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 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
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effective date of such adjustment. The corporation may obtain the
certificate of any independent firm of public accountants of national
recognition selected by the Board of Directors which, if obtained, shall be
presumptive evidence of the correctness of any computation made under Section
1(c).
2. VOTING RIGHTS
(a) GENERAL. The holders of Common Stock and Class B Common Stock
shall have identical voting rights and vote together as a single class on all
actions to be taken by such holders, except as specified below. Each share
of Common Stock shall, when entitled to vote, have one vote and each share of
Class B Common Stock shall, when entitled to vote, have the number of votes
that a holder of the Reference Package would have.
(b) ELECTION OF DIRECTORS. There shall be two classes of
directors, those elected by the Common Stock ("Common Directors") and those
elected by the Class B Common Stock ("Class B Directors"). The rights,
duties and authority of the Common Directors and the Class B Directors shall
be identical in all respects. The number of Common Directors shall be the
number to be determined by the Nominating Committee of the Corporation. The
number of Class B Directors shall be one, except that if Southwestern Bell
Wireless Holdings, Inc. ("SBW") and its Affiliates Beneficially Own (as
hereinafter defined) 20% or more of the outstanding Common Stock, including
Common Stock issuable upon conversion of Class B Common Stock or other
convertible securities or upon the exercise of any outstanding options,
warrants, rights or obligations, other than shares issuable upon the exercise
of (i) the 5,000,000 warrants issued on September 27, 1996 (the "Warrants"),
and (ii) options, warrants, rights or obligations issued by any entity other
than the corporation ("Excluded Options"), there shall be two Class B
Directors. For the purposes of the foregoing calculations, the number of
outstanding shares of Common Stock shall include all shares issuable upon
conversion of outstanding convertible securities or upon exercise of
outstanding options, warrants, rights or obligations other than the Warrants,
Excluded Options and employee stock options. As used herein, an "Affiliate"
of any specified person or entity means any person or entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with such person. As used herein, the term "Beneficially Own" (and
correlative terms) shall mean, with respect to any shares of Common Stock or
other securities, to be entitled, directly or indirectly through one or more
intermediaries, to all material incidents of ownership with respect to such
securities, including, but not limited to, (i) the right to vote such
securities (in the case of voting securities), (ii) subject to any transfer
restrictions, the right to dispose of such securities and to receive any
proceeds realized from the
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disposition thereof and (iii) the right to receive any dividends and other
distributions with respect to such securities.
The Common Directors shall be elected by the holders of Common
Stock by a plurality vote and the Class B Directors shall be elected by the
holders of the Class B Common Stock by a plurality vote, in either case at an
annual stockholders meeting, except as hereinafter provided, and each
director shall hold office until his successor has been duly elected and
qualified or his earlier death, resignation or removal. Vacancies in any
class of directors and newly created directorships resulting from any
increase in the authorized number of directors of any class of Company Common
Stock may be filled by the majority of directors of such class then in
office, though less than a quorum, or by a sole remaining director so elected
and the directors so chosen shall hold office until the next annual election
and until their successors are duly elected and shall qualify, or until their
earlier death, resignation or removal. If there are no directors in office,
then an election of directors may be held in the manner provided by law. If,
at the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of the whole
Board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent (10%) of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancy or newly-created directorships,
or to replace the directors chosen by the directors then in office. Unless
otherwise restricted by law, any director or the entire Board may be removed,
with or without cause, by a majority vote of the class of Company Common
Stock entitled to elect such director or directors. No decrease in the size
of the Board shall serve to shorten the term of an incumbent director.
(c) VOTING RIGHTS OF CLASS B COMMON STOCK. The following actions
shall require the approval of a majority of the outstanding Class B Common
Stock, voting as a single class:
(i) the approval of any annual budget or business plan for
the corporation or any subsidiary of the corporation or the deviation
by the corporation or any such subsidiary from any annual budget for
the corporation or such subsidiary approved by the Board of Directors
by more than five percent (5%);
(ii) issuance by the corporation of any equity securities,
including securities convertible into equity securities (other than
(A) the grant of employee stock options (subject to the proviso set
forth in (D)
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below), (B) the issuance of equity securities pursuant to
the Purchase Agreement, dated as of September 27, 1996 between the
corporation and SBW (the "Purchase Agreement") or pursuant to any of
the other Transaction Documents (as defined in the Purchase
Agreement), (C) the issuance of equity securities upon the exercise or
conversion of securities or employee stock options that are
outstanding as of September 27, 1996 or (D) the issuance of equity
securities upon the conversion of Class B Common Stock or upon the
exercise of employee stock options granted hereafter, PROVIDED,
HOWEVER, that there shall not be outstanding at any time employee
stock options for more than 1.5 million shares of Common Stock plus
the options granted to William C. Kennedy, Jr. and William C. Saunders
that are outstanding at September 27, 1996) or incurrence of any
indebtedness, provided that the corporation can incur up to $5 million
in indebtedness in any year without the approval of the Class B Common
Stock;
(iii) the hiring or termination by the corporation of
its chief executive officer, chief operating officer or chief
financial officer;
(iv) the corporation's entering into any line of business
other than its Existing Line of Business (as hereinafter defined) or
into any joint ventures, partnerships or similar arrangements;
(v) the corporation's exiting its Existing Line of Business
or disposing of assets (other than telecommunications equipment and
other assets sold in the ordinary course of business) in any year with
a value in excess of $500,000 or which are otherwise material to the
corporation's operations;
(vi) the adoption, implementation or acceptance (including
the failure to opt out) of any Anti-Takeover Provision (as hereinafter
defined) not in effect as of September 27, 1996 that would be
applicable to, and, in the reasonable determination of SBW, adversely
affect, the holders of the Class B Common Stock and their Affiliates;
or
(vii) the taking of any corporate action that would
reduce the number of shares in the Reference Package below 1,600.
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"Anti-Takeover Provision" means (i) any provision of the
certificate of incorporation or bylaws of the corporation or any contract,
agreement or plan to which the corporation is a party or by which it is bound
or any statutory provision enacted after September 27, 1996 which is
applicable to the corporation which the corporation may opt out of if the
effect of such provision would be to materially delay, hinder or prevent a
change in control of the corporation or (ii) a stockholder rights plan or
"poison pill," including the provisions of any preferred stock or common
stock purchase rights issued pursuant thereto; provided, however, that such
term shall not include any customary change of control provisions contained
in employment agreements between the corporation and any of its directors,
officers or other employees or in any plans or agreements relating to stock
options or other awards of equity securities made by the corporation to any
such persons.
"Existing Line of Business" means a non-facilities based, enhanced
service provider that offers fleet management and/or status or information
about vehicles and/or location capabilities through mobile communications
service.
(d) BYLAWS. Any alteration, amendment, repeal or replacement of
Article XI of the corporation's bylaws, or of any other Article of the bylaws
that would have a similar effect, by the stockholders of the corporation
shall require the approval of a majority of the outstanding Class B Common
Stock, voting as a separate class.
3. CONVERSION
(a) OPTIONAL CONVERSION. At the option of the holder thereof,
each share of Class B Common Stock may be converted into the Reference
Package; provided, however, that no shares of Class B Common Stock may be
converted pursuant to this Section 3(a) unless the holders of all outstanding
shares of Class B Common Stock elect to convert such shares into the
Reference Package as of the same date in accordance with the procedures set
forth below.
(b) OPTIONAL CONVERSION PROCEDURES. Any holder of shares of Class
B Common Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Class B
Common Stock, at the principal office of the corporation or such other office
as the corporation may designate for such purpose, which certificate or
certificates, if the corporation shall so require, shall be duly endorsed to
the corporation or in blank, or accompanied by proper instruments of transfer
to the corporation or in blank, accompanied by irrevocable written notice to
the corporation that the holder elects so to convert such shares of Class B
Common Stock and specifying
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the name or names (with address or addresses) in which a certificate or
certificates evidencing shares of Common Stock are to be issued. The
corporation shall, as soon as practicable after such surrender of
certificates evidencing shares of Class B Common Stock accompanied by the
written notice and compliance with any other conditions herein contained,
deliver by first class mail postage prepaid to the holder that surrendered
such shares of Class B Common Stock or to such holder's nominee certificates
evidencing the number of full shares of Common Stock to which such holder
shall be entitled as aforesaid, together with a cash adjustment in respect of
any fraction of a share of Common Stock as provided below. No interest will
be payable with respect to any cash adjustment paid with respect to any
fractional shares of Common Stock as provided below. On the date shares of
Class B Common Stock are surrendered for conversion, dividends shall cease to
accrue on all shares of Class B Common Stock, such shares shall no longer be
deemed outstanding, all rights of the holders thereof as holders of Class B
Common Stock shall cease (other than the right to receive dividends declared
payable to holders of record of Class B Common Stock on a record date prior
to the date of surrender) and thereupon the certificate or certificates
theretofore representing such shares of Class B Common Stock shall represent
only the right to receive the Common Stock deliverable upon conversion in
respect thereof.
(c) FRACTIONAL SHARES; TAXES. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of Class B
Common Stock. If any such conversion would otherwise require the issuance of
a fractional share, an amount equal to such fraction multiplied by the
Closing Price of the Common Stock on the day of conversion shall be paid to
the holder in cash by the Corporation. The term "Closing Price" on any day
shall mean the reported last sale price per share of Common Stock regular way
on such day or, in case no such sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in each case on the
New York Stock Exchange, or, if the shares of Common Stock are not listed or
admitted to trading on such Exchange, the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if not so
quoted, the average of the closing bid and asked prices quoted on the Nasdaq
National Market, or, if not so quoted, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the corporation for
that purpose. The corporation will pay any and all stamp taxes, stock
issuance taxes or similar taxes that may be payable in respect of the
issuance or delivery of Common Stock on conversion of shares of Class B
Common Stock; provided, however, that the corporation shall not be required
to pay any tax or other charge that may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name
7
other than that of the record holder of the shares of Class B Common Stock
being converted and in such case the corporation shall not be obligated to
issue or deliver any stock certificate until such tax or charge has been paid
in full or it has been established to the satisfaction of the corporation
that no such tax or charge is due.
(d) AVAILABLE COMMON STOCK. The corporation shall at all times
reserve and keep available out of its authorized but unissued Common Stock,
for the purpose of issuance upon conversion of Class B Common Stock, the full
number of Common Stock then deliverable upon the conversion of all shares of
Class B Common Stock then outstanding.
4. TRANSFER
(a) PROHIBITED TRANSFERS. No holder of shares of Class B Common
Stock shall Transfer any such shares or any interest therein to any Person
(as hereinafter defined) other than SBW or an Affiliate of SBW. As used
herein, the term "Transfer" means any sale, transfer, assignment, disposition
or other means of conveying legal or beneficial ownership of such shares,
whether direct or indirect and whether voluntary or involuntary, and the
terms "Transferred," "Transferable," "Transferor" and "Transferee" have
correlative meanings. As used herein, the term "Person" means any
individual, corporation, partnership, joint stock company, joint venture,
association, trust, unincorporated organization, government or any agency,
department or political subdivision thereof, or any other entity.
(b) EFFECT OF PURPORTED TRANSFERS. Any attempted or purported
Transfer of shares of Class B Common Stock in violation of paragraph (a)
above shall not be effective to Transfer ownership of such shares to the
purported Transferee thereof, who shall not be entitled to any rights as a
stockholder of the corporation with respect to the shares purported to be
Transferred (including, but not limited to, the right to vote such shares or
to receive dividends with respect thereto). All rights with respect to any
shares attempted or purported to be Transferred in violation of the
aforementioned provisions shall remain the property of the stockholder who
initially attempted or purported to transfer such shares in violation
thereof. Upon a determination by the Board of Directors that there has been
or is threatened an attempted or purported Transfer of shares in violation of
the aforementioned provisions, the Board of Directors may take such action as
it deems advisable, including but not limited to refusing to give effect on
the books of the corporation to such attempted or purported Transfer or
instituting legal proceedings to enjoin or rescind the same.
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(c) LEGEND. All certificates evidencing shares of this Series
shall bear a conspicuous legend referencing the restrictions set forth in
this Section 4.
B. PREFERRED STOCK
The Board of Directors of the corporation, by resolution or
resolutions, may at any time and from time to time, divide and establish any
or all of the unissued shares of Preferred Stock not then allocated to any
series of Preferred Stock into one or more series and, without limiting the
generality of the foregoing, fix and determine the designation of each such
share, the number of shares which shall constitute such series and certain
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations and restrictions and voting rights of
the shares of each series so establishing.
SERIES D PARTICIPATING CONVERTIBLE
PREFERRED STOCK
1. DESIGNATION AND AMOUNT. The distinctive serial designation of
this series shall be "Series D Participating Convertible Preferred"
(hereinafter sometimes referred to as "this Series"). The number of shares
in this Series shall be 1,000, which number may be decreased (but not
increased) by the Board of Directors of the corporation (the "Board of
Directors") without a vote of stockholders; PROVIDED, HOWEVER, that such
number may not be decreased below the number of then currently outstanding
shares of this Series.
2. DIVIDENDS. (a) The holders of shares of this Series shall be
entitled to receive, when and as declared by the Board of Directors, but only
out of funds legally available therefor, dividends and distributions, on each
date that dividends or other distributions (other than dividends or
distributions payable in Common Stock (as defined below)) are payable on or
in respect of Common Stock in an amount per share of this Series equal to the
aggregate amount of dividends or other distributions (other than dividends or
distributions payable in Common Stock of the corporation) that would be
payable on such date to a holder of the Reference Package. Each such
dividend and distribution shall be paid to the holders of record of shares of
this Series on the date, not exceeding sixty days preceding such dividend or
distribution payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend or distribution.
(b) The term "Reference Package" shall initially mean 1,600 shares
of Common Stock. In the event the corporation shall at any time after the
close of business on September 27, 1996 (A) declare or pay a dividend on
any Common Stock payable in
9
Common Stock, (B) subdivide any Common Stock or (C) combine any Common Stock
into a smaller number of shares or (D) change or reclassify the Common Stock
(whether pursuant to a merger or consolidation or otherwise), then and in
each such case the Reference Package after such event shall be the Common
Stock, or new class of shares, that a holder of the Reference Package
immediately prior to such event would hold thereafter as a result thereof.
3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the affairs of the corporation, whether
voluntary or involuntary, the holders of shares of this Series shall be
entitled, before any distribution or payment is made on any date to the
holders of the Common Stock or any other stock of the corporation ranking
junior to this Series upon liquidation, to be paid in full an amount per
share of this Series equal to the greater of (A) $20,000 or (B) the aggregate
amount distributed or to be distributed prior to such date in connection with
such liquidation, dissolution or winding up to a holder of the Reference
Package (such greater amount being hereinafter referred to as the
"Liquidation Preference"), together with accrued dividends to such
distribution or payment date, whether or not earned or declared. If such
payment shall have been made in full to all holders of shares of this Series,
the holders of shares of this Series as such shall have no right or claim to
any of the remaining assets of the corporation.
(b) In the event the assets of the corporation available for
distribution to the holders of shares of this Series upon any liquidation,
dissolution or winding up of the corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (a) of this Section 3, no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series
upon such liquidation, dissolution or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such liquidation,
dissolution or winding up.
(c) For the purposes of this Section 3, the consolidation or
merger of, or binding share exchange by, the corporation with any other
corporation or the sale of all or substantially all the assets of the
corporation shall not be deemed to constitute a liquidation, dissolution or
winding up of the corporation.
4. CONVERSION PRIVILEGE. (a) Subject to and upon compliance with
the provisions of this Section 4, at the option of the holder of shares of
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this Series, shares of this Series may be converted, in blocks of 250 shares
or any larger integral multiple thereof. Such conversion right shall
commence at the opening of business on September 30, 1996.
(b) Subject to subsection (a) hereof, each share of this Series
shall be convertible into the Reference Package.
(c) The Board of Directors may make such adjustments in the
Reference Package, in addition to those required by Section 2(b), as shall be
determined by the Board, as evidenced by a Board resolution, to be necessary
and advisable in order to avoid taxation so far as practicable of any
dividend of stock or stock rights or any event treated as such for Federal
income tax purposes to the recipients.
(d) Whenever any adjustment is required in the Reference Package,
the corporation shall forthwith (i) file at the principal office of the
corporation a statement describing in reasonable detail the adjustment and
the method of calculation used, and (ii) cause a copy of such statement to be
mailed by first class mail postage prepaid to the holders of record of this
Series as of the effective date of such adjustment.
(e) The corporation shall at all times reserve and keep available
out of its authorized but unissued Common Stock, for the purpose of issuance
upon conversion of this Series, the full number of Common Stock then
deliverable upon the conversion of all shares of this Series then outstanding.
(f) The corporation will pay any and all stamp taxes, stock
issuance taxes or similar taxes that may be payable in respect of the
issuance or delivery of Common Stock on conversion of shares of this Series;
provided, however, that the corporation shall not be required to pay any tax
or other charge that may be payable in respect of any transfer involved in
the issuance and delivery of any certificate in a name other than that of the
record holder of the shares of this Series being converted and in such case
the corporation shall not be obligated to issue or deliver any stock
certificate until such tax or charge has been paid in full or it has been
established to the satisfaction of the corporation that no such tax or charge
is due.
(g) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of this Series. If any such conversion
would otherwise require the issuance of a fractional share, an amount equal
to such fraction multiplied by the Closing Price of the Common Stock on the
day of conversion shall be paid to the holder in cash by the corporation.
The term "Closing Price" on any day shall mean the reported last sale price
per share of Common Stock regular way on such day or, in case no such sale
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takes place on such day, the average of the reported closing bid and asked
prices regular way, in each case on the New York Stock Exchange, or, if the
shares of Common Stock are not listed or admitted to trading on such
Exchange, the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the closing bid
and asked prices quoted on the Nasdaq National Market, or, if not so quoted,
the average of the closing bid and asked prices as furnished by any member of
the National Association of Securities Dealers, Inc. selected from time to
time by the corporation for that purpose.
(h) The corporation may obtain the certificate of any independent
firm of public accountants of national recognition selected by the Board of
Directors, which, if obtained, shall be presumptive evidence of the
correctness of any computation made under Section 2(b).
(i) All shares of this Series surrendered for conversion or
otherwise acquired by the corporation shall be cancelled and thereupon
restored to the status of authorized but unissued preferred stock
undesignated as to series.
5. CONVERSION PROCEDURES. (a) Any holder of shares of this
Series desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of this Series together
with instructions setting forth the number of shares to be converted, at the
principal office of the corporation or such other office as the corporation
may designate for such purpose, which certificate or certificates, if the
corporation shall so require, shall be duly endorsed to the corporation or in
blank, or accompanied by proper instruments of transfer to the corporation or
in blank, accompanied by irrevocable written notice to the corporation that
the holder elects so to convert such shares of this Series and specifying the
name or names (with address or addresses) in which a certificate or
certificates evidencing shares of Common Stock are to be issued.
(b) The corporation shall, as soon as practicable after such
surrender of certificates evidencing shares of this Series accompanied by the
written notice and compliance with any other conditions herein contained,
deliver by first class mail postage prepaid to the Person that surrendered
such shares of this Series or to such Person's nominee certificates
evidencing the number of full shares of Common Stock to which such Person
shall be entitled as aforesaid, together with a cash adjustment in respect of
any fraction of a share of Common Stock as provided above. No interest will
be payable with respect to any cash adjustment paid with respect to any
fractional shares of Common Stock as provided above.
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(c) In the event that fewer than all shares of Series D
Participating Convertible Preferred represented by a surrendered certificate
are to be converted hereunder, a new certificate shall be issued at the
expense of the corporation representing the shares of Series D Participating
Convertible Preferred not so converted.
(d) On the date shares of Series D Participating Convertible
Preferred are surrendered for conversion, dividends shall cease to accrue on
any shares of this Series surrendered for conversion, such shares shall no
longer be deemed outstanding, all rights of the holders thereof as preferred
stockholders of the corporation shall cease (other than the right to receive
dividends declared payable to holders of record of this Series on a record
date prior to the date of surrender) and thereupon the certificate or
certificates theretofore representing such shares of Series D Participating
Convertible Preferred shall represent only the right to receive the Common
Stock deliverable upon conversion in respect thereof.
6. MANDATORY CONVERSION. (a) If the Regulatory Relief Date shall
not have occurred on or before September 27, 2001, all of the then
currently outstanding shares of Series D Participating Convertible Preferred
shall, at the election of the corporation at any time after the opening of
business on September 28, 2001 and after notice has been provided as set
forth below, be converted into shares of Common Stock on the basis provided
in Section 4.
(b) If the corporation has elected to convert this Series into
Common Stock pursuant to this Section 6, the corporation will provide notice
of mandatory conversion of shares of Series D Participating Convertible
Preferred pursuant to this Section 6 to holders of record of the Series D
Participating Convertible Preferred to be converted not less than 15 nor more
than 60 days prior to the date fixed for conversion. Such notice shall be
provided by mailing notice of such conversion first class mail postage
prepaid, to each holder of record of the Series D Participating Convertible
Preferred to be converted, at such holder's address as it appears on the
stock register of the corporation.
(c) Effective on the conversion date fixed by the corporation and
notified to the holders of Series D Participating Convertible Preferred
pursuant to subparagraph (b) of this Section 6, each outstanding share of
Series D Participating Convertible Preferred shall be converted into fully
paid and nonassessable shares of Common Stock on the basis provided in
Section 4, automatically and without any action on the part of any holder of
shares of Series D Participating Convertible Preferred, and such shares of
Common Stock shall be deemed outstanding from and after such conversion date.
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(d) As of the Regulatory Relief Date, each share of this Series
shall automatically, without any action on the part of the holder thereof,
convert into one share of Class B Common Stock, and as of such date, the
holders thereof shall be treated in all respects as the holders of Class B
Common Stock.
(e) Each holder of shares of Series D Participating Convertible
Preferred to be converted pursuant to Section 6(a) and 6(d) shall surrender
the certificates evidencing such shares to the corporation at the principal
office of the corporation, and shall thereupon be entitled to receive
certificates evidencing shares of Common Stock and to receive any dividends
or other distributions payable on shares of Common Stock payable following
such surrender to the holders of record after the date of such conversion and
any cash payable in lieu of fractional shares.
7. PROVISIONS IN CASE OF CONSOLIDATION OR MERGER. In case of any
consolidation of the corporation with, or merger of the corporation into, any
other Person or any merger of another Person into the corporation (other than
a merger which does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of Common Stock of the corporation),
the Person formed by such consolidation or resulting from such merger, as the
case may be, shall provide for the conversion of each share of this Series
into the kind and amount of securities, cash and other property receivable
upon such consolidation or merger by a holder of the number of shares of
Common Stock of the corporation into which such share of this Series might
have been converted immediately prior to such consolidation or merger,
assuming such holder of Common Stock of the corporation (i) is not a Person
with which the corporation consolidated or into which the corporation merged
or which merged into the corporation, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such consolidation or merger (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation or merger is not the same for each share of Common
Stock of the corporation held immediately prior to such consolidation or
merger by others than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section 7 the kind and
amount of securities, cash and other property receivable upon such
consolidation or merger by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). If as a result of the provisions of this Section 7 the shares of
this Series become convertible or exchangeable into securities or assets of a
Constituent Person, such Constituent Person shall provide for adjustments
which, for events subsequent to the effective date of such consolidation,
merger or sale of assets, shall be as nearly equivalent as may be practicable
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to the adjustments provided for herein. The above provisions of this Section
7 shall similarly apply to successive consolidation or mergers.
8. REDEMPTION. The shares of this Series shall not be redeemable.
9. VOTING RIGHTS. (a) Except as required by law or as provided
in Section 9(b) below, the holders of shares of this Series shall not be
entitled to vote on any matter submitted to the stockholders of the
corporation.
(b) In addition to any vote of this Series which may be required
by law, the affirmative vote of a majority of the outstanding shares of the
Series D Participating Convertible Preferred, voting as a class, shall be
required to approve the following:
(i) any merger or consolidation of the corporation with or
into any other Person that requires a vote of the stockholders of the
corporation in accordance with the applicable provisions of the
General Corporation Law of the State of Delaware;
(ii) any sale or transfer of all or substantially all of the
assets of the corporation that requires a vote of the stockholders of
the corporation in accordance with the applicable provisions of the
General Corporation Law of the State of Delaware;
(iii) any amendment, alteration or repeal of the
corporation's Certificate of Incorporation, as amended;
(iv) the dissolution of the corporation;
(v) the adoption, implementation or acceptance (including
the failure to opt out) of any Anti-Takeover Provision not in effect
as of September 27, 1996 that would be applicable to, and, in the
reasonable determination of the holders of this Series, adversely
affect, the holders of this Series and their Affiliates;
(vi) issuance by the corporation of any equity securities,
including securities convertible into equity securities (other than
(A) the grant of employee stock options (subject to the proviso set
forth in (D) below), (B) the issuance of equity securities pursuant to
the Purchase Agreement or any of the other Transaction Documents, (C)
the issuance of
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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
16
any rights as a stockholder of the corporation with respect to the shares
purported to be Transferred (including, but not limited to, the right to vote
such shares or to receive dividends with respect thereto). All rights with
respect to any shares attempted or purported to be Transferred in violation
of the aforementioned provisions shall remain the property of the Person who
initially attempted or purported to transfer such shares in violation
thereof. Upon a determination by the Board of Directors that there has been
or is threatened an attempted or purported Transfer of shares in violation of
the aforementioned provisions, the Board of Directors may take such action as
it deems advisable, including, but not limited to, refusing to give effect on
the books of the corporation to such attempted or purported Transfer or
instituting legal proceedings to enjoin or rescind the same.
(c) LEGEND. All certificates evidencing shares of this Series
shall bear a conspicuous legend referencing the restrictions set forth in
this Section 10.
11. DEFINITIONS. As used herein, the following terms shall have
the following meanings unless the context otherwise requires.
"Purchase Agreement" means the Purchase Agreement, dated as of
September 27, 1996, between the corporation and SBW.
"Regulatory Relief Date" shall mean that date on which SBC
Communications, Inc. or its Affiliates have, in their sole judgment, obtained
all necessary federal and state regulatory approvals to provide landline,
interLATA long-distance service pursuant to the Communications Act of 1934,
as amended by the Telecommunications Act of 1996.
SECOND: That thereafter the necessary number of shares as required
by statute were voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with
the provisions of Sections 228 and 242 of the General Corporation Law of the
State of Delaware.
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IN WITNESS WHEREOF, HighwayMaster Communications, Inc. has made
under its corporate seal and the hands of its President and Secretary,
respectively, of such corporation the foregoing certificate, and the said
President and Secretary have hereunto set their hands and caused the
corporate seal of such corporation to be hereunto affixed this ___th day of
__________, 1996.
HIGHWAYMASTER COMMUNICATIONS, INC.
By:
-------------------------------------
President
ATTEST:
- -------------------------------
Secretary
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