SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. _____________]
Filed by the Registrant [X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
- --------------------------------------------------------------------------------
WIRELESS CABLE & COMMUNICATIONS, INC.
-------------------------------------
Name of Registrant as Specified in Its Charter
WIRELESS CABLE & COMMUNICATIONS, INC.
-------------------------------------
Name of Person(s) Filing Proxy Statement if other than the Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and )-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined.)______________________________________________________
4) Proposed maximum aggregate value of transaction:___________________
5) Total fee paid:____________________________________________________
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:____________________________________________
2) Form Schedule or Registration Statement No.:_______________________
3) Filing Party:______________________________________________________
4) Date Filed:________________________________________________________
<PAGE>
WIRELESS CABLE & COMMUNICATIONS, INC.
102 WEST 500 SOUTH
SUITE 230
SALT LAKE CITY, UTAH 84101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 17, 1998
To the Stockholders of Wireless Cable & Communications, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
Wireless Cable & Communications, Inc., a Nevada corporation (the "Company"),
will be held on the 17th day of August, 1998, at 10:00 a.m., Mountain Standard
Time, at the law offices of Parsons Behle & Latimer, 201 South Main Street,
Suite 1800, Salt Lake City, Utah, 84111 (the "Meeting") for the purposes of (1)
considering and approving the Amended and Restated Articles of Incorporation of
the Company, (2) electing eight Directors to the Board of Directors of the
Company to serve until such time as the term of the Class to which is Director
is elected shall expire, (3) considering and approving the appointment of
Deloitte & Touche LLP as independent auditor for the Company for the fiscal year
ending December 31, 1998, (4) considering, approving and adopting the Company's
1998 Stock Incentive Plan, (5) considering, approving and adopting the 1998
Director Stock Plan, (6) considering, authorizing and approving a consolidation
of the Company's outstanding shares of Common Stock, Series A Preferred Stock,
and Series B Preferred Stock on a 3.5 to 1 basis, (7) authorizing the conversion
of each share of Series A Preferred Stock into ten shares of Common Stock, and
(8) transacting such other business as may properly come before the Meeting, or
any adjournment or postponement thereof.
The Board of Directors of the Company has set July 1, 1998 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Meeting. Accordingly, only stockholders of record at the close of
business on that date are entitled to vote at the Meeting, or any adjournment or
postponement thereof. Proxy solicitation material is being mailed to
stockholders commencing on or about July 24, 1998. Proxies must be received by
the Company by August 3, 1998, in order to be validly present and voted at the
Meeting.
Stockholders are cordially invited to attend the Meeting. Regardless of
whether you expect to attend the Meeting in person, we urge you to read the
attached Proxy Statement and sign and date the accompanying proxy card and
return it in the enclosed postage-prepaid envelope. It is important that your
shares be represented at the Meeting. If you receive more than one proxy card
because your shares are registered in different names or notices go to different
addresses, each card should be completed and returned to assure that all of your
shares are voted.
By Order of the Board of Directors
/s/Anthony Sansone
Salt Lake City, Utah Anthony Sansone
July 24, 1998 Secretary
<PAGE>
WIRELESS CABLE & COMMUNICATIONS, INC.
102 West 500 South
Suite 230
Salt Lake City, Utah 84101
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 17, 1998
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
General
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Wireless Cable & Communications, Inc., a Nevada corporation
(the "Company"), for use at the 1998 annual meeting of stockholders of the
Company (the "Meeting"). The Meeting will be held on the 17th day of August,
1998, at 10:00 a.m., Mountain Standard Time, at the law offices of Parsons Behle
& Latimer, 201 South Main Street, Suite 1800, Salt Lake City, Utah, 84111. All
holders of record of the Company's shares of common stock, par value $.01 per
share (the "Common Stock"), shares of Series A Preferred Stock, par value $.01
per share (the "Series A Preferred Stock") and shares of Series B Preferred
Stock, par value $.01 per share (the "Series B Preferred Stock," and
collectively with the Common Stock and Series A Preferred Stock, the "Capital
Stock") on July 1, 1998, the record date, will be entitled to vote at the
Meeting. At the close of business on the record date, the Company had 8,209,900
shares of Common Stock outstanding, 3,257,490 shares of Series A Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"), and 345,825
shares of Series B Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock"). The shares of Capital Stock will be voted and counted as one
class. Each share of the Company's Common Stock and Series B Preferred Stock is
entitled to one vote upon each matter presented to stockholders at the Meeting.
Each share of the Company's Series A Preferred Stock is entitled to ten votes
upon each matter presented to stockholders at the Meeting. On a common share
equivalent basis, whereby each share of Series A Preferred Stock will be treated
as the equivalent of ten shares of Common Stock, a majority (20,565,313) of
these shares will constitute a quorum for the transaction of business at the
Meeting.
<PAGE>
This Proxy Statement, the accompanying proxy, and the Company's Annual
Report on Form 10-KSB as amended, were first mailed to stockholders on or about
July 24, 1998. The Company's Annual Report on Form 10-KSB as amended, contains
the information required by Rule 14a-3 of the Rules of the Securities and
Exchange Commission (the "SEC"), including audited financial statements for the
Company's fiscal year which ended December 31, 1997. The Annual Report is not
and should not be regarded as material for the solicitation of proxies or as a
communication by means of which solicitation is made with respect to the
Meeting. At the Meeting, the Company's stockholders will be asked to (1) approve
the Amended and Restated Articles of Incorporation of the Company, (2) elect
eight Directors to the Board of Directors of the Company to serve until such
time as the term of the Class to which is Director is elected shall expire, (3)
approve the appointment of Deloitte & Touche LLP as independent auditor for the
Company for the fiscal year ending December 31, 1998, (4) adopt the Company's
1998 Stock Incentive Plan, (5) adopt the 1998 Director Stock Plan, (6) approve a
consolidation of the Company's Capital Stock on a 3.5 to 1 basis, (7) authorize
the conversion of each share of Series A Preferred Stock into ten shares of
Common Stock, and (8) vote on such other business as may properly come before
the Meeting, or any adjournment or postponement thereof.
Proxies in the enclosed form will be effective if they are properly
executed, returned to the Company prior to the Meeting, and not revoked. The
shares of Capital Stock represented by each effective proxy will be voted at the
Meeting in accordance with the instructions on the proxy. If no instructions are
indicated on a proxy, all shares of Capital Stock represented by that proxy will
be voted in favor of the election of the nominees for directors described in
this Proxy Statement and, as to any other matters of business which properly
come before the Meeting, will be voted by the named proxies as directed by the
present Board.
A stockholder giving a proxy pursuant to this solicitation may revoke
it at any time prior to its exercise by delivering to the Secretary of the
Company a written notice of revocation, or a duly executed proxy bearing a later
date, or by attending the Meeting and voting in person. Attendance at the
Meeting will not, however, constitute revocation of a proxy without further
action by the stockholder. Any written notice revoking a proxy should be sent to
the principal executive offices of the Company, addressed as follows: Wireless
Cable & Communications, Inc., 102 West 500 South, Suite 320, Salt Lake City,
Utah, 84101, Attention: Anthony Sansone, Secretary.
The eight nominees for director receiving the highest number of
affirmative votes will be elected as directors. Votes withheld from any director
will be counted for purposes of determining the presence of a quorum for the
transaction of business, but will have no other effect. The approval of the
Company's independent auditors, the 1998 Director Stock Plan, the 1998 Stock
Incentive Plan, the consolidation of the Company's Capital Stock, and the
Amended and Restated Articles of Incorporation of the Company each require the
affirmative vote of the majority of the shares present, on a common share
equivalent basis whereby each share of Series A Preferred Stock present at the
Meeting will be treated as the equivalent of ten shares of Common Stock, at the
meeting either in person or by proxy. If a stockholder abstains from voting
certain shares, those shares will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, will not be considered as votes cast either for or against
a particular matter. The Company intends to treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which the broker or
nominee indicates on a proxy that it does not have discretionary authority to
vote) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Broker non-votes will not be considered as
votes cast either for or against a particular matter.
<PAGE>
The entire cost of soliciting proxies for use at the Meeting (estimated
by the Company to be approximately $30,000) will be borne by the Company.
Proxies will be solicited by use of the mails. Directors, officers and regular
employees of the Company may solicit proxies by telephone, telecopier or
personal contact. The Company will not pay any special compensation, to any
person, in connection with the solicitation of proxies. The cost of the
solicitation of proxies will include the cost of supplying necessary copies of
the solicitation materials to the beneficial owners of those shares of Capital
Stock which are held of record by brokers, dealers, banks, voting trustees and
their nominees, including, upon request, the reasonable expenses which are
incurred by such record holders in mailing the solicitation materials to
beneficial owners.
1. APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
In June, 1998, the Board considered and approved for recommendation to
the Company's stockholders, a form of Amended and Restated Articles of
Incorporation (the "Amended Articles"). The proposed Amended Articles provide
for, among other things, (i) the change of the Company's name to Convergence
Communications, Inc., (ii) a classified Board pursuant to which approximately
one-third of the Board will stand for re-election every year, and (iii) an
increase in the number of authorized shares of Common Stock from 15,000,000
shares, par value $.01 per share, to 100,000,000 shares without par value, and
an increase in the number of shares of Preferred Stock from 5,000,000, par value
$.01 per share, to 15,000,000 without par value, a portion with which have been
designated.
Certain provisions of the proposed Amended Articles are summarized
below. The complete text of the Amended Articles is attached to this Proxy
Statement as Exhibit A and the following summary is qualified in its entirety by
express reference to the complete text of the Amended Articles.
Name Change
The Company was formed in July, 1995 for the purpose of continuing the
development of certain business assets formerly held by Transworld
Telecommunications, Inc. ("TTI"). Through its joint venture entity, Wireless
Holdings, Inc., a Delaware joint venture corporation ("WHI"), TTI owns operating
and non-operating wireless communications networks in six United States markets
through WHI. TTI also owned an interest in certain New Zealand and Park City,
Utah network rights.
In July 1995, the board of directors of TTI voted to separate its
business assets into two groups. Under the terms of the business separation (the
"Separation"), TTI agreed to form the Company to hold TTI's New Zealand and Park
City, Utah network rights, and the stock of that corporation was then to be
distributed to TTI's shareholders in escrow.
In order to complete the Separation, TTI formed the Company and, in
August 1995, it issued 3,500,000 shares of its common stock to TTI in exchange
for TTI's interest in the New Zealand and Park City, Utah networks. The New
Zealand network rights represented approximately 99% of the value of the assets
TTI contributed to the Company.
<PAGE>
As a result of the Separation, the Company intends to provide high
quality, low-cost, telecommunications services to subscribers in emerging
markets outside the United States. The Company intends to provide these services
using its own networks of fixed local point to multi-point broadband wireless
communication systems. The Company anticipates that it will also be able to
provide its services using fiber optic networks and coaxial cable where the
Company believes it is economically attractive or strategically desirable to do
so. The Company currently holds or has the right to acquire communications
networks in six countries which have an aggregate population of approximately 80
million, including Venezuela, Costa Rica, Guatemala, Argentina, Panama and New
Zealand. The Company also expects to obtain rights to additional communications
networks in other emerging markets, primarily in Latin America.
The Company intends to offer a number of integrated service packages
targeted to businesses, governmental agencies and residential consumers. The
Company intends to evolve into a full-service provider of "one-stop shopping"
communications services with a product portfolio that includes Internet and
intranet services, high speed data connectivity, and local and long distance
telephony services. The Company's bundled service packages will be tailored to
the specific needs of the target customer group, but will initially focus on
high speed data connectivity and Internet and intranet access. The Company also
plans to add local and long distance telephony services and video conferencing
services and/or multi-channel television services to its service packages at a
later date.
As a result of the Company's development and expansion, the Board
believes that the Company should bear a name which more accurately reflects and
characterizes its broadened direction and strengths in the global
telecommunications market. The Board believes that the name Convergence
Communications, Inc. will provide the Company with greater recognition among its
customers and investors, and further strengthen the Company's market position.
Classified Board
The Amended Articles would provide for a classified Board of Directors,
pursuant to which the directors of the Company would be divided into three
classes of directors of approximately equal numbers and staggered three-year
terms. Approximately one-third of the directors would stand for election each
year and the entire Board could be replaced in the course of three annual
meetings. Under the current Articles of Incorporation of the Company, each
director serves for a one year term until the next succeeding annual meeting of
the stockholders.
The classification of the Board would ensure that there remains
continuity and experience of the directors in the business and the affairs of
the Company. The Board believes that such a board is best situated to maximize
long-term stockholder value, particularly in light of rapidly developing
technology in the telecommunications industry, changing domestic and foreign
regulation of the Company's operations, and increased market competition. In
addition, continuity on the board is integral to developing, refining and
executing a long-term strategic plan, a process that often takes years.
<PAGE>
The Board believes that an abrupt change of control could disrupt the
Company in achieving its long-term strategic goals, and thus might deprive the
stockholders of the opportunity to realize the full value of their investment.
The Board further believes that the classification of the Board will cause third
parties seeking to take control of the Company to negotiate the acquisition with
the Board while refraining from imposing a structure which effectively coerces
the stockholders to sell their shares for an inadequate amount. At the same
time, the stockholders will retain the power to propose and elect alternative
nominees for the class of directors to be elected each year, and thus influence
the composition of the Board.
Authorized Shares of Capital Stock
The Amended Articles would increase the number of shares of Common
Stock the Company is authorized to issue to 100,000,000 shares, and increase the
number of undesignated shares of Preferred Stock the Company is authorized to
15,000,000. The Company currently is authorized to issue 15,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. As of June 30, 1998, there
were 8,209,900 shares of Common Stock, outstanding and 1,213,516 shares of
Common Stock reserved for issuance under stock plans, warrants and options. As a
result, approximately 5,576,584 shares of Common Stock remain unissued and not
reserved for issuance. As of June 30, 1998, 3,257,490 shares of Series A
Preferred Stock, and 354,825 shares of Series B Preferred Stock of the Company
were outstanding and 199,812 shares of Series A Preferred Stock reserved for
issuance under stock plans, warrants and options. Approximately 1,187,873 shares
of Preferred Stock of the Company remain unissued.
While the Company has no present intention of issuing any shares of
Capital Stock sought to be authorized that are not required by the conversion of
the Preferred Stock into Common Stock if approved by the stockholders, the
additional shares of Capital Stock would provide the Company with a
ready-available means to finance further acquisitions of telecommunications
companies worldwide, providing an alternative to the use of the Company's cash
reserves. In addition, the additional shares of Capital Stock to be authorized
would be available for possible future stock dividends or splits and other
corporate purposes. The additional shares of Capital Stock would provide the
Company with greater flexibility and allow shares of Capital Stock to be issued
without the expense and delay of a special stockholders' meeting. The additional
shares of Capital Stock would be available for issuance without further action
by the stockholders unless such action is required by applicable law or the
rules of any stock exchange on which the Company's securities may be listed in
the future.
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company on a common stock equivalent basis, either in
person or by proxy, and entitled to vote is required to approve the proposal.
<PAGE>
<TABLE>
<CAPTION>
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ADOPTION OF THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF THE COMPANY
2. ELECTION OF DIRECTORS
At the Meeting, eight directors are to be elected. If the Amended and
Restated Articles of Incorporation are approved and adopted by the stockholders,
each director will serve for the term of the Class to which such director is
appointed. All directors will serve until their successors are duly elected and
qualified, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
The persons named as proxy holders in the enclosed proxy cards (Messrs.
Lance D'Ambrosio and Anthony Sansone) have advised the Company that, unless a
contrary direction is indicated on the proxy card, they intend to vote for the
election of the eight nominees named below. They have also advised the Company
that in the event any of the eight nominees are not available for election for
any reason, they will vote for the election of such substitute nominee or
nominees, if any, as the Board may propose. Each person nominated for election
has agreed to serve if elected, and the Board has no reason to believe that any
nominee will be unavailable to serve on the Board.
Nominees
The Company's nominees for the Board, and information regarding the
nominees, are as follows:
Director
Name Age Position Since
---- --- -------- -----
<S> <C> <C> <C>
Lance D'Ambrosio 41 Chief Executive Officer and Director 1995
Donald Williams 37 Vice President of Latin American Operations and Director 1997
E. Andrew Lowe 53 Vice President of Finance and Director 1997
Troy D'Ambrosio 37 Director 1995
George Sorenson 43 Director 1995
Gaston Acosta-Rua 33 Director 1998
Jorge Fucaraccio 54 Director 1997
Peter Schiller 63 Director 1998
</TABLE>
<PAGE>
Lance D'Ambrosio -- Mr. D'Ambrosio is the Chief Executive Officer and
Director of the Company, and holds other executive officer and director
positions in the Company's subsidiaries and affiliates. Mr. D'Ambrosio has been
involved in the telecommunications business for the last seven years. Mr.
D'Ambrosio is responsible for the Company's acquisitions, strategic planning and
mergers, and is responsible for all financing plans for the Company. Between
1992 and 1997 Mr. D'Ambrosio served as the President, Chief Executive Officer
and a Director of Transworld Telecommunications, Inc., the corporation from
which the Company was formed as a result of a spinoff ("TTI"). Mr. D'Ambrosio
also acted as the President and a Director of Wireless Holding, Inc., an
operating subsidiary of TTI ("WHI"), and held executive offices and/or director
positions in WHI's subsidiaries. Between 1987 and 1992, Mr. D'Ambrosio was the
President of Bridgeport Financial, Inc., a holding company that acquired a
full-service broker/dealer securities operation which was primarily involved in
raising venture capital for investments in high-tech companies. Mr. D'Ambrosio
holds a Bachelor of Science in Marketing and Management from the University of
Utah, which he received in 1979.
Donald Williams -- Mr. Williams joined the Company in 1997 as Vice
President of Latin American Operations and also serves as a Director. Mr.
Williams has six years of senior management and wireless communications business
development experience in Venezuela. In 1992, Mr. Williams founded
Comunicaciones Centurion, S.A., and applied for and was granted the concession
for the 28 GHz frequency band for Venezuela. Mr. Williams was responsible for
building out the world's first fully commercial multi-channel television system
utilizing local multipoint distribution service in Caracas, Venezuela. In 1990,
Mr. Williams co-founded CARESA, a technical systems integrator and
manufacturer's representative to the Venezuelan petroleum industry located in
Maracaibo, Venezuela. Mr. Williams obtained a Bachelors Degree in international
business administration from Schiller International University in London,
England in 1983.
E. Andrew Lowe -- Mr. Lowe serves as Vice President of Finance and as a
Director of the Company. Since 1992, Mr. Lowe has also served as an Executive
Officer and a Director of TTI, and held Executive Officer or Director positions
in TTI's and its affiliates' subsidiaries. Between 1966 and 1992, Mr. Lowe was
an employee of Citicorp, most recently serving as Director of Marketing and
Customer Relations for the Real Estate Investment Advisory Division, where he
was the interface between pension funds, insurance companies, international
investment agencies and Citibank.
Troy D'Ambrosio -- Mr. D'Ambrosio is a Director of the Company. Between
1993 and 1996 he served as Vice President of Administration and as a Director of
TTI and also served in executive positions and as a director of WHI and its
subsidiaries Since September 1996, Mr. D'Ambrosio has served as the Manager of
Mutual Fund Operations for Wasatch Advisors, Inc., a registered investment
advisory firm, which manages approximately $1 billion dollars in separately
managed accounts and a family of six mutual funds. Between July of 1992 and
November of 1993, Mr. D'Ambrosio was a Vice President and a partner in a public
relations firm specializing in legal, economic and government relations for
business. Between 1985 and 1992, Mr. D'Ambrosio was employed by American Stores
Company, most recently as Vice President of Corporate Communications and
Government Relations. Mr. D'Ambrosio received a Bachelor of Arts degree in
Political Science from the University of Utah in 1982.
<PAGE>
Gaston Acosta-Rua - Mr. Acosta-Rua is a Director of the Company. Mr.
Acosta-Rua has spent the last 8 years in the private equity investment and
management sector in Latin America, primarily as a Director of FondElec Group,
Inc. Before joining FondElec, Mr. Acosta-Rua worked for and helped create the
Latin American Group for Chemical Venture Partners and was previously an officer
with the Chemical Bank Debt/Equity Group, which was responsible for managing the
combined Chemical Bank Manufacturers Hanover portfolio of Latin American equity
investments. Before working for Chemical Bank, Mr. Acosta-Rua worked as a
consultant to the Brooking Institute in Washington, D.C. Mr. Acosta-Rua received
a Juris Doctorate from the George Mason School of Law in 1991, and a Bachelor of
Arts Degree in Computer Science and Finance from Furman University in 1987.
George Sorenson -- Mr. Sorenson is a Director of the Company and also
served as a Director of TTI. Mr. Sorenson is a Principal in FondElec Group, Inc.
which, together with its affiliates, invests in energy and electricity markets
in Latin American, and advises United States corporations on their investments
in that area. Between 1990 and 1992, Mr. Sorenson was the Associate Director of
Bear, Sterns & Co., Inc. where he was principally responsible for its
international investment banking in the far east and coordinated product
development, marketing and account coverage for Japanese accounts in New York
and Tokyo. Between 1983 and 1990, Mr. Sorenson worked for Drexel Burnham &
Lambert, Inc., most recently as a Senior Vice President in Tokyo, Japan, where
he managed the company's high yield bond operations in Asia. Mr. Sorenson
received a Bachelor of Arts degree in Finance from the University of Utah in
1979 and a Masters in International Business Management in 1981 from the
American Graduate School of International Management.
Jorge Fucaraccio - Mr. Fucaraccio is a Director of the Company. Since
1994, Mr. Fucaraccio has been an advisor to Petrolera Argentina San Jorge S.A.
and Bolland S.A., Argentinean corporations, in software engineering applications
related to oil production and data communications. Between 1989 and 1991, Mr.
Fucaraccio worked as the National Director of Technology at the National
Institute of Industrial Technology in Argentina (the "INTI") where he was
responsible for managing all technical departments and research centers of the
INTI, including its communications, software engineering, energy, mechanics and
building technologies research departments. Between 1982 and 1988, he was a
member of the Board of Advisors at the Ministry of Science and Technology and
the Ministry of Energy in Argentina. During this period, he was responsible for
the creation of a number of research centers and directed several technical
governmental missions between the government of Argentina and countries in
Europe and Asia. Between 1978 and 1985, Mr. Fucaraccio was a director of an
energy transmission and solar energy utilization research program sponsored by
the Organization of American States. Mr. Fucaraccio received a Licentiate in
Physical Sciences from the Buenos Aires University in 1970. He has also served
as "guest worker" at the National Institutes of Standards and Technology
(formerly the National Bureau of Standards) in Maryland under a fellowship
sponsored by the United Nations. Mr. Fucaraccio also conducted post-graduate
research activities at the Technical University of Denmark (Lyngby).
<PAGE>
Peter Schiller - Mr. Schiller is a Director of the Company. Since 1993,
Mr. Schiller has been employed by Bolland S.A. and its affiliates, Petrolera
Argentina San Jorge S.A. and OEA Services, all of which are Argentinean
corporations engaged in oil and gas services, where he currently serves as the
Director of New Business Development. Between 1976 and 1993, Mr. Schiller held
general management positions in the heavy electromechanical manufacturing,
automotive components and non-ferrous metals industries. Between 1961 and 1975,
Mr. Schiller held a number of product design and quality control management
positions in the electrical, automotive and tractor industries. Mr. Schiller
received a degree in Electrical Engineering from the University of La Plata,
Argentina in 1961 and pursued a three year, post-graduate course in Business
Management in 1971 at the Argentine Catholic University in Buenos Aires,
Argentina. In 1993, Mr. Schiller conducted post-graduate studies in oil and gas
specialization at the Argentine Catholic University in Buenos Aires.
Classes
If the nominees for the Board are elected by the stockholders, the
current Board of Directors has determined that Messrs. Lance D'Ambrosio,
Acosta-Rua, and Fucaraccio will be appointed to serve as the initial Class I
Directors, that Messrs. Williams, Sorenson and Schiller will be appointed to
serve as the initial Class II Directors, and that Messrs. Lowe and Troy
D'Ambrosio will be appointed to serve as the initial Class III Directors. Each
director shall serve for three years, until the third annual meeting following
the annual meeting at which such director was elected; provided, that each
initial director in Class I shall serve for a term ending on the date of the
annual meeting in 2001; each initial director in Class II shall serve for a term
ending on the date of the annual meeting in 2000; and each initial director in
Class III shall serve for a term ending on the date of the annual meeting in
1999. The term of each director shall be always subject to the election and
qualification of his successor and to his earlier death, resignation or removal.
Board of Director Meetings and Committee Meetings
During fiscal 1997, the Board of Directors held three meetings. Each
director of the Company attended at least seventy-five percent of the meetings
of the Board.
The Board of Directors has two standing committees, the Audit
Committee, and the Compensation Committee. The Audit Committee is primarily
charged with the review of professional services provided by the Company's
independent auditors, the determination of the independence of such auditors,
the annual financial statements of the Company and the Company's system of
internal accounting controls. The Audit Committee also reviews such other
matters with respect to the accounting, auditing and financial reporting
practices and procedures of the Company as it may find appropriate or as may be
brought to its attention. Messrs. Fucaraccio, Sorensen and Lowe serve as the
members of the Audit Committee. The Audit Committee was only recently formed and
held no meetings prior to the current fiscal year.
The Compensation Committee is charged with the responsibility of
reviewing executive salaries, administering bonuses, incentive compensation and
stock option plans of the Company, and approving the salaries and other benefits
of the executive officers of the Company. The Compensation Committee also
consults with the Company's management regarding pension and other benefit
plans, and the Company's compensation policies and practices in general. Messrs.
Fucaraccio, Sorensen and Troy D'Ambrosio serve as the members of the
Compensation Committee. The Compensation Committee was only recently formed and
held no meetings prior to the current fiscal year.
<PAGE>
<TABLE>
<CAPTION>
Director Compensation
Directors do not receive cash compensation for serving on the Board of
Directors or any committee of the Board, or for any other services rendered to
the Company in their capacity as director of the Company, but are reimbursed for
expenses they incur in connection with attending Board or committee meetings. In
the event the stockholders approve the Director Stock Plan described in Proposal
5 below, the Directors who are not employees of the Company will be awarded the
number of options described therein, upon the terms and conditions set forth in
the Director Stock Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table describes the beneficial ownership, as of June 30,
1998, of the Company's Capital Stock by (i) each stockholder known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock, Series A Preferred Stock or Series B Preferred Stock, (ii) each
director, (iii) each executive officer and (iv) all directors and executive
officers as a group. Unless otherwise indicated, each such person (alone or with
family members) has voting and dispositive power of the shares listed opposite
such person's name. The offices and positions shown in parentheses after the
name of certain of the persons shown below state the current offices and
positions held by those persons in the Company's management.
Name and Address of Number of Pecentage of
Beneficial Owners Class Shares Class(1)
----------------- ----- ------ ------
<S> <C> <C> <C>
George D'Ambrosio Common 471,291(2) 5.74%
5451 South 1410 East Series A Preferred 1,192,872(2) 36.62%
Salt Lake City, Utah Series B Preferred -0- *
FondElec Group, Inc.3 Common 2,115,837 25.77%
333 Ludlow Street Series A Preferred 625,126 19.19%
Stamford, Connecticut Series B Preferred -0- *
Petrolera Argentina San Jorge, S.A. Common 1,500,000 18.27%
Peron 925 Piso 5(degree)(1038) Series A Preferred 609,709 18.72%
Buenos Aires, Argentina Series B Preferred -0- *
<PAGE>
Lance D'Ambrosio Common 290,533(4) 3.54%
(Chief Executive Series A Preferred 359,660(4) 11.04%
Officer, Director) Series B Preferred -0- *
3276 E. Almira Court
Salt Lake City, Utah
Donald Williams5 Common 855,556 10.42%
(Vice President, Latin America Series A Preferred -0- *
Operations, Director) Series B Preferred 231,490 65.24%
7 Winter Wheat
The Woodlands, Texas
E. Andrew Lowe Common 87,328 1.06%
(Vice President, Finance and Series A Preferred 34,260(6) 1.05%
Director) Series B Preferred -0- *
1590 Sandpoint Drive
Roswell, Georgia
Anthony Sansone Common 4,850 *
(Secretary/Treasurer) Series A Preferred 57,092(7) 1.75%
3692 South 645 East Series B Preferred -0- *
Salt Lake City, Utah
Brian Reynolds8 Common -0- *
(President/Chief Operating Series A Preferred -0- *
Officer) Series B Preferred -0- *
13224 Via Ranchero Court
Saratoga, CA 95070
Jose Miguel Padron9 Common -0- *
(Vice President/CEO of Series A Preferred -0- *
Venezuelan Operations) Series B Preferred -0- *
812 Heritage Drive
Fort Lauderdale, FL 33326
George Sorenson10 Common 14,145 *
(Director) Series A Preferred -0- *
12 Fairgreen Lane Series B Preferred -0- *
Old Greenwich, Connecticut
Troy D'Ambrosio Common 33,096 *
(Director) Series A Preferred 199,811 6.13%
2914 Nila Way Series B Preferred -0- *
Salt Lake City, Utah
<PAGE>
Gaston Acosta-Rua(11) Common -0- *
(Director) Series A Preferred -0- *
4 Memory Lane Series B Preferred -0- *
Rowaytoa, Connecticut
Jorge Fucaraccio(12) Common -0- *
(Director) Series A Preferred -0- *
Peron 925 Piso 5(degree)(1038) Series B Preferred -0- *
Buenos Aires, Argentina
Peter Schiller(13) Common -0- *
(Director) Series A Preferred -0- *
Peron 925 Piso 5(degree)(1038) Series B Preferred -0- *
Buenos Aires, Argentina
All directors and officers as a group Common 1,309,757 15.95%
13 persons)(14) Series A Preferred 667,953 20.51%
Series B Preferred 231,490 65.24%
- ----------------------
*Less than 1%
</TABLE>
(1) Based on 8,209,900 outstanding shares of Common Stock, 3,257,490
outstanding shares of Series A Preferred Stock and 354,825 outstanding
shares of Series B Preferred Stock. The inclusion herein of any shares as
beneficially owned does not constitute an admission of beneficial
ownership of those shares. Unless otherwise indicated, each person listed
has sole investment and voting power with respect to the shares listed. In
accordance with the rules of the Securities and Exchange Commission, each
person is deemed to beneficially own any shares issuable upon exercise of
stock options or warrants held by such person that are currently
exercisable or that become exercisable within 60 days after June 30, 1998.
(2) Includes shares held in the name of Mr. D'Ambrosio and held in the name of
entities over which Mr. D'Ambrosio has voting and/or beneficial control
and for which he does not disclaim beneficial ownership. Also includes
shares held by Mr. D'Ambrosio as nominee for a general partnership whose
other partner is Mr.
D'Ambrosio's son, Lance D'Ambrosio.
(3) Reflects shares held by FondElec Group, Inc. and its affiliates, including
FondElec Essential Services Growth Fund, L.P. and Pegasus Fund, L.P.
(collectively, "FondElec"). Includes options to acquire 15,417 shares of
Series A Preferred Stock and Warrants to acquire 615,837 shares of Common
Stock. The number of shares of Series A Preferred Stock subject to the
option is subject to adjustment if the Company engages in certain
fundamental corporate transactions.
(4) Includes shares held in the name of Mr. D'Ambrosio and shares held in the
name of entities over which Mr. D'Ambrosio has voting and/or beneficial
control and for which he does not disclaim beneficial ownership. Does not
include shares held by Mr. D'Ambrosio's father as nominee for a
partnership in which Mr.
D'Ambrosio is a 50% partner.
(5) Mr. Williams is a principal of Caribbean Comunicaciones Group, which holds
a portion of the shares of Common Stock and Series B Preferred Stock
shown. Mr. Williams does not disclaim beneficial interest in the shares
held by Caribbean Comunicaciones Group.
(6) Includes options to acquire 34,260 shares of Series A Preferred Stock.
<PAGE>
(7) Shares shown are held by a limited liability company for which Mr. Sansone
acts as managing member. Mr. Sansone does not disclaim beneficial
ownership of such shares. Also includes options to acquire 17,130 shares
of Series A Preferred Stock.
(8) Mr. Reynolds' employment agreement includes options to acquire shares of
the Company's Common Stock. The number of shares shall be conclusively
determined by the Compensation Committee of the Board of Directors at a
later date.
(9) Mr. Padron's employment agreement includes options to acquire shares of
the Company's Common Stock. The number of shares shall be conclusively
determined by the Compensation Committee of the Board of Directors at a
later date.
(10) Mr. Sorenson is a principal of FondElec. Mr. Sorenson disclaims beneficial
interest in the shares held by FondElec.
(11) Mr. Acosta-Rua is a principal of FondElec. Mr. Acosta-Rua disclaims
beneficial interest in the shares held by FondElec.
(12) Mr. Fucaraccio is an officer of Petrolera. Mr. Fucaraccio disclaims
beneficial interest in the shares held by Petrolera, or its affiliates.
(13) Mr. Schiller is an officer of Petrolera. Mr. Schiller disclaims beneficial
interest in the shares held by Petrolera, or its affiliates.
(14) Includes options to acquire 83,937 Series A Preferred Shares and warrants
to acquire 615,837 shares of Common Stock.
Except as set forth above, the Company knows of no beneficial owner of
five percent or more of the Company's Common Stock or Preferred Stock nor does
it know of any arrangement which may at a subsequent date result in a change of
control of the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation paid to or earned by
the Company's Chief Executive Officer and the four most highly compensated
executive officers whose total salary and bonus exceeded $100,000 (collectively,
the "Named Executive Officers") during the fiscal year ended December 31, 1997,
except with respect to Mssrs. Brian Reynolds and Miguel Padron, each of whom
commenced their respective employments with the Company in 1998. During the
fiscal years ended December 31, 1996 and 1995, none of the Company's officers
received any cash compensation, bonuses, stock appreciation rights, long-term
compensation, stock awards or long-term incentive rights from the Company.
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
------------------- Other Annual
Name and Principal Position Salary Bonus Compensation(1)
--------------------------- ------ ----- ---------------
<S> <C> <C> <C>
Lance D'Ambrosio $165,0002 $6,875 $13,8003
Chief Executive Officer
and Director
Brian Reynolds $135,0004 -0- $6,000
President and Chief Executive
Officer
Jose Miguel Padron $105,0005 -0- $6,000
Vice President/CEO of
Venezuelan Operations
Donald Williams $102,8576 $17,1436 $6,000
Vice President of Latin American
Operations and Director
E. Andrew Lowe $100,0007 -0- $6,000
Vice President of Finance and
Director
- -----------------------
(1) Represents full year premiums on group term life insurance and medical and
dental insurance.
(2) Reflects full year base salary. Mr. D'Ambrosio became a salaried employee
of the Company on August 1, 1997.
(3) Includes an automobile allowance of $7,800.
(4) Reflects full year salary. Mr. Reynolds became a salaried employee of the
Company on July 1, 1998.
(5) Reflects full year salary. Mr. Padron became a salaried employee of the
Company on April 1, 1998.
(6) Reflects full year base salary. Mr. Williams became a salaried employee of
the Company on August 13, 1997. The bonus amounts payable to Mr. Williams
are benefits pursuant to Venezuela employment law.
(7) Reflect full year base salary. Mr. Lowe became a salaried employee of the
Company on August 1, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Stock Option Grants
The following table provides information relating to stock options
awarded to each of the Named Executive Officers during the fiscal year ended
December 31, 1997. The only options granted to Named Executive Officers by the
Company were options to acquire Series A Preferred Stock.
Series A Preferred Stock
Option Grants in Last Fiscal Year
Individual Grants
-------------------------------------------
Percent of Potential Realizable
Total Options
Granted to Value at Assumed Annual
Employees in Rate of Stock Appreciation
Number of Fiscal Year(1) Exercise for Option Term3
- ---------------------- Underlying Price Per Expiration
Name Options Granted(#) Share(2) Date 5%($) 10%($)
---- ------------------ ----------- -------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
E. Andrew Lowe 34,260 39% $2.25 2001 $313,792 $332,405
- -----------------------
(1) Based on options for an aggregate of 88,220 shares of Series A Preferred
Stock granted during the fiscal year ended December 31, 1997.
(2) On the date of the grant of the options for the Series A Preferred Stock,
the Board of Directors of the Company estimated that the fair market value
of that stock was $10.86.
(3) Potential realizable value is based on the assumption that the Series A
Preferred Stock of the Company appreciates at the annual rate shown
(compounded annually) from the date of grant until the expiration of the
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth.
Fiscal Year-End Option Value
The following table provides information regarding the number and value
of options held by the Named Executive Officers on December 31, 1997.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Fiscal Year-End (#) Fiscal Year-End(1)
------------------- ------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
E. Andrew Lowe 34,260 -0- $295,179 -0-
- ----------------------
</TABLE>
(1) For purposes of determining the values of the options held by the Named
Executive Officers, the Company assumed that the shares of Series A
Preferred Stock underlying the options had a value of $10.86 per share on
December 31, 1997, which is the estimated fair market value the Board of
Directors attributed to that stock in November 1997 in connection with the
Company's transactions with FondElec and Petrolera. The option value is
based on the difference between the fair market value of such shares on
December 31, 1997, and the option exercise price per share, multiplied by
the number of shares subject to the options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following information summarizes certain transactions either
engaged in by the Company during the past two years, or proposed to be engaged
in by the Company, involving its executive officers, directors, 5% stockholders
and immediate family members of those persons:
<PAGE>
Recent Transactions
Services Agreement. On January 1, 1997, TIC entered into a services
agreement (the "Services Agreement") with Bridgeport Financial, Inc.
("Bridgeport"), an entity which has experience in negotiating and acquiring
telecommunications rights in emerging growth countries and which has, in the
Company's opinion, significant proprietary contacts in the telecommunications
industries and network rights in those countries. The principal of Bridgeport is
George D'Ambrosio, a primary stockholder of the Company, and the father of Lance
D'Ambrosio and Troy D'Ambrosio, directors of the Company. Under the terms of the
agreement, TIC retained Bridgeport to provide TIC with advisory and other
services relating to the acquisition, ownership and operation of
telecommunications services in Central and South America, Europe and Asia. In
consideration for these services, TIC agreed to pay Bridgeport, on a continuing
basis and in arrears, an amount equal to (i) two percent of the first $50
million of TIC's gross annual revenues, and (ii) one percent of TIC's gross
annual revenues in excess of $50 million from all sources. The minimum amount
payable to Bridgeport Financial in the first contract year, however, was
$150,000. The Services Agreement replaces a prior consulting services agreement
between Bridgeport and TIC under which TIC was obligated to pay Bridgeport a
specified dollar amount per month. For purposes of calculating the amounts due
under the Services Agreement, the gross annual revenues of TIC include all of
the revenues of its parent or subsidiaries, and its parent's subsidiaries,
provided that if any subsidiary is not held 100% by TIC or its parent, the
revenue of that subsidiary is attributed to TIC only to the extent of TIC's or
its parent's ownership of that subsidiary. The agreement contains a specific
exclusion for any gross revenues attributed to TIC from the operations of
wireless communication rights in New Zealand and Park City, Utah.
The term of the Services Agreement is five years, and it automatically
renews for successive periods of one year unless either party notifies the other
of its election not to renew the agreement at least 60 days before the end of
the current term. The agreement can be terminated at any time by TIC if, among
other things, Bridgeport fails or refuses to perform or Bridgeport or its
principal is charged with or convicted of any felony. The Company intends to
terminate the Services Agreement in the near future.
During the term of the agreement and for a period of one year after its
termination, Bridgeport has agreed not to enter into any business operations in
direct or indirect competition with the business of TIC or in any current market
of TIC. The Services Agreement is binding upon any successor or assignee of TIC
and, as a result of the transaction with TIC, the provisions of the Services
Agreement apply to the gross revenues generated by TIC, the Company and their
respective subsidiaries.
TIC Transaction. In February, 1997, a wholly-owned subsidiary of the
Company merged with and into TIC. TIC was the surviving entity in the
transaction. Certain of the shareholders of TIC also served as officers and
directors of the Company. In addition, the father of the Company's chief
executive officer was the majority stockholder of TIC. As a result of the
transaction with TIC, he and the other former shareholders and option holders of
TIC currently hold approximately 54.6% of the Company's voting power on a
fully-diluted common stock equivalent basis. In connection with the TIC
transaction, the Company assumed an interest-bearing note in the amount of
$180,281 due to an entity controlled by the father of the Company's president.
As of December 31, 1997, $138,129 plus accrued interest of $50,820 were
outstanding on the loan.
<PAGE>
CVV Transaction. In August 1997, the Company acquired a 68.14% interest
in Caracas Viva Vision TV, S.A., a telecommunications operating company in
Venezuela ("CVV"). In November 1997, the Company acquired an additional 10% of
CVV (and an option to purchase the balance of CVV through November 2000). The
Company has also acquired an approximately 8.5% interest in Comunicaciones
Centurion, S.A., the holding company of CVV ("Centurion"). Mr. Donald Williams,
an officer and director of the Company, was a former principal (either directly
or through his affiliates) in CVV and Centurion.
Petrolera Transaction. Effective August 1, 1997, the Company executed
an agreement with Petrolera Argentina San Jorge S.A., an Argentinean corporation
(together with its affiliates, "Petrolera"), to sell 800,305 shares of the
Company's authorized but unissued Common Stock and 526,331 shares of its
authorized but unissued Series A Preferred Stock for $10 million (the "Petrolera
Transaction"). The Petrolera Transaction was funded on August 30, 1997. As of
that date, the Common Stock and Series A Preferred Stock Petrolera acquired
represented, in the aggregate, approximately 18% of the voting control of the
Company on a common share equivalent basis. Petrolera also acquired the right to
purchase, for a nominal purchase price, shares of the Company's Common Stock and
Series A Preferred Stock sufficient to maintain its percentage interest in the
voting control of the Company if the Company entered into transactions for the
sale of its securities with certain specified parties on or before November 1,
1997. As a result of the Company's acquisition of its interest in Caracas Viva
Vision TV, S.A. and the FondElec Transaction (as described below), Petrolera
acquired an additional 699,695 shares of Common Stock and 83,378 shares of
Series A Preferred Stock for a total purchase price of $7,831 in order to
maintain its effective voting percentage in the Company.
In connection with the Petrolera Transaction, the Company and certain
of its shareholders entered into a voting agreement to elect persons designated
by Petrolera as members of the Board of Directors of the Company until the
earlier of August 1, 2000, or immediately preceding the closing of a public
offering by the Company which results in net proceeds to the Company of at least
$15 million and a market capitalization of at least $50 million (a "Qualified
Offering"). Under the voting agreements, Petrolera can designate 20% of the
board so long as it holds 10% or more of the Company on a common share
equivalent basis and 10% of the board if Petrolera's ownership falls below 10%.
Currently, the Petrolera designees to the board of directors are Messrs.
Fucaraccio and Schiller. Petrolera has agreed to waive its rights to designate
members of the Company's board of directors under the voting agreement upon the
closing of a qualified public offering by the Company.
In connection with the Petrolera Transaction, the Company and Petrolera
formed WCI de Argentina, S.A., an Argentinean corporation, for the purpose of
pursuing certain wireless telecommunication network rights in Argentina.
Wireless Communications de Argentina, S.A. is held 80% by the Company and 20% by
Petrolera.
<PAGE>
FondElec Transaction. Effective November 1, 1997, the Company entered
into an agreement with FondElec Essential Services Fund, L.P. and Pegasus Fund,
L.P., affiliates of FondElec, to sell an aggregate of 1,487,067 shares of the
Company's authorized but unissued Common Stock and 250,049 shares of the
Company's authorized but unissued Series A Preferred stock for a total purchase
price of $5,248,795 (the "FondElec Transaction"). The purchase price for the
shares was funded in November 1997 and February 1998. As a result of the
transaction, FondElec and its affiliates currently hold an aggregate (exclusive
of the warrants to purchase an additional 615,837 shares of Common Stock they
acquired in connection with their purchase of $871,095 in secured notes the
Company retired in full in November 1997) of approximately 18% of the voting
control of the Company on a common share equivalent basis.
In connection with the FondElec Transaction, the Company and certain of
its shareholders entered into a voting agreement to elect persons designated by
FondElec to the Board of Directors of the Company until the earlier of November
1, 2000 or immediately preceding the closing of a Qualified Offering. Under the
voting agreement, FondElec can designate 20% of the board so long as it holds
10% or more of the Company on a common share equivalent basis and 10% of the
board if its ownership falls below 10%. Currently, the FondElec designees on the
board are Messrs. Accosta-Rua and Sorenson. FondElec has agreed to waive its
rights to designate members of the Company's board of directors under the voting
agreement upon the closing of a qualified public offering by the Company.
Pacific Mezzanine Fund, L.P. In June, 1996, TTI borrowed $2.5 million
from Pacific Mezzanine Fund, L.P., an unrelated party ("PMF"). The terms of the
loan allowed TTI to loan to the Company, pursuant to a separate loan commitment,
up to $1,000,000 from the Pacific Mezzanine Fund, L.P. loan proceeds. Interest
on the outstanding balance of the loan between TTI and the Company accrues at
the rate of 8% per annum, and all outstanding principal and interest are due and
payable in full on August 1, 2001. As of December 31, 1997, $996,707 plus
accrued interest of $133,953 was outstanding on the loan. In July, 1997, PMF
acquired from TTI the note the Company issued to TTI.
Separation Liability. The Company has a current liability to
Bridgeport, the entity owned by George D'Ambrosio, the father of the chief
executive officer of the Company in the amount of $100,000 for a commitment fee
related to the entity's investment that secured the New Zealand channel rights
prior to TTI's involvement in New Zealand. TTI assumed this liability in
connection with its acquisition of the New Zealand rights and the Company
subsequently assumed the liability in connection with the Separation.
Employment Agreements
As of May 31, 1998, the Company had entered into employment agreements
with several of its key officers, including Lance D'Ambrosio, Brian Reynolds,
William Levan, Jose Miguel Padron, Donald Williams and E. Andrew Lowe. The
agreements have initial terms of one to three years. Under the agreements, the
employee is entitled to a base salary ($165,000 in the case of Mr. D'Ambrosio,
$135,000 in the case of Mr. Reynolds, $120,000 in the case of Mr. Levan,
$105,000 in the case of Mr. Padron, $102,857 in the case of Mr. Williams, and
$100,000 in the case of Mr. Lowe), plus incentive bonuses (as determined by the
Board of Directors) and standard benefits such as health and life insurance and
reimbursement of reasonable expenses. Under Mr. Williams' contract, he is also
entitled to additional payments (in the approximate amount of two month's
compensation) as required under Venezuelan law.
<PAGE>
In general, the employment contracts may be terminated only for cause,
which is defined in the agreements as willful misconduct, fraud,
misappropriation, embezzlement, and similar unlawful acts. In addition, the
employee can terminate the contract on ninety to one hundred eighty days notice.
If the contract is terminated without cause absent a change in control, the
employee is entitled to receive severance pay in an amount equal to the
remaining amount due under the contract, up to one year of such employee's
annual base salary. If the contract is terminated without cause pursuant to a
change in control of the Company, the employee is entitled to receive severance
pay in an amount equal to one or two years of such employee's annual base
salary, depending on the particular agreement. The contracts also contain
non-competition provisions which the Company believes are consistent with
industry practice. The Company intends to enter into employment agreements with
all of its officers and key employees.
Certain Litigation
Certain of the Company's officers and directors have acted (and, in the
case of Mr. Lowe, currently act) as executive officers or directors of TTI. In
December 1997, TTI filed a petition under Chapter 11 of the United States
Bankruptcy Code in connection with the defense and prosecution of litigation
claims relating to the termination by Pacific Telesis Group and its affiliates
of their agreement to acquire TTI's United States network rights
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's executive officers and directors, and persons
who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and any exchange on which
the securities of the Company are listed, and to furnish the Company with
copies.
Based on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons, the Company
believes that during fiscal year 1997 all filing requirements under Section
16(a) were complied with.
Vote Required for Approval. The eight nominees for director receiving the
highest number of votes of Capital Stock present at the Meeting on a common
stock equivalent basis, either in person or by proxy, and entitled to vote, will
be elected as directors of the Company.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
ALL OF THE EIGHT NOMINEES SET FORTH ABOVE UNDER THE HEADING
"NOMINEES."
<PAGE>
3. APPOINTMENT OF INDEPENDENT AUDITORS
At the meeting, stockholders will be asked to ratify the Company's
appointment of Deloitte & Touche LLP as its independent public accountants for
the fiscal year ending December 31, 1998. Deloitte & Touche currently acts as
the Company's independent auditors, and has acted in that capacity since
September 5, 1996, when it was engaged to replace Jones, Jensen & Company
("Jones Jensen"), as the Company's independent certified public accountants for
the year ending December 31, 1996. Jones Jensen's engagement was terminated on
September 5, 1996. Jones Jensen's report on the Company's financial statements
for each of the two most recent years preceding its termination did not contain
an adverse opinion or disclaimer of opinion, nor was its report modified as to
uncertainty, audit scope, or accounting principles. Jones Jensen's termination
did not occur because of resolved or unresolved disagreements on any matter of
accounting principles or practices, financial statement disclosures or auditing
scope or procedures. The decision to change the Company's accountants to
Deloitte & Touche was recommended by the Company's officers and approved by the
Board.
A representative of Deloitte & Touche has been invited to the Meeting,
and if in attendance, will have the opportunity to make a statement, and will be
expected to be available to respond to appropriate questions from stockholders.
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company present at the Meeting on a common stock equivalent
basis, either in person or by proxy, and entitled to vote is required to approve
the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE SELECTION
OF DELOITTE & TOUCHE LLP TO SERVE AS AUDITORS FOR THE COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998.
4. APPROVAL OF THE 1998 STOCK INCENTIVE PLAN
General
In June, 1998, the Board adopted, subject to approval by the Company's
stockholders, the 1998 Stock Incentive Plan (the "Incentive Plan") and reserved
1,250,000 shares of Common Stock for issuance under the Incentive Plan subject
to the approval of Proposals 1 and 6 herein by the stockholders. The Board
believes that the availability of stock options and other incentives will be an
important factor in the Company's ability to attract and retain qualified
employees and to provide incentives for them to exert their best efforts on
behalf of the Company. The affirmative vote of the holders of a majority of the
shares of Capital Stock present on a common stock equivalent basis, in person or
by proxy, and entitled to vote at the meeting is required to approve the
Incentive Plan. If the Incentive Plan is not so approved it will not be
effective.
<PAGE>
Certain provisions of the Incentive Plan are summarized below. The
complete text of the Incentive Plan is attached to this Proxy Statement as
Exhibit B and the following summary is qualified in its entirety by express
reference to the complete text of the Incentive Plan.
All employees, officers and directors of the Company and its
subsidiaries are eligible to participate in the Incentive Plan. Also eligible
are non-employee agents, consultants, advisors and independent contractors of
the Company or any subsidiary.
The Company has approximately ten employees, officers and directors
eligible to participate in the Incentive Plan. The Incentive Plan shall be
administered by the Board, which shall designate from time to time the
individuals to whom awards are made under the Incentive Plan, the amount of any
such award and the price and other terms and conditions of any such award. The
Board may delegate any or all authority for administration of the Incentive Plan
to a committee of the Board. Subject to the provisions of the Incentive Plan,
the Board, or a committee, if any, may adopt and amend rules and regulations
relating to the administration of the Incentive Plan. Only the Board may amend,
modify or terminate the Incentive Plan.
Types of Awards
The Incentive Plan permits the grants of incentive stock options,
nonstatutory stock options, stock awards, stock appreciation rights, cash bonus
rights, dividend equivalent rights, performance-based awards and foreign
qualified grants. Shares awarded under the Incentive Plan may be authorized and
unissued shares or shares acquired in the market. If any award granted under the
Incentive Plan expires, terminates or is cancelled, or if shares sold or awarded
under the Incentive Plan are forfeited to the Company or repurchased by the
Company, the shares again become available for issuance under the Incentive
Plan.
The Incentive Plan shall continue in effect for ten years from the date
it was adopted by the Board, subject to earlier termination by the Board. The
Board may suspend or terminate the Incentive Plan at any time.
The Board determines the persons to whom options are granted, the
option price, the number of shares to be covered by each option, the period of
each option, the times at which options may be exercised and whether the option
is an incentive stock option ("ISO"), as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or a non-statutory stock option
("NSO"). An Employee may be granted options or stock appreciation rights under
the Incentive Plan as determined by the Compensation Committee of the Board of
Directors. No monetary consideration is paid to the Company upon the granting of
options.
Options are exercisable in accordance with the terms of an option
agreement entered into at the time of grant. If the option is an ISO, all terms
must be consistent with the requirements of the Code and applicable regulations,
including that the option price cannot be less than the fair market value of the
shares of Common Stock on the date of the grant. If the option is an NSO, the
option price may be any price determined by the Board, which may be less than
the fair market value of the shares of Common Stock on the date of grant. Upon
the exercise of an option, the number of shares subject to the option is reduced
by the number of shares with respect to which the option is exercised, and the
number of shares available under the Incentive Plan for future option grants are
reduced by the number of shares with respect to which the option is exercised,
less the number of shares surrendered or withheld in connection with the
exercise of the option and the number of shares surrendered or withheld to
satisfy withholding obligations. No options have been granted under the
Incentive Plan.
<PAGE>
The Board may award shares of Common Stock under the Incentive Plan as
stock bonuses, restricted stock awards or otherwise. The Board determines the
persons to receive awards, the number of shares to be awarded and the time of
the award. Shares received as a stock bonus are subject to the terms, conditions
and restrictions determined by the Board at the time the bonus is awarded. The
aggregate number of shares that may be awarded to any one person pursuant to
stock awards under the Incentive Plan shall be determined by the Compensation
Committee of the Board of Directors. No stock awards have been granted under the
Incentive Plan.
The Incentive Plan provides that the Company may issue shares under the
Incentive Plan subject to a purchase agreement between the Company and the
prospective recipient in such amounts, for such consideration, subject to such
restrictions and on such terms as the Board may determine.
Stock appreciation rights ("SARs") may be granted under the Incentive
Plan. SARs may, but need not, be granted in connection with an option grant or
an outstanding option previously granted under the Incentive Plan. A SAR gives
the holder the right to payment from the Company of an amount equal in value to
the excess of the fair market value on the date of exercise of a share of Common
Stock over its fair market value on the date of grant or, if granted in
connection with an option, the option price per share under the option to which
the SAR relates.
A SAR is exercisable only at the time or times established by the
Board. If an SAR is granted in connection with an option, it is exercisable only
to the extent and on the same conditions that the related option is exercisable.
Payment by the Company upon exercise of a SAR may be made in shares of Common
Stock valued at its fair market value, in cash, or partly in stock and partly in
cash, as determined by the Board. The Board may withdraw any SAR granted under
the Incentive Plan at any time and may impose any condition upon the exercise of
a SAR or adopt rules and regulations from time to time affecting the rights of
holders of SARs. No SARs have been granted under the Incentive Plan.
The existence of SARs, as well as certain bonus rights described below,
would require charges to income over the life of the right based upon the amount
of appreciation, if any, in the market value of the shares of Common Stock over
the exercise price of shares subject to exercisable SARs or bonus rights.
The Board may grant cash bonus rights under the Incentive Plan in
connection with (i) options granted or previously granted, (ii) SARs granted or
previously granted, (iii) stock awarded or previously awarded and (iv) shares
sold or previously sold under the Incentive Plan. Bonus rights may be used to
provide cash to employees for the payment of taxes in connection with awards
under the Incentive Plan. No cash bonus rights have been granted under the
Incentive Plan.
<PAGE>
The Board may grant awards intended to qualify as performance-based
compensation under Section 162(m) of the Code and the regulations thereunder
("Performance-based Awards"). Performance-based Awards may be denominated either
in shares of Common Stock or in dollar amounts. All or part of the awards will
be earned if performance goals established by the Board for the period covered
by the awards are met and the employee satisfies any other restrictions
established by the Board. The performance goals will be expressed as one or more
targeted levels of performance with respect to the Company or any subsidiary,
division or other unit of the Company: earnings, earnings per share, stock price
increase, total stockholder return (stock price increase plus dividends), return
on equity, return on assets, return on capital, economic value added, revenues,
operating income, cash flows or any of the foregoing. No Performance-based
Awards have been granted under the Incentive Plan.
Awards under the Incentive Plan may be granted to eligible persons
residing in foreign jurisdictions. The Board may adopt supplements to the
Incentive Plan necessary to comply with the applicable laws of foreign
jurisdictions and to afford participants favorable treatment under those laws,
but no award may be granted under any supplement with terms that are more
beneficial to the participants than the terms permitted by the Incentive Plan.
No foreign qualified grants have been awarded under the Incentive Plan.
Changes in Capital Structure
The Incentive Plan provides that if the number of outstanding shares of
Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any recapitalization, stock split or similar
transaction, appropriate adjustment will be made by the Board in the number and
kind of shares available for awards under the Incentive Plan. In the event of a
merger, consolidation or plan of exchange to which the Company is a party or a
sale of all or substantially all of the Company's assets (each a "Transaction"),
the Board will, in its sole discretion and to the extent possible under the
structure of the Transaction, select one of the following alternatives for
treating outstanding options under the Incentive Plan: (i) outstanding options
will remain in effect in accordance with their terms, (ii) outstanding options
shall be converted into options to purchase stock in the corporation that is the
surviving or acquiring corporation in the Transaction, or (iii) the Board will
provide a 30-day period prior to the consummation of the Transaction during
which outstanding options shall be exercisable to the extent exercisable and
upon the expiration of such 30-day period, all unexercised options shall
immediately terminate. The Board may, in its sole discretion, accelerate the
exercisability of options so that they are exercisable in full during such
30-day period. In the event of the dissolution of the Company, options shall be
treated in accordance with clause (iii) above.
<PAGE>
Tax Consequences
Certain options authorized to be granted under the Incentive Plan are
intended to qualify as ISOs for federal income tax purposes. Under federal
income tax law currently in effect, the optionee will recognize no income upon
grant or upon a proper exercise of the ISO. The amount by which the fair market
value of the stock at the time of exercise exceeds the exercise price, however,
is includible in the optionee's alternative minimum taxable income and may,
under certain conditions, result in alternative minimum tax liability. If an
employee exercises an ISO and does not dispose of any of the option shares
within two years following the date of grant and within one year following the
date of exercise, any gain realized on subsequent disposition of the shares will
be treated as income from the sale or exchange of a capital asset. If an
employee disposes of shares acquired upon exercise of an ISO before the
expiration of either the one-year holding period or the two-year waiting period,
any amount realized will be taxable as ordinary compensation income in the year
of such disqualifying disposition to the extent that the lesser of the fair
market value of the shares on the exercise date or the fair market value of the
shares on the date of disposition exceeds the exercise price. The Company will
not be allowed any deduction for federal income tax purposes at either the time
of the grant or the exercise of an ISO. Upon any disqualifying disposition by an
employee, the Company will generally be entitled to a deduction to the extent
the employee realized ordinary income.
Certain options authorized to be granted under the Incentive Plan will
be treated as NSOs for federal income tax purposes. Under federal income tax law
currently in effect, no income is realized by the grantee of an NSO until the
option is exercised. At the time of exercise of an NSO, the optionee will
realize ordinary compensation income, and the Company will generally be entitled
to a deduction, in the amount by which the market value of the shares subject to
the option at the time of exercise exceeds the exercise price. The Company is
required to withhold on the income amount. Upon the sale of shares acquired upon
exercise of an NSO, the difference between the amount realized from the sale as
compared with the market value of the shares on the date of exercise will
generally be treated by the optionee as income or loss from the sale of a
capital asset.
Under federal income tax law currently in effect, no income is realized
by the grantee of a SAR until the SAR is exercised. At the time the SAR is
exercised, the grantee will realize ordinary compensation income, and the
Company generally will be entitled to a deduction, in an amount equal to the
fair market value of the shares or cash received. The Company is required to
withhold on the income amount.
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt unless the
shares are substantially nonvested for purposes of Section 83 of the Code and no
Section 83(b) election is made. If the shares are not vested at the time of
receipt, the employee will realize taxable income in each year in which a
portion of the shares substantially vest, unless the employee elects to
accelerate the recognition of income under Section 83(b) within 30 days after
the original transfer. The Company will generally be entitled to a tax deduction
in the amount includible as income by the employee at the same time or times as
the employee recognizes income equal to the amount of the cash bonus paid at the
time of receipt.
<PAGE>
Section 162(m) of the Code limits to $1,000,000 per person the amount
that the Company may deduct for compensation paid to any of its most highly
compensated officers in any single year. Under IRS regulations, compensation
received through the exercise of an option or a SAR is not subject to the
$1,000,000 limit if the option or SAR and the Incentive Plan meet certain
requirements of the exception for performance-based compensation. One
requirement is that stockholders approve per-employee limits on the number of
shares as to which options and SARs may be granted. For other performance-based
awards, stockholders must approve the performance criteria upon which award
payouts will be based and the maximum amount payable under awards, both of which
are set forth in Section 11 of the Incentive Plan regarding performance-based
awards. Other requirements of the exception for performance-based compensation
are that the option or stock appreciation right be granted by a committee
composed solely of at least two outside directors and that the exercise price of
the option or the stock appreciation right be not less than fair market value of
the Common Stock on the date of grant. The Company believes that if Proposal 4
is approved by stockholders, and if the options or rights are granted by a
committee composed solely of at least two outside directors, then compensation
paid or deemed paid in connection with options, SARs and other performance-based
awards granted or made under the Incentive Plan in compliance with the above
requirements will not be subject to the $1,000,000 deduction limit.
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company present at the Meeting on a common stock equivalent
basis, either in person or by proxy, and entitled to vote is required to approve
the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE ADOPTION OF THE COMPANY'S 1998 STOCK INCENTIVE PLAN.
5. APPROVAL OF 1998 DIRECTOR STOCK PLAN
The Board has adopted the 1998 Director Stock Plan (the "Director Stock
Plan"), subject to approval by the Company's stockholders at the Meeting. The
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Meeting is required
to approve the Director Stock Plan. If the Director Plan is not so approved, it
will not become effective.
Certain provisions of the Director Plan are summarized below. The
complete text of the Director Plan is attached to this Proxy Statement as
Exhibit C and the following summary is qualified in its entirety by express
reference to the complete text of the Director Plan.
The purpose of the Director Stock Plan is to provide for a method of
compensation for the members of the Board who are not employees of the Company
(the "Non-Employee Directors") that will strengthen the alignment of their
financial interests with those of the Company's stockholders.
The Director Stock Plan would provide the Non-Employee Directors with
an aggregate annual compensation retainer of options (each, an "Option") to
acquire 8,000 shares of Common Stock. Each Option will be granted on the 1st day
of January of each year for services performed in the preceding year.
<PAGE>
If approved by the Company's stockholders, the first Options will be
granted on January 1, 1999, for the annual period which commenced on July 1,
1998. Each Non-Employee Director will continue to receive such annual grants as
long as the director has the status of Non-Employee Director. If a Non-Employee
Director no longer serves as a director of the Company for any reason, that
director will be entitled to all unpaid portions of his or her the Option which
will have accrued on a daily basis through the date of such termination.
The Common Stock underlying the Options under the Director Stock Plan
may be issued, upon exercise of the Option, out of the authorized but unissued
shares of Common Stock or by transfer of shares of Common Stock previously
reacquired by the Company. Each Option will vest on the first anniversary of the
date of the grant, and the Option will expire, if unexercised, five years from
the date of grant. The exercise price of each Option is eighty-five percent
(85%) of the fair market value of a share of Common Stock. The number of shares
issuable in connection with any Option and the aggregate number of shares
remaining available for issuance under the Director Stock Plan will be
proportionately adjusted to reflect any subdivision or combination of
outstanding shares of Common Stock.
The Director Stock Plan will continue until May 30, 2008, unless and
until it is terminated prior to that time by action of the Board. The Board may
from time to time amend, modify, or suspend the Director Stock Plan for the
purpose of meeting or addressing any changes in legal requirements or for any
other purpose permitted by law except that (i) no amendment or alteration shall
be effective prior to approval by the Company's stockholders to the extent such
approval is then required by applicable legal requirements and (ii) the Director
Stock Plan shall not be amended more than once every six months to the extent
such limitation is required by Rule 16b-3(c)(2)(ii) (or any successor provision)
under the Securities Exchange Act of 1934, as then in effect.
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company present at the Meeting on a common stock equivalent
basis, either in person or by proxy, and entitled to vote is required to approve
the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE ADOPTION OF THE COMPANY'S 1998 DIRECTOR STOCK PLAN.
6. APPROVAL OF CONSOLIDATION OF CAPITAL STOCK
The Board has recently commenced discussions with certain underwriters
regarding a possible public and/or private offering of the shares of the
Company's Common Stock. Based upon on preliminary valuations of the Company, the
Board has determined, in conjunction with its potential underwriters, that it is
in the best interests of the Company and the stockholders that every 3.5
outstanding shares of Capital Stock be consolidated into one share of Capital
Stock. The Board believes that the reverse-split of its shares of Capital Stock
is necessary in order to attain an initially stronger price per share for the
Common Stock and attract institutional investors, while developing a strong
trading market for its Common Stock. The immediate effect of the consolidation
would be to increase the fair market value of each share of Common Stock, as
determined by the Board to approximately $4.60, to increase the fair market
value of each share of Series A Preferred Stock, as determined by the Board, to
approximately $44.60, and increase the fair market value of each share of Series
B Preferred Stock to approximately $35.00. Any fractional shares created as a
result of the consolidation will be paid in immediately available funds to the
stockholders.
<PAGE>
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company present at the Meeting on a common stock equivalent
basis, either in person or by proxy, and entitled to vote is required to approve
the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE CONSOLIDATION OF THE COMPANY'S CAPITAL STOCK.
7. APPROVAL OF CONVERSION OF SERIES A PREFERRED STOCK
As described above under the section entitled "Authorized Shares of
Capital Stock" of Proposal 1, the Company has issued two classes of preferred
stock, the Series A Preferred Stock, and the Series B Preferred Stock.
Generally, under the Company's current Articles of Incorporation, each
share of Series A Preferred Stock entitles the holder thereof to ten votes on
all matters duly submitted to the Company's stockholders for consideration. In
all issues brought before the stockholders, the holders of the Series A
Preferred Stock are entitled to vote, and have their votes counted, together
with the Common Stock and Series B Preferred Stock as one class.
Upon any liquidation of the Company, the holders of the Series A
Preferred Stock are entitled to receive as a distribution from the Company ten
times the amount which is to be distributed to the holders of Common Stock. In
the event the Company determines that it is in the best interests of its
stockholders to declare a dividend, the holders of the Series A Preferred Stock
are entitled to ten times the amount which is declared as a dividend to the
holders of Common Stock. The shares of Series A Preferred Stock are not
convertible or redeemable.
In order to position the Company for its contemplated initial public
offering, the Board has determined, upon the advice of its potential
underwriters, that the outstanding shares of Series A Preferred Stock should be
converted into shares of Common Stock in an effort to simplify the Company's
current capital structure. Each share of Series A Preferred Stock would be
converted into ten shares of Common Stock. The proposed Amended and Restated
Articles of Incorporation of the Company, as described in Proposal 1, assume,
and is conditioned upon, the approval of this Proposal.
The current Articles of Incorporation of the Company do not authorize
the Company to issue a sufficient number of shares of Common Stock to effect a
conversion of the Series A Preferred Stock into Common Stock, and the
designations and preferences of the Series A Preferred Stock do not provide for
their conversion. In addition, as described in the proposal recommending an
increase in the number of authorized shares of Capital Stock, the regulations of
the National Market System of the National Association of Securities Dealers
Automated Quotation System, the exchange on which the Company intends to list
its shares of Common Stock for public trading, requires that the stockholders
approve, by a majority of the total votes cast the issuance of shares of Common
Stock which is or exceeds twenty percent of the outstanding shares of Common
Stock before the issuance.
<PAGE>
Vote Required for Approval. The affirmative vote of a majority of the shares of
Capital Stock of the Company present at the Meeting, on a common stock
equivalent basis, either in person or by proxy, and entitled to vote is required
to approve the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE CONVERSION OF THE PREFERRED STOCK.
STOCKHOLDER PROPOSALS
In accordance with recently adopted rules of the Securities and
Exchange Commission, a stockholder proposal to be considered for inclusion in
the proxy material for the Company's 1999 Annual Meeting must be received by the
Company no later than forty-five days before the 1999 Annual Meeting.
Accordingly, the Company requests the stockholders submit any appropriate
proposal to be received by the Company no later than March 1, 1999. Stockholder
proposals should be addressed to Anthony Sansone, Secretary, Wireless Cable &
Communications, Inc., 102 West 500 South, Suite 230, Salt Lake City, Utah,
84101.
OTHER MATTERS
The Board does not presently intend to bring any other business before
the Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
By Order of the Board of Directors
/S/Anthony Sansone
------------------
Anthony Sansone
Secretary
All stockholders are urged to complete, sign, date and return the
accompanying proxy card in the enclosed postage-paid envelope. Thank you for
your prompt attention to this matter.
<PAGE>
PROXY FOR
WIRELESS CABLE & COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 17, 1998
The undersigned hereby appoints Lance D'Ambrosio and Anthony Sansone,
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the common or preferred
shares of Wireless Cable & Communications, Inc. (the "Corporation") held of
record by the undersigned on July 1, 1998, at the annual meeting of the
stockholders to be held on August 17, 1998, or any adjournment thereof.
1. Articles of Incorporation. To approve and adopt the Amended and
Restated Articles of Incorporation for the Corporation, as recommended by the
Board of Directors.
FOR AGAINST ABSTAIN
2. Election of Directors. To elect the following nominees as Directors
of the Corporation, until such time as each such member's successor shall have
been elected and duly qualified: Lance D'Ambrosio; Donald Williams, E. Andrew
Lowe; Troy D'Ambrosio; George Sorenson; Gaston Acosta-Rua; Jorge Fucaraccio; and
Peter Schiller. To withhold your vote from any of the nominees, please clearly
cross-out such nominee's name from the preceding list.
FOR AGAINST ABSTAIN
3. Independent Accountant. To approve and appoint the accounting firm
of Deloitte & Touche LLP as the Corporation's independent accountant.
FOR AGAINST ABSTAIN
4. Stock Incentive Plan. To approve and adopt the 1998 Stock Incentive
Plan, as recommended by the Board of Directors.
FOR AGAINST ABSTAIN
5. Director Stock Plan. To approve and adopt the 1998 Director Stock
Plan, as recommended by the Board of Directors.
FOR AGAINST ABSTAIN
6. Consolidation of Stock. To approve a consolidation of the
Corporation's capital stock, by which each three and one-half (3.5) shares of
issued and outstanding capital stock of the Corporation will be converted into
one share of such respective capital stock.
FOR AGAINST ABSTAIN
<PAGE>
7. Conversion. To approve the conversion of each share of Series A
Preferred Stock into ten shares of Common Stock.
FOR AGAINST ABSTAIN
8. General. To approve such other business as may properly come before
the Annual Meeting or any adjournments thereof.
FOR AGAINST ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made, this proxy will be voted for
all proposals and election set forth in this Proxy.
By signing this proxy, you represent and warrant to the Corporation
that you are entitled to vote the number of shares in the manner prescribed. The
Corporation may rely upon this representation and you agree to provide the
Corporation, upon request, with evidence that you are authorized to vote the
shares as represented.
Please sign your name exactly as it appears on the Corporation's
records, and indicate the number and class of shares of capital stock you held
of the Company as of July 1, 1998. When shares are held by joint tenants, both
should sign. When signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation or other entity,
please sign in full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated:______________________, 1998
_________________________________ ___________________________
(Signature of Shareholder) (Signature of Shareholder if
held jointly)
__________________________________
Exact Name(s) of Shareholder(s),
as set forth in the Corporation's records
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CONVERGENCE COMMUNICATIONS, INC.
ARTICLE I
The name of the corporation is Convergence Communications, Inc.
(the "Corporation")
ARTICLE II
The purposes for which the Corporation is organized are to engage in
any and all lawful acts that, presently or in the future, may legally be
performed by a corporation organized under the laws of the State of Nevada.
ARTICLE III
A. Authorized Shares. The corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock," and "Preferred
Stock." The total number of shares of stock the Corporation is authorized to
issue is 115,000,000, divided into 100,000,000 shares of Common Stock, and
15,000,000 shares of Preferred Stock. The preferences, limitations and relative
rights of the shares of each class of stock, and the express grant of authority
to the board of directors to amend these articles of incorporation to divide the
shares of Preferred Stock into series, to establish and modify the preferences,
limitations and relative rights of each share of Preferred Stock, and to
otherwise impact the capitalization of the corporation, are set forth below.
B. Common Stock.
1. Voting Rights. Except as otherwise expressly provided by
law or in this Article III, each outstanding share of Common Stock shall be
entitled to one vote on each matter to be voted on by the shareholders of the
Corporation;
2. Liquidation Rights. Subject to any prior or superior rights
of liquidation as may be conferred upon any shares of Preferred Stock, and after
payment or provision for payment of the debts and other liabilities of the
Corporation, upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the holders of shares of Common
Stock then outstanding shall be entitled to receive all of the assets and funds
of the Corporation remaining and available for distribution. Such assets and
funds shall be divided among and paid to the holders of the shares of Common
Stock, on a pro rata basis, according to the number of shares of held by each of
them;
3. Dividends. Dividends may be paid on the outstanding shares
of Common Stock as and when declared by the board of directors, out of funds
legally available therefor; provided, however, no dividends shall be made with
respect to the shares of Common Stock until all preferential dividends required
to be paid or set apart for any shares of Preferred Stock have been paid or set
apart; and
<PAGE>
4. Residual Rights. All rights accruing to the outstanding
shares of the capital stock of the corporation not expressly provided for to the
contrary herein or in the corporation's bylaws or in any amendment hereto or
thereto shall be vested in the shares of Common Stock.
C. Shares of Preferred Stock. Other than as set forth in Section D of
this Article III, the board of directors, without shareholder action, may amend
the corporation's articles of incorporation, pursuant to the authority granted
to the board of directors under Section 78.1955 of the Nevada Revised Statutes
(the "Statutes"), to do any of the following:
1. Preferences. Designate and determine, in whole or in part,
the preferences, limitations and relative rights of the shares of Preferred
Stock, within the limits set forth in the Statutes;
2. Series. Create one or more series of shares of Preferred
Stock, fix the number of shares of each such series, and designate and
determine, in whole or part, the preferences, limitations and relative rights of
each series of shares of Preferred Stock, within the limits set forth in the
Statutes;
3. Changes in Rights. Alter or revoke the preferences,
limitations and relative rights granted to or imposed upon the shares of
Preferred Stock (before the issuance of any shares of Preferred Stock) or upon
any wholly unissued series of Preferred Stock; and
4. Increase in Series. Increase or decrease the number of
shares constituting any series of Preferred Stock, the number of shares of which
was originally fixed by the board of directors, either before or after the
issuance of shares of the series, provided that the number may not be decreased
below the number of shares of such series then outstanding, or increased above
the total number of authorized shares of Preferred Stock available for
designation as a part of such series.
D. Series B Preferred Stock. Notwithstanding the preceding, the Board
of Directors of the Corporation has fixed and determined the voting rights,
designations, preferences, qualifications, privileges, limitations,
restrictions, options and other special or relative rights of a series of the
Corporation's Preferred Stock, hereinafter designated as the "Series B Preferred
Stock," consisting of 750,000 shares of the Corporation's 15,000,000 shares of
authorized Preferred Stock, of which (prior to the filing of this Certificate)
14,250,000 shares of such 15,000,000 shares are undesignated.
1. Dividends.
(a) No dividend shall be declared or paid on the
Common Stock of the Corporation during any fiscal year of the Corporation until
dividends in the annual amount of $2.3625 per share (as adjusted for any stock
dividends, combinations, or stock splits with respect to such stock as set forth
below), noncumulative, on the shares of Series B Preferred Stock shall have been
declared and paid during such fiscal year. The preferential dividend on the
shares of Series B Preferred Stock shall be payable semiannually on January 1
and July 1 of each year.
<PAGE>
(b) The preferential dividend described in Section
D(1)(a) of Article III hereof shall be payable by the Corporation, in its sole
discretion, in (a) cash, or (b) by the delivery to each holder of the shares of
the Series B Preferred Stock of the number of shares of Series B Preferred Stock
equal to the product of (i) .0675 (annually, or .03375 semi-annually, as the
case may be), multiplied by (ii) the number of shares of issued and outstanding
Series B Preferred Stock held by such shareholder.
2. Liquidation. In the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holder of each
share of Series B Preferred Stock shall be entitled to receive (subject to any
other class of the Corporation's stock that is senior to the Service B Preferred
Stock), prior and in preference to any distribution of any of the assets of the
Corporation to the holders of the shares of Common Stock, an amount equal to
$35.00 per share of Series B Preferred Stock. If, upon any such liquidation,
dissolution or winding up of the Corporation, the assets distributable among the
holders of the Series B Preferred Stock shall be insufficient to permit the
payment in full to such holders of the amount hereinabove provided, then the
entire assets of the Corporation shall be applied ratably to the payment of such
amount to the holders of shares of the Series B Preferred Stock then
outstanding.
3. Redemptions. Shares of Series B Preferred Stock shall not
be redeemable.
4. Conversion. Shares of Series B Preferred Stock shall not be
convertible, except as provided in the further paragraphs of this Section D(4)
of Article III.
(a) All issued and outstanding shares of Series B
Preferred Stock shall be automatically converted into fully paid and
nonassessable shares of Common Stock of the Corporation at the applicable
Conversion Rate on the date preceding the earliest to occur of (i) three years
from the date of the initial issuance of the Series B Preferred Stock, or (ii)
the date of the consummation of the Corporation's sale of shares of its Common
Stock in an underwritten public offering pursuant to a registration statement
(other than a registration statement filed on Form S-4 or S-8, or other form not
applicable for the general issuance of shares) filed with and declared effective
by the U.S. Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, which results in aggregate gross cash proceeds to the
Corporation of at least $15,000,000 and which results in a market capitalization
for the Corporation of at least $50,000,000 (post money) (an "Offering"), or
(iii) if the Corporation shall merge with or consolidate into another
corporation and shall not be the surviving entity in such merger or
consolidation, or shall sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business.
(b) As used herein, the term "Conversion Rate" shall
mean, with respect to the occurrence of any event described in clause (i) or
clause (iii) of Section D(4)(a) of Article III, a fraction, the numerator of
which shall be $35.00 and the denominator of which shall be the then value, per
share, of the Corporation's Common Stock, as determined in good faith by the
Board of Directors, and, with respect to the occurrence of the event described
in clause (ii) of Section D(4)(a) of Article III, a fraction, the numerator of
which shall be $35.00 and the denominator of which shall be the greater of the
actual per share price paid by investors in the Corporation's Common Stock
pursuant to the Offering.
<PAGE>
(c) Upon a conversion of shares of Series B Preferred
Stock into shares of Common Stock pursuant to the provisions of Section D(4)(a)
of Article III, the holder thereof shall surrender, during regular business
hours, the certificate or certificates representing the shares of the Series B
Preferred Stock, duly endorsed to the Corporation or in blank, at the principal
office of the Corporation or at such other place as the Corporation shall
designate. The Corporation shall, promptly following its receipt of such
certificates, determine the number of shares of Common Stock into which the
shares of Series B Preferred Stock shall convert by multiplying the number of
shares of Series B Preferred Stock so tendered to the Corporation by the
applicable Conversion Rate, and deliver to such holder of the shares of Series B
Preferred Stock, or to such holder's nominee or nominees as shall be designated
by such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, together with cash to which such
holder shall be entitled in lieu of fractional shares. The shares of Series B
Preferred Stock to be converted shall be deemed to have been converted and
canceled as of the day immediately preceding the earliest to occur of the events
described in Section D(4)(a) of Article III, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(d) At least 10 days prior to the anticipated
occurrence of the earliest to occur of any event specified in Section D(4)(a) of
Article III, the Corporation shall give a written notice to each holder of
record of the shares of Series B Preferred Stock, by certified mail enclosed in
a postage paid envelope addressed to such holder at such holder's address as the
same shall appear on the books of the Corporation. Delivery shall be deemed to
have occurred on the second day after deposit of such notice in the mail. Such
notice shall (i) state that the shares will be automatically converted on the
date preceding the consummation of the anticipated event, (ii) state the
expected date of conversion, and (iii) call upon such holder to exchange on or
after said date at the principal place of business of the Corporation a
certificate or certificates representing the shares of Series B Preferred Stock
to be converted in accordance with such notice as provided above. Upon any
conversion hereunder, the Corporation shall not be obligated to issue
certificates for the shares of Common Stock unless and until certificates
evidencing the converted shares of Series B Preferred Stock are delivered to the
Corporation.
(e) The issuance of certificates for shares of Common
Stock upon the conversion of shares of Series B Preferred Stock shall be made
without charge to the converting holder of shares of Series B Preferred Stock
for any original issue or transfer tax in respect of the issuance of such
certificates.
(f) The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the conversion of shares of Series B Preferred
Stock, the full number of shares of Common Stock then deliverable upon the
conversion or exchange of all the shares of Series B Preferred Stock at the time
outstanding. The Corporation shall take at all times such corporate action as
shall be necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the conversion of
shares of Series B Preferred Stock in accordance with the provisions hereof.
<PAGE>
(g) No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issued upon any
conversion of shares of Series B Preferred Stock.
5. Equitable Adjustment. If a state of facts shall occur
which, without being specifically controlled by the provisions of these
resolutions (including, without limitation, any subdivision of the outstanding
shares of the Common Stock into a greater number of shares of Common Stock, any
combination of the outstanding shares of Common Stock into a lesser number of
shares, the issuance of rights to all of the holders of its shares of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the then fair market value of the shares of Common
Stock, the declaration of a dividend or other distribution payable in shares of
Common Stock, or the reorganization of the Corporation), would not fairly
protect the conversion, dividend or voting rights of the holders of the shares
of Series B Preferred Stock or the rights of the Corporation in accordance with
the essential intent and principles of these resolutions, then the Board of
Directors of the Corporation shall make an adjustment in the application of the
provisions hereof, in accordance with such essential intent and principles, so
as to protect such rights. Anything herein to the contrary notwithstanding, no
adjustment in the Conversion Rate shall be required unless such adjustment,
either by itself or with other adjustments not previously made, would require a
change of at least 5% in the Conversion Rate, provided, however, that any
adjustment which by reason of this subparagraph is not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section shall be made to the nearest one-thousandth of a
share.
6. Voting Rights. Except as provided by statute, each share of
Series B Preferred Stock shall entitle the holder thereof the right to cast one
vote on every matter duly brought before the holders of shares of Common Stock
of the Corporation. The holders of the shares of Series B Preferred Stock and of
the Common Stock shall vote together as one class on all matters submitted to a
vote of the shareholders of the Corporation.
7. Rank. All shares of Preferred Stock shall be identical and
of equal rank except as to terms which may be specified by the Board of
Directors pursuant to the resolution or resolutions providing for the issuance
or amendment of the terms applicable to the shares of Series B Preferred Stock
adopted from time to time by the Board of Directors.
<PAGE>
ARTICLE IV
A. Voting Generally. Unless otherwise provided in these Articles of
Incorporation, or in the Statutes, every shareholder entitled to vote shall have
the right to vote his shares for the election of the directors of the
Corporation, but no shareholder shall have the right to accumulate its votes for
the election of the directors.
B. Directors.
1. Number. The number of directors of the Corporation shall be
set by the Bylaws, but shall not be less than three or more than nine. The board
of directors to be elected in 1998 shall be comprised of eight directors.
2. Classes. The board of directors shall be divided into three
groups, designated, respectively, Class I, Class II, and Class III. No one class
shall have more than one director more than any other class. If a fraction is
contained in the quotient arrived at by dividing the designated number of
directors by three, then, if such fraction is one-third, the additional director
shall be a member of Class I and if such fraction is two-thirds, one of the
additional directors shall be a member of Class I and one of the additional
directors shall be a member of Class II, unless otherwise provided from time to
time by resolution adopted by the board of directors.
3. Terms. Each director shall serve for three years, until the
third annual meeting following the annual meeting at which such director was
elected; provided, that each initial director in Class I shall serve for a term
ending on the date of the annual meeting in 2001; each initial director in Class
II shall serve for a term ending on the date of the annual meeting in 2000; and
each initial director in Class III shall serve for a term ending on the date of
the annual meeting in 1999. The term of each director shall be always subject to
the election and qualification of his successor and to his earlier death,
resignation or removal.
4. Removal. Directors of the Corporation may be removed only
for cause as determined by the affirmative vote or written consent of (i) all of
the other directors then in office, or (ii) the holders of at least two-thirds
of the shares of the Corporation entitled to vote thereon.
5. Vacancies. Any vacancy in the board of directors including
a vacancy from an enlargement of the board, shall be filled by a vote of a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. A director elected to fill a vacancy shall be elected
to hold office until the next election of the class for which such director
shall have been chosen, subject to the election and qualification of his
successor and to his earlier death, resignation or removal.
6. Allocations of Directors Among Classes. In the event of any
increase or decrease in the authorized number of directors, (i) each director
then serving as such shall nevertheless continue as a director of the class of
which he is a member, and (ii) the newly created or eliminated directorship
resulting from such increase or decrease shall be apportioned by the board of
directors among the three classes of directors so as to ensure that no one class
has more than one director more than any other class. To the extent possible,
newly created directorships shall be added to those classes whose terms of
office are to expire at the latest dates following such allocation, and
eliminated directorships shall be subtracted from those classes whose terms of
offices are to expire at the earliest dates following such allocation, unless
otherwise provided from time to time by resolution adopted by the board of
directors.
<PAGE>
7. Quorum; Action at Meeting. A majority of the directors at
any time in office shall constitute a quorum for the transaction of business. If
at any meeting of the directors there shall be less than such a quorum, a
majority of those present may adjourn the meeting. Every decision made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors unless a greater
number is required by law, by the Bylaws of the Corporation or by these Articles
of Incorporation.
8. Amendments to this Article. The affirmative vote or written
consent of the holders of at least two-thirds of the shares of the Corporation
issued and outstanding and entitled to vote shall be required to amend or
repeal, or to adopt any provision inconsistent with, this Article IV.
ARTICLE V
A. Indemnification. The Corporation shall, to the fullest extent
permitted by the Statutes, as the same may be amended and supplemented,
indemnify all directors, officers, employees and agents of the Corporation whom
it shall have the power to indemnify thereunder from and against any and all of
the expenses, liabilities, or other matters referred to therein or covered
thereby. The Corporation shall advance expenses to its directors, officers,
employees and agents to the full extent permitted by the Statutes, as the same
may be amended or supplemented. Such rights to indemnification or advancement of
expenses shall continue as to a person who has ceased to be a director, officer,
employee or agent of the Corporation, and shall inure to the benefit of the
heirs, executives and administrators of such persons. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement may be
entitled under any bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise. The Corporation shall have the right to purchase and
maintain insurance on behalf of its directors, officers, employees or agents to
the full extent permitted by the Statutes, as the same may be amended or
supplemented.
B. Limitation of Directors Liability. To the fullest extent permitted
by section 841 of the Statutes or as it may hereafter be amended, or any other
applicable law as now in effect, no director of the corporation shall be
personally liable to the corporation or its shareholders for monetary damages
for any action taken or any failure to take any action as a director. No
amendment or repeal of this Article V, nor the adoption of any provision in
these articles of incorporation inconsistent with this Article, shall eliminate
or reduce the effect of this Article, in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
<PAGE>
In witness whereof, the undersigned has executed this Amended and
Restated Articles of Incorporation this ____ day of _______, 1998.
Convergence Communications, Inc.
/s/Lance D'Ambrosio
-------------------
Lance D'Ambrosio
Chief Executive Officer
STOCK INCENTIVE PLAN
WIRELESS CABLE & COMMUNICATIONS, INC., a Nevada corporation, (the
"Company") adopts this Stock Incentive Plan (the "Plan"), effective June 12,
1998.
1. Purpose. The purpose of this Plan is to enable the Company to attract and
retain the services of and provide performance incentives to (1) selected
employees, officers and directors of the Company or of any subsidiary of the
Company ("Employees") and (2) selected nonemployee agents, consultants, advisors
and independent contractors of the Company or any subsidiary.
2. Shares Subject to the Plan. Subject to adjustment as provided below and in
paragraph 13, the shares to be offered under the Plan shall consist of the
common stock of the Company, par value $.01 per share ("Common Stock"), and the
total number of shares of Common Stock that may be issued under the Plan shall
not exceed 1,250,000 shares, all of which may be issued pursuant to the exercise
of options granted pursuant to the Plan. The shares issued under the Plan may be
authorized and unissued shares or reacquired shares or shares acquired in the
market. If any award granted under the Plan expires, terminates or is canceled,
the unissued shares subject to such award shall again be available under the
Plan and if shares which are awarded under the Plan are forfeited to the Company
or repurchased by the Company, that number of shares shall again be available
under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan (as amended and restated) shall become
effective on the date adopted by the Board of Directors. Awards may be
granted and shares may be awarded or sold under the Plan at any time
after the effective date and before termination of the Plan.
(b) Duration. The Plan shall continue in effect for a period of 10
years from the date adopted by the Board of Directors, subject to
earlier termination by the Board of Directors. The Board of Directors
may suspend or terminate the Plan at any time, except with respect to
awards then outstanding under the Plan. Termination shall not affect
the terms of any outstanding awards.
4. Administration.
(a) Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time
to time the individuals to whom awards shall be made, the amount of the
awards and the other terms and conditions of the awards. Subject to the
provisions of the Plan, the Board of Directors may from time to time
adopt and amend rules and regulations relating to the administration of
the Plan, advance the lapse of any waiting period, accelerate any
exercise date, waive or modify any restriction applicable to shares
(except those restrictions imposed by law) and make all other
determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by
the Board of Directors shall be final and conclusive. The Board of
Directors may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any related agreement in the manner
and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final judge of such expediency.
<PAGE>
(b) Committee. The Board of Directors may delegate to a committee of
the Board of Directors (the "Committee") any or all authority for
administration of the Plan. If authority is delegated to a Committee,
all references to the Board of Directors in the Plan shall mean and
relate to the Committee except (i) as otherwise provided by the Board
of Directors and (ii) that only the Board of Directors may amend or
terminate the Plan as provided in paragraphs 3 and 14.
(c) Officer. The Board of Directors or the Committee, as applicable,
may delegate to an executive officer of the Company authority to
administer those aspects of the Plan that do not involve the
designation of individuals to receive awards or decisions concerning
the timing, amounts or other terms of awards. No officer to whom
administrative authority has been delegated pursuant to this provision
may waive or modify any restriction applicable to an award to such
officer under the Plan.
5. Types of Awards; Eligibility. The Board of Directors may, from time to time,
take the following actions, separately or in combination, under the Plan: (i)
grant Incentive Stock Options, as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), as provided in paragraph 6; (ii) grant
options other than Incentive Stock Options ("Non-Statutory Stock Options") as
provided in paragraph 6; (iii) award stock as provided in paragraph 7; (iv) sell
shares subject to restrictions as provided in paragraph 8; (v) grant stock
appreciation rights as provided in paragraph 9; (vi) grant cash bonus rights a
provided in paragraph 10; (vii) grant Performance-based Rights as provided in
paragraph 11 and (viii) grant foreign qualified awards as provided in paragraph
12. Any such awards may be made to Employees, including Employees who are
officers or directors, and to other individuals described in paragraph 1 whom
the Board of Directors believes have made or will make an important contribution
to the Company or any subsidiary of the Company; provided, however, that only
Employees shall be eligible to receive Incentive Stock Options under the Plan.
The Board of Directors shall select the individuals to whom awards shall be made
and shall specify the action taken with respect to each individual to whom an
award is made. Unless otherwise determined by the Board of Directors with
respect to an award, each option, stock appreciation right, cash bonus right or
performance-based right granted pursuant to the Plan by its terms shall be
nonassignable and nontransferable by the recipient, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the recipient's domicile at the time of death. No
fractional shares shall be issued in connection with any award. In lieu of any
fractional shares, cash may be paid in an amount equal to the value of the
fraction or, if the Board of Directors shall determine, the number of shares may
be rounded downward to the next whole share.
<PAGE>
6. Option Grants. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option price,
the period of the option, the time or times at which the option may be exercised
and whether the option is an Incentive Stock Option or a Non-Statutory Stock
Option and any other terms of the grant, all of which shall be set forth in an
option agreement between the Company and the optionee. In the case of Incentive
Stock Options, all terms shall be consistent with the requirements of the Code
and applicable regulations. Upon the exercise of an option, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued upon exercise of the option less the number of shares surrendered or
withheld in connection with the exercise of the option and the number of shares
surrounded or withheld to satisfy withholding obligations in accordance with
paragraph 17.
7. Stock Awards. The Board of Directors may award shares under the Plan as stock
bonuses or otherwise. Shares awarded pursuant to this paragraph shall be subject
to the terms, conditions, and restrictions determined by the Board of Directors.
The Board of Directors may require the recipient to sign an agreement as a
condition of the award, but may not require the recipient to pay any monetary
consideration other than amounts necessary to satisfy tax withholding
requirements. The agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares awarded shall bear any legends required by
the Board of Directors. Upon the issuance of a stock award, the number of shares
available for issuance under the Plan shall be reduced by the number of shares
issued less the number of any shares surrendered to satisfy withholding
obligations in accordance with paragraph 17.
8. Purchased Stock. The Board of Directors may issue shares under the Plan for
such consideration (including promissory notes and services) as determined by
the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. All
Common Stock issued pursuant to this paragraph 8 shall be subject to a purchase
agreement, which shall be executed by the Company and the prospective recipient
of the shares prior to the delivery of certificates representing such shares to
the recipient. The purchase agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares shall bear any legends required by the
Board of Directors. Upon the issuance of purchased stock, the number of shares
available for issuance under the Plan shall be reduced by the number of shares
issued less the number of any shares surrendered to satisfy withholding
obligations in accordance with paragraph 17.
9. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be granted under the Plan by
the Board of Directors, subject to such rules, terms, and conditions as
the Board of Directors prescribes.
<PAGE>
(b) Exercise. Each stock appreciate right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an
amount equal in value to the excess of the fair market value on the
date of grant (or, in the case of a stock appreciation right granted in
connection with an option, the excess of the fair market value of one
share of Common Stock of the Company over the option price per shares
under the option to which the stock appreciation right relates),
multiplied by the number of shares covered by the stock appreciation
right or the option, or portion thereof, that is surrendered. Payment
by the Company upon exercise of a stock appreciation right may be in
Common Stock valued at fair market value, in cash, or partly in Common
Stock and partly in cash, all as determined by the Board of Directors.
The Board of Directors may withdraw any stock appreciation right
granted under the Plan at any time and may impose any conditions upon
the exercise of a stock appreciation right or adopt rules and
regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right to
exercise stock appreciation rights granted thereafter. Upon the
exercise of a stock appreciation right for shares, the number of shares
available for issuance under the Plan shall be reduced by the number of
shares issued less the number of any shares surrendered or withheld to
satisfy withholding obligations in accordance with paragraph 17. Cash
payments of stock appreciation rights shall not reduce the number of
shares of Common Stock available for issuance under the Plan.
10. Cash Bonus Rights. The Board of Directors may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted, (ii)
stock appreciation rights granted or previously granted, (iii) stock awarded or
previously awarded and (iv) shares sold or previously sold under the Plan. Cash
bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. The payment of a cash bonus shall not reduce the number
of shares of Common Stock available for issuance under the Plan. A cash bonus
right granted in connection with an option will entitle an optionee to a cash
bonus when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part if, in the sole discretion of the Board of Directors, the bonus right will
result in a tax deduction that the Company has sufficient taxable income to use.
A cash bonus right granted in connection with a stock award pursuant to
paragraph 7 or purchase of stock pursuant to paragraph 8 will entitle the
recipient to a cash bonus payable when the stock award is awarded or the shares
are purchased or restrictions, if any, to which the stock is subject lapse. If
the stock awarded or the shares purchased are subject to restrictions and are
repurchased by the Company or forfeited by the holder, the cash bonus right
granted in connection with the stock awarded or shares purchased shall terminate
and may not be exercised.
11. Performance-based Awards. The Board of Directors may grant awards intended
to qualify as performance-based compensation under Section 162(m) of the Code
and the regulations thereunder ("Performance-based Awards"). Performance-based
Awards shall be denominated at the time of grant either in shares of Common
Stock ("Stock Performance Awards") or in dollar amounts ("Dollar Performance
Awards"). Payment under a Stock Performance Award or a Dollar Performance Award
shall be made, at the discretion of the Board of Directors, subject to the
limitations set forth in paragraph 2, in shares of Common Stock ("Performance
Shares"), or in cash or any combination thereof. Performance-based Awards shall
be subject to the following terms and conditions:
<PAGE>
(a) Award Period. The Board of Directors shall determine the period of
time for which a Performance-based Award is made (the "Award Period").
(b) Performance Goals and Payment. The Board of Directors shall
establish in writing objectives ("Performance Goals") that must be met
by the Company or any subsidiary, division or other unit of the Company
("Business Unit") during the Award Period as a condition to payment
being made under the Performance-based Award. The Performance Goals for
each award shall be one or more targeted levels of performance with
respect to one or more of the following objective measures with respect
to the Company or any Business Unit: earnings, earnings per share,
stock price increases, total shareholder return (stock price increase
plus dividends), return on equity, return on assets, return on capital,
economic value added, revenues, operating income, cash flows or any of
the foregoing (determined according to criteria established by the
Board of Directors). The Board of Directors shall also establish the
number of Performance Shares or the amount of cash payment to be made
under a Performance-based Award if the Performance Goals are met or
exceeded, including the fixing of a maximum payment (subject to
paragraph 11(d)). The Board of Directors may establish other
restrictions to payment under a Performance-based Award, such as a
continued employment requirement, in addition to satisfaction of the
Performance Goals. Some or all of the Performance Shares may be issued
at the time of the award as restricted shares subject to forfeiture in
whole or in part if Performance Goals, or if applicable, other
restrictions are not satisfied.
(c) Computation of Payment. During or after an Award Period, the
performance of the Company or Business Unit, as applicable, during the
period shall be measured against the Performance Goals. If the
Performance Goals are not met, no payment shall be made under a
Performance-based Award. If the Performance Goals are met or exceeded,
the Board of Directors shall certify that fact in writing and certify
the number of Performance Shares earned or the amount of cash payment
to be made under the terms of the Performance-based Award.
(d) Effect on Shares Available. The payment of a Performance-based
Award in cash shall not reduce the number of shares of Common Stock
available for issuance under the Plan. The number of shares of Common
Stock available for issuance under the Plan shall be reduced by the
number of shares issued upon payment of an award, less the number of
shares surrendered or withheld to satisfy withholding obligations.
12. Foreign Qualified Grants. Awards under the Plan may be granted to such
Employees and such other persons described in paragraph 1 residing in foreign
jurisdictions as the Board of Directors may determine from time to time. The
Board of Directors may adopt such supplements to the Plan as may be necessary to
comply with the applicable laws of such foreign jurisdictions and to afford
participants favorable treatment under such laws; provided, however, that no
award shall be granted under any such supplement with terms that are more
beneficial to the participants than the terms permitted by the Plan.
<PAGE>
13. Changes in Capital Structure.
(a) Stock Splits; Stock Dividends. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities
of the Company by reason of any stock split, combination of shares or
dividend payable in shares, recapitalization or reclassification,
appropriate adjustment shall be made by the Board of Directors in the
number and kind of shares available for grants under the Plan. In
addition, the Board of Directors shall make appropriate adjustment in
the number and kind of shares as to which outstanding options, or
portions thereof then unexercised, shall be exercisable, so that the
optionee's proportionate interest before and after the occurrence of
the event is maintained. Notwithstanding the foregoing, the Board of
Directors shall have no obligation to effect any adjustment that would
or might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any
such adjustments made by Board of Directors shall be conclusive.
(b) Mergers, Reorganizations, Etc. The Board of Directors may include
such terms and conditions, including without limitation, provisions
relating to acceleration in the event of a change in control, as it
deems appropriate in connection with any award under the Plan with
respect to a merger, consolidation, plan of exchange, acquisition of
property or stock, separation, reorganization or liquidation to which
the Company or a subsidiary is a party or a sale or all or
substantially all of the Company's assets (each, a "Transaction").
Notwithstanding the foregoing, in the event of a Transaction, the Board
of Directors shall, in its sole discretion and to the extent possible
under the structure of the Transaction, select one or the following
alternatives for treating outstanding Incentive Stock Options or
Non-Statutory Stock Options under the Plan:
(i) Outstanding options shall remain in effect in accordance
with their terms.
(ii) Outstanding options shall be converted into options to
purchase stock in the company that is surviving or acquiring
company in the Transaction. The amount, type of securities
subject thereto and exercise price of the converted options
shall be determined by the Board of Directors of the Company,
taking into account the relative values of the companies
involved in the Transaction and the exchange rate, if any,
used in determining shares of the surviving corporation to be
issued to holders of shares of the Company. Unless otherwise
determined by the Board of Directors, the converted options
shall be vested only to the extent that the vesting
requirements relating to options granted hereunder have been
satisfied.
(iii) The Board of Directors shall provide a 30-day period
prior to the consummation of the Transaction during which
outstanding options may be exercised to the extent then
exercisable, and upon the expiration of such 30-day period,
all unexercised options shall immediately terminate. The Board
of Directors may, in its sole discretion, accelerate the
exercisability of options so that they are exercisable in full
during such 30-day period.
<PAGE>
(c) Dissolution of the Company. In the event of the dissolution of the
Company, options shall be treated in accordance with paragraph
13(b)(iii).
(d) Rights Issued by Another Corporation. The Board of Directors may
also grant options, stock appreciation rights, performance units, stock
bonuses and cash bonuses and issue restricted stock under the Plan
having terms, conditions and provisions that vary from those specified
in this Plan provided that any such awards are granted in substitution
for, or in connection with the assumption of, existing options, stock
appreciation rights, stock bonuses, cash bonuses, restricted stock and
performance units granted, awarded or issued by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant
to or by reason of a Transaction.
14. Amendment of Plan. The Board of Directors may at any time, and from time to
time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 9, 10 and 13, however, no change in an
award already granted shall be made without the written consent of the holder of
such award.
15. Approvals. The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company will use its best efforts to take steps required by state or
federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the Company's
shares may then be listed, in connection with the grants under the Plan. The
foregoing notwithstanding, the Company shall not be obligated to issue or
deliver Common Stock under the Plan if such issuance or delivery would violate
applicable state or federal securities laws.
16. Employment and Service Rights. Nothing in the Plan or any award pursuant to
the Plan shall (i) confer upon any Employee any right to be continued in the
employment of the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary by whom such Employee is employed to
terminate such Employee's employment at any time, for any reason, with or
without cause, or to decrease such Employee's compensation or benefits, or (ii)
confer upon any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
17. Taxes. Each participant who has received an award under the Plan shall, upon
notification of the amount due, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local withholding requirements. If the
participant fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the participant including
salary, subject to applicable law. With the consent of the Board of Directors, a
participant may satisfy this withholding obligation, in whole or in part, by
having the Company withhold from any shares to be issued that number of shares
that would satisfy the amount due or by delivering Common Stock to the Company
to satisfy the withholding amount.
<PAGE>
18. Rights as a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any Common Stock until the date
of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
Approved by the Board of Directors: __________________, 1997.
WIRELESS CABLE & COMMUNICATIONS, INC.
1998 DIRECTOR STOCK PLAN
PART 1. PLAN ADMINISTRATION AND ELIGIBILITY
I. Purpose
The purpose of this 1998 Director Stock Plan (the "Plan") of Wireless
Cable & Communications, Inc. (the "Company") is to encourage ownership in the
Company by outside directors of the Company (each, a "Non-Employee Director," or
collectively, the "Non-Employee Directors") whose continued services are
considered essential to the Company's continued progress and thus to provide
them with a further incentive to remain as directors of the Company.
II. Administration
The Board of Directors (the "Board") of the Company or any committee
(the "Committee") of the Board that will satisfy Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any regulations
promulgated thereunder, as from time to time in effect, including any successor
rule ("Rule 16b-3"), shall supervise and administer the Plan. The Committee
shall consist solely of two or more non-employee directors of the Company, who
shall be appointed by the Board. A member of the Board shall be deemed to be a
"non-employee director" only if such member satisfies such requirements as the
Securities and Exchange Commission may establish for non-employee directors
under Rule 16b-3. Members of the Board receive no additional compensation for
their services in connection with the administration of the Plan.
The Board or the Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. All questions of interpretation of the
Plan or of any shares issued under it shall be determined by the Board or the
Committee and such determination shall be final and binding upon all persons
having an interest in the Plan.
III. Participation in the Plan
Each member of the Board who is not an employee of the Company or any
of its subsidiaries or affiliates shall receive payment for his or her Annual
Retainer (as defined in Section VI below) under the Plan, for so long as he or
she serves as a director of the Company.
IV. Stock Subject to the Plan
The maximum number of shares of the Company's common stock, no par
value per share ("Common Stock"), which may be issued under the Plan shall be
One Hundred Thousand (100,000). The limitation on the number of shares which may
be issued under the Plan shall be subject to adjustment as provided in Section
IX of the Plan.
<PAGE>
PART 2. TERMS OF THE PLAN
V. Effective Date of the Plan
The Plan shall be effective as of July 1, 1998, subject to the approval
and ratification of the Plan by the shareholders of the Company. The Plan shall
terminate on May 30, 2008, unless earlier terminated by the Board of Directors
or the Committee.
VI. Terms and Conditions
A. Compensation. During the term of the Plan, the Company
shall pay to each Non-Employee Director for each year in which the Non-Employee
Director serves as a Non-Employee Director of the Company, annual compensation
in the form and amount set forth below (the "Annual Retainer"). If a
Non-Employee Director no longer serves as a director of the Company, for any
reason including death or disability, such Non-Employee Director shall be
entitled to all unpaid portions of his or her Annual Retainer which shall have
accrued (on a daily basis) through the date of such termination.
B. Options.
1. Annual Grant. During the term of the Plan, the
Company shall grant to each Non-Employee Director for each year in which the
Non-Employee Director serves as a Non-Employee Director of the Company, an
option to purchase 8,000 shares of Common Stock. Notwithstanding the preceding,
the Company shall grant to each Non-Employee Director on January 1, 1999, an
option to purchase 4,000 shares of Common Stock for the period commencing on
July 1, 1998 and ending on December 31, 1998. The Option shall not qualify as an
"incentive stock option" as defined in Section 422(b) of the Internal Revenue
Code of 1986. If a Non-Employee Director no longer serves as a director of the
Company, for any reason including death or disability, such Non-Employee
Director shall be entitled to the portion of his or her Option which shall have
accrued (on a daily basis) through the date of such termination.
2. Purchase Price. The purchase price of the Common
Stock issued pursuant to an exercise of the Option shall be eighty-five percent
(85%) of the Fair Market Value of the Common Stock at the date the Option is
granted (the "Purchase Price"). The Purchase Price shall be payable upon the
exercise of the Option and may be paid by (i) cash or check payable to the
Company, (ii) the delivery to the Company of the number of outstanding shares of
Common Stock equal in Fair Market Value to the Purchase Price, or (iii)
receiving from the Company in exchange for the Option the number of shares of
Common Stock equal in value to the excess of the Fair Market Value of one share
of Common Stock of the Company over the Purchase Price per share of Common
Stock, multiplied by the number of shares of Common Stock underlying the Option.
3. Term and Vesting. Except as otherwise set forth
herein, unless earlier exercised, each Option shall terminate and expire upon
the fifth anniversary of the date such Option is awarded. The Option granted to
a Non-Employee Director shall vest on the first anniversary of the effective
date of the award, provided that the Non-Employee shall have remained a director
of the Company since the date of the award. In the event a Non-Employee Director
ceases to be employed by the Company for reason, any Option granted to a
Non-Employee Director which has (i) not vested in accordance with this section
shall be forfeited without compensation by the Company, and all rights of the
Non-Employee Director in respect of such non-vested portion of the Option shall
terminate and be of no further force or effect, and (ii) vested in accordance
with this section shall remain exercisable for a period of one year following
the last day such Non-Employee Director is a director of the Company, after
which period the Option shall terminate and be of no further force or effect.
<PAGE>
4. Fair Market Value. As used herein, "Fair Market
Value" shall mean the twenty (20) day average of the closing prices for the
Common Stock as reported by (i) the NASDAQ Stock Market, if available, on the
date in question (or, if such day is not a business day, on the next succeeding
business day) or by (ii) the average of the prices quoted by the then market
makers in the Company" Common Stock on such dates or by (iii) such amount as the
Board or Committee determined in good faith to be the fair value of a share of
Common Stock.
PART 3. GENERAL PROVISIONS
VII. Assignments
The rights and benefits under this Plan may not be assigned, pledged or
hypothecated. Upon the death of a Non-Employee Director, such person's rights to
receive any payments hereunder will transfer to such person's named beneficiary,
if any, or to his or her estate.
VIII. Limitation of Rights
Neither the Plan, nor the issuance of shares of Common Stock nor any
other action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain a
director for any period of time, or at any particular rate of compensation.
IX. Changes in Present Stock
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, or other change in the corporate
structure or capitalization affecting the Company's present Common Stock, at the
time of such event the Board or the Committee shall make appropriate adjustments
to the number (including the aggregate number specified in Section IV) and kind
of shares to be issued under the Plan and the price of any Common Stock Payment.
X. Amendment of the Plan
The Board shall have the right to amend, modify, suspend or terminate
the Plan at any time for any purpose; provided, that following the approval of
the Plan by the Company's shareholders, the Company will seek shareholder
approval for any change to the extent required by applicable law, regulation or
rule.
<PAGE>
XI. Compliance with Section 16 of the Exchange Act
It is the Company's intent that the Plan comply in all respects with
Rule 16b-3. If any provision of this Plan is found not to be in compliance with
such rule and regulations, the provision shall be deemed null and void, and the
remaining provisions of the Plan shall continue in full force and effect. All
transactions under this Plan shall be executed in accordance with the
requirements of Section 16 of the Exchange Act and regulations promulgated
thereunder. The Board or the Committee may, in its sole discretion, modify the
terms and conditions of this Plan in response to and consistent with any changes
in applicable law, rule or regulation.
XII. Governing Law
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the law of the State of Nevada, without giving effect to
any choice or conflict of law provision (whether of the State of Nevada or other
jurisdiction) which would cause the application of any law or rule other than of
the State of Nevada.
Approved by the Board Of Directors:___________________________
Approved by the Shareholders:_________________________________
/s/Anthony Sansone
------------------
Anthony Sansone
Secretary
_________________ , Inc.
SERIES A PREFERRED STOCK
EXCHANGE AGREEMENT
This Exchange Agreement is entered into and effective as of the 12th
day of June, 1998, by and among Wireless Cable & Communications, Inc., a Nevada
corporation (the "Corporation"), and the persons and entities listed on the
Schedule of Holders attached hereto as Schedule "A," which Schedule of Holders
sets forth all of the holders of record of the Corporation's shares of Series A
Preferred Stock (collectively, the "Stockholders").
The Stockholders are the sole holders of the Corporation's Series A
Preferred Stock.
The Corporation and the Stockholders desire to exchange the issued and
outstanding shares of Series A Preferred Stock for shares of the Corporation's
common stock, par value $.01 per share (the "Common Stock") in the manner and
upon the terms and conditions set forth herein.
Now, therefore, in consideration of the foregoing recitals and the
covenants and agreements set forth herein, together with other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Exchange of Securities. Subject to the approval of the Corporation's
stockholders of the Corporation's Amended and Restated Articles of
Incorporation, by the execution of this Agreement, each Stockholder herewith
sells, assigns, transfers and sets over unto the Corporation all of such
Stockholder's right, title and interest in and to the number of shares of the
issued and outstanding Series A Preferred Stock set forth opposite such
Stockholder's name on the Schedule of Holders solely in exchange for the number
of duly and validly authorized and issued, fully paid, non-assessable, voting
shares of Common Stock of the Corporation set forth opposite such Stockholder's
name on the Schedule of Holders (the "Exchange Shares"). By the execution of
this Agreement, the Corporation accepts from each Stockholder the transfer of
the shares of Series A Preferred Stock solely in exchange, and as payment in
full for, the Exchange Shares.
2. Deliveries. Upon the execution and delivery of this Agreement, the
Corporation shall deliver to each Stockholder a certificate representing the
respective number of Exchange Shares set forth opposite such Stockholder's name
on the Schedule of Holders, and each Stockholder shall deliver to the
Corporation the certificate or certificates representing the shares of Series A
Preferred Stock held of record by such Stockholder duly endorsed in blank, or
accompanied by duly executed stock powers.
3. Representations and Warranties of the Corporation. The Corporation
represents and warrants to each Stockholder that the statements contained in
this Section 3 are true, correct and complete as of the date of this Agreement,
except as set forth in the Disclosure Schedule attached hereto as Schedule "B"
(the "Disclosure Schedule").
3.1 Organization. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. the Corporation is duly licensed or qualified to do business, and is in
good standing under the laws of each state in which the Corporation is required
to be so licensed or qualified, except where the lack of such qualification
would not have a material adverse effect on the financial condition of the
Corporation. The Corporation has the corporate power and authority to own or
lease its properties, rights and assets and to conduct its business as now
conducted and as presently proposed to be conducted.
<PAGE>
3.2 Execution and Delivery. The Corporation has full corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby and thereby. All corporate action on the part
of the Corporation necessary to authorize the execution, delivery and
performance by the Corporation of this Agreement, and the consummation of the
transactions contemplated hereby and thereby, has been taken. This Agreement has
been duly and validly authorized, executed and delivered by the Corporation, and
constitutes a valid and binding obligation of the Corporation, enforceable
against the Corporation in accordance with its respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or effecting creditors rights and to general equitable
principals.
3.3 Noncontravention. The execution, delivery and performance
by the Corporation of this Agreement do not and will not (i) violate or breach
the Articles of Incorporation or Bylaws of the Corporation, (ii) violate or
conflict with any applicable law, (iii) violate, breach, cause a default under
or otherwise give rise to a right of termination, cancellation or acceleration
with respect to (presently, with the giving of notice or the passage of time)
any material agreement, contract or instrument to which the Corporation is a
party or by which its assets are bound, or (iv) result in the creation or
imposition of any lien, pledge, mortgage, claim, charge or encumbrance upon any
of the assets of the Corporation.
3.4 Consents. Assuming the accuracy of the Stockholders'
representations and warranties in Section 4 hereof, no consent, authorization,
license, permit, registration or approval of, or exemption or other action by
any governmental authority or other person is required in connection with the
Corporation's execution and delivery of this Agreement, or with the performance
by the Corporation of its obligations hereunder, except, in each case, where any
such consent, authorization, license, permit, registration or approval has been
obtained and remains in full force and effect.
3.5 Exchange Shares. The Exchange Shares will, upon issuance
pursuant to the terms of this Agreement and the Corporation's receipt of the
deliveries set forth in Section 2 hereof, be duly and validly authorized and
issued, fully paid and non-assessable, free and clear of all liens, options,
rights of first refusal or other encumbrance.
4. Representations and Warranties of the Stockholders. The
Stockholders, and each of them, hereby represent and warrant to the Corporation
that the statements contained in this Section 4 are true, correct and complete
as of the date of this Agreement.
<PAGE>
4.1 Execution and Delivery. The Stockholders have full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All action on the part of each Stockholder
required to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby has been taken.
This Agreement has been duly and validly authorized, executed and delivered by
the Stockholders and constitutes a valid and binding obligation of the
Stockholders, enforceable against each in accordance with its respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or effecting creditors rights and to
general equitable principals.
4.2 Noncontravention. The execution, delivery and performance
by the Stockholders of this Agreement do not and will not (i) violate or
conflict with any applicable law, (ii) violate, breach, cause a default under or
otherwise give rise to a right of termination, cancellation or acceleration with
respect to (presently, with the giving of notice or the passage of time) any
material agreement, contract or instrument to which a Stockholder is a party or
by which any of his, her or its assets is bound, or (iv) result in the creation
or imposition of any lien, pledge, mortgage, claim, charge or encumbrance upon
any assets of a Stockholder.
4.3 Consents. No consent, authorization, license, permit,
registration or approval of or exemption or other action by any governmental
authority or other person is required in connection with the Stockholders'
execution and delivery of this Agreement or with the performance by the
Stockholders of their obligations hereunder, except in each case where any such
consent, authorization, license, permit, registration or approval has been
obtained and remains in full force and effect.
4.4 Ownership. Each Stockholder is the sole owner of the
shares of Series A Preferred Stock set forth opposite such Stockholder's name on
the Schedule of Holders, and no Stockholder has pledged, hypothecated or
otherwise encumbered the shares of Series A Preferred Stock set forth opposite
such Stockholder's name on the Schedule of Holders. Upon the date of this
Agreement and the delivery of the shares of Series A Preferred Stock to the
Corporation, the shares of Series A Preferred Stock shall be free of liens and
encumbrances of every type, nature or description.
4.5 Investment Intent. The Stockholders are acquiring the
Exchange Shares for investment for their own respective accounts and not with a
view to, or for re-sale in connection with, any public distribution, and
understand that the Exchange Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the representations of the Stockholders set
forth herein.
4.6 Restricted Securities. The Stockholders understand and
agree that the Exchange Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective Registration Statement
covering the Exchange Shares, or an available exemption from registration under
the Securities Act, the Exchange Shares must be held indefinitely. In
particular, the Stockholders are aware that the Exchange Shares constitute
"Restricted Securities" as defined in Rule 144 promulgated under the Securities
Act and may not be sold pursuant to such Rule unless all of the conditions of
that Rule are met. The Stockholders agree that the certificate or certificates
representing the Exchange Shares may bear such restrictive legends as may be
deemed necessary or appropriate by the Board of Directors of the Corporation, in
order to denote and clarify their status as Restricted Securities.
<PAGE>
4.7 Disclosure. The Stockholders understand that their
representations and warranties set forth herein shall be deemed material and to
have been relied upon by the Corporation. No representation or warranty by the
Stockholders in this Agreement, and no written statement contained in any
document, certificate or other writing delivered by a Stockholder to the
Corporation in connection with this Agreement contains any untrue statement of
material fact, or omits a material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
5. Indemnification.
5.1 Indemnification of Stockholders. The Corporation hereby
indemnifies and holds the Stockholders, and each of them and their respective
agents, consultants and advisors harmless from and against any and all losses,
claims, damages, taxes (of any nature), expenses (including costs of
investigation and reasonable legal fees and expenses at trial or on appeal and
without initiation of suit) or other liabilities which arise out of or result
from any misrepresentation or breach of any warranty, representation or covenant
of the Corporation in the Agreement.
5.2 Indemnification of the Corporation. The Stockholders, and
each of them, hereby indemnify and hold the Corporation and its directors,
officers, agents, consultants and advisors harmless from and against any and all
losses, claims, damages, taxes (of any nature), expenses (including costs of
investigations and reasonable legal fees and expenses at trial or on appeal and
without initiation of suit) or other liabilities which arise out of or result
from any misrepresentation or breach of any warranty, representation or covenant
of the Stockholders in this Agreement.
5.3 Indemnification Procedure. If any action is commenced
against, or claim is made by, an indemnified party under this Section 5, the
indemnified party shall give notice to the indemnifying party of such action or
claim covered by this indemnity within thirty (30) days following the
indemnified party's knowledge thereof. To the extent that failure to give such
notice unduly prejudices the indemnifying party and causes additional damages to
be incurred, the indemnifying party shall not be liable for such additional
damages. The failure to give such notice will not relieve the indemnifying party
from any liability which it may otherwise have to the indemnified party whether
arising hereunder or otherwise. With respect to each such notice, the
indemnifying party shall immediately retain counsel satisfactory to the
indemnified party and take such other actions as are necessary to defend the
indemnified party or to discharge the indemnity obligations hereunder. The
Corporation and the Stockholders seeking indemnification or from whom
indemnification is being sought shall participate in all decisions regarding the
defense of any action to be taken concerning the indemnified obligations or the
discharge thereof. If the indemnifying party fails to notify the indemnified
party within thirty (30) days of receipt of the indemnified party's notice that
the indemnifying party must retain counsel and take such other actions as are
necessary, the indemnified party may, at its option, conduct such defense at the
expense of the indemnifying party and the indemnifying party shall pay on demand
any amounts owed hereunder to the indemnified party.
<PAGE>
6. General Provisions.
6.1 Waiver; Remedies. No failure on the part of any party to
exercise, and no delay in exercising a right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege, and no waiver whatever shall be valid, unless in writing signed by
the other party or parties to be charged and then only to the extent
specifically set forth in such writing. All remedies, rights, powers and
privileges, either under this Agreement or by law or otherwise afforded to the
parties to this Agreement, shall be cumulative and shall not be exclusive of any
remedies, rights, powers and privileges provided by law. Each party hereto may
exercise all such remedies afforded to it in any order of priority.
6.2 Successors. This Agreement shall be binding upon and inure
to the benefit of the respective heirs, personal representatives, successors and
assigns of the parties. No party shall delegate its or their duties or
obligations hereunder without the written consent of the other parties, which
consent shall not be unreasonably withheld.
6.3 Governing Law. The rights and obligations of the parties
pursuant to this Agreement shall be governed by and construed in accordance with
the laws of the State of Utah, without giving effect to any choice or conflict
of law rule or provision (whether of the State of Utah or other jurisdiction)
which would cause the application of any law or rule other than of the State of
Utah.
6.4 Severability. Should any term or provision of this
Agreement or the application thereof to any circumstance, in any jurisdiction
and to any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable such term or
provision in any other jurisdiction, the remaining terms and provision of this
Agreement or the application of such terms and provisions to circumstances other
than those as to which it is held invalid or unenforceable.
6.5 Incorporation of Exhibits and Schedules. All exhibits and
schedules attached to this Agreement are incorporated herein as though fully set
forth.
6.6 Entire Agreement. This Agreement, together with its
exhibits and schedules, constitutes the entire agreement among the parties
pertaining to the subject matter herein and supersedes all prior and
contemporaneous agreements, representation and understandings of the parties in
connection with the transactions contemplated hereby. No supplement,
modification or amendment shall be binding unless executed in writing by all
parties.
<PAGE>
6.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original instrument and
all of which together shall be considered one and the same agreement. Delivery
and receipt of executed pages by facsimile transmission shall constitute
effective and binding executing and delivery of this Agreement.
6.8 Expenses. Except as otherwise expressly provided herein,
the parties shall bear their own expenses, including the fees and expenses of
any attorneys, accountants or others engaged by them incurred in connection with
this Agreement and the transaction contemplated hereby.
6.9 Attorneys' Fees. Should any litigation be commenced
between the parties or their representatives concerning any provision of this
Agreement or the rights and duties of any person in relation thereto, the party
prevailing in such litigation shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum as and for its attorneys' fees and
costs and court costs in such litigation which shall be determined by the court
in such litigation or in a separate action brought for that purpose.
6.10 Arbitration. Any controversy arising under, out of, in
connection with, or relating to, this Agreement, and any amendment thereof, or
the breach thereof, shall be determined and settled by arbitration in Salt Lake
City, Utah, in accordance with the rules of the American Arbitration
Association. Any award rendered therein shall be final and binding on each and
all of the parties thereto and their personal representatives, and judgment may
be entered thereon in any court having competent jurisdiction thereon. The
prevailing party shall be entitled to recover, from the other party, his full
costs incurred as a result of the arbitration, including reasonable attorneys'
fees.
6.11 Advisers' Fees. Each party hereto shall bear his own
legal, accounting, or other expenses with respect to the consummation of the
transaction contemplated herein.
<PAGE>
In witness whereof, the parties hereto have signed or caused this
Agreement to be signed in their respective names as of the day and date first
above written.
Wireless Cable & Communications, Inc.
___________________________________
Lance D'Ambrosio,
Chief Executive Officer
Petroleora Argentina San Jorge SA Fondelec Essential Services
Growth Fund, L.P.
By _____________________ By________________________
______________________ __________________________
_______________________ __________________________
Pegasus Fund LP Emanuel A Floor & Associates
By _____________________ By________________________
______________________ __________________________
_______________________ __________________________
_________________________ ___________________________
George D'Ambrosio Lance D'Ambrosio
_________________________ __________________________
Troy D'Ambrosio Trent D'Ambrosio
_________________________ __________________________
Lauri Welch Manny Martinez
_________________________ Sansone Enterprises, L.L.C.
Tina Lasserre
By_________________________
_________________________
_________________________
<PAGE>
EXHIBIT A
SCHEDULE OF SHAREHOLDERS
Name No. of Shares
Petrolora Argentina San Jorge SA 609,709 Series A Preferred
________ Exchange Shares
Fondelec Essential Services Growth 595,417 Series A Preferred
________ Exchange Shares
Pegasus Fund LP 14,292 Series A Preferred
________ Exchange Shares
Floor Emanuel A Floor & Associates 19,981 Series A Preferred
________ Exchange Shares
George D'Ambrosio 1,192,872 Series A Preferred
________ Exchange Shares
Lance D'Ambrosio 359,660 Series A Preferred
________ Exchange Shares
Troy D'Ambrosio 199,811 Series A Preferred
________ Exchange Shares
Trent D'Ambrosio 89,915 Series A Preferred
________ Exchange Shares
Lauri Welch 89,915 Series A Preferred
________ Exchange Shares
Manny Martinez 39,962 Series A Preferred
________ Exchange Shares
Tina Lasserre 5,994 Series A Preferred
________ Exchange Shares
Sansone Enterprises 39,962 Series A Preferred
________ Exchange Shares
