4(k). No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as waiver of any preceding or succeeding breach and no failure by any party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. (j) Transfer Void. Any Transfer of any security of the Company in violation of this Agreement shall be null and void and the Company covenants and agrees that it will not register or otherwise recognize a Transfer (whether for the purposes of shareholder voting or in connection with the distribution of dividends or other corporate assets) of any securities which it has reason to believe was effected in violation of this Agreement. (k) Counterparts. This Agreement may be executed in one or more counterparts, by the original parties hereto and any successor in interest, each of which shall be deemed to be an original and all of which together shall be deemed to constitute one and the same agreement. (l) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. (m) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, 44 illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby. 45 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. HIGHWAYMASTER COMMUNICATIONS, INC. By: /s/ William C. Saunders Name: William C. Saunders Title: SOUTHWESTERN BELL WIRELESS HOLDINGS, INC. By: /s/ S. Sigman Name: Stan Sigman Title: President & CEO CARLYLE-HIGHWAYMASTER INVESTORS, L.P. By: TC Group, L.L.C., its General Partner By: /s/ M.D. Ein Name: Title: CARLYLE-HIGHWAYMASTER INVESTORS II, L.P. By: TC Group, L.L.C., its General Partner By: /s/ M.D. Ein Name: Title: 46 H.M. RANA INVESTMENTS LIMITED By: By: /s/ F.A. Almubarak Name: Fahad A. Almubarak Title: President TC GROUP, L.L.C. By: /s/ M.D. Ein Name: Title: /s/ M.D. Ein CHASE MANHATTAN INVESTMENT HOLDINGS, INC. By: Name: Title: ARCHERY PARTNERS By: its General Partner By: Name: Title: 47 CLIPPER CAPITAL ASSOCIATES, L.P. By: Clipper Capital Associates, Inc., its General Partner By: /s/ Daniel V. Cahillane Name: Daniel V. Cahillane Title: Treasurer & Secretary CLIPPER/MERCHANT PARTNERS, L.P. By: Clipper Capital Associates, L.P. its General Partner By: Clipper Capital Associates, Inc. its General Partner By: /s/ Daniel V. Cahillane Name: Daniel V. Cahillane Title: Treasurer & Secretary CLIPPER/MERBAN, L.P. By: Clipper Capital Associates, L.P. its General Partner By: Clipper Capital Associates, Inc. its General Partner By: /s/ Daniel V. Cahillane Name: Daniel V. Cahillane Title: Treasurer & Secretary ERIN MILLS INTERNATIONAL INVESTMENT CORPORATION By: /s/ S.L. Greaves Name: Stephen L. Greaves Title: General Manager 48 THE ERIN MILLS DEVELOPMENT CORPORATION By: /s/ G.C. Quinn Name: G.C. Quinn Title: Executive Vice President THE ERIN MILLS INVESTMENT CORPORATION By: /s/ G.C. Quinn Name: G.C. Quinn Title: President /s/ William C. Kennedy, Jr. William C. Kennedy, Jr. Donald M. Kennedy /s/ William C. Saunders William C. Saunders /s/Robert T. Hayes, by Douglas Dunlop, Attorney-in-Fact Robert T. Hayes /s/Hoddard Dinchlen, Attorney-in- Fact, for Robert S. Folsom Robert S. Folsom 49 The undersigned are executing this Agreement solely for the purpose of evidencing their approval of the amendment and restatement of the Original Agreement (as amended from time to time) in its entirety as set forth herein, it being understood that the undersigned shall not be deemed Stockholders for purposes of this Agreement and shall not have any rights or obligations hereunder. /s/ Margaret D. Folsom Margaret D. Folsom /s/ R. Stephen Folsom R. Stephen Folsom Joann Hayes /s/ Cynthia Ann Hayes Cynthia Ann Hayes /s/ Alicia Ellen Hayes Alicia Ellen Hayes 50 APPENDIX A ORIGINAL PARTIES Carlyle-HighwayMaster Investors, L.P. Carlyle-HighwayMaster Investors II, L.P. Chase Manhattan Investment Holdings, Inc. Clipper/Merban, L.P. Clipper/Merchant Partners, L.P. Clipper Capital Associates, L.P. Erin Mills International Investment Corporation FU Enterprises Ltd. By-Word Technologies, Inc. Robert S. Folsom Robert T. Hayes A-1 APPENDIX B AMENDMENTS AND ADDENDA 1. Addendum No. 1 to Subscription Agreement and Stockholders Agreement by and among HM Holding Corporation, Carlyle-HighwayMaster Investors, L.P., Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC Group, L.L.C., Chase Manhattan Investment Holdings, Inc., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Erin Mills International Investment Corporation, FU Enterprises Ltd., By-Word Technologies, Inc., Robert S. Folsom and Robert T. Hayes. 2. Consent of Security Holders of HM Holding Corporation and Second Amendment to Stockholders' Agreement, dated November, 1994, among HM Holding Corporation, By-Word Technologies, Inc., the former shareholders of By-Word Technologies, Inc. listed on Exhibit A, Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Carlyle-HighwayMaster Investors, L.P., CarlyleHighwayMaster Investors II, L.P., TC Group, L.L.C., H.M. Rana Investments Limited, Chase Manhattan Investment Holdings, Inc., Erin Mills International Investment Corporation, Robert S. Folsom and Robert T. Hayes. 3. Joinder Agreement to Stockholders Agreement executed as of January 3, 1995 by Mark D. Ein. 4. Third Amendment to Stockholders Agreement, dated as of April 28, 1995, among HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P., Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Erin Mills International Investment Corporation, Robert S. Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes, Cynthia Ann Hayes, Alicia Ellen Hayes, Joann Hayes, William C. Saunders, William C. Kennedy, Jr. and Donald M. Kennedy. 5. Note Exchange and Amendments Agreement, dated as of May 26, 1995, among HighwayMaster Communications, Inc., Archery Partners, Chase Manhattan Investment Holdings, Inc., Carlyle-HighwayMaster Investors, L.P., Carlyle-HighwayMaster Investors II, L.P., H.M. Rana Investments Limited, TC Group, L.L.C., Clipper/Merban, L.P., Clipper Merchant Partners, L.P., Clipper Capital Associates, L.P., Erin Mills International Investment Corporation, Robert S. Folsom, Margaret D. Folsom, R. Stephen Folsom, Robert T. Hayes, Cynthia Ann Hayes, Alicia Ellen Hayes, Joann Hayes, William B-1 C. Saunders, William C. Kennedy, Jr., Donald M. Kennedy, Mark D. Ein and The Erin Mills Investment Corporation. B-2 APPENDIX C FORMER PARTIES Margaret D. Folsom R. Stephen Folsom Joann Hayes Cynthia Ann Hayes Alicia Ellen Hayes C-1 APPENDIX D CERTAIN STOCKHOLDERS NUMBER OF SHARES Erin Mills International Investment Corporation 8,141,706 William C. Kennedy, Jr. 2,029,318 Carlyle-HighwayMaster Investors, L.P. 1,805,727 William C. Saunders 892,015 Clipper/Merban, L.P. 530,930 Clipper/Merchant Partners, L.P. 524,209 H.M. Rana Investments Limited 423,802 T.C. Group, L.L.C. 291,315 Robert S. Folsom 280,000 Carlyle-HighwayMaster Investors II, L.P. 170,071 D-1 EX-5 6 EXHIBIT 5 FORM OF CONSENT OF STOCKHOLDER OF HIGHWAYMASTER COMMUNICATIONS, INC. The undersigned being the holder of _________ shares of Common Stock, par value $0.01 per share, of HighwayMaster Communications, Inc., on September 30, 1996 does hereby consent to the adoption of and hereby adopts the resolution attached as Annex A hereto and directs that this consent be delivered to the officer or agent having custody of the books in which proceedings of meetings of the stockholders are kept. IN WITNESS WHEREOF, the undersigned has signed this consent this ____ day of September, 1996. STOCKHOLDER By:______________________________________ By:___________________________________ Name:______________________________ Title:_____________________________ Consented to and Accepted: HIGHWAYMASTER COMMUNICATIONS, INC. By:_______________________________ Name:__________________________ Title:_________________________ Annex A STOCKHOLDER RESOLUTIONS CHARTER AMENDMENT WHEREAS, attached as Exhibit A hereto is a Certificate of Amendment (the "Certificate of Amendment") which sets forth a proposed amendment (the "Proposed Charter Amendment") to the Certificate of Incorporation of HighwayMaster Communications, Inc. (the "Company") for the purpose of, among other things, creating a new class of common stock of the Company designated as Class B Common Stock, par value $.01 per share ("Class B Common Stock"); NOW THEREFORE BE IT RESOLVED, that the form, terms and provisions of the Certificate of Amendment are hereby approved in all respects, and the Proposed Charter Amendment is hereby adopted and approved. WARRANTS WHEREAS, attached as Exhibit B hereto is a Warrant Certificate (the "Warrant Certificate") evidencing warrants (the "Warrants") to purchase 5,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), of the Company to be executed by the Company in favor of Southwestern Bell Wireless Holdings, Inc.; NOW THEREFORE BE IT RESOLVED, that the Corporation is hereby authorized, empowered and directed to issue and deliver up to 5,000,000 shares of Common Stock upon the exercise of the Warrants in accordance with the terms and subject to the conditions set forth in the Warrant Certificate. Appendix to Exhibit 5 Erin Mills International Investment Corporation William C. Kennedy, Jr. Carlyle-HighwayMaster Investors, L.P. William C. Saunders Clipper/Merban, L.P. Clipper/Merchant Partners, L.P. H.M. Rana Investments Limited T.C. Group, L.L.C. Robert S. Folsom Carlyle-HighwayMaster Investors II, L.P. EX-6 7 EXHIBIT 6 FORM OF IRREVOCABLE PROXY The undersigned stockholder of HighwayMaster Communications, Inc., a Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent provided by law) appoints Southwestern Bell Wireless Holdings, Inc., a Delaware corporation ("SBW"), or its nominee, the attorney and proxy of the undersigned, with full power of substitution and resubstitution, to the full extent of the undersigned's rights with respect to the _____________ shares of Common Stock, par value $0.01 per share ("Common Stock"), of the Company owned beneficially or of record by the undersigned (the "Shares"), and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof, to exercise the voting and other rights specified below in accordance with the provisions and subject to the limitations set forth herein. Upon the execution hereof, all prior proxies given by the undersigned with respect to the Shares and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof as to matters covered hereby are hereby revoked and no subsequent proxies will be given as to the matters covered hereby. This proxy is irrevocable (to the fullest extent provided by law), coupled with an interest, and is granted in connection with the Amended and Restated Stockholders' Agreement, dated the date hereof, among the Company and the stockholders party thereto, including the undersigned stockholder (the "Stockholders' Agreement"), and is granted in consideration of SBW entering into the Purchase Agreement, dated the date hereof (the "Purchase Agreement"), between the Company and SBW. The attorney and proxy named above will be empowered to exercise all voting and other rights (including, without limitation, the power to execute and deliver written consents with respect to the Shares) of the undersigned at every annual, special or adjourned meeting of stockholders of the Company and in every written consent in lieu of such a meeting, or otherwise, (i) in favor of approval of the adoption of the Certificate of Amendment attached hereto as Exhibit A (the "Certificate of Amendment"), (ii) in favor of the approval of the issuance by the Company to SBW of shares of Common Stock upon the exercise of the Warrants to purchase an aggregate of up to 5,000,000 shares of Common Stock evidenced by the Warrant Certificate, dated the date hereof, executed by the Company in favor of SBW and (iii) against any action or agreement that, directly or indirectly, is inconsistent with or that is reasonably likely to impede, interfere with, delay or postpone the transactions referred to in clause (i) or (ii) above. The attorney and proxy named above may only exercise this proxy to vote the Shares subject hereto at any annual, special or adjourned meeting of the stockholders of the Company, and in any written consent in lieu of such meeting, with respect to the matters specified in clauses (i), (ii) and (iii) of the immediately preceding paragraph, and may not exercise this proxy in respect of any other matter. The undersigned stockholder may vote the Shares (or grant one or more proxies to vote the Shares) on all other matters. Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned. The undersigned stockholder shall perform such further acts and execute such further documents as may reasonably be required to vest in SBW the power to vote the Shares in accordance with the provisions and subject to the limitations set forth herein and to otherwise carry out the provisions of this proxy. This power of attorney and proxy shall terminate upon the earlier of the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware and the termination of the Purchase Agreement pursuant to Section 2 thereof. Date: September ___, 1996 STOCKHOLDER By:__________________________________________ Name:_____________________________________ Title:____________________________________ Appendix to Exhibit 6 Erin Mills International Investment Corporation William C. Kennedy, Jr. Carlyle-HighwayMaster Investors, L.P. William C. Saunders Clipper/Merban, L.P. Clipper/Merchant Partners, L.P. H.M. Rana Investments Limited T.C. Group, L.L.C. Robert S. Folsom Carlyle-HighwayMaster Investors II, L.P. -----END PRIVACY-ENHANCED MESSAGE-----