SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
December 12, 1996
NATIONAL WIRELESS HOLDINGS INC.
(Exact name of registrant as specified in its charter
Delaware 0-23598 13-3735316
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation Identification No.)
249 Royal Palm Way, Suite 301, Palm Beach, Florida 33480
(Address of principal executive offices and zip code)
(407) 832-0981
(Registrant's telephone number, including area code)
<PAGE>
Item 1. Changes in Control of Registrant
Not applicable
Item 2. Acquisition or Disposition of Assets
Exercise of EDSS Option.
On December 13, 1996, National Wireless Holdings Inc. (the "Company")
exercised a warrant and an option to purchase additional shares of the common
stock of Electronic Data Submission Systems, Inc. ("EDSS"), which when combined
with its existing share ownership represents 50% of the outstanding common stock
and, pursuant to the EDSS Shareholders Agreement, dated as of July 25, 1996,
control of EDSS. The aggregate purchase price for the purchase of EDSS shares
was approximately $1,887,500 of which an aggregate of $887,500 was paid to EDSS
and $1,000,000 was paid to Joseph D. Truscelli, a principal stockholder and
President of EDSS. With the proceeds received from the Company, EDSS acquired a
non-interest-bearing $1,000,000 note payable to a former stockholder for
$775,000. In addition, pursuant to a loan agreement between EDSS and the Company
dated June 9, 1995, as of December 13, 1996, the Company had outstanding loans
to EDSS of approximately $988,000.
EDSS is a provider of electronic data interchange services in the
healthcare billing field, providing services to healthcare providers in
Colorado, Florida and Illinois. EDSS's services enable direct electronic billing
of healthcare claims to 300 insurance companies in the U.S., and permit the
rapid exchange of time sensitive billing information.
EDSS was incorporated in Colorado on January 7, 1991. EDSS developed a
comprehensive software system, referred to as HECET SystemsTM, that enables
physicians, clinics, managed care organizations, HMOs, PPOs, and major insurance
companies, including Blue Cross/Blue Shield, Medicare, Medicaid and commercial
payors, to communicate electronically the information needed to process and pay
insurance claims, check patient eligibility, make claim status inquiries, and
provide comprehensive reporting on those claims. HECET SystemsTM enables health
care professionals throughout the country to reduce the need for paper claims
processing while enhancing the payment process. EDSS has entered into various
service agreements with several thousand health care providers and many health
insurance carriers/managed care organizations.
EDSS has incurred operating losses since 1994 of approximately $1,284,000
on a cumulative basis through September 30, 1996. Such losses have been financed
principally through a $300,000 loan from EDSS's President and a $1,000,000 line
of credit from the Company pursuant to a loan agreement described above, which
has been substantially utilized as of December 13, 1996. Based upon existing
contracts with physicians and providers and current expense levels, management
believes that EDSS will achieve positive cash flow from operations for fiscal
1997 without the need to obtain additional financing. EDSS, however, may seek to
obtain additional financing to accelerate its strategic business plan.
Item 3. Bankruptcy or Receivership
Not Applicable
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Item 4. Changes in Registrant's Certifying Accountant
Not Applicable
Item 5. Other Events
A. Stockholders Rights Plan
On December 12, 1996, the Board of Directors of the Company declared a
dividend distribution of one preferred share purchase right (a "Right") for each
outstanding share of Common Stock, par value $0.01 per share (the "Common
Shares"), of the Company. The dividend is payable to the stockholders of record
on December 24, 1996 (the "Record Date"), and with respect to Common Shares
issued thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Shares issued after the Distribution Date.
Except as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series A Preferred Stock, without par value (the "Preferred Shares"), of the
Company at a price of $75 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Continental Stock Transfer and Trust Company, as Rights Agent (the
"Rights Agent"), dated as of December 12, 1996.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earliest
to occur of (i) a person or group of affiliated or associated persons having
acquired beneficial ownership of 20%, or more of the outstanding Common Shares
(except pursuant to a Permitted Offer, as hereinafter defined): or (ii) 10 days
(or such later date as the Board may determine) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group becoming an Acquiring
Person (as hereinafter defined) (the earliest of such dates being called the
"Distribution Date"). A person or group whose acquisition of Common Shares
causes a Distribution Date pursuant to clause (i) above is an "Acquiring
Person." The date that a person or group becomes an Acquiring Person is the
"Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of a Summary of Rights to Purchase Preferred Shares of National Wireless
Holdings Inc. (the "Summary of Rights") being attached thereto, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date (and to each initial record
holder of certain Common Shares issued after the Distribution Date), and such
separate Right Certificates alone will evidence the Rights.
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<PAGE>
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 12, 2006, unless earlier redeemed by the
Company as described below.
In the event that any person becomes an Acquiring Person (except pursuant
to a tender or exchange offer which is for all outstanding Common Shares at a
price and on terms which a majority of certain members of the Board of Directors
determines to be adequate and in the best interests of the Company, its
stockholders and other relevant constituencies, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer")), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares or of one one-thousandths of a share of
Preferred Shares (or, in certain circumstances, other securities of the Company)
having a value (immediately prior to such triggering event) equal to two times
the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person or any affiliate or associate thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding Common Shares immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (ii) more than 50% of the Company's assets or
earning power is sold or transferred, in either case with or to an Acquiring
Person or any affiliate or associate or any other person in which such Acquiring
Person, affiliate or associate has an interest or any person acting on behalf of
or in concert with such Acquiring Person, affiliate or associate, or, if in such
transaction all holders of Common Shares are not treated alike, any other
person, then each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the "Flip-Over
Right") to receive, upon exercise, common shares of the acquiring company having
a value equal to two times the exercise price of the Right. The holder of a
Right will continue to have the Flip-Over Right whether or not such holder
exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Preferred Shares, Common
Shares or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 1,000 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares
will be entitled to a
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minimum preferential liquidation payment of $1,000.00 per share; thereafter, and
after the holders of the Common Shares receive a liquidation payment of $0.01
per share, the holders of the Preferred Shares and the holders of the Common
Shares will share the remaining assets in the ratio of 1,000 to 1 (as adjusted)
for each Preferred Share and Common Share so held, respectively. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 1,000 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions. In the event that the amount of accrued and unpaid
dividends on the Preferred Shares is equivalent to six full quarterly dividends
or more, the holders of the Preferred Shares shall have the right, voting as a
class, to elect two directors in addition to the directors elected by the
holders of the Common Shares until all cumulative dividends on the Preferred
Shares have been paid through the last quarterly dividend payment date or until
non-cumulative dividends have been paid regularly for at least one year.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. Additionally, following the
Shares Acquisition Date, the Company may redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price, provided that such redemption
is in connection with a merger or other business combination transaction or
series of transactions involving the Company in which all holders of Common
Shares are treated alike but not involving an Acquiring Person or its affiliates
or associates.
All of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or, subject to certain limitations, to
shorten or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders of the Company, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement is available free of charge from the
Company. The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement (and the
exhibits thereto), which is hereby incorporated herein by reference.
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<PAGE>
B. Severance Benefit Agreements
On December 12, 1996, the Company entered into Severance Benefit
Agreements with Terrence S. Cassidy, President and Chief Executive Officer of
the Company, and Michael J. Specchio, Chairman of the Company. Each agreement
extends the term of each of these executives' employment to September 2001, and
provides that in the event of a change in control of the Company, such executive
may in certain circumstances terminate his employment and receive severance
benefit pay equal to three times such executive's annual compensation, including
certain bonuses.
C. Potential Sale of South Florida TV
The Company is continuing discussions with BellSouth Corporation for the
sale of its South Florida TV subsidiary, with all of its wireless cable assets
in the Miami area, to BellSouth for $48 million in stock. The transaction is
subject to completion of due diligence and negotiation of definitive agreements.
There can be no assurance that such agreements will be entered into or that the
transaction can be completed as proposed. Further details are not being
disclosed at this time pending the outcome of talks between the parties.
D. Special Note Regarding Forward-Looking Statements
Certain statements contained in this Form 8-K, including, without
limitation, statements containing the words "believes," "anticipates," "expects"
and words of similar import, constitute "forwardlooking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements for
the company, or industry results, to be materially different from any future
results, performance or achievements. The Company disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements contained or incorporated by reference
herein to reflect future events or developments.
Item 6. Resignations of Registrant's Directors
Not Applicable
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Electronic Data Submission Systems, Inc. Financial Statements for the
years ended September 30, 1995 and 1996.
<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
-------
FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Electronic Data Submission Systems, Inc.:
We have audited the accompanying balance sheets of Electronic Data Submission
Systems, Inc. as of September 30, 1996 and 1995, and the related statements of
operations, changes in stockholders' deficit and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Electronic Data Submission
Systems, Inc. as of September 30, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Denver, Colorado
November 22, 1996
<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
BALANCE SHEETS
September 30, 1996 and 1995
-------
<TABLE>
<CAPTION>
ASSETS 1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 160,968 $ 2,705
Trade accounts receivable 148,926 56,639
Prepaid expense 9,365 2,508
----------- -----------
Total current assets 319,259 61,852
Furniture and equipment, net 77,610 72,593
Property under capital lease, net 33,087 --
Other assets 12,320 3,300
----------- -----------
Total assets $ 442,276 $ 137,745
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 87,121 $ 73,852
Accrued liabilities 226,131 76,335
Current portion of long-term debt 4,923 --
Current portion of capital lease obligation 7,041 4,100
----------- -----------
Total current liabilities 325,216 154,287
Long-term debt, less current portion 2,255,048 1,651,599
Capital lease obligation 31,487 --
----------- -----------
Total liabilities 2,611,751 1,805,886
----------- -----------
Commitments (Notes 3 and 4)
Stockholders' deficit:
Common stock, no par value, 100,000 shares authorized;
8,724 shares issued and outstanding 62,915 62,915
Accumulated deficit (2,154,297) (1,652,963)
Advance to stockholder (78,093) (78,093)
----------- -----------
Total stockholders' deficit (2,169,475) (1,668,141)
----------- -----------
Total liabilities and stockholders' deficit $ 442,276 $ 137,745
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
STATEMENTS OF OPERATIONS
for the years ended September 30, 1996 and 1995
-------
1996 1995
---- ----
Service revenue $ 1,071,315 $ 307,199
----------- -----------
Selling, general and administrative expenses (1,377,196) (982,342)
Interest income 3,216 97
Interest expense (198,669) (96,499)
----------- -----------
Net loss $ (501,334) $ (771,545)
=========== ===========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
for the years ended September 30, 1996 and 1995
-------
<TABLE>
<CAPTION>
Common Stock Advance Total
----------------------- Accumulated To Stockholders'
Shares Amount Deficit Stockholder Deficit
-------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1994 5,000 $ 2,915 $ (9,796) $ -- $ (6,881)
Advance to stockholder -- -- -- (78,093) (78,093)
Issuance of common stock in exchange for shares of IPS (Note 6) 6,224 60,000 -- -- 60,000
Purchase and retirement of treasury stock (Note 6) (2,500) -- (871,622) -- (871,622)
Net loss -- -- (771,545) -- (771,545)
-------- ----------- ----------- ----------- -----------
Balance, September 30, 1995 8,724 62,915 (1,652,963) (78,093) (1,668,141)
Net loss -- -- (501,334) -- (501,334)
-------- ----------- ----------- ----------- -----------
Balance, September 30, 1996 8,724 $ 62,915 $(2,154,297) $ (78,093) $(2,169,475)
======== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
for the years ended September 30, 1996 and 1995
-------
1996 1995
---- ----
Cash flows from operating activities:
Net loss $(501,334) $(771,545)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 54,252 32,401
Amortization of discount on note payable 93,015 59,521
Change in operating assets and liabilities:
Accounts receivable (92,287) (31,236)
Accounts payable 13,268 63,264
Accrued liabilities 149,796 21,648
Current portion of long-term debt 823 4,100
Current portion of capital leases 7,041 --
Prepaid expenses (6,857) (1,258)
--------- ---------
Net cash used in operating activities (282,283) (623,105)
--------- ---------
Cash flows used in investing activities:
Purchases of furniture and equipment (55,515) (78,737)
Other (11,534) (869)
--------- ---------
Net cash used in investing activities (67,049) (79,606)
--------- ---------
Cash flows from financing activities:
Proceeds from notes payable 515,000 957,022
Payments on notes payable (4,566) (176,566)
Advance to stockholder -- (78,093)
Payments on capital leases (2,839) --
--------- ---------
Net cash provided from financing activities 507,595 702,363
--------- ---------
Net increase (decrease) in cash 158,263 (348)
Cash and cash equivalents, beginning of year 2,705 3,053
--------- ---------
Cash and cash equivalents, end of year $ 160,968 $ 2,705
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 164,328 $ 90,350
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
-------
1. Business:
Electronic Data Submission Systems, Inc. ("EDSS" or the "Company") was
incorporated in Colorado on January 7, 1991. During 1993, the Company
developed a comprehensive software system, referred to as HECET SystemsTM,
that enables physicians, clinics, managed care organizations, HMOs, PPOs,
and major insurance companies including Blue Cross/Blue Shield, Medicare,
Medicaid, and commercial payors to communicate electronically the
information needed to process and pay insurance claims, check patient
eligibility, make claim status inquiries, and provide comprehensive
reporting on those claims. HECET SystemsTM enables health care
professionals throughout the country to reduce the need for paper claims
processing while enhancing the payment process. The Company has entered
into various service agreements with several thousand health care providers
and many health insurance carriers/managed care organizations which to name
a few include FHP Health Care, Metra Health Insurance Company, Mutual of
Omaha and Prudential Insurance Company.
The Company has incurred operating losses since 1994 which have amounted to
$1,284,000 on a cumulative basis through September 30, 1996. Such losses
have been financed principally through a $300,000 loan from the Company's
president and a $1,000,000 line of credit from National Wireless Holdings,
Inc. ("National") as described in Note 4, which has been substantially
utilized as of September 30, 1996. Based upon existing contracts with
physicians and providers and current expense levels, management believes
that it will achieve positive cash flow from operations for fiscal 1997
without the need to obtain additional financing. The Company, however, may
seek to obtain additional financing to accelerate its strategic business
plan.
2. Summary of Significant Accounting Policies:
Cash and Cash Equivalents:
Cash and cash equivalents include cash and other highly liquid cash
investments with original maturities of three months or less.
Furniture and Equipment:
Furniture and equipment are recorded at cost. Depreciation is provided
using accelerated methods over the estimated useful lives of the assets.
Gains and losses on dispositions of furniture and equipment are included
in operations.
Income Taxes:
The Company has been approved by the Internal Revenue Service as a
Subchapter S Corporation and as such, all income is allocated to the
individual stockholders and no income tax is provided at the Company
level.
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ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
-------
2. Summary of Significant Accounting Policies, continued:
Revenue Recognition:
Service revenue is recognized as earned in the period the services are
provided and includes installation revenue and revenue associated with
electronic transactions to and from physicians, hospital networks and
health insurance carriers which include managed care organizations.
Deferred Advertising:
The Company defers certain seminar costs related to direct-response
advertising of its HECET SystemsTM which are charged to expense over the
period during which benefits are expected, currently three years.
Use of Estimates in the Preparation of Financial Statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Furniture and Equipment and Lease Obligations:
The following summarizes furniture and equipment and accumulated
depreciation for the years ended September 30, 1996 and 1995:
Estimated
Useful Life 1996 1995
----------- ---- ----
Furniture and fixtures 7 $ 83,659 $ 64,273
Computer equipment 5 100,786 71,692
--------- ---------
184,445 135,965
Less accumulated depreciation (106,835) (63,372)
--------- ---------
$ 77,610 $ 72,593
========= =========
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ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
-------
3. Furniture and Equipment and Lease Obligations, continued:
Included in the accompanying 1996 balance sheet are the following assets
held under capital leases:
Phone system $ 34,570
Computer printer 6,790
--------
Assets under capital leases 41,360
Less accumulated amortization (8,273)
--------
Assets under capital leases, net $ 33,087
========
<TABLE>
<S> <C>
Capital lease obligations at September 30, 1996 are summarized as follows:
Phone system (with lease expiring June 2001 at an interest rate of 14.8%) $ 32,858
Computer printer (with lease expiring June 1999 at an interest rate of 11.8%) 5,670
---------
Total obligations under capital leases 38,528
Less current installments (7,041)
---------
Obligations under capital leases, less current installments $ 31,487
=========
</TABLE>
The Company also leases office space under a noncancelable operating lease
agreement which expires May 31, 1998, and which also includes specified
rent escalation clauses. Rent expense for the years ended September 30,
1996 and 1995, was $50,205 and $31,228, respectively. Future minimum rental
payments under leases expiring subsequent to September 30, 1996, are as
follows:
Operating Capital
Years Ending September 30, Leases Leases
-------------------------- ------ ------
1997 $ 59,674 $ 13,064
1998 49,485 12,979
1999 -- 10,909
2000 -- 9,334
2001 -- 5,647
-------- ---------
Total minimum lease payments $109,159 51,933
========
Less amount representing interest (13,405)
---------
Present value of net minimum lease payments $ 38,528
=========
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ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
-------
4. Long-term Debt:
Long-term debt includes the following:
September 30,
-------------------
1996 1995
---- ----
Note payable to National $ 988,000 $ 773,000
Note payable to former shareholder, net 964,158 871,143
Note payable to shareholder 300,000 --
Note payable to bank 7,813 11,556
----------- -----------
2,259,971 1,655,699
Less current portion (4,923) (4,100)
----------- -----------
$ 2,255,048 $ 1,651,599
=========== ===========
On March 3, 1995, the Company entered into an agreement with National
whereby National made available to the Company a line of credit (the "Loan
Agreement") for $1,000,000. The president of the Company has guaranteed the
payment of this note payable. The Company used $350,000 of the loan
proceeds to repay bank borrowings with the remainder of the proceeds
available for the Company's operations. Provisions of the loan agreement
include:
o The loan is collateralized by a first lien on the Company's real and
personal property and a lien subordinate to a former stockholder (see
Note 6) on the Company's common stock.
o Interest is at the prime rate plus 2%, payable quarterly in arrears. The
interest rate for the note payable to National was 10.5% and 10.75% at
September 30, 1996 and 1995, respectively.
o The loan will mature in June 1997, with the Company having the right to
extend the loan maturity to June 1998.
o An employment agreement with the president and stockholder of the
Company for a period of five years with an initial annual base salary of
$180,000 for years one and two and increasing to $220,000 in years three
through five.
o A provision whereby the Company is permitted, under certain conditions,
to make loans to the president and stockholder not to exceed $200,000.
o Restrictive and financial covenants, including a restriction on the
payment of dividends.
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ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
-------
4. Long-term Debt, continued:
The note payable to former shareholder is discussed in Note 6 and matures
February 3, 1997. The Company has the right to extend the maturity date of
the note payable for an additional 12 months. If the note is extended,
$1,350,000 will become due on February 3, 1998. If the $1,350,000 note
balance is not paid in full on February 3, 1998, interest will accrue at an
annual rate of 12% on any remaining unpaid balance. The note is callable by
the borrower in the event that the remaining stockholder of the Company
should own less than 50% of the outstanding shares of the Company. The note
is collateralized by 5,612 EDSS common shares held by the remaining EDSS
stockholder. The note has been recorded net of unamortized discount at the
Company's incremental borrowing rate at February 3, 1995 of 11%. The
unamortized discount at September 30, 1996 and 1995 was $35,842 and
$128,857, respectively.
The interest rate for the note payable to the Company's president is the
prime rate plus 2% and was 10.5% at September 30, 1996. After the payment
of the National note discussed above, this note is due on demand.
The estimated fair value of the Company's debt approximates their carrying
value at September 30, 1996 and 1995. The fair value of debt was estimated
using discounted cash flows at current interest rates.
5. Related Party:
The Company had an advance receivable from the Company's president of
$78,093 as of September 30, 1996 and 1995, which has been recorded as a
reduction of stockholders' equity. This advance is expected to be repaid in
1998 and is noninterest bearing.
6. Capital Stock:
Effective February 3, 1995, through a stock exchange between the
stockholders of the Company and International Provider Services, Inc.
("IPS"), a company owned by the stockholder of EDSS, all common ownership
between the companies was eliminated. The exchange has been accounted for
based upon the historical accounting basis of the assets exchanged. In
order to complete the transaction, the remaining stockholder of EDSS
transferred his 6,000 shares of IPS common stock to EDSS in exchange for
6,224 shares of EDSS common stock. The remaining stockholder of IPS
transferred his 2,500 shares of EDSS common stock to the Company in
exchange for the 6,000 shares of the aforementioned IPS common stock and a
noninterest bearing note payable of $1,000,000 (see Note 4).
-10-
<PAGE>
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
-------
6. Capital Stock, continued:
Under the National line of credit agreement discussed in Note 4 above, a
stock option was granted to acquire 2,908 shares of common stock of the
Company directly from the principal stockholder for $1,000,000 and a
warrant to acquire 2,908 shares of newly issued stock of the Company for
$1,000,000. Upon exercise of the warrant, $1,000,000 of the proceeds will
be used for repayment of the $1,000,000 note payable to a former
stockholder (see Note 4). This stock option and warrant expires the earlier
of (i) December 15, 1996 or; (ii) ninety days after the Company fully pays
the Loan Agreement borrowings. If National does not exercise the option and
warrant, National has the option to obtain a 50% ownership interest in the
Company's provider business to be developed in the State of Florida. The
cost to National would be 100% of the costs incurred in developing the
Company's provider business in the State of Florida.
-11-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(Continued)
(b) Pro Forma Financial Information
Pro Forma Financial Information reflecting acquisition of interest in
EDSS.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Unaudited Pro Forma Financial Information
The accompanying Pro Forma Consolidated Balance Sheet as of July 31, 1996 gives
effect to the acquisition of the 50% interest in EDSS acquired by the Company in
December 1996 as if the acquisition occurred on July 31, 1996. The accompanying
Pro Forma Consolidated Statements of Income for the nine months ended July 31,
1996, and the year ended October 31, 1995, give effect to the acquisition of the
50% interest in EDSS by the Company and related use of proceeds by EDSS as if
the acquisition had occurred as of November 1, 1994. The pro forma information
is based on the historical statements as of the Company and EDSS after giving
effect to the acquisition.
The Pro Forma Consolidated Balance Sheet and Statements of Income have been
prepared by the management of the Company. These pro forma statements may not be
indicative of the results that would have actually occurred if the acquisition
had been in effect on the dates indicated. Also, there may not be indicative of
the results that may be achieved in the future. The Pro Forma Consolidated
Balance Sheet and Statements of Income should be read in conjunction with the
Company's financial statements for the nine months ended July 31, 1996 and the
year ended October 31, 1995, and the accompanying notes thereto.
1
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
As of July 31, 1996
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
The Company EDSS, Inc
July 31, September 30, Pro Forma Pro Forma
1996 1996 Adjustments Consolidated
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash, cash equivalents and U.S.
treasury securities $15,207,494 $ 160,968 $(1,887,500) $13,480,962
Trade receivables, other receivables
and other current assets 584,411 158,291 742,702
----------- ----------- ----------- -----------
Total current assets 15,791,905 319,259 (1,887,500) 14,223,664
Notes receivable from EDSS 988,000 (988,000)
Wireless frequency license and
acquisition costs 2,676,956 2,676,956
Transmission and related equipment 1,192,888 1,192,888
Leasehold improvements, office
equipment and service vehicles 418,282 110,697 528,979
Intangible and other assets 832,930 12,320 3,092,817 3,938,067
----------- ----------- ----------- -----------
Total assets $21,900,961 $ 442,276 $ 217,317 $22,560,554
=========== =========== =========== ===========
LIABILITIES and STOCKHOLDERS'
EQUITY:
Liabilities:
Accounts payable and accrued
expenses $ 650,760 $ 313,252 $ 964,012
Long-term debt 789,107 2,298,499 $(1,952,158) 1,135,448
----------- ----------- ----------- -----------
Total liabilities 1,439,867 2,611,751 (1,952,158) 2,099,460
Stockholders' equity: 20,461,094 (2,169,475) 2,169,475 20,461,094
----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity $21,900,961 $ 442,276 $ 217,317 $22,560,554
=========== =========== =========== ===========
</TABLE>
2
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
The Company EDSS, Inc
For the Nine For the Nine
Months Ended Months Ended
July 31, June 30, Pro Forma Pro Forma
1996 1996 Adjustments Consolidated
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Interest income $ 880,465 $ 2,412 $ (71,749) $ 811,128
Services income 894,659 803,486 1,698,145
----------- ----------- ----------- -----------
Total revenues 1,775,124 805,898 (71,749) 2,509,273
----------- ----------- ----------- -----------
Expenses:
Cost of services 531,357 531,357
Market development 621,977 621,977
Technology development 37,170 37,170
Professional fees 222,301 222,301
General and administrative 602,293 1,032,897 1,635,190
Depreciation and
amortization 450,056 154,641 604,697
Interest 58,188 149,002 (141,510) 65,680
----------- ----------- ----------- -----------
Total expenses 2,523,342 1,181,899 13,131 3,718,372
----------- ----------- ----------- -----------
Loss before minority interest (748,218) (376,001) (84,880) (1,209,099)
Minority interest -- -- -- --
----------- ----------- ----------- -----------
Net loss $ (748,218) $ (376,001) $ (84,880) $(1,209,099)
=========== =========== =========== ===========
Net loss per common share $ (0.23) $ (0.37)
=========== ===========
Weighted average number of
common shares outstanding 3,253,000 3,253,000
=========== ===========
</TABLE>
3
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
The Company EDSS, Inc
For the Year For the Year
Ended Ended
October 31, September 30, Pro Forma Pro Forma
1995 1995 Adjustments Consolidated
----------- ----------- ----------- ------------
Revenues:
<S> <C> <C> <C> <C>
Interest income $ 1,154,673 $ 97 $ (24,757) $ 1,130,013
Services income 945,616 307,199 1,252,815
----------- ----------- ----------- -----------
Total revenues 2,100,289 307,296 (24,757) 2,382,828
----------- ----------- ----------- -----------
Expenses:
Cost of services 512,449 512,449
Market development 835,560 835,560
Technology development 39,776 39,776
Professional fees 294,547 294,547
General and administrative 641,737 982,342 1,624,079
Depreciation and
amortization 363,232 206,188 569,420
Interest 53,069 96,499 (84,278) 65,290
----------- ----------- ----------- -----------
Total expenses 2,740,370 1,078,841 121,910 3,941,121
----------- ----------- ----------- -----------
Loss before minority interest (640,081) (771,545) (146,667) (1,558,293)
Minority interest -- -- -- --
----------- ----------- ----------- -----------
Net loss $ (640,081) $ (771,545) $ (146,667) $(1,558,293)
=========== =========== =========== ===========
Net loss per common share $ (0.20) $ (0.48)
=========== ===========
Weighted average number of
common shares outstanding 3,222,863 3,222,863
=========== ===========
</TABLE>
4
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Notes to Pro Forma Condensed Consolidated Financial Statements
Note 1 - Proforma adjustment comprise the following:
<TABLE>
<S> <C>
Cash:
Payment to EDSS shareholder for 2,908 shares of EDSS
common stock $(1,000,000)
Payment to EDSS for 2,908 shares of EDSS common stock (887,500)
-----------
$(1,887,500)
===========
Notes receivable from EDSS:
Elimination of intercompany notes receivable $ (988,000)
===========
Intangible and other assets:
Purchase price for the 50% interest (5,816 shares of common stock) in EDSS $ 1,887,500
Step up in basis of assets relating to the acquisition of the 50% interest in EDSS 1,205,317
-----------
$ 3,092,817
===========
Long-term debt:
Satisfaction of note payable to former shareholder of EDSS $ (964,158)
Elimination of intercompany note payable (988,000)
-----------
$(1,952,158)
===========
Stockholders equity:
Elimination of historical stockholders deficit of EDSS $ 2,169,475
===========
</TABLE>
5
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
Notes to Pro Forma Condensed Consolidated Financial Statements, Continued
Nine Months
Ended Year Ended
July 31, December 31,
1996 1996
--------- ---------
Interest income:
Elimination of interest income on
intercompany note receivable $ (71,749) $ (24,757)
--------- ---------
Depreciation and amortization:
Amortization expense related to the step up
in basis of assets (intangible assets) on a
straight line basis over 15 years $ 154,641 $ 206,188
--------- ---------
Interest expense:
Elimination of interest expense on note payable
to former shareholders of EDSS $ (69,761) $ (59,521)
Elimination of interest expense on intercompany
notes payable (71,749) (24,757)
--------- ---------
$(141,510) $ (84,278)
========= =========
Note 2 - Minority Interest
The minority shareholders in EDSS have a negative basis in their investment;
therefore the Company recognizes 100% of EDSS losses until profitability is
achieved.
6
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(Continued)
(c) Exhibits
Exhibit
Number
4 Rights Agreement, dated as of December 12, 1996, between National
Wireless Holdings Inc. and Continental Stock Transfer and Trust
Company, as Rights Agent, which includes as Exhibit A the Form of
Certificate of Designations designating the relative rights,
preferences and limitations of the Series A Junior Preferred Stock
of National Wireless Holdings Inc., as Exhibit B the Form of Right
Certificate, and as Exhibit C the Summary of Rights to Purchase
Preferred Shares.
10.33(h) Shareholders Agreement, dated as of July 25, 1996, among the
Company, Joseph D. Truscelli and EDSS.
10.36 (a) Severance Benefit Agreement, dated December 12, 1996, with
Terrence S. Cassidy.
(b) Severance Benefit Agreement, dated December 12, 1996, with
Michael J. Specchio.
Item 8. Change in Fiscal Year
Not applicable.
-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL WIRELESS HOLDINGS INC.
-----------------------------------
(Registrant)
Date: December 20, 1996 By: /s/ Terrence S. Cassidy
--------------------------------
Terrence S. Cassidy, Principal
Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
-7-
PRIVILEGED AND CONFIDENTIAL
NATIONAL WIRELESS HOLDINGS INC.
and
CONTINENTAL STOCK TRANSFER AND TRUST COMPANY, as Rights
Agent
--------------------
RIGHTS AGREEMENT
Dated as of December 12, 1996
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions
Section 2. Appointment of Rights Agent
Section 3. Issue of Right Certificates
Section 4. Form of Right Certificate
Section 5. Countersignature and Registration
Section 6. Transfer; Split-Up; Combination and Exchange Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificate
Section 7. Exercise of Rights; Purchase Price; Date of Rights
Section 8. Cancellation and Destruction of Right Certificates
Section 9. Reservation and Availability of Preferred Shares
Section 10. Preferred Shares Record Date
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
Section 14. Fractional Rights and Fractional Shares
Section 15. Rights of Action
Section 16. Agreement of Right Holders
Section 17. Right Certificate Holder Not Deemed a Stockholder
Section 18. Concerning the Rights Agent
Section 19. Merger or Consolidation or Change of Name of Rights Agent
Section 20. Duties of Rights Agent
Section 21. Change of Rights Agent
Section 22. Issuance of New Right Certificates
Section 23. Redemption and Termination
Section 24. Exchange
Section 25. Notice of Certain Events
Section 26. Notices
Section 27. Supplements and Amendments
Section 28. Determination and Actions by the Board of Directors, etc.
Section 29. Successors
Section 30. Benefits of this Agreement
Section 31. Severability
Section 32. Governing Law
Section 33. Counterparts
Section 34. Descriptive Headings
Signatures
Exhibit A- Form of Certificate of Designations designating the relative
rights, preferences and limitations of the Series A Junior Preferred
Stock of National Wireless Holdings Inc.
Exhibit B- Form of Right Certificate
Exhibit C- Summary of Rights to Purchase Preferred Shares
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 12, 1996 (the "Agreement"), between
National Wireless Holdings Inc., a Delaware corporation (the "Corporation"), and
Continental Stock Transfer and Trust Company (the "Rights Agent").
On December 12, 1996, the Board of Directors of the Corporation has
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Corporation
outstanding at the Close of Business (as defined below) on December 24, 1996
(the "Record Date"), each Right representing the right to purchase one
one-thousandth (subject to adjustment) of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date (as such terms are hereinafter defined); provided, however, that Rights may
be issued with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the Final
Expiration Date in accordance with the provisions of Section 22 of this
Agreement.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the then outstanding Common Shares (other than as a result of a
Permitted Offer (as hereinafter defined)) or was such a Beneficial Owner at any
time after the date hereof, whether or not such person continues to be the
Beneficial Owner of 20% or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (A) the term "Acquiring Person" shall not include
(i) the Corporation, (ii) any Subsidiary of the Corporation, (iii) any employee
benefit plan of the Corporation or of any Subsidiary of the Corporation, (iv)
any Person or entity organized, appointed or established by the Corporation for
or pursuant to the terms of any such plan, or (v) any Person, who or which
together with all Affiliates and Associates of such Person becomes the
Beneficial Owner of 20% or more of the then outstanding Common Shares as a
result of the acquisition of Common Shares directly from the Corporation, and
(B) no Person shall be deemed to be an "Acquiring Person" either (X) as a result
of the acquisition of Common Shares by the Corporation which, by reducing the
number of Common Shares outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates and Associates of
such Person; except that if (i) a Person would become an Acquiring Person (but
for the operation of this
-1-
<PAGE>
subclause X) as a result of the acquisition of Common Shares by the Corporation,
and (ii) after such share acquisition by the Corporation, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed an Acquiring Person,
or (Y) if (i) within 8 days after such Person would otherwise have become an
Acquiring Person (but for the operation of this subclause Y), such Person
notifies the Board of Directors that such Person did so inadvertently and (ii)
within 2 days after such notification, such Person is the Beneficial Owner of
less than 20% of the outstanding Common Shares. For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date hereof.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act and in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, shall be deemed to
have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, directly or
indirectly within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on
the date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other
than customary agreements between underwriter, and selling
group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own,
(1) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (2) securities which such
Person has a right to acquire upon exercise of Rights at any
time prior to the time that any Person becomes an Acquiring
Person or (3) securities issuable upon the exercise of the
Rights from and after the time that any Person becomes an
Acquiring
-2-
<PAGE>
Person if such Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof ("original Rights") or pursuant to Section 11(a) or
Section 11(n) with respect to an adjustment to the original
Rights; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement,
arrangement or understanding if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to
a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to
Section 1(c)(ii)(B)) or disposing of such securities of the
Company; provided, however, that no Person who is an officer,
director or employee of an Exempt Person shall be deemed,
solely by reason of such Person's status or authority as such,
to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section l(c)),
including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or
employee of an Exempt Person.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York or the city in which
the principal office of the Rights Agent is located are authorized or obligated
by law or executive order to close.
(f) "Capital Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
-3-
<PAGE>
(h) "Common Share" when used with reference to the Company shall mean the
Common Stock, presently par value $.01 per share, of the Company. "Common Stock"
when used with reference to any Person other than the Company shall mean the
common stock (or, in the case of an unincorporated entity, the equivalent equity
interest) with the greatest voting power of such other Person or, if such other
Person is a subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(k) "Exempt Person" shall mean the Corporation or any Subsidiary of the
Corporation, in each case including, without limitation, in its fiduciary
capacity, any employee benefit plan of the Corporation or any Subsidiary of the
Corporation; or any entity or trustee holding Common Shares for or pursuant to
the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Corporation or any
Subsidiary of the Corporation.
(l) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(m) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(n) "Nasdaq" shall mean The Nasdaq Stock Market.
(o) "New York Stock Exchange" shall mean the New York Stock Exchange, Inc.
(p) "Permitted Offer" shall mean a tender or exchange offer made by an
Acquiring Person which is for all outstanding Common Shares at a price and on
terms which a majority of certain members of the Board of Directors determines
to be adequate and in the best interests of the Corporation, its stockholders
and other relevant constituencies, other than an Acquiring Person, its
affiliates and associates.
(q) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) to such entity.
(r) "Preferred Shares" shall mean the Series A Junior Preferred Stock, par
value $1.00 per share, of the Company having the rights and preferences set
forth in the Form of Certificate of Designation attached to this Agreement as
Exhibit A.
(s) "Principal Party" shall have the meaning set forth in Section 11(m)
hereof.
(t) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
-4-
<PAGE>
(u) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(v) "Right Certificate" shall have the meaning set forth in Section 3
hereof.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended.
(x) "Section 11(a)(ii) Event" shall have the meaning set forth in Section
11(a)(ii).
(y) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(z) "Section 13 Event" shall have the meaning set forth in Section 13(a).
(aa) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such, or such
earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
(ab) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ac) "Subsidiary" of any Person shall mean any corporation or other Person
of which a majority of the voting power of the voting equity securities, equity
interest or other ownership interests is owned, directly or indirectly, by such
Person, and any corporation or other Person that is otherwise controlled by such
Person.
(ad) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Corporation hereby appoints
the Rights Agent to act as agent for the Corporation and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates. (a) Until the Close of Business
on earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
close of business on the tenth day (or such later date as may be determined by
action of the Corporation's Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than an Exempt Person) of, or of the first public announcement of the
intention of any Person (other than an Exempt Person) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer the consummation of which would result
in any Person (other than an Exempt Person) becoming an Acquiring Person
(including, in the case
-5-
<PAGE>
of both (i) and (ii), any such date which is after the date of this Agreement
and prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Corporation); provided, however, that if a
tender offer is terminated prior to the occurrence of a Distribution Date, then
no Distribution Date shall occur as a result of such tender offer. As soon as
practicable after the Distribution Date, the Corporation will prepare and
execute, the Rights Agent will countersign, and the Corporation will send or
cause to be sent (and the Rights Agent will if requested, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Corporation, a Right Certificate, substantially in
the form of Exhibit B hereto (a "Right Certificate"), evidencing one Right for
each Common Share so held. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the Corporation
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Corporation. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with such Common Shares.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, shall be
deemed also to be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between National Wireless
Holdings Inc. and Continental Stock Transfer and Trust Company, dated as
of December 12, 1996, as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of National
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<PAGE>
Wireless Holdings Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. National Wireless
Holdings Inc. will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights owned by, issued to, transferred to or held by, any Person who is,
was or becomes an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement) and certain related persons thereof
whether currently held by or on behalf of such Person or by any subsequent
holder, will become null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Corporation purchases
or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Corporation shall not be entitled to exercise
any Rights associated with the Common Shares which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not affect
the enforceability of any part of this Agreement or the rights of any holder of
the Rights.
Section 4. Form of Right Certificate. (a) The Right Certificates (and the
forms of election to purchase and of assignment to be printed on the reverse
thereof) shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Corporation may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
interdealer quotation system on which the Rights may from time to time be listed
or quoted, or to conform to usage. Subject to the provisions of Section 11,
Section 13 and Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one-thousandths of a Preferred Share
as shall be set forth therein at the price per one one-thousandth of a Preferred
Share set forth therein (the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
of this Agreement and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
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The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the Rights represented
hereby are null and void and are no longer transferable.
Provisions of Section 7(e) of this Rights Agreement shall be operative whether
or not the foregoing legend is contained on any such Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Corporation by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents, or its Treasurer,
either manually or by facsimile signature, shall have affixed thereto the
Corporation's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Corporation who shall have signed any of the Right
Certificates shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Corporation with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Corporation; and any Right Certificate may be signed on
behalf of the Corporation by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office or offices designated as the appropriate place for
surrender of such Right Certificate or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
certificate number and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate. Subject to
the provisions of Section 4(b), Section 7(e), Section 11(a)(ii) and Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandth of a Preferred Share (or following a Triggering Event, other
securities, as the case may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right
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<PAGE>
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Corporation shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e), Section 11(a)(ii) and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Corporation may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Subject to the provisions of Section 11(a)(ii) hereof, at any time after
the Close of Business on the Distribution Date and prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date,
upon receipt by the Corporation and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Corporation will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time on or after the Distribution
Date upon surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for the
total number of one one-thousandths of a Preferred Share (or other securities,
as the case may be) as to which such surrendered Rights are exercised, at or
prior to the earliest of (i) the close of business on December 12, 2006 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $75.00, shall be subject
to adjustment from time to time as provided in the next sentence and in Sections
11 and 13(a) hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below. Anything in this Agreement to
the contrary notwithstanding, in the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Corporation
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<PAGE>
shall (i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such case,
each Common Share outstanding following such dividend being declared or paid, or
such subdivision, combination or consolidation shall continue to have a Right
associated therewith and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of Common Shares outstanding immediately following the occurrence of such
event. The adjustment provided for in the preceding sentence shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the Preferred Shares (or other
securities, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Corporation, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares certificates for the number of Preferred Shares to be purchased
and the Corporation hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Corporation, in its sole discretion, shall
have elected to deposit the Preferred Shares issuable upon exercise of the
Rights hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Corporation hereby directs the
depositary agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Corporation is obligated to issue other securities (including
Common Shares) of the Corporation pursuant to Section 11(a) hereof, the
Corporation will make all arrangements necessary so that such other securities
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section
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<PAGE>
14 hereof, or the Rights Agent shall place an appropriate notation on the Right
Certificate with respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Corporation has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Corporation shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
Liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Corporation shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial owner) or Affiliates or Associates
thereof as the Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Corporation shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Corporation.
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<PAGE>
Section 9. Reservation and Availability of Preferred Shares. The
Corporation covenants and agrees that at all times prior to the occurrence of a
Section 11(a)(ii) Event it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares, or any authorized and issued
Preferred Shares held in its treasury, the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights and,
after the occurrence of a Section 11(a)(ii) Event, shall, to the extent
reasonably practicable, so reserve and keep available a sufficient number of
Common Shares (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the occurrence of a Section
11(a)(ii) Event, Common Shares or any other securities) issuable upon the
exercise of the Rights may be listed or admitted to trading on any national
securities exchange, or quoted on Nasdaq the Corporation shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed or admitted to trading on such
exchange, or quoted on Nasdaq, upon official notice of issuance upon such
exercise.
The Corporation covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (and, after the occurrence
of a Section 11(a)(ii) Event, Common Shares and/or other securities, as the case
may be) delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due and
payable any and all U.S. federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Shares (or Common Shares and/or other securities, as the case
may be) upon the exercise of Rights. The Corporation shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or the issuance or
delivery of certificates or depository receipts for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Corporation's reasonable satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date, a registration statement
under the Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the
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expiration of the rights provided by Section 11(a)(ii). The Corporation will
also take such action as may be appropriate under the blue sky laws of the
various states.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Corporation are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Corporation are
open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when
the Preferred Shares transfer books of the Corporation were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Corporation issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
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<PAGE>
(ii) In the event any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person ("Section 11(a)(ii)
Event"), then proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e) hereof) shall, for a
period of 60 days after the later of the occurrence of any such event or
the effective date of an appropriate registration statement under the Act
pursuant to Section 9 hereof, have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price, in accordance
with the terms of this Agreement, such number of Common Shares (or, in the
discretion of the Board of Directors, one one-thousandths of a Preferred
Share) as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Section 11 (a)(ii) Event, and (y) dividing that
product by 50% of the then current per share market price of the
Corporation's Common Shares (determined pursuant to Section 11(d) hereof)
on the date of the first occurrence of a Section 11(a)(ii) Event (such
number of shares being referred to as the "Adjustment Shares"); provided,
however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11 (a)(ii);
(iii) In the event that there shall not be sufficient treasury shares
or authorized but unissued (and unreserved) Common Shares to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board has
determined to make the Rights exercisable into fractions of a Preferred
Share), notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right shall
thereafter represent the right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of this
Agreement, (x) a number of (or fractions of) Common Shares (up to the
maximum number of Common Shares which may permissibly be issued) and (y)
one-one thousandths of a Preferred Share or a number of, or fractions of
other equity securities of the Corporation (or, in the discretion of the
Board of Directors, debt) which the Board of Directors of the Corporation
has determined to have the same aggregate current market value (determined
pursuant to Section 1 l(d)(i) and (ii) hereof, to the extent applicable,)
as one Common Share (such number of, or fractions of, Preferred Shares,
debt, or other equity securities or debt of the Corporation) being
referred to as a "capital stock equivalent"), equal in the aggregate to
the number of Adjustment Shares; provided, however, if sufficient Common
Shares and/or capital stock equivalents are unavailable, then the
Corporation shall, to the extent permitted by applicable law, take all
such action as may be necessary to authorize additional Common Shares or
capital stock equivalents for issuance upon exercise of the Rights,
including the calling of a meeting of stockholders; and provided further
that, if the Corporation is unable to cause sufficient Common Shares
and/or capital stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter represent
the right to receive the Adjusted Number of Shares upon exercise at the
Adjusted
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Purchase Price (as such terms are hereinafter defined). As used herein,
the term "Adjusted Number of Shares" shall be equal to that number of (or
fractions of) Common Shares (and/or capital stock equivalents) equal to
the product of (x) the number of Adjustment Shares and (y) a fraction, the
numerator of which is the number of Common Shares (and/or capital stock
equivalents) available for issuance upon exercise of the Rights and the
denominator of which is the aggregate number of Adjustment Shares
otherwise issuable upon exercise in full of all Rights (assuming there
were a sufficient number of Common Shares available) (such fraction being
referred to as the "Proration Factor"). The "Adjusted Purchase Price"
shall mean the product of the Purchase Price and the Proration Factor. The
Board of Directors may, but shall not be required to, establish procedures
to allocate the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Corporation shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as determined
pursuant to Section 11(d) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares and equivalent
preferred shares outstanding on such record date plus the number of Preferred
Shares and equivalent preferred shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price, and the denominator of which shall be the number of Preferred Shares and
equivalent preferred shares outstanding on such record date plus the number of
additional Preferred Shares or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Corporation issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by the Board of
Directors of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent.
Preferred Shares and equivalent preferred shares owned by or held for the
account of the Corporation shall not be deemed outstanding for the purpose of
any such computation.
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Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price (as
determined pursuant to Section 11(d) hereof) of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Corporation to be
issued upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such Security
and prior to the expiration of thirty (30) Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the
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Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Corporation. If on any such date no such market maker is making market in
the Security, the fair value of the Security on such date as determined in good
faith by the Board of Directors of the Corporation shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i), (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by 1,000. If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandths of a Preferred Share or one
ten-thousandths of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Corporation other than
Preferred Shares, thereafter the number of other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Shares shall apply on like terms to any such other shares.
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(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) The Corporation may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Corporation shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(h), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Corporation, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein and shall
be registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-thousandths of
a Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(j) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
one-thousandths of a Preferred Share Common Shares or other securities issuable
upon exercise of the Rights, the Corporation shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue such number of fully
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paid and non-assessable one one-thousandths of a Preferred Share, Common Shares
or other securities at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
Preferred Shares, Common Shares or other securities of the Corporation, if any,
issuable upon such exercise over and above the Preferred Shares, Common Shares
or other securities of the Corporation, if any, issuable upon exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Corporation to holders of its Preferred
Shares shall not be taxable to such stockholders.
(m) The Corporation covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction which does not violate Section
11(n) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Corporation in a transaction which does not violate Section 11(n)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(n) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other actions
taken, which would materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(m).
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(n) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action the purpose of which
is to, or if at the time such action is taken it is reasonably foreseeable that
the effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Corporation shall consolidate with, or merge
with and into, any other Person, (y) the Corporation shall consolidate with, or
merge with any other Person, and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger (other than, in a case of
any transaction described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the election of
directors ("voting securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Corporation or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Corporation shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person (other
than the Corporation or any Subsidiary of the Corporation in one or more
transactions each of which does not violate Section 11(n) hereof), then, upon
the first occurrence of such event and in each such case ("Section 13 Event")
(except as provided in Section 13(d) hereof), proper provision shall be made so
that (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Shares and Common Shares of the Corporation
such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable Common Shares of the Principal Party (as hereinafter defined),
not subject to
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any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-thousandths of a Preferred Share for which a
Right is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii)) and (B) dividing that product by 50% of the
then current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11 (d) hereof) on the date of consummation of
such Section 13 Event provided, however, that the Purchase Price and the number
of Common Shares (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(f)
hereof to reflect any events occurring in respect of the Common Shares of such
Principal Party after the occurrence of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Corporation
pursuant to this Agreement; (iii) the term "Corporation" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the consummation of
any such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares thereafter deliverable upon the exercise of the Rights;
provided, however, that the Purchase Price and the number of Common Shares (as
heretofore adjusted in accordance with Section 119a)(ii) hereof) of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the common Shares of such Principal
Party after the occurrence of such Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Corporation are converted in
such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation (including,
if applicable, the Corporation if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the Common Shares
of such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person the
Common Shares of which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a
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Subsidiary, directly or indirectly, of more than one Person, the Common Shares
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (1)
and (2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer referred to in Section 13(a) hereof unless the Principal Party
shall have a sufficient number of its authorized Common Shares which have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the
Corporation and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement confirming that the requirements set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any consolidation, merger, sale or transfer
mentioned in paragraph (a) of this Section 13, the Principal Party at its own
expense shall:
(i) prepare and file a registration statement under the Act with respect
to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date and
similarly to comply with applicable state securities laws;
(ii) use its best efforts, if the common Shares of the Principal Party
shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Shares of the Principal Party shall not be
listed or admitted to trading ont he New York Stock Exchange or a national
securities exchange, to cause the Rights and the securities receivable
upon exercise of the Rights to be authorized for quotation on Nasdaq or on
such other system then in use;
(iii) deliver to holders of the Rights historical financial statements for
the Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act;
and
(iv) obtain waivers of any rights of first refusal or preemptive rights in
respect of the Common Shares of the Principal Party subject to purchase
upon exercise of outstanding Rights.
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The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation r by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with or as a consequence of, the consummation
of a transaction referred to in this Section 13, Common Shares of such Principal
Party at less than the then current market price per share thereof (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible
into, Common Shares of such Principal Party at less than such then current
market price, or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common Shares of such Principal
Party pursuant to the provisions of Section 13, then, in such event, the
Corporation hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Corporation and such
Principal Party shall have exercised and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if: (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of consideration offered in such transaction
is the same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Corporation
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
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listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Corporation. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue fractions of Preferred
Shares (other than fractions which are one one-thousandth or integral multiples
of one one-thousandths of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandths of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-thousandths of a Preferred Share may, at the election of
the Corporation, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Corporation and a depositary selected by it; provided that
such agreement shall provide that the holders of such depositary receipts shall
have the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not one
one-thousandths or integral multiples of one one-thousandths of a Preferred
Share, the Corporation shall pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive Common Shares,
capital stock equivalents (other than Preferred Shares) or other securities upon
the exercise of a Right, the Corporation shall not be required to issue
fractions of shares or units of such Common Shares, capital stock equivalents or
other securities upon exercise of the Rights or to distribute certificates which
evidence fractions of such Common Shares, capital stock equivalents or other
securities. In lieu of fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Corporation may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share or unit of such Common Shares, capital stock equivalents or
other securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise and, if such capital
stock equivalent is not traded, each
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such capital stock equivalent shall have the value of one one-thousandths of a
Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional share upon exercise
of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate (or, prior to the
Distribution Date, by the Common Shares) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Corporation and the
Rights Agent may deem and treat the Person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
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(d) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or a beneficial interest in a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Corporation must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Corporation which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or other distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Corporation agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. The indemnity provided
for herein shall survive the expiration of the Rights and the termination of
this Agreement.
The Rights Agent shall be protected and shall incur no liability for, or
in respect of, any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Shares or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
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(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or all or substantially all of the corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Right Certificates so counter signed; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only those
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Corporation and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including without limitation, the identity of an Acquiring Person and the
determination of the current market price of any Security) be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
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taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature on such Right Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required
under the provisions of Section 3, Section 11, Section 13, Section 23 or Section
24 hereof or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of the certificate described in Section 12 hereof);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Shares or Common Shares will, when issued, be
validly authorized and issued, fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Secretary of the Corporation, and to
apply to such officers for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered by it in good faith or
lack of action in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Corporation may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on or after
which such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on or after
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the date specified in such application (which date shall not be less than five
Business Days after the date any officer of the Corporation actually receives
such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instruction in response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Corporation or become pecuniarily interested in any transaction in which
the Corporation may be interested, or contract with or lend money to the
Corporation or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the
Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Corporation and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Corporation may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and to
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent. If the Corporation
shall fail to make such appointment within a period of thirty (30)
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days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Corporation), then
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Corporation or by such a court, shall be
a corporation organized and doing business under the laws of the United States
or of the State of New York (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of ), in good standing, having an office in the State of New York, which
is authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Corporation shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Corporation (a) shall with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Corporation, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Corporation, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) the
Corporation shall not be obligated to issue any such Right Certificates if, and
to the extent that, the Corporation shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate would be issued,
and (ii) no Right Certificate shall be issued if, and to the
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extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
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Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Corporation may, at its option,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"), at any time prior to the earlier of (x) the occurrence of a Section
11(a)(ii) Event, or (y) the Final Expiration Date. The Corporation may, at its
option, pay the Redemption Price either in Common Shares (based on the "current
per share market price," as defined in Section 11(d) hereof, of the Common Share
at the time of redemption) or cash; provided that if the Corporation elects to
pay the Redemption Price in Common Shares, the Corporation shall not be required
to issue any fractional Common Shares and in lieu of any such fractional Common
Shares shall pay in cash the market value of such fractional Common Shares. The
redemption of the Rights may be made effective as such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(ii) In addition, the Board of Directors of the Corporation may, at
its option, at any time following the occurrence of a Section 11(a)(ii) Event
and the expiration of any period during which the holder of Rights may exercise
the rights under Section 11(a)(ii) but prior to any Section 13 Event redeem all
but not less than all of the then outstanding Rights at the Redemption Price (x)
in connection with any merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets or earning power
aggregating 50% or more of the earning power of the Corporation and its
subsidiaries (taken as a whole) in which all holders of Common Shares are
treated alike or (y)(aa) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of the Common Shares, and (bb) at the time of
redemption no other Persons are Acquiring Persons.
(b) Notwithstanding the provisions of Section 23(a), in the event that a
majority of the Board of Directors of the Corporation is comprised of (i)
persons elected at a meeting of or by written consent of stockholders who were
not nominated by the Board of Directors in office immediately prior to such
meeting or action by written consent, and/or (ii) successors of such persons
elected to the Board of Directors for the purpose of either facilitating a
transaction with an Acquisition Person or circumventing, directly or indirectly
the provisions of this Section 23(b), then (I) the Rights may not be redeemed
for a period of 180 days following the effectiveness of such election if such
redemption is reasonably likely to have the purpose or effect of facilitating a
transaction with an Acquisition Person and (II) the Rights may not be redeemed
following such 180-day period, if (x) such redemption is reasonably likely to
have the purpose or effect of facilitating a transaction with an Acquisition
Person and (y) during such 180-day period, the Corporation enters into any
agreement, arrangement or understanding with any Acquisition Person which is
reasonably likely to have the purpose or effect of facilitating a transaction
with any Acquisition Person.
(c) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the date for redemption set forth (or determined in the manner
specified in) in a resolution of
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the Board of Directors of the Corporation ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. In the case of a redemption
permitted only under Section 23(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price upon the later of ten
Business Days following the giving of such notice or the expiration of any
period during which the rights under Section 11(a)(ii) may be exercised. The
Corporation shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after such date for
redemption set forth in a resolution of the Board of Directors ordering the
redemption of the Rights, the Corporation shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on, the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Corporation nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
(d) The Corporation may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Common Shares, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the
Corporation.
Section 24. Exchange. (a) The Board of Directors of the Corporation may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11 (a)(ii) hereof) for Common Shares of the Corporation at an exchange ratio of
one Common Share per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Corporation,
any Subsidiary of the Corporation, any employee benefit plan of the Corporation,
or any such Subsidiary, any entity holding Common Shares for or pursuant to the
terms of any such a plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding. From and after the occurrence of an event specified in Section
13(a) hereof, any Rights that theretofore have not been exchanged
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pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 any may not be exchanged pursuant to this Section
24(a).
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Corporation shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Corporation shall promptly mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11 (a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Corporation, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11 (b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one one-thousandths of a
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have the same
voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Corporation shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights.
Section 25. Notice of Certain Events. (a) In case the Corporation shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regularly quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Corporation in a
transaction which does not violate Section 11 (n) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect
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any sale or other transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which does not violate
Section 11(n) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation shall give to
each holder of a Right Certificate (or if occurring prior to the distribution
Date, the holders of the Common Shares) in accordance with Section 26 hereof, a
notice of such proposed action to the extent feasible and file a certificate
with the Rights Agent to that effect, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
(b) In case of a Section 11(a)(ii) Event or a Section 13 Event, then (i)
the Corporation shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph (a) to Preferred Shares shall
be deemed thereafter to refer also to Common Shares and/or, if appropriate,
other securities of the Corporation.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Corporation shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
National Wireless Holdings Inc.
249 Royal Palm Way, Suite 301
Palm Beach, Florida 33480
Attention: Terrence S. Cassidy, President
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118
Attention: James Kardon, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Corporation or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail,
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postage prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:
Continental Stock Transfer and Trust Company
2 Broadway
New York, NY 10004
Attention: Steven Nelson
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Corporation.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares. From and after the
Distribution Date, the Corporation and the Rights Agent shall, if the
Corporation so directs, supplement or amend this Agreement in any respect
without the approval of any holders of Right Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Corporation may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment, provided that
such supplement or amendment does not adversely affect the rights or obligations
of the Rights Agent under Section 18 or Section 20 of this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares. Notwithstanding
anything contained in this Rights Agreement to the contrary, in the event that a
majority of the Board of Directors of the Corporation is comprised of (i)
persons elected at a meeting of or by written consent of stockholders and who
were not nominated by the Board of Directors in office immediately prior to such
meeting or action by written consent and/or (ii) successors of such persons
elected to the Board of Directors for the purpose of either facilitating a
transaction with an Acquisition Person or circumventing directly or indirectly
the provisions of this Section 27, then for a period of 180 days following the
effectiveness of such action, this Rights
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Agreement shall not be amended or supplemented in any manner reasonably likely
to have the purpose or effect of facilitating a transaction with an Acquisition
Person.
Section 28. Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Right Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Corporation,
the Rights Agent, the holders of the Right Certificates and all other parties,
and (y) not subject the Board to any liability to the holders of the Right
Certificates.
Section 29. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Corporation or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Corporation, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the
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laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date and year first above written.
NATIONAL WIRELESS HOLDINGS INC.
Attest:
By__________________ By /s/ Terrence S. Cassidy
-----------------------------
Name: Name:
Title: Title:
CONTINENTAL STOCK TRANSFER AND
TRUST COMPANY
Attest:
By__________________ By /s/ Steven Nelson
-----------------------------
Name: Name:
Title: Title:
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<PAGE>
Exhibit A
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
of
SERIES A JUNIOR PREFERRED STOCK
OF
NATIONAL WIRELESS HOLDINGS INC.
(Pursuant to Section 151
of the Delaware General Corporation Law)
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware National Wireless Holdings Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance with
the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of said
Corporation, the said Board of Directors on December 12, 1996 adopted the
following resolution creating a series of one hundred thousand (100,000) shares
of Preferred Stock designated as "Series A Junior Preferred Stock":
1. The following resolution was duly adopted by the Board of Directors of
the Corporation in accordance with the provisions of the Corporation's
Certificate of Incorporation at a meeting duly called and held on December 12,
1996:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation in accordance with the provisions
of the Certificate of Incorporation, the Board of Directors hereby creates
a series of Series A Junior Preferred Stock, with a par value of $.01 per
share, of the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences and limitations thereof
(in addition to the provisions set forth in the Certificate of
Incorporation which are applicable to the Preferred Stock of all classes
and series) as follows:
SERIES A JUNIOR PREFERRED STOCK
Section 1. Designation, Par Value and Amount. The shares of such series
shall be designated as "Series A Junior Preferred Stock" (hereinafter referred
to as "Series A Junior
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Preferred Stock"), the shares of such series shall be with par value of $.01 per
share, and the number of shares constituting such series shall be 100,000;
provided, however, that, if more than a total of 100,000 shares of Series A
Junior Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of December 12,
1996, between the Corporation and Continental Stock Transfer and Trust Company,
as Rights Agent (as amended from time to time) (the "Rights Agreement"), the
Board of Directors of the Corporation, pursuant to Section 151 of the Delaware
General Corporation Law, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged and filed providing for the total
number of shares of Series A Junior Preferred Stock authorized to be issued to
be increased (to the extent that the Certificate of Incorporation then permits)
to the largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of the Rights.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Junior Preferred Stock with respect to dividends, the holders of shares
of Series A Junior Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of assets legally available for the
purpose, quarterly dividends payable in cash on the first business day of
November, February, May and August in each year (each such date being referred
to herein as a ("Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock, par value $.01 per share, of
the Corporation (the "Common Stock") or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Preferred Stock.
(B) The Corporation shall declare a dividend or distribution on the Series
A Junior Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series A Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date
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of issue of such shares of Series A Junior Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Preferred Stock shall have the following voting rights:
(A) Except as provided in paragraph C of this Section 3 and subject to the
provision for adjustment hereinafter set forth, each share of Series A Junior
Preferred Stock shall entitle the holder thereof to a number of votes equal to
the Adjustment Number on all matters submitted to a vote of the stockholders of
the Corporation.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Junior Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If, on the date used to determine stockholders of record for any
meeting of stockholders for the election of directors, a default in
preference dividends (as defined in subparagraph (v) below) on the Series
A Junior Preferred Stock shall exist, the holders of the Series A Junior
Preferred Stock shall have the right, voting as a class as described in
subparagraph (ii) below, to elect two directors (in addition to the
directors elected by holders of Common Stock of the Corporation). Such
right may be exercised (a) at any meeting of stockholders for the election
of directors or (b) at a meeting of the holders of shares of Voting
Preferred Stock (as hereinafter defined), called for the purpose in
accordance with the By-laws of the Corporation, until all such cumulative
dividends (referred to above) shall have been paid in full or until non
cumulative dividends have been paid regularly for at least one year.
(ii) The right of the holders of Series A Junior Preferred Stock to
elect two directors, as described above, shall be exercised as a class
concurrently with the rights of holders of any other series of Preferred
Stock upon which voting rights to elect such directors have been conferred
and are then exercisable. The Series A Junior Preferred Stock and any
additional series of Preferred Stock which the
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Corporation may issue and which may provide for the right to vote with the
foregoing series of Preferred Stock are collectively referred to herein as
"Voting Preferred Stock."
(iii) Each director elected by the holders of shares of Voting
Preferred Stock shall be referred to herein as a "Preferred Director." A
Preferred Director so elected shall continue to serve as such director for
a term of one year, except that upon any termination of the right of all
of such holders to vote as a class for Preferred Directors, the term of
office of such directors shall terminate. Any Preferred Director may be
removed by, and shall not be removed except by the vote of the holders of
record of a majority of the outstanding shares of Voting Preferred Stock
then entitled to vote for the election of directors, present (in person or
by proxy) and voting together as a single class (a) at a meeting of the
stockholders, or (b) at a meeting of the holders of shares of such Voting
Preferred Stock, called for the purpose in accordance with the By-laws of
the Corporation, or (c) by written consent signed by the holders of a
majority of the then outstanding shares of Voting Preferred Stock then
entitled to vote for the election of directors, taken together as a single
class.
(iv) So long as a default in any preference dividends on the Series A
Junior Preferred Stock shall exist or the holders of any other series of
Voting Preferred Stock shall be entitled to elect Preferred Directors, (a)
any vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (b)) by an instrument in writing signed
by the remaining Preferred Director and filed with the Corporation and (b)
in the case of the removal of any Preferred Director, the vacancy may be
filled by the vote or written consent of the holders of a majority of the
outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors, present (in person or by proxy) and voting together
as a single class, at such time as the removal shall be effected. Each
director appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director. Whenever
(x) no default in preference dividends on the Series A Junior Preferred
Stock shall exist and (y) the holders of other series of Voting Preferred
Stock shall no longer be entitled to elect such Preferred Directors, then
the number of directors constituting the Board of Directors of the
Corporation shall be reduced by two.
(v) For purposes hereof, a "default in preference dividends" on the
Series A Junior Preferred Stock shall be deemed to have occurred whenever
the amount of cumulative and unpaid dividends on the Series A Junior
Preferred Stock shall be equivalent to six full quarterly dividends or
more (whether or not consecutive), and, having so occurred, such default
shall be deemed to exist thereafter until, but only until, all cumulative
dividends on all shares of the Series A Junior Preferred Stock then
outstanding shall have been paid through the last Quarterly Dividend
Payment Date or until, but only until, non-cumulative dividends have been
paid regularly for at least one year.
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<PAGE>
(E) Except as set forth herein (or as otherwise required by applicable
law), holders of Series A Junior Preferred Stock shall have no general or
special voting rights and their consent shall not be required for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior Preferred
Stock outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends, or make any other distributions on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior Preferred Stock, except
dividends paid ratably on the Series A Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
(except as provided in (iv) below) shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Junior Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A Junior Preferred
Stock:
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Junior Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
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<PAGE>
Section 5. Reacquired Shares. Any shares of Series A Junior Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, in any other Certificate of
Designation creating a series of Preferred Stock or as otherwise required by
law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the prior and superior rights of holders of any shares of
any series of Preferred Stock ranking prior and superior to the shares of Series
A Junior Preferred Stock with respect to rights upon liquidation, dissolution or
winding up (voluntary or otherwise), no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Preferred Stock
shall have received $1,000.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Capital Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
1,000 (as appropriately adjusted as set forth in paragraph C below to reflect
such event as stock split, stock dividends and recapitalizations with respect to
Common Stock) (such number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Series A Liquidation Preference and the
Capital Adjustment in respect of all outstanding shares of Series A Junior
Preferred Stock and Common Stock, respectively, holders of Series A Junior
Preferred Stock and holders of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of Series A Junior Preferred
Stock and the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Capital Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Distribution
Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each case the Adjustment
Number in effect immediately
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<PAGE>
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Junior Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series A Junior Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Series A Junior Preferred Stock shall rank junior
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A Junior
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Junior Preferred Stock.
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<PAGE>
IN WITNESS WHEREOF, this Certificate is executed on behalf of the
Corporation by its President and Chief Executive Officer and attested by its
Secretary this 24th day of December, 1996.
NATIONAL WIRELESS HOLDINGS INC.
By:____________________________
Name: Terrence S. Cassidy
Title: President and Chief Executive
Officer
Attest:
______________________
Name: James Kardon
Title: Secretary
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<PAGE>
Exhibit B
Form of Right Certificate
No. R- ______ Rights
NOT EXERCISABLE AFTER DECEMBER 12, 2006, OR EARLIER IF REDEEMED
BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
National Wireless Holdings Inc.
This certifies that ___________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of December 12, 1996 (the "Rights Agreement") between
National Wireless Holdings Inc., a Delaware (the "Corporation"), and Continental
Stock Transfer and Trust Company (the "Rights Agent"), to purchase from the
Corporation at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. New York time, on December 12,
2006, unless the rights evidenced hereby shall have been previously redeemed by
the Corporation, at the principal office or offices of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one one-thousandths of a fully paid non-assessable share of Series A Junior
Preferred Stock, without par value (the "Preferred Shares"), of the Corporation,
at a purchase price of $75 per one one-thousandths of Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
December 12, 1996, based on the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee after the Acquiring Person becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such, such Rights shall
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandths of a Preferred Share or other securities which may be
purchased upon the
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<PAGE>
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Corporation and the principal office or offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Corporation at a redemption price of
$.01 per Right (subject to adjustment as provided in the Rights Agreement)
payable in cash.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are one
one-thousandths or integral multiples of one one-thousandths of a Preferred
Share, which may, at the election of the Corporation, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Corporation which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or other distributions or to exercise
any preemptive or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
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<PAGE>
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal. Dated as of ____________, _____.
[SEAL]
ATTEST: NATIONAL WIRELESS HOLDINGS INC.
________________________ By____________________________
Name: Name:
Title: Title:
Countersigned:
[_______________________]
By_______________________
Authorized Signatory
Name:
Title:
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<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________ hereby sells, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Corporation, with full power
of substitution.
Dated: ___________, ____
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Right Agreement) and (2) after due inquiry and
to the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).
__________________________
Signature
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FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the Preferred Shares, Common
Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares, Common Shares or other
securities be issued in the name of:
Please insert social security
or other identifying number_____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number_____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, ____
___________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement) and (2) after due inquiry and to the best
knowledge of the undersigned, the
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<PAGE>
undersigned did not acquire the Rights evidenced by this Rights Certificate from
any Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
_________________________
Signature
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NOTICE
The signature on the foregoing Forms of Assignment and Election and
certificates must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of election to Purchase, as the case may be, is not completed, the
Corporation and the Rights Agent will deem the Beneficial Owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On December 12, 1996, the Board of Directors of National Wireless Holdings
Inc. (the "Corporation") declared a dividend distribution of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock, par value
$0.01 per share (the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record on December 24, 1996 (the "Record Date"),
and with respect to Common Shares issued thereafter until the Distribution Date
(as defined below) and, in certain circumstances, with respect to Common Shares
issued after the Distribution Date. Except as set forth below, each Right, when
it becomes exercisable, entitles the registered holder to purchase from the
Corporation one one-thousandths of a share of Series A Preferred Stock, without
par value (the "Preferred Shares"), of the Corporation at a price of $75 per one
one-thousandths of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Corporation and Continental Stock
Transfer and Trust Company, as Rights Agent (the "Rights Agent"), dated as of
December 12, 1996.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earliest
to occur of (i) a person or group of affiliated or associated persons having
acquired beneficial ownership of 20%, or more of the outstanding Common Shares
(except pursuant to a Permitted Offer, as hereinafter defined): or (ii) 10 days
(or such later date as the Board may determine) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group becoming an Acquiring
Person (as hereinafter defined) (the earliest of such dates being called the
"Distribution Date"). A person or group whose acquisition of Common Shares
causes a Distribution Date pursuant to clause (i) above is an "Acquiring
Person." The date that a person or group becomes an Acquiring Person is the
"Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights) new Common
Share certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of
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<PAGE>
business on the Distribution Date (and to each initial record holder of certain
Common Shares issued after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 12, 2006, unless earlier redeemed by the
Corporation as described below.
In the event that any person becomes an Acquiring Person (except pursuant
to a tender or exchange offer which is for all outstanding Common Shares at a
price and on terms which a majority of certain members of the Board of Directors
determines to be adequate and in the best interests of the Corporation, its
stockholders and other relevant constituencies, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer")), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares or of one one-thousandths of a share of
Preferred Shares (or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void.
In the event that, at any time following the Shares Acquisition Date, (i)
the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other person
in which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Shares are not
treated alike, any other person, then each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the exercise price of the
Right. The holder of a Right will continue to have the Flip-Over Right whether
or not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Preferred Shares, Common
Shares or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the
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<PAGE>
Preferred Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of one one-thousandths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but, if greater, will be entitled
to an aggregate dividend per share of one 1,000 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $1,000.00 per
share; thereafter, and after the holders of the Common Shares receive a
liquidation payment of $0.01 per share, the holders of the Preferred Shares and
the holders of the Common Shares will share the remaining assets in the ratio of
1,000 to 1 (as adjusted) for each Preferred Share and Common Share so held,
respectively. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share. These
rights are protected by customary antidilution provisions. In the event that the
amount of accrued and unpaid dividends on the Preferred Shares is equivalent to
six full quarterly dividends or more, the holders of the Preferred Shares shall
have the right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Common Shares until all cumulative
dividends on the Preferred Shares have been paid through the last quarterly
dividend payment date or until non-cumulative dividends have been paid regularly
for at least one year.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandths of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. Additionally, following the
Shares Acquisition Date, the Corporation may redeem the then outstanding Rights
in whole, but not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business combination
transaction or series of transactions involving the Corporation in which all
holders of Common Shares are treated alike but not involving an Acquiring Person
or its affiliates or associates.
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<PAGE>
All of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Corporation prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or, subject to certain limitations, to
shorten or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated December
20, 1996. A copy of the Rights Agreement is available free of charge from the
Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
--------------------
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this "Agreement"),
dated as of December 12, 1996, is made and entered into by and between NATIONAL
WIRELESS HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and
TERRENCE S. CASSIDY (the "Executive").
BACKGROUND
The Company and the Executive are parties to an Employment Agreement
dated as of September 27, 1993 (the "Employment Agreement").
The Company, on behalf of itself and its stockholders, desires to
continue to attract and retain well-qualified executives and key personnel who
are an integral part of the management of the Company, such as the Executive,
and to assure itself of continuity of management. The Company recognizes that,
as is the case with many publicly-held corporations, the possibility of a change
of control exists and that such possibility, and the uncertainty which it may
raise among management, may result in the distraction or departure of management
to the detriment of the Company and its shareholders.
For these reasons, the Company desires to amend, modify and
supplement the Employment Agreement to, (i) extend the term of employment set
forth under the Employment Agreement, (ii) protect the continued employment of
the Executive which would be at risk in the event of a change in control and
(iii) provide an incentive to the Executive, whose knowledge, expertise and
level of performance are critical to the current and future success of the
Company, to remain in the employ of the Company, notwithstanding the uncertainty
and job insecurity created by an actual or threatened change in control.
This Agreement sets forth the specific severance compensation which
the Company agrees that it will pay to the Executive if the Executive's
employment with the Company terminates as provided herein.
NOW THEREFORE, in order to induce the Executive to remain in the
employ of the Company in consideration of the foregoing recitals and the mutual
covenants and agreements contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. As used herein, the terms below shall have the
following meanings:
<PAGE>
(a) Cash Compensation. "Cash Compensation" shall mean the sum
of (x) the higher of the Executive's annual base salary at (i) the time the
Notice of Termination provided for in Section 3(b) of this Agreement is given or
(ii) immediately prior to a Change in Control, and (y) an amount equal to the
highest aggregate Cash Bonus Earned by the Executive under all cash bonus plans
of the Company for any of the three fiscal years immediately preceding the year
in which the Date of Termination occurs. "Cash Bonus Earned" shall mean all
amounts actually earned for performance in a specific fiscal year without regard
to voluntary or mandatory payment deferrals if so specified in the applicable
bonus plan.
(b) Change in Control. A "Change in Control" of the Company
shall mean the occurrence during the term of the Employment Agreement of any one
of the following events:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any person (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), but not including Terrence S. Cassidy
or Michael J. Specchio) (each such person, a "Person"), immediately
after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifteen
percent (15%) or more of the combined voting power of the Company's
then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Company or (2) any corporation
or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (B) the Company or its Subsidiaries, or (C) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date this Agreement
is approved by the Board of Directors are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall
be considered a member of the Incumbent Board if
<PAGE>
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless such merger, consolidation or
reorganization is a "NonControl Transaction". A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization of the Company where:
(1) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own directly or indirectly immediately
following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization,
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of
the Surviving Corporation, and
(3) no Person other than (a) the Company,
(b) any Subsidiary, (c) any employee benefit plan (or
any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary,
or (d) any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership
of fifteen percent (15%) or more of the then outstanding
Voting Securities), has Beneficial Ownership of
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<PAGE>
fifteen percent (15%) or more of the combined voting
power of the Surviving Corporation's then outstanding
voting securities.
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(c) Effective Date. "Effective Date" shall mean the date on
which a Change in Control is effectuated.
(d) Good Reason. The Executive's termination of employment
with the Company shall be deemed for "Good Reason" if it occurs within six (6)
months of any of the following without the Executive's express written consent:
(i) the assignment to the Executive by the Company of
duties inconsistent with, or a substantial alteration in the nature
or status of, Executive's responsibilities immediately prior to a
Change in Control of the Company other than any such alteration
primarily attributable to the fact that the Company's securities are
no longer publicly traded;
(ii) a reduction by the Company in the Executive's Cash
Compensation (as defined in Section 1(a) above) as in effect on the
date of a Change in Control of the Company or as in effect
thereafter if such Cash Compensation has been increased during the
term of this Agreement;
(iii) any failure by the Company to continue in effect
without substantial change any compensation, incentive, welfare or
benefit plan or arrangement, as well as any plan or arrangement
whereby the Executive
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<PAGE>
may acquire securities of the Company, in which the Executive is
participating at the time of a Change in Control of the Company (or
any other plans, currently in effect or hereafter adopted by the
Company, providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans"), or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of a
Change in Control of the Company unless an equitable substitute
arrangement (embodied in an ongoing substitute or alternative
Benefit Plan) has been made for the benefit of the Executive with
respect to the Benefit Plan in question. For purposes of the
foregoing, Benefit Plans shall include, but not be limited to, the
1993 Stock Option Plan or any other plan or arrangement to receive
and exercise stock options or stock appreciation rights,
supplemental pension plan, insured medical reimbursement plan,
automobile benefits, executive financial planning, group life
insurance plan, personal catastrophe liability insurance, medical,
dental, accident and disability plans;
(iv) relocation to any place more than 100 miles from
the office regularly occupied by the Executive, except for required
travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations at the time of a Change in Control;
(v) any material breach by the Company of any provision
of this Agreement or the Employment Agreement;
(vi) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(vii) any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section 3(b) below,
and for purposes of this Agreement, no such purported termination
shall be effective.
All terms not otherwise defined herein shall have the meanings
ascribed to them in the Employment Agreement.
2. Extension of Term. The Employment Agreement is hereby amended
as follows:
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<PAGE>
(a) The term of the Employment Agreement as set forth in
Paragraph 1 thereof is hereby amended to provide for an extension of three
additional years.
(b) Paragraph 13 of the Employment Agreement is hereby amended
by adding after the word "other" contained on the third line thereof the
following: "; provided, however, that a notice in connection with the
termination of the Executive's employment shall be provided in accordance with
the terms set forth in Section 3(b) of Amendment No. 1 to Employment Agreement
dated as of _______ __, 1996".
3. Termination Following Change in Control.
(a) Termination of Employment. If a Change in Control of the
Company as defined in Section 1(b) shall have occurred while the Executive is
still an employee of the Company, the Executive shall be entitled to the
compensation provided in Section 4 upon the subsequent termination of the
Executive's employment with the Company by the Company or by the Executive,
unless such termination is a result of (i) the Executive's death; (ii) the
Executive is permanently disabled (as more fully described in Paragraph 6(a)(1)
of the Employment Agreement); (iii) the Executive's termination by the Company
for "cause" (as defined in the Employment Agreement); or (iv) the Executive's
decision to terminate his employment with the Company other than for Good Reason
(as defined in Section 1(d) above). No compensation shall be payable and no
rights shall vest in the Executive under this Agreement except as specifically
set forth in this Section 3(a).
(b) Notice of Termination. Any purported termination of the
Executive's employment by the Company or the Executive hereunder shall be
communicated by a Notice of Termination to the other party as set forth herein.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(c) Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated by the Company pursuant to Section 3(a)(ii)
above, thirty (30) days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such thirty (30) day period),
(ii) if the Executive's employment is terminated by the Company for any other
reason, the date on which a Notice of Termination is given, provided that if
within thirty (30) days after any Notice of Termination is given to the
Executive by the Company, the Executive notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
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<PAGE>
written agreement of the parties, by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected), or (iii) if the Agreement is terminated by
the Executive, the date on which the Executive delivers Notice of Termination to
the Company.
4. Severance Compensation upon Termination of Employment. If the
Executive's employment with the Company shall be terminated as provided in
Section 3(a), then the Company shall:
(a) subject to Sections 5 and 6 below, pay to the Executive as
severance payment in a lump sum in cash, on the fifth day following the Date of
Termination, an amount equal to three times (the "multiple") the Executive's
Cash Compensation (the "Executive's Severance Cash Benefit").
(b) arrange to provide the Executive for two years (or such
shorter period as Executive may elect) with disability, life, accident and
health insurance substantially similar to those insurance benefits which
Executive is receiving immediately prior to the Notice of Termination (including
coverage for dependents at the same per person cost as the Executive is then
paying). Benefits otherwise receivable by Executive pursuant to this Section
4(b) shall be reduced to the extent comparable benefits are actually received by
the Executive during such two (2) year period following his termination (or such
shorter period elected by the Executive), and any such benefits actually
received by Executive shall be reported by him to the Company.
5. Reduction in Benefits for "Parachute Payment". Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
payments under Section 4 of this Agreement to the Executive, either alone or
together with other payments the Executive has a right to receive from the
Company, would not be deductible (in whole or in part) by the Company as a
result of such payments constituting a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code, as amended (the "Code")), such
payments shall be reduced to the largest amount as will result in no portion of
the payments under Section 4 not being fully deductible by the Company as the
result of Section 280G of the Code. The determination of any reduction in the
payments under Section 4 pursuant to the foregoing sentence shall be made
exclusively by Coopers & Lybrand, LLP, or such other firm of certified
independent public accountants as may be serving as the Company's principal
auditors immediately prior to the Effective Date (the "Auditors") (whose fees
and expenses shall be borne by the Company), and such determination shall be
conclusive and binding on the Company and the Executive.
6. Reduction of Severance Cash Benefit in Certain Other
Circumstances. Notwithstanding anything contained in this Agreement to the
contrary, in the event that on the Effective
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<PAGE>
Date the Company's Aggregate Severance Liability (as defined below) exceeds 5%
of the Company's Market Capitalization (as defined below), the Executive's
Severance Cash Benefit shall be reduced to the product of (a) 5% of the
Company's Market Capitalization and (b) a fraction (x) the numerator of which
shall be the Executive's Severance Cash Benefit as of the Effective Date and (y)
the denominator of which shall be the Company's Aggregate Severance Liability.
"The Company's Aggregate Severance Liability," as used herein, shall
mean an amount (determined by the Auditors) equal to the aggregate of the
Severance Cash Benefits payable to all employees of the Company party to written
Severance Benefit Agreements on the Effective Date, calculated as of the
Effective Date instead of as of the Dates of Termination of such employees and
in each case reduced by the applicable "parachute payment" reduction, if any,
described in Section 5 hereof. "The Company's Market Capitalization," as used
herein, shall mean the sum of: (i) the product of (a) the total number of shares
of common stock of the Company (the "Common Stock") outstanding as of the
Effective Date and (b) the last reported sale price on the Nasdaq Small
Capitalization of one share of Common Stock on the Effective Date; plus (ii) the
product of (a) the total number of shares of preferred stock of the Company (the
"Preferred Stock") outstanding on the Effective Date and (b) the liquidation
value of one share of Preferred Stock; plus (iii) the aggregate amount of
outstanding indebtedness for borrowed money of the Company on the Effective
Date; plus (iv) the aggregate amount of short and lone-term liabilities of the
discontinued operations of the Company as reflected on the Company's most
recently prepared quarterly balance sheet. "The Executive's Severance Cash
Benefit as of the Effective Date," as used herein, shall mean an amount
(determined by the Auditors) equal to the Executive's Severance Cash Benefit
calculated as of the Effective Date rather than as of the Date of Termination,
which calculation shall include the "parachute payment" reduction, if any, which
would be made pursuant to Section 5 hereof. The determination of any reduction
in the Executive's Severance Cash Benefits pursuant to this Section 6 shall be
made exclusively by the Auditors (whose fees and expenses shall be borne by the
Company), and such determination shall be conclusive and binding on the Company
and the Executive.
7. Mitigation of Damages. The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination, or otherwise, except to the extent provided in Section 4 above.
8. Effect of Agreement on Other Contractual Rights. The provisions
of this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in
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<PAGE>
any way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under the Employment Agreement, any
Benefit Plan or other contract, plan or arrangement.
9. Term. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid, upon the earliest of (i)
five years from the date hereof if a Change in Control has not occurred within
such five-year period; (ii) upon the termination of the Executive's employment
with the Company based on death, retirement, disability (as described in Section
3(a)(ii)) or cause or by the Executive other than for Good Reason; or (iii)
three years from the Effective Date of a Change in Control which was not
approved by the Board of Directors or two years from the Effective Date of a
Change in Control which was approved by the Board of Directors.
10. Successor to the Company.
(a) Assumption of Agreement. The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled hereunder if such
succession had not occurred, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination. For purposes of this Section 10, "Company" shall
mean the Company as defined above and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for herein or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) Heirs of the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
11. Miscellaneous. No provisions of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver, or
discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party
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<PAGE>
hereto at any time of any breach by the other party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Gender. In this Agreement (unless the context requires
otherwise), the use of any masculine term shall include the feminine.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NATIONAL WIRELESS HOLDINGS, INC.
By: _____________________________
Name:
Title:
_________________________________
Terrence S. Cassidy
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AMENDMENT NO. 2 TO CONSULTING AGREEMENT
This AMENDMENT NO. 2 TO CONSULTING AGREEMENT (this "Agreement"),
dated as of December __, 1996, is made and entered into by and between NATIONAL
WIRELESS HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and
MICHAEL J. SPECCHIO (the "Executive").
BACKGROUND
The Company and the Executive are parties to a Consulting Agreement
dated as of September 22, 1993, as amended by Amendment No. 1 to Consulting
Agreement dated January 1995 (as amended, the "Consulting Agreement").
The Company, on behalf of itself and its stockholders, desires to
continue to attract and retain well-qualified executives and key personnel who
are an integral part of the management of the Company, such as the Executive,
and to assure itself of continuity of management. The Company recognizes that,
as is the case with many publicly-held corporations, the possibility of a change
of control exists and that such possibility, and the uncertainty which it may
raise among management, may result in the distraction or departure of management
to the detriment of the Company and its shareholders.
For these reasons, the Company desires to further amend, modify and
supplement the Consulting Agreement to (i) extend the retainer period set forth
under the Consulting Agreement, (ii) protect the continued employment of the
Executive which would be at risk in the event of a change in control and (iii)
provide an incentive to the Executive, whose knowledge, expertise and level of
performance are critical to the current and future success of the Company, to
remain in the employ of the Company, notwithstanding the uncertainty and job
insecurity created by an actual or threatened change in control.
This Agreement sets forth the specific severance compensation which
the Company agrees that it will pay to the Executive if the Executive's
employment with the Company terminates as provided herein.
NOW THEREFORE, in order to induce the Executive to remain in the
employ of the Company in consideration of the foregoing recitals and the mutual
covenants and agreements contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. As used herein, the terms below shall have the
following meanings:
<PAGE>
(a) Cash Compensation. "Cash Compensation" shall mean the sum
of (x) the higher of the Executive's annual base consulting fee at (i) the time
the Notice of Termination provided for in Section 3(b) of this Agreement is
given or (ii) immediately prior to a Change in Control, and (y) an amount equal
to the highest aggregate Cash Bonus Earned by the Executive under all cash bonus
plans of the Company for any of the three fiscal years immediately preceding the
year in which the Date of Termination occurs. "Cash Bonus Earned" shall mean all
amounts actually earned for performance in a specific fiscal year without regard
to voluntary or mandatory payment deferrals if so specified in the applicable
bonus plan.
(b) Change in Control. A "Change in Control" of the Company
shall mean the occurrence during the term of the Consulting Agreement of any one
of the following events:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any person (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), but not including Terrence S. Cassidy
or Michael J. Specchio) (each such person, a "Person"), immediately
after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifteen
percent (15%) or more of the combined voting power of the Company's
then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Company or (2) any corporation
or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (B) the Company or its Subsidiaries, or (C) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date this Agreement
is approved by the Board of Directors are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall
be considered a member of the Incumbent Board if
<PAGE>
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless such merger, consolidation or
reorganization is a "NonControl Transaction". A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization of the Company where:
(1) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own directly or indirectly immediately
following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization,
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of
the Surviving Corporation, and
(3) no Person other than (a) the Company,
(b) any Subsidiary, (c) any employee benefit plan (or
any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary,
or (d) any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership
of fifteen percent (15%) or more of the then outstanding
Voting Securities), has Beneficial Ownership of
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<PAGE>
fifteen percent (15%) or more of the combined voting
power of the Surviving Corporation's then outstanding
voting securities.
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(c) Effective Date. "Effective Date" shall mean the date on
which a Change in Control is effectuated.
(d) Good Reason. The Executive's termination of employment
with the Company shall be deemed for "Good Reason" if it occurs within six (6)
months of any of the following without the Executive's express written consent:
(i) the assignment to the Executive by the Company of
duties inconsistent with, or a substantial alteration in the nature
or status of, Executive's responsibilities immediately prior to a
Change in Control of the Company other than any such alteration
primarily attributable to the fact that the Company's securities are
no longer publicly traded;
(ii) a reduction by the Company in the Executive's Cash
Compensation (as defined in Section 1(a) above) as in effect on the
date of a Change in Control of the Company or as in effect
thereafter if such Cash Compensation has been increased during the
term of this Agreement;
(iii) any failure by the Company to continue in effect
without substantial change any compensation, incentive, welfare or
benefit plan or arrangement, as well as any plan or arrangement
whereby the Executive
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<PAGE>
may acquire securities of the Company, in which the Executive is
participating at the time of a Change in Control of the Company (or
any other plans, currently in effect or hereafter adopted by the
Company, providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans"), or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of a
Change in Control of the Company unless an equitable substitute
arrangement (embodied in an ongoing substitute or alternative
Benefit Plan) has been made for the benefit of the Executive with
respect to the Benefit Plan in question. For purposes of the
foregoing, Benefit Plans shall include, but not be limited to, the
1993 Stock Option Plan or any other plan or arrangement to receive
and exercise stock options or stock appreciation rights,
supplemental pension plan, insured medical reimbursement plan,
automobile benefits, executive financial planning, group life
insurance plan, personal catastrophe liability insurance, medical,
dental, accident and disability plans;
(iv) relocation to any place more than 100 miles from
the office regularly occupied by the Executive, except for required
travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations at the time of a Change in Control;
(v) any material breach by the Company of any provision
of this Agreement or the Consulting Agreement;
(vi) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(vii) any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section 3(b) below,
and for purposes of this Agreement, no such purported termination
shall be effective.
All terms not otherwise defined herein shall have the meanings
ascribed to them in the Consulting Agreement.
2. Extension of Term and Amendment to Consulting Agreement. The
Consulting Agreement is hereby amended as follows:
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<PAGE>
(a) The term of the Consulting Agreement as set forth in
Paragraph 1 thereof is hereby amended to provide for an extension of three
additional years.
(b) Paragraph 13 of the Consulting Agreement is hereby amended
by adding after the word "other" contained on the third line thereof the
following: "; provided, however, that a notice in connection with the
termination of the Executive's employment shall be provided in accordance with
the terms set forth in Section 3(b) of Amendment No. 2 to Consulting Agreement
dated as of December __, 1996".
3. Termination Following Change in Control.
(a) Termination of Employment. If a Change in Control of the
Company as defined in Section 1(b) shall have occurred while the Executive is
still an employee of the Company, the Executive shall be entitled to the
compensation provided in Section 4 upon the subsequent termination of the
Executive's employment with the Company by the Company or by the Executive,
unless such termination is a result of (i) the Executive's death; (ii) the
Executive is permanently disabled (as more fully described in Paragraph 6(a)(1)
of the Consulting Agreement); (iii) the Executive's termination by the Company
for "cause" (as defined in the Consulting Agreement); or (iv) the Executive's
decision to terminate his employment with the Company other than for Good Reason
(as defined in Section 1(d) above). No compensation shall be payable and no
rights shall vest in the Executive under this Agreement except as specifically
set forth in this Section 3(a).
(b) Notice of Termination. Any purported termination of the
Executive's employment by the Company or the Executive hereunder shall be
communicated by a Notice of Termination to the other party as set forth herein.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(c) Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated by the Company pursuant to Section 3(a)(ii)
above, thirty (30) days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such thirty (30) day period),
(ii) if the Executive's employment is terminated by the Company for any other
reason, the date on which a Notice of Termination is given, provided that if
within thirty (30) days after any Notice of Termination is given to the
Executive by the Company, the Executive notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
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<PAGE>
written agreement of the parties, by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected), or (iii) if the Agreement is terminated by
the Executive, the date on which the Executive delivers Notice of Termination to
the Company.
4. Severance Compensation upon Termination of Employment. If the
Executive's employment with the Company shall be terminated as provided in
Section 3(a), then the Company shall:
(a) subject to Sections 5 and 6 below, pay to the Executive as
severance payment in a lump sum in cash, on the fifth day following the Date of
Termination, an amount equal to three times (the "multiple") the Executive's
Cash Compensation (the "Executive's Severance Cash Benefit").
(b) arrange to provide the Executive for two years (or such
shorter period as Executive may elect) with disability, life, accident and
health insurance substantially similar to those insurance benefits which
Executive is receiving immediately prior to the Notice of Termination (including
coverage for dependents at the same per person cost as the Executive is then
paying). Benefits otherwise receivable by Executive pursuant to this Section
4(b) shall be reduced to the extent comparable benefits are actually received by
the Executive during such two (2) year period following his termination (or such
shorter period elected by the Executive), and any such benefits actually
received by Executive shall be reported by him to the Company.
5. Reduction in Benefits for "Parachute Payment". Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
payments under Section 4 of this Agreement to the Executive, either alone or
together with other payments the Executive has a right to receive from the
Company, would not be deductible (in whole or in part) by the Company as a
result of such payments constituting a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code, as amended (the "Code")), such
payments shall be reduced to the largest amount as will result in no portion of
the payments under Section 4 not being fully deductible by the Company as the
result of Section 280G of the Code. The determination of any reduction in the
payments under Section 4 pursuant to the foregoing sentence shall be made
exclusively by Coopers & Lybrand, LLP, or such other firm of certified
independent public accountants as may be serving as the Company's principal
auditors immediately prior to the Effective Date (the "Auditors") (whose fees
and expenses shall be borne by the Company), and such determination shall be
conclusive and binding on the Company and the Executive.
6. Reduction of Severance Cash Benefit in Certain Other
Circumstances. Notwithstanding anything contained in this Agreement to the
contrary, in the event that on the Effective
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<PAGE>
Date the Company's Aggregate Severance Liability (as defined below) exceeds 5%
of the Company's Market Capitalization (as defined below), the Executive's
Severance Cash Benefit shall be reduced to the product of (a) 5% of the
Company's Market Capitalization and (b) a fraction (x) the numerator of which
shall be the Executive's Severance Cash Benefit as of the Effective Date and (y)
the denominator of which shall be the Company's Aggregate Severance Liability.
"The Company's Aggregate Severance Liability," as used herein, shall
mean an amount (determined by the Auditors) equal to the aggregate of the
Severance Cash Benefits payable to all employees of the Company party to written
Severance Benefit Agreements on the Effective Date, calculated as of the
Effective Date instead of as of the Dates of Termination of such employees and
in each case reduced by the applicable "parachute payment" reduction, if any,
described in Section 5 hereof. "The Company's Market Capitalization," as used
herein, shall mean the sum of: (i) the product of (a) the total number of shares
of common stock of the Company (the "Common Stock") outstanding as of the
Effective Date and (b) the last reported sale price on the Nasdaq SmallCap of
one share of Common Stock on the Effective Date; plus (ii) the product of (a)
the total number of shares of preferred stock of the Company (the "Preferred
Stock") outstanding on the Effective Date and (b) the liquidation value of one
share of Preferred Stock; plus (iii) the aggregate amount of outstanding
indebtedness for borrowed money of the Company on the Effective Date; plus (iv)
the aggregate amount of short and lone-term liabilities of the discontinued
operations of the Company as reflected on the Company's most recently prepared
quarterly balance sheet. "The Executive's Severance Cash Benefit as of the
Effective Date," as used herein, shall mean an amount (determined by the
Auditors) equal to the Executive's Severance Cash Benefit calculated as of the
Effective Date rather than as of the Date of Termination, which calculation
shall include the "parachute payment" reduction, if any, which would be made
pursuant to Section 5 hereof. The determination of any reduction in the
Executive's Severance Cash Benefits pursuant to this Section 6 shall be made
exclusively by the Auditors (whose fees and expenses shall be borne by the
Company), and such determination shall be conclusive and binding on the Company
and the Executive.
7. Mitigation of Damages. The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination, or otherwise, except to the extent provided in Section 4 above.
8. Effect of Agreement on Other Contractual Rights. The provisions
of this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in
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<PAGE>
any way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under the Consulting Agreement, any
Benefit Plan or other contract, plan or arrangement.
9. Term. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid, upon the earliest of (i)
five years from the date hereof if a Change in Control has not occurred within
such five-year period; (ii) upon the termination of the Executive's employment
with the Company based on death, retirement, disability (as described in Section
3(a)(ii)) or cause or by the Executive other than for Good Reason; or (iii)
three years from the Effective Date of a Change in Control which was not
approved by the Board of Directors or two years from the Effective Date of a
Change in Control which was approved by the Board of Directors.
10. Successor to the Company.
(a) Assumption of Agreement. The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled hereunder if such
succession had not occurred, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination. For purposes of this Section 10, "Company" shall
mean the Company as defined above and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for herein or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) Heirs of the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
11. Miscellaneous. No provisions of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver, or
discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party
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<PAGE>
hereto at any time of any breach by the other party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Gender. In this Agreement (unless the context requires
otherwise), the use of any masculine term shall include the feminine.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NATIONAL WIRELESS HOLDINGS, INC.
By: ____________________________
Name: Terrence S. Cassidy
Title: President
________________________________
Michael J. Specchio
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SHAREHOLDER AGREEMENT
THIS AGREEMENT made and entered into this 25th day of July, 1996, by and
between JOSEPH D. TRUSCELLI ("Truscelli") and NATIONAL WIRELESS HOLDINGS INC.
("National") a Delaware corporation (Truscelli and National are hereinafter
sometimes referred to individually as a "Shareholder" or collectively as
"Shareholders") and ELECTRONIC DATA SUBMISSION SYSTEMS, INC., a Colorado
corporation, (hereinafter referred to as the "Company").
RECITALS
Truscelli has granted to National an option, expiring November 20, 1996,
(the "Option") to purchase an aggregate of 2,908 shares of common stock in the
Company. Truscelli and National have agreed that National may exercise a portion
of the Option and purchase 1,000 shares of the Company's common stock from
Truscelli. The Shareholders are the beneficial owners and holders of record of
all of the issued and outstanding common voting stock of the Company. The
individual ownership of each Shareholder is as follows:
Number of Shares
Name of Common Stock Issued
---- ----------------------
JOSEPH D. TRUSCELLI 7,724
NATIONAL WIRELESS HOLDINGS, INC. 1,000
-----
Total 8,724
=====
The Shareholders and the Company desire to provide for the retention of a
high degree of ownership of the Company by the Shareholders. The Shareholders in
consideration hereof desire to place certain restrictions on the right of a
Shareholder to sell or otherwise dispose of its shares and to allow their sale
by a Shareholder and purchase by the Company or other Shareholders upon the
occurrence of certain conditions.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
and conditions contained in this Agreement, the parties hereto mutually agree as
follows:
1. Stock Legend. The following legend shall be endorsed upon each
certificate representing the shares prior to its delivery to the Shareholder:
The shares of stock represented by the within certificate are not
registered securities within the provisions of the Federal Securities Act
of 1933
<PAGE>
or the Colorado Securities Law and the transferability or resale of such
shares is restricted thereby.
The shares of capital stock which are evidenced by this certificate
may not be sold, transferred or otherwise disposed of by the registered
owner thereof except in accordance with and subject to the terms and
conditions of a Shareholder Agreement dated July 25, 1996, by and among
Electronic Data Submission Systems, Inc., a Colorado corporation (the
"Company"), and the shareholders thereof, a copy of which Agreement is on
deposit with the Secretary of the Company.
2. General Restriction on Transfer. Without the prior approval of the
Company's Board of Directors, each Shareholder shall not sell, transfer or
otherwise dispose of all or any part of his or her shares in the Company except
in accordance with the provisions of this Agreement. Notwithstanding anything in
this Agreement to the contrary, a Shareholder may transfer some or all of his or
its shares in the Company to an "affiliate" (as hereinafter defined) without
the prior consent of the Company so long as the transferee agrees in writing to
be bound by the terms of this Agreement. For purposes of this Agreement,
"affiliate" shall mean as to an individual, any spouse, parent, sibling, or
child of such individual or any corporation, trust, partnership or limited
liability company controlled by such individual. or as to any corporation, any
corporation controlling such corporation, any corporation controlled by such
corporation, or any shareholder individually or group of shareholders
collectively in control of such corporation.
3. Optional Redemption Upon Death of Truscelli. Upon the death of a
Truscelli, Truscelli's estate may offer all, but not less than all, of the
shares owned by Truscelli to the Company for redemption. If Truscelli's estate
so elects, the Company shall, if it is not prohibited by the Colorado
Corporation Act, any successor statute, or any other applicable corporate law
from doing so, have the option to redeem all, but not less than all, of the
shares owned by Truscelli at the time the Company receives written notice of his
death (the "Death Date") at the prices set forth in Section 6 hereof to be
determined as of the Death Date. The Company shall have the option to pay for
such shares either in a lump sum within 90 days following written notice to the
Company of the Death Date or in installments as set forth in Section 7.
4. Company's Right of First Refusal. If any Shareholder desires to sell,
transfer or otherwise dispose of all or any part of the shares which he or it
then owns or if a Shareholder is required by law to transfer some or all of his
or its shares due to divorce, dissolution, liquidation, corporate
reorganization, bankruptcy or for any other reason, he or it shall first deliver
written notice thereof to the Company (the "Company Notice"), specifying the
number of shares which he or it desires or is required to dispose of, the name,
address, telephone number, and social security number of the proposed
transferee, the proposed price (if any), terms and all conditions of the
proposed sale, transfer or disposition, and the names
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of the shareholders or beneficiaries of any proposed transferee which is a
trust, estate, or corporation (the "Third Party Offer"). Upon the delivery of
such written notice (the "Company Notice Date"), the Company shall, to the
extent that it is permitted to do so by the Colorado Corporation Act, any
successor statute, or any other applicable corporate statute have the option
(the "Company Option"), but shall not be required, to buy all or any part of the
shares owned by the Shareholder which he or it has specified in the Company
Notice are to be transferred at the price and on all of the terms and conditions
set forth in the Third-Party Offer. The Company shall give the selling
Shareholder written notice of its election to exercise the Company Option within
30 days of the Company Notice Date.
5. Contingent Option of Remaining Shareholders. If the Company is
prohibited by the Colorado Corporation Act, any successor statute, or any other
applicable corporate law from buying any of the shares offered for sale to it by
the Shareholder pursuant to Sections 3 or 4 or if the Company elects not to buy
any of the shares offered for sale to it by the Shareholder pursuant to Section
4 of this Agreement, then the other Shareholder will have the option to buy all,
but not less than all, of the shares which the Company is so prohibited from
buying or so elects not to buy, at the same price which the Company would have
been required to pay for the said shares pursuant to Section 3 or 4 of this
Agreement. In the foregoing events, the Company will, not later than 30 days
from the Company Notice Date, notify each of the Shareholders in writing
thereof, specifying the number of the said shares which it is so prohibited from
buying or has so elected not to buy and the price which it would have been
required to pay for the said shares pursuant to Section 3 or 4 of this
Agreement. The other Shareholder shall have the option to purchase the shares
within 30 days following the date on which the Company delivers said written
notice to the other Shareholder (the "Shareholder Notice Date").
To the extent that neither the Company nor the other Shareholder elect to
exercise the aforesaid options, the offering Shareholder shall be entitled, for
an ensuing period of 30 days from and after the expiration of the option periods
provided hereinabove, to sell, transfer, or otherwise dispose of the shares
owned by the Shareholder so long as the transferee executes this Agreement and
agrees to be bound by all terms hereof; provided, however, that any such sale,
transfer, or disposition pursuant to the provisions of paragraph 4 hereof shall
be only upon the price, terms, conditions, and to the offeree stated in the
Third-Party Offer. If no such sale or other transfer is consummated within said
30-day period, the restrictions and options herein provided shall be restored
and shall continue in full force and effect. So long as these restrictions and
options remain in effect, the offering Shareholder and any transferee shall not
thereafter sell or otherwise transfer any shares in the Company without first
giving the Company and the other Shareholder, where required hereby, notice as
herein provided and otherwise complying with the foregoing provisions.
6. Valuation of Shares. The price to be paid for any shares of stock of the
Company to be redeemed, sold and/or purchased pursuant to Section 3 this
Agreement shall be determined as follows:
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(a) During the balance of the calendar year 1996, the price shall be
$_______ per share.
(b) On or before January 1, 1997, and/or or before January 1 of each
subsequent year, Shareholders owning not less than eighty percent (80%) the
Company's stock and the Company shall stipulate the agreed value of the shares
of stock to be effective during such calendar year. Such stipulation shall be
made, from time to time, by filing the following statement, signed by
Shareholders owning not less than eighty percent (80%) of the outstanding shares
of the Company's stock, with the Secretary of the Company.
"The value of each share of the common capital stock of Electronic
Data Submission Systems, Inc., for the year ___________, for the purposes
of the Shareholder Agreement between the undersigned dated July 25, 1996,
shall be $______________ per share."
Appropriate adjustments in the stipulated value shall be made for any stock
dividends, stock splits, recapitalization or issuance by the Company of
additional outstanding shares occurring after the fixing of the last stipulated
value.
(c) In the event the parties fail to enter into the stipulation
provided in (b) above with respect to any year, the last previous stipulated
value shall be used except as hereinafter provided. If no stipulated value is
entered into for any year preceding the death of a Shareholder, the valuation of
the shares shall be fixed by a board of three (3) arbitrators selected as
follows: The surviving Shareholders (by vote weighted in proportion to their
stock ownership) and the representative of the estate of the deceased
Shareholder shall each select one third-party arbitrator, and the two so
selected shall select one third-party arbitrator, and the decision of a majority
of the three arbitrators with respect to the value of the shares shall be final
and binding upon the parties. The cost of arbitration shall be split equally
between the surviving Shareholders and the estate of the deceased Shareholder.
In determining the value of the shares of stock, the arbitrators shall
disregard: (1) discounts for block sales, minority interest and lack of
marketability, and (ii) the excess of any insurance proceeds or claim arising
out of insurance owned by the Company on the life of the deceased Shareholder,
over and above the cash surrender value thereof at the date of death. The
arbitrators shall first value the Company as a whole on a going-concern basis
and then determine the value of the shares based upon the ratio of the shares to
be valued to the fully-diluted number of shares then outstanding, assuming that
all stock options, stock warrants and convertible stock or securities are
exercised or converted, as the case may be, immediately before calculation of
the number of shares outstanding.
7. Installment Payments. The Company or the acquiring Shareholder, as the
case may be, may elect to pay the purchase price for any shares acquired
hereunder in installments as follows.
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The purchase price shall be paid:
(a) At least twenty percent (20%) of the purchase price shall be paid
in cash within ninety (90) days after the relevant notice date; and
(b) The balance of the purchase price shall be paid by delivery of the
Company's or the acquiring Shareholder's, as the case may be, promissory note in
an amount equal to said balance of the purchase price (the "Note"). The Note
shall bear interest commencing ninety (90) days after the relevant notice date
at a rate equal to the lowest rate then allowed to be charged under the Internal
Revenue Code without subjecting the recipient to imputed interest, but in no
event less than seven percent (7%) per annum. The term of the Note shall be for
a period not less than five (5) nor greater than seven (7) years from the date
of the Note. Principal and interest shall be amortized over the term of the Note
and payable in equal installments not less frequently than quarterly. The Note
shall contain customary provisions relating to default including but not
limited to reasonable attorneys' fees and acceleration. The maker of the Note
shall have the right to prepay all or part of the principal at any time without
penalty.
8. Conditions Precedent to Obligations. The Company's and the Shareholders'
rights and obligations under this Agreement are subject to the following
additional provisions:
(a) If any party to this Agreement elects to pay in installments for
the shares being purchased by it pursuant hereto, he, she or it shall have the
right at any time to prepay without penalty all or any portion of the unpaid
principal balance of installments plus interest accrued to the date of such
payment.
(b) Properly endorsed certificates for the shares being sold by the
Shareholder or his estate, as the case may be, to the Company or the other
Shareholders pursuant to this Agreement, shall be delivered to the party buying
them by the seller not later than the date of the lump sum payment of the
purchase price therefor. If the party buying the shares elects to pay for them
in installments, the shares shall be placed in escrow with a mutually agreed
upon bank or person (the "Escrow Agent") prior to the date of payment of the
first installment of the purchase price therefor. The Escrow Agent shall hold
the shares as collateral for the installment payment obligations of the party
buying the shares and shall release the shares to the buying party upon payment
in full or to the selling party in the event of a default which is not cured
within thirty (30) days following notice of default. Upon placement of the
shares in escrow, the Shareholder or his estate, as the case may be, shall cease
to be a Shareholder of the Company with respect to such shares and the shares
shall not be voted while in escrow.
(c) Any written notice required to be delivered pursuant to this
Agreement shall be sent by prepaid first class certified mail, return receipt
requested, and such notice shall be considered to be delivered on the date such
notice is deposited in the United States
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mail. Any such notice, if sent to the Company, shall be addressed to the Company
at its principal place of business, and if sent to any of the Shareholders it
shall be mailed to him at his address as shown on the Company's stock records,
unless in either case a different address has been designated.
9. Voting Agreement.
9.1 Irrevocable Proxy. Upon complete exercise of both the Option and
Warrant by National, Truscelli shall deliver to National an Irrevocable Proxy
(the "Proxy") in the form attached hereto as Exhibit A authorizing National to
vote one (1) share of Truscelli's stock in the Company. The Proxy shall
terminate upon the first to occur of the following events:
a) The effective date of a registration statement allowing a
public offering of the Company's stock;
b) A transfer by National of some or all of its stock in the
Company to anyone other than an affiliate of National;
c) The date on which either Terrence Cassidy or Timothy Mathews
ceases to be a member of the Company's board of directors and fails to be
replaced with a successor reasonably acceptable to Truscelli.
Upon termination of the Proxy for any of the reasons set forth above, National
shall return the Proxy to Truscelli and the Proxy shall be cancelled.
9.2 Election of Directors.
a) Prior to delivery of the Proxy, National shall be entitled to
nominate one (1) director, and the Company's board of director's shall have
three (3) members.
b) While the Proxy is effective:
1) If the Company's board of directors has three (3) members,
National shall nominate two (2) members and Truscelli shall nominate one (1)
member.
2) If the Company's board of directors has five (5) members,
National shall nominate three (3) members and Truscelli shall nominate two (2)
members.
3) National and Truscelli shall each vote a sufficient number of
shares in favor of the other party's nominee(s) to assure that such nominee(s)
will be elected to the Company's board of directors.
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c) Upon the earlier termination of this Agreement or the Proxy,
the provisions of this Section 9.2 shall terminate.
9.3 Supermajority Vote Requirements. Until November 20, 1996, each of
the following actions hall require a ninety percent (90%) majority vote of the
issued and outstanding voting common shares of the Company:
a) amendment of the Certificate of Incorporation and/or By-laws
of the Company,
b) merger or consolidation of the Company with any other
corporation regardless of whether the Company will be the surviving entity,
c) liquidation and/or dissolution of the Company,
d) sale of all or substantially all of the Company's assets, and
e) issuance of any equity securities in the Company, issuance of
any securities convertible into equity securities in the Company, or issuance of
any warrants, options or other rights to acquire any of such securities.
10. Co-Sale Rights
10.1 Co-Sale Rights. Except for any Permitted Transfer, no Shareholder
shall sell for value any shares representing more than 10% of the then
outstanding shares of the Company without permitting the other Shareholders to
participate as a seller in such transaction (the "Co-Sale Rights") such that the
other Shareholders shall be entitled to sell on the same terms as the selling
Shareholder, in connection with such transaction, the number of shares equal to
(i) the total number of shares of Company Stock which the purchaser is willing
to acquire in such transaction, multiplied by (ii) a fraction, the numerator of
which is the number of shares owned by the other Shareholders and the
denominator of which is the total number of the Company's outstanding shares at
the time of such transaction.
10.2 Procedure. Before accomplishing or entering into a binding
contract for any sale for value of any shares that would be covered by the
Co-Sale Rights, each Shareholder agrees to give the other Shareholders prompt
written notice (the "Co-Sale Notice") of any such proposed sale (the "Sale
Proposal"), stating the terms and conditions of the Sale Proposal, including
without limitation the name and address of the buyer, the number of shares which
will be sold in the transaction, the form and amount of consideration and the
payment terms. The other Shareholders shall notify the selling Shareholder in
writing within twenty (20) business days after receipt of the Co-Sale Notice
(the "Co-Sale Election Period") as to whether or not the other Shareholder
wishes to exercise his Co-Sale Rights and participate in the Sale Proposal.
Failure by the other Shareholders to respond in writing
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<PAGE>
within the Co-Sale Election Period shall be deemed to be a waiver by the other
Shareholder of his Co-Sale Rights with respect to only such Sale Proposal. Upon
a waiver by the other Shareholder of his Co-Sale Rights for any Sale Proposal,
the selling Shareholder may sell his or her Shares in accordance with the Sale
Proposal provided that (a) such sale is consummated within 60 days after the
expiration of the Co-Sale Election Period, (b) the transaction involves more
than 10% of the Company's outstanding shares and (c) the terms of the actual
transaction are in all material respects as set forth in the Co-Sale Notice. For
purposes of this Section, transactions involving (a) a single buyer or
coordinated group of buyers and multiple Shareholders as sellers and/or (b)
multiple sales by a single Shareholder within a twelve-month period, shall be
grouped together for purposes of determining whether the number of shares
exceeds 10% of the Company's outstanding shares.
11. Take Along Rights. The provisions of this Section 11 are not intended
to limit or restrict the rights of the Shareholders in their capacity as holders
of the capital stock of the Company, except that the Shareholders shall not be
entitled to exercise dissenters' rights under the Colorado Corporation Act or
any succeeding provisions providing for dissenters' rights with respect to an
Acquisition Transaction effected pursuant to the Take Along Rights under this
Section 11.
11.1 Right to Initiate Sale. Shareholders owning not less than
two-thirds (2/3) of the Company's shares (the "Initiating Shareholders") shall
have the right to sell the Company to an unaffiliated third party under this
Section 11 (the "Take-Along Rights"), whether such sale (a "Sale Transaction")
is in the form of (a) a sale of all or substantially all of the assets of the
Company, (b) a sale of all of the outstanding stock of the Company, (c) a
merger, consolidation or reorganization, or (d) any other transaction which
effectively transfers all or substantially all of the operating assets and
business of the Company. If (a) one or more Shareholders exercise their
Take-Along Rights, and (b) a Sale Transaction is consummated, then each
Shareholder shall be entitled to a pro rata share of the Aggregate Acquisition
Consideration based on the number of Shares owned by such Shareholder.
11.2 Notice of Initiation of Action to Sell. The Initiating
Shareholders agree that, no more than thirty (30) days after the initiation by
the Initiating Shareholders in his, her or their individual capacity of any
action to sell the Company in a Sale Transaction pursuant to this Section 11
(which actions shall include, but not be limited to, solicitations by such
Shareholder of offers to acquire the Company or the engagement of an investment
banking firm by the Company for any purpose relating to the sale of the
Company), such Initiating Shareholders shall notify the other Shareholders and
the Company in writing of the proposed initiation of such action.
11.3 Notice of Acquisition Offer. If an Acquisition Offer shall be
made as a result of the efforts by the Initiating Shareholders which Initiating
Shareholders desire to have the Company accept, the Initiating Shareholders
shall give the Acquisition Notice to the Other Shareholders stating that the
Initiating Shareholders propose that the Acquisition Offer be
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<PAGE>
accepted, which notice shall set forth the name and address of the Acquisition
Offeror and the Aggregate Sale Consideration and shall be accompanied by a
signed copy of the Acquisition Offer and any other documents provided by the
Acquisition Offer or to the Initiating Shareholders in connection therewith. The
Initiating Shareholders shall not receive any consideration in connection with
the consummation pursuant to this Agreement of a Sale Transaction other than his
or her pro rata share of the Aggregate Sale Consideration based on the number of
Shares owned by the Initiating Shareholders.
11.4 Acquisition Offer. The Acquisition Offer shall:
(a) be in writing, signed by the Acquisition Offeror and
addressed to the Company; and
(b) propose to pay the entire Aggregate Sale Consideration
allocated among the holders of the shares of the Common Stock in a manner such
that the fair market value of the consideration paid for each share of Common
Stock outstanding immediately prior to such closing (the "Per Share Acquisition
Consideration") shall be the same for all shareholders of the Company.
11.5 Consummation of Sale Transaction. The Shareholders and any
transferee of Shares shall use their best efforts to consummate the Sale
Transaction all as the Initiating Shareholder may reasonably request.
12. Additional Rights and Agreements.
12.1 Pre-emptive Rights. Each Shareholder shall have a right of first
refusal to purchase a pro rata portion (as provided below) of any shares of
capital stock of the Company or any other instrument which is exercisable or
convertible into shares of the Company's capital stock which the Company
proposes to sell (a "Proposed Sale"). The notice shall set forth the material
terms and conditions of the Proposed Sale and shall constitute an offer to sell
such securities to the respective Shareholders on such terms and conditions.
Each Shareholder may accept such offer by delivering a written notice of
acceptance to the Company within ten (10) days after receipt of the Company's
notice of the Proposed Sale. The pro rata portion of securities to be sold in
the Proposed Sale that the respective Shareholders may acquire by exercise of
his or her rights hereunder is the ratio that the number of shares of Common
Stock owned by such Shareholder bears to the total number of shares of the
Common Stock issued and outstanding before the Proposed Sale. If any Shareholder
elects to exercise such right of first refusal and does not complete the
purchase of such securities within fifteen (15) days after delivery of its
written notice of acceptance to the Company, or such later date as may be
specified by the Company, the Company may complete the Proposed Sale on the
terms and conditions specified in the Company's notice to the Shareholders. The
rights granted to the Shareholders pursuant to this Section 12 do not apply to
(a) any Public Offering, and (b) any Proposed Sale (including the grant of stock
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options) of shares of Common Stock to employees (excluding Truscelli) of the
Company approved by the Company's Board of Directors, provided that the
aggregate number of shares to be issued to employees, inclusive of all shares
previously issued to employees, does not exceed 10% of the Company's then
outstanding shares.
12.2 Piggyback Registration Rights. Each time the Company shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act in connection with the proposed offer and
sale for money of any of its securities by it or any of its equity security
holders (other than a registration statement on Form S-8 or other limited
purpose form), the Company will give written notice of its determination to the
Shareholders. Upon the written request of any Shareholder given within 15 days
after receipt of any such notice from the Company, the Company will except as
herein provided, cause all or a part of the Shares of such Shareholder(s) to be
included in such registration statement, all to the extent requisite to permit
the sale or disposition to be so registered; provided, however, that nothing
herein shall prevent the Company from, at any time, abandoning or delaying any
registration. If any registration pursuant to this Section 12.2 shall be
underwritten in whole or in part, the Company may require that the Shares
requested for inclusion pursuant to this Section be included in the underwriting
on the same terms and conditions as the securities otherwise being sold through
the underwriters, including any "lock-up." If in the good faith judgment of the
managing underwriter of such public offering the inclusion of all of the Shares
originally covered by a request for registration would reduce the number of
shares to be offered by the Company or interfere with the successful marketing
of the shares of stock offered by the Company, the number of Shares to be
included in the underwritten public offering may be reduced pro rata among the
holders thereof requesting inclusion in such registration. With respect to each
inclusion of Shares in a registration statement pursuant to this Section 12.2,
the Company shall bear the following fees, costs and expenses: all registration,
filing and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of counsel and accountants for any of the
Shareholders selling Shares, underwriting discounts and commissions and transfer
taxes for such Shares and any other expenses incurred by such Shareholders not
expressly included above shall be borne by the respective shareholders.
12.3 Indemnification.
(a) The Company will indemnify and hold harmless each Shareholder
whose Shares are included in a registration statement pursuant to the provisions
of Section 12.2 and any underwriter (as defined in the Securities Act) for such
Shareholder and each person, if any, who controls such underwriter within the
meaning of the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which such Shareholder or any such underwriter or
controlling person may become subject under the
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Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with written information furnished by such Shareholder,
such underwriter or such controlling person specifically for use in the
preparation thereof.
(b) Each Shareholder whose Shares are included in a registration
statement to Section 12.2 will indemnify and hold harmless the Company, any
controlling person and any underwriter from and against any and all loss,
damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such Shareholder
specifically for use in the preparation thereof.
(c) Within 15 days after receipt by an indemnified party pursuant
to the provisions of paragraph (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it, she or he
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any action include both the
indemnified party and the indemnifying party and there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties shall have the right to
select separate counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the
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indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the proviso of
the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party. No
indemnifying party shall be liable for any settlement entered into without its
prior written consent.
13. Restriction on Encumbrances. Each Shareholder agrees not to pledge or
hypothecate any shares owned by him, except as collateral to a note (i) in favor
of the Company or (ii) in favor of a lending institution, if the proceeds of
such loan are used in their entirety to purchase additional shares of common
stock of the Company, providing that the borrowing Shareholder delivers to the
Company a written undertaking of the lender, in form acceptable to the Company,
that such lender will only dispose of said shares in accordance with the
provisions of this Agreement.
14. Application to Newly Authorized Shares. If the Company amends its
articles of incorporation to authorize it to issue shares of any other class of
capital stock, this Agreement shall be deemed to apply to any shares of such
other class of capital stock as though they were and to the same extent it
applies to shares of its class of common stock.
15. Amendment. This Agreement may be amended, restated or revoked only by
the written agreement of all of the parties to this Agreement.
16. Binding Effect. This Agreement shall he binding upon and (unless
inconsistent with its provisions) shall inure to the benefit of the executor,
administrator or personal representative and the heirs and assigns of each of
the Shareholders.
17. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the state in which the Company is incorporated
applicable to contracts made in and to be performed in that State.
18. Counterpart. This Agreement may be executed in any number of
counterparts, each of which so executed together constitute but one shall be
deemed to be an original, but all such counterparts shall and the same
Agreement.
19. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof and the
agreement shall be construed in all other respects as if such invalid or
unenforceable provision were omitted.
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20. Prior Agreements. This Agreement cancels, terminates and supersedes all
prior agreements of the parties or any of them respecting any and all subject
matter contained herein.
21. Voting Rights of Jointly-held Shares. If two or more persons hold
shares in the Company in joint ownership, the joint owners shall designate one
person to vote the shares and the other joint owner(s) shall have no voting
rights for so long as such designation is in effect.
22. Termination. This Agreement shall terminate in its entirety upon the
earliest of (i) the effective date of a registration statement of the Company
under the Securities Act of 1933 covering the Company's initial public offering
of Common Stock resulting in gross proceeds of at least $10,000,000, or (ii) the
sale of all or substantially all of the assets or business of the Company, by
sale of assets, merger, consolidation or otherwise.
IN WITNESS WHEREOF, the Shareholders have hereunto set their hands and
seals and the Company has caused these presents to be executed and signed by its
duly authorized officers and its corporate seal to be affixed hereto this day
and year first above written.
ELECTRONIC DATA SUBMISSION
SYSTEMS, INC.
A Colorado Corporation
By: /s/ Joseph D. Truscelli
----------------------------------
Joseph D. Truscelli, President
ATTEST: /s/ Joseph D. Truscelli
------------------------------
Joseph D. Truscelli, Secretary
SHAREHOLDERS:
/s/ Joseph D. Truscelli
----------------------------------
JOSEPH D. TRUSCELLI
NATIONAL WIRELESS HOLDINGS, INC.
A Delaware Corporation
By: /s/ [ILLEGIBLE]
------------------------------
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