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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL WIRELESS HOLDINGS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NATIONAL WIRELESS HOLDINGS INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
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NATIONAL WIRELESS HOLDINGS INC.
249 ROYAL PALM WAY, SUITE 301
PALM BEACH, FLORIDA 33480
April 3, 1997
To the Holders of Common Stock:
The annual meeting of stockholders will be held at the Biscayne Bay
Marriott Hotel, 1633 North Bayshore Drive, Miami, Florida 33132 at 11:00 a.m. on
April 18, 1997. A formal Notice of the Annual Meeting, a proxy card and Proxy
Statement are attached hereto.
You are cordially invited to attend the annual meeting in person; if
this should be impossible, we request that you sign, date, and mail your proxy
card promptly.
Prompt return of your voted proxy will reduce the cost of further
mailings. You may revoke your voted proxy at any time prior to the meeting or
vote in person if you attend the meeting.
It is always a pleasure for me and the other members of the Board of
Directors to meet with our stockholders. We look forward to greeting as many of
you as possible at the meeting.
Terrence S. Cassidy
President and
Chief Executive Officer
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NATIONAL WIRELESS HOLDINGS INC.
249 ROYAL PALM WAY, SUITE 301
PALM BEACH, FLORIDA 33480
NOTICE OF ANNUAL MEETING
April 3, 1997
To the Holders of Common Stock:
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders
of National Wireless Holdings Inc. will be held at 11:00 a.m. at the Biscayne
Bay Marriott Hotel, 1633 North Bayshore Drive, Miami, Florida 33132, on April
18, 1997, for the following purposes:
To amend the Company's Certificate of Incorporation:
To provide for the election of directors to staggered
terms and for certain related matters;
To limit the liability and broaden the indemnity of
directors and officers;
To provide standards for the Board of Directors in
evaluating certain offers;
To require that stockholder actions may only be taken at
an annual or special meeting of stockholders and may not
be taken by written consent; and
To require that certain sections of the Certificate of
Incorporation may only be amended by the affirmative vote
of at least 75% of the total number of the then
outstanding shares of capital stock of the Company;
To amend the Company's By-Laws
To provide for the election of directors to staggered
terms; and
To provide for the removal of directors only for "cause";
To elect five (5) directors of the Company to hold office for
initial terms of one, two, or three years, or in the event the
proposed amendments to the Company's Certificate of
Incorporation and By-Laws authorizing a staggered Board of
Directors are not approved, then for a term of one year;
To ratify the appointment of Coopers & Lybrand
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L.L.P. as independent public accountants for the year 1997;
and
To take action upon any other matters that may properly come
before the meeting.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
The Company will admit to the Annual Meeting stockholders of record,
persons holding proof of beneficial ownership or who have been granted proxies
and any other person that the Company, in its sole discretion, may elect to
admit. If you plan to attend the Annual Meeting, please check the appropriate
box on your proxy card.
Stockholders of record at the close of business on March 17, 1997
are entitled to notice of, and to vote at the Annual Meeting or any adjournment
thereof. A list of such stockholders will be available at the Annual Meeting and
during the ten days prior thereto, at the office of the Company's counsel, Hahn
& Hessen LLP, 350 Fifth Avenue, in the city of New York, New York County, New
York.
By Order of the Board of Directors,
James Kardon
Secretary
New York, New York
April 3, 1997
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED PREPAID ENVELOPE.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE DATE AND SIGN THE
ENCLOSED PROXY. IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
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NATIONAL WIRELESS HOLDINGS INC.
249 ROYAL PALM WAY, SUITE 301
PALM BEACH, FLORIDA 33480
PROXY STATEMENT
The enclosed proxy is being solicited by the Board of Directors of
the Company for use in connection with the annual meeting of stockholders to be
held on April 18, 1997. This proxy statement and enclosed proxy are first being
sent to stockholders on or about April 3, 1997. The mailing address of the
principal executive office of the Company is 249 Royal Palm Way, Suite 301, Palm
Beach, Florida 33480. The cost of preparing, printing and mailing the notice of
meeting, proxy, proxy statement and annual report will be borne by the Company.
Proxy solicitation other than by use of the mail may be made by regular
employees of the Company by telephone and personal solicitation. Banks,
brokerage houses, custodians, nominees and fiduciaries are being requested to
forward the soliciting material to their principals and to obtain authorization
for the execution of proxies, and may be reimbursed for their out-of-pocket
expenses incurred in that connection. Any stockholder giving the enclosed proxy
has the right to revoke it at any time before it is voted. To revoke a proxy,
the stockholder must file with the Secretary of the Company either a written
revocation or a duly executed proxy bearing a later date. If you decide to
attend the meeting, you may revoke your proxy and vote your shares in person.
The record of stockholders entitled to notice of, and to vote at,
the annual meeting was taken at the close of business on March 17, 1997. At that
date the Company had outstanding 3,253,000 shares of Common Stock ($.01 par
value) of the Company ("Common Stock"). Each share of Common Stock is entitled
to one vote. No other class of securities is entitled to vote at this meeting.
A number of the proposals to be voted on at the annual meeting would
have the effect of reducing the likelihood that the Company would be subject to
a change of control or would delay such a change of control and may have the
effect of preserving the incumbent management in office. In addition, such
proposals are also designed to discourage accumulations of large blocks of the
Company's voting shares by purchasers whose objective is to have such voting
shares repurchased by the Company at a premium, thus reducing the temporary
fluctuations in the market price of such shares caused by such accumulations.
Accordingly, stockholders could be deprived of certain opportunities to sell
their shares at a temporarily higher market price. No such proposal is in
response to any change of control activity of which management of the Company is
aware.
The Proxies given pursuant to this solicitation will be voted at the
meeting
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or any adjournment thereof. Abstentions and broker non-votes are voted neither
"for" nor "against," and have no effect on the vote, but are counted in the
determination of a quorum.
AVAILABLE INFORMATION AND SOURCES OF INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). The reports, proxy
statements and other information filed by the Company with the SEC can be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material also may be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Reports and other information concerning the Company can be
inspected and copied at the offices of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
Statements contained in this Proxy Statement or in any document
incorporated by reference in this Proxy Statement as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed or incorporated by reference as an exhibit to the
registration statement or such other document, each such statement being
qualified in all respects by such reference.
No persons have been authorized to give any information or to make
any representation other than those contained in this Proxy Statement in
connection with the solicitations of proxies made hereby and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company or any other person. The delivery of this Proxy
Statement shall not under any circumstances create an implication that there has
been no change in the affairs of the Company since the date hereof or that the
information herein is correct as of any time subsequent to its date.
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the number of shares of Common Stock
beneficially owned by those known by the Company to own beneficially 5% or more
of the Common Stock, all the directors, and nominees for election as directors,
each executive officer listed in the table under the caption "Executive
Compensation" and by all directors and executive officers of the Company as a
group. On March 17, 1997, there were 3,253,000 shares of Common Stock
outstanding.
Name Amount and Nature of
Beneficial Ownership+ Percent
- ----------------------------------------- --------------------- -------
Terrence S. Cassidy...................... 469,000(1) 14.4%
249 Royal Palm Way, Suite 301
Palm Beach, FL 33480
Michael J. Specchio...................... 469,000(2) 14.4%
233 North Garrard Drive
Rantoul, IL 61866
Paul Sinderbrand......................... 80,000 2.5%
888 16th Street NW
Washington, DC 20006
Nicholas Applegate Capital
Management............................. 168,100(3) 5.2%
600 West Broadway, 29th Floor
San Diego, CA 92101
Peoples Choice TV Corp................... 300,000(4) 8.4%
2 Corporate Drive, Suite 249
Shelton, Connecticut 06484
Wall Street Associates................... 196,900(5) 6.0%
1200 Prospect Street, Suite 100
P.O. Box 8589
La Jolla, California 92038-8585
Wellington Management
Company LLP............................ 322,000(6) 9.9%
75 State Street
Boston, Massachusetts 02109
Thomas R. DiBenedetto.................... 23,000(7) *
249 Royal Palm Way, Suite 301
Palm Beach, FL 33480
Louis B. Lloyd........................... 16,000(8) *
156 W. 56th Street
New York, New York 10019
Michael A. McManus, Jr................... 10,000(9) *
241-02 Northern Blvd
Douglaston, New York 11362
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Timothy Mathews.......................... 30,140(10) *
233 North Garrard
Rantoul, IL 61866
All officers and directors as a
group (seven persons).................. 1,097,140
(1)(2)(7)(8)(9)(10) 32.9%
- ----------
+ The number of shares beneficially owned is deemed to include shares of the
Company's Common Stock as to which the beneficial owner has or shares either
investment or voting power. Unless otherwise stated, and except for voting
powers held jointly with a person's spouse, the persons and entities named in
the table have voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them. All information with respect to
beneficial ownership is based on filings made by the respective beneficial
owners with the Securities and Exchange Commission (the "SEC") or information
provided to the Company by such beneficial owners.
* Less than 1%.
(1) Includes 50,000 shares owned by a family trust, of which Mr. Cassidy
disclaims beneficial ownership.
(2) Includes 50,000 shares owned by a family trust, of which Mr. Specchio
disclaims beneficial ownership.
(3) Includes 168,100 shares which Nicholas Applegate Capital Management
("NACM") has sole power to vote or to direct the vote and 168,100 shares
which NACM has sole dispositive power, each as reported on its most recent
Schedule 13G. NACM is an investment adviser registered with the Securities
and Exchange Commission under the Investment Advisers ACT of 1940, as
amended (the "Advisers Act").
(4) Includes 300,000 shares issuable pursuant to an option.
(5) Includes 105,100 shares which Wall Street Associates ("WSA") has the sole
power to vote or to direct the vote and 196,900 shares which WSA has sole
dispositive power as reported on Schedule 13G. WSA is an investment
adviser registered with the Securities and Exchange Commission under the
Advisers Act.
(6) Includes 136,000 shares which Wellington Management Company, LLP ("WMC")
has shared power to vote or to direct the vote and 322,000 shares which
WMC has shared dispositive power, each as reported on its most recent
Schedule 13G. WMC is an investment adviser registered
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with the Securities and Exchange Commission under the Advisers Act. As of
January 31, 1997 WMC, in its capacity as investment adviser, may be deemed
to have beneficial ownership of 322,000 shares of Common Stock that are
owned by numerous investment advisory clients, none of which is known to
have such interest with respect to more than five percent of the shares of
Common Stock outstanding except Wellington Trust Company NA ("WTC"), a
subsidiary of WMC. According to the Schedule 13G, WTC is a national bank
organized under the laws of the United States and, as such, is exempt from
registration as an investment adviser with the Securities and Exchange
Commission pursuant to the Advisers Act. As of January 31, 1997, WTC, in
its capacity as investment adviser, may be deemed to have beneficial
ownership of 195,800 shares of Common Stock that are owned by numerous
investment advisory clients, none of which is known to have such interest
with respect to more than five percent of the shares of Common Stock
outstanding.
(7) Includes 16,000 shares currently issuable upon the exercise of options and
7,000 shares owned by Boston International Partners, L.P. ("BIPLP"), of
which Mr. DiBenedetto is General Partner and in which he has an
approximate 56% partnership interest. Mr. DiBenedetto's children own an
additional 5% of BIPLP, of which Mr. DiBenedetto disclaims beneficial
ownership.
(8) Includes 16,000 shares currently issuable upon the exercise of options.
(9) Includes 10,000 shares currently issuable upon the exercise of options.
(10) Includes 30,000 shares currently issuable upon the exercise of options.
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PROPOSALS 1(a)-(e)
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has adopted resolutions
proposing amendments to the Company's Certificate of Incorporation, a number of
which would have the effect of reducing the likelihood that the Company would be
subject to a change of control or would delay such a change of control. No such
amendment is in response to any change of control activity of which management
of the Company is aware. A copy of the proposed amendments to the Company's
Certificate of Incorporation is set forth in Appendix I attached hereto and a
description of the salient amendments are set forth below.
Amendment of Certificate of Incorporation to Authorize Staggered
Terms for Election of Directors
The Board of Directors of the Company has adopted resolutions
proposing an amendment to Article SEVENTH of the Company's Certificate of
Incorporation under which the Board of Directors will be divided into three
classes, as provided under Section 141 of the General Corporation Law of
Delaware (the "GCL"). Initially Class III directors (Terrence S. Cassidy and
Thomas R. DiBenedetto) would be elected for a three-year term, Class II
directors (Michael J. Specchio and Michael A. McManus, Jr.) would be elected for
a two-year term, and the Class I director (Louis B. Lloyd) would be elected for
a one-year term; thereafter, successors to directors whose terms expire will be
elected for three-year terms.
Section 141 of the GCL allows a corporation to amend its Certificate
of Incorporation and By-Laws to provide for the election of directors to
staggered terms. Under this statute, the board may be divided into one, two or
three classes of directors who may then be elected to initial terms of one, two
and three-year terms if there are three classes. Thereafter, and at each annual
election held after such classification and election, directors shall be chosen
for a full term, as the case may be, to succeed those whose terms expire. The
Company's Board of Directors has proposed an amendment to its Certificate of
Incorporation under which there would be three classes of directors who would be
initially elected to one, two and three-year terms, respectively, and thereafter
to three-year terms. The Board of Directors has designated which of its current
members are to be assigned to each of the three classes of directors, if the
amendment is approved. If the number of directors is changed in the future, any
increase or decrease must be apportioned among the classes so the number of
directors in each class is as nearly equal as possible. Any additional director
of any class elected to fill a vacancy resulting from an increase in the number
of directors shall hold office for a term that shall coincide with the remaining
term of that class. In no event may a decrease in the number of directors
shorten the terms of any incumbent director. Each elected or appointed director
shall hold office until the annual meeting for the year in which such director's
term expires and until
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such director's successor shall be elected and qualified.
The Company believes that the proposed amendment to establish
staggered terms for the election of directors will provide additional continuity
to its management by having persons serve on its Board of Directors for a longer
period of time, without standing for reelection. The Board believes that the
longer time required to elect the majority of the Board will help to assure the
continuity and stability of the Company's management and policies in the future,
since a majority of the directors at any given time will have prior experience
as directors of the Company. Although the Company has had no difficulty in the
past in maintaining continuity, the Board considers it advisable to provide the
additional assurance of continuity that is afforded by the classification of
directors. The Board of Directors may in the future expand the number of
positions on the Board as it identifies qualified persons who are willing to
serve as directors of the Company although it has no current plans to do so. The
Company believes that three-year terms for its directors will be more attractive
to a potential director candidate and thus will make available to the Company
more candidates.
In addition, the Company believes that if a potential acquiror were
to purchase a significant or controlling interest in the Company, such potential
acquiror's ability to remove the Company's directors and obtain control of the
Board and thereby remove the Company's management would severely curtail the
Company's ability to negotiate effectively with such potential acquiror. The
threat of obtaining control of the Board would deprive the Board of the time and
information necessary to evaluate the proposal, to study alternative proposals
and to help ensure that the best price is obtained in any transaction involving
the Company which may ultimately be undertaken. A staggered board is designed to
reduce the vulnerability of the Company to an unsolicited takeover proposal,
particularly a proposal that does not contemplate the acquisition of all of the
Company's outstanding shares, or an unsolicited proposal for the restructuring
or sale of all or part of the Company.
While the Company believes the proposed amendment to its Certificate
of Incorporation is warranted because of the factors discussed above, the
amendments will also make it more difficult to change control of the Company. If
there were an attempt by the stockholders to change control of the Company by
removing and replacing all or a majority of the Board of Directors, it will be
more difficult if there are staggered terms for the election of directors. Since
not all directors will stand for election at a single stockholders' meeting, as
is the case now, the stockholders desiring to change control would have to vote
at multiple meetings in order to do so. It would require at least two annual
meetings to remove and replace a majority of the directors of the Company,
stockholders would have to vote at multiple meetings in order to do so. It would
require three annual meetings to remove and replace the entire Board of
Directors.
The proposed amendment to Article SEVENTH also provides in
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subsection 4 thereof for the removal of directors only for good cause shown. As
more fully explained in Proposal 2(b), this amendment is intended to prevent a
majority of stockholders from defeating the provisions of the staggered board by
simply amending the Certificate of Incorporation. This amendment is intended to
parallel the proposed amendment to the ByLaws set forth in Proposal 2(b), and
such discussion is incorporated herein by reference.
Stockholder Vote Required for Proposal 1(a) and Board Recommendation:
Approval of the amendment to the Certificate of Incorporation to
provide for a staggered board of directors requires the affirmative vote of the
holders of a majority of the shares of Common Stock issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to Article SEVENTH of the Company's Certificate of Incorporation
in the form attached to this Proxy Statement as Appendix I.
Amendment of Certificate of Incorporation to Broaden Indemnity of
Directors and Officers
The Board of Directors has proposed an amendment to Article TENTH of
the Company's Certificate of Incorporation to make it easier to attract and
retain qualified persons to serve as directors of the Company by expanding the
indemnity already available to directors to eliminate the personal liability of
its directors to the fullest extent permitted by the GCL for monetary damages
resulting from the execution of the duties of such director. Although the
Company is not currently experiencing any problems retaining and attracting
qualified persons, the Company believes it is advisable to prevent such problems
before they arise.
The amendment would broaden the previously existing ability of the
Company to indemnify directors, officers, employees and agents to the fullest
extent provided by Section 145 of the GCL. Section 145 of the GCL provides a
detailed statutory framework covering indemnification of directors, officers,
employees and agents against liabilities and expenses arising out of legal
proceedings brought against them by reason of their status or service. Since the
amendment is intended to clarify the rights of directors, officers, employees
and agents to the full benefit of Section 145, there are no substantial
differences between the amendment and Section 145, except that (i) the amendment
imposes an obligation on the Company to indemnify, and advance expenses to, the
Company's directors, officers, employees and agents and (ii) creates a
presumption that the applicable standard of conduct has been met. Under Section
145 of the GCL, the directors who are not parties to such legal proceedings (or
if there are no such directors, independent legal counsel or the stockholders)
must make a determination that the applicable standard has been met, and prior
to advancing any expenses to any such person, the Company must receive an
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undertaking to repay such advance if it is ultimately determined that such
person is not entitled to such indemnification under Section 145.
If the courts or the Delaware Legislature narrow or expand the
coverage of the Act, the effect of the amendment will likewise be narrowed or
expanded without further stockholder action. The Delaware GCL does not permit
liability to be eliminated (i) for any breach of a director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions, as
provided in Section 174 of the Delaware GCL or (iv) for any transaction from
which the director derived an improper personal benefit. In addition, as
permitted in Section 145 of the Delaware GCL, the Certificate of Incorporation
of the Company would provide that the Company shall indemnify its directors,
officers, employees and agents to the fullest extent permitted by the Delaware
GCL, including those circumstances in which indemnification would otherwise be
discretionary, subject to certain exceptions. The Certificate of Incorporation
would also provide that the Company may advance expenses to directors, officers,
employees and agents incurred in connection with an action or proceeding as to
which they may be entitled to indemnification, subject to certain exceptions.
The amendment affects indemnification of directors, officers,
employees and agents only for future conduct and does not limit liability for
conduct which predates the amendment. In addition, Article TENTH, both as it
exists and is it is proposed to be amended, has no effect on the liability of
directors, officers, employees and agents under federal securities laws. The
Company is not aware of any pending or threatened claims which would be covered
by the amendment. There has not been any recent litigation which would have been
affected by the amendment had it been in effect during such litigation. Courts
could rule, under various legal theories, that certain liabilities may not be
limited or eliminated by amending a Company's certificate of incorporation
pursuant to the GCL.
The Company believes that this amendment is in the best interests of
the stockholders as well as the Company. This amendment maintains the Company's
ability to attract and retain qualified individuals to serve as directors,
officers, employees and agents of the Company by assuring directors, officers,
employees and agents (and potential directors, officers, employees and agents)
that they will not bear expenses in the event their decisions are second-guessed
by a new Board of Directors or a court evaluating decisions with the benefit of
hindsight. This amendment, however, further limits the remedies available to a
stockholder dissatisfied with a board decision which is protected by Article
TENTH and by Article TENTH as amended. A disgruntled stockholder's only remedy
in such a circumstance is to sue to stop the completion of the Board's action.
In many situations this remedy may not be effective. Stockholders, for example,
may not be aware of a transaction or an event until it is too late to prevent
it. In these cases, the stockholders and the Company could be injured by a Board
decision and yet have no effective remedy. The Board of Directors
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recognizes that there may be a conflict between their interests and those of the
stockholders who are not members of the Board of Directors or their affiliates.
The revised indemnification provided for in this amendment may
result in additional expenses to the Company which it would not otherwise incur.
Although the Company does not anticipate paying indemnification expenses, such
expenses could, in some instances, place a substantial financial burden on the
Company and could affect the returns on a stockholder's investment.
The Company believes that the diligence exercised by its directors,
officers, employees and agents stems primarily from their desire to act in the
best interests of the Company and not from a fear of monetary damage awards.
Consequently, the Board believes that the level of scrutiny and care exercised
by directors will not be lessened by the adoption of this amendment.
Stockholder Vote Required for Proposal 1(b) and Board Recommendation:
Approval of the amendment to the Certificate of Incorporation to
broaden the indemnity of directors, officers, employees and agents requires the
affirmative vote of the holders of a majority of the shares of Common Stock
issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to Article TENTH of the Company's Certificate of Incorporation in
the form attached to this Proxy Statement as Appendix I.
Amendment of Certificate of Incorporation to Provide Certain
Criteria to be Considered by the Board of Directors in Evaluating
Offers
The Board of Directors has proposed an amendment of the Company's
Certificate of Incorporation to add a new Article TWELFTH to provide standards
by which the Board of Directors must evaluate offers to the Company from another
party to make a tender or exchange offer or to effect a business combination.
Proposed Article TWELFTH provides that the Company's Board of
Directors, when evaluating any offer to the Company from another party to (a) to
make a tender or exchange offer for any equity security of the Corporation or
(b) to effect a business combination, must give due consideration to all
relevant factors, including without limitation (i) the interests of the
Corporation's stockholders, (ii) whether the proposed transaction might violate
federal or state laws, (iii) not only the consideration being offered in the
proposed transaction, in relation to the then current market price for the
outstanding capital stock of this Corporation, but also to the market price for
the capital stock of the Corporation over a period of years, the estimated price
that might be achieved in a negotiated sale of the Corporation as a whole or in
part or through orderly liquidation, the premiums over market price for the
securities of other
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corporations in similar transactions, current political, economic and other
factors bearing on securities prices and the Corporation's financial condition
and future prospects, and (iv) the social, legal and economic effects upon
employees, suppliers, customers and others having similar relationships with the
Corporation, and the communities in which the Corporation conducts its business.
This proposal, if approved, is intended to give comfort to the
Company's employees, customers and other constituencies that the Board of
Directors would consider their interest in deciding whether to recommend a
tender or exchange offer or to authorize a merger. The Board believes that this
would have a positive impact on the communities in which the Company and its
subsidiaries operate. This proposal also reflects the Board's concern that the
value of the Company at any one time may not be adequately reflected in the
market price of its stock. Therefore, this proposal would explicitly permit the
Board of Directors to compare the consideration to be offered in a proposed
acquisition of the Company with other measures of the Company's worth.
While the value of the consideration offered to the stockholders is
a very important factor when weighing the benefits of an acquisition or business
combination proposal, the Board of Directors believes it is also appropriate to
consider other relevant factors. For example, the proposed amendment directs the
Board to evaluate the consideration being offered in relation to both the
then-current value of the Company in a freely negotiated transaction and in
relation to the Board of Directors estimate of the future value of the Company
as an independent concern. A takeover bid often places the target virtually in
the position of making a forced sale, often at a time when the market price of
its stock may be temporarily depressed. In a friendly, negotiated transaction,
however, management would have the opportunity to seek a suitable partner at a
time of its choosing and to negotiate for the most favorable price and terms
which would reflect not only the current but also the future value of the
Company.
Under present Delaware law, absent a charter provision such as
Proposal 1(c), the Board of Directors may be limited in its ability to consider
any interests other than the short-term maximization of value to the
stockholders. Other states have enacted corporation laws which allow the
directors to consider the interests of constituencies other than the
stockholders, but Delaware has yet to adopt a so-called constituency statute.
Adoption of Proposal 1(c) will strengthen the hand of the Board of
Directors in dealing with anyone attempting to take over the Company, but may
also discourage potential purchasers. The Board believes that the advantages of
being able to take the long-term and broad-constituency view will maximize
stockholder values in the long run.
Stockholder Vote Required for Proposal 1(c) and Board Recommendation:
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Approval of the amendment to the Certificate of Incorporation to
provide certain criteria to be considered by the Board of Directors in
evaluating offers requires the affirmative vote of the holders of a majority of
the shares of Common Stock issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to the Company's Certificate of Incorporation to add a new Article
TWELFTH in the form attached to this Proxy Statement as Appendix I.
Amendment to Certificate of Incorporation to Require Action by
Stockholders at a Special or Annual Meeting
The Board of Directors has proposed an amendment of the Company's
Certificate of Incorporation to add a new Article ELEVENTH to prohibit
stockholder action by written consent in lieu of a meeting so long as the
Company has a class of stock registered under the Securities Exchange Act of
1934.
This provision of the Certificate of Incorporation would prohibit a
significant stockholder or group of stockholders from authorizing action which
is subject to stockholder approval under Delaware law without a meeting at which
all stockholders would be entitled to participate, even where such stockholders
hold shares of Common Stock sufficient to authorize the action. For example, if
enacted this provision would limit director removal and elections to annual or
special meetings of stockholders, thereby fortifying current management's
tenure. The Board believes that this provision will curtail surreptitious
takeover bids and give the Company the opportunity to assess potential
acquisitions, consider alternatives and present its position to the stockholders
at a general meeting.
Stockholder Vote Required for Proposal 1(d) and Board Recommendation:
Approval of the amendment to the Certificate of Incorporation to
require action by stockholders at a special or annual meeting requires the
affirmative vote of the holders of a majority of the shares of Common Stock
issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to the Company's Certificate of Incorporation to add a new Article
TWELFTH in the form attached to this Proxy Statement as Appendix I.
Amendment to Certificate of Incorporation to Require Approval of
Amendment by Supermajority
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The Board of Directors has proposed an amendment of the Company's
Certificate of Incorporation to add a new Article THIRTEENTH requiring that
Articles SEVENTH, NINTH, TENTH, ELEVENTH, TWELFTH and THIRTEENTH of the
Certificate of Incorporation may only be amended by the affirmative vote of at
least 75% of the total number of the then outstanding shares of capital stock of
the Company entitled to vote thereon.
The Board of Directors believes that requiring a supermajority for
the amendment of each of the described sections will further protect the Company
from unsolicited change of control attempts and are necessary to fulfil the
intent of the other amendments being acted upon at this annual meeting. For
example, the requirement of an increased stockholder vote for amendment of the
provisions contained in Proposal 1(a) is designed to prevent a stockholder with
a majority of the Company's stock from avoiding the requirements of a staggered
board by simply amending the Certificate of Incorporation to delete all of these
provisions. It thereby assists management in retaining their present positions.
A requirement for a super majority could also have the effect of giving the
holders of a minority of the total shares outstanding a veto power over a merger
which management majority may believe is desirable and beneficial. Officers and
directors of the Company own or control 1,097,140 shares of common stock of
32.9% of the total shares outstanding. See "Security Ownership of Directors and
Executive Officers".
For further discussion of the advantages and disadvantages of
Proposal 1(e), including possible "anti-takeover" effects and other potential
adverse consequences to the stockholders, see "Advantages and Disadvantages of
Classified Board Amendments."
Stockholder Vote Required for Proposal 1(e) and Board Recommendation:
Approval of the amendment to the Certificate of Incorporation to
require a 75% supermajority for certain amendments requires the affirmative vote
of the holders of a majority of the shares of Common Stock issued and
outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to the Company's Certificate of Incorporation to add a new Article
THIRTEENTH in the form attached to this Proxy Statement as Appendix I.
PROPOSALS 2(a)-(b)
The Board of Directors of the Company has adopted resolutions
proposing amendments to the Company's By-Laws under which, among other things,
the Board of Directors will be divided into three classes, as provided under
Section 141 of the GCL and providing for removal of directors only for cause. A
copy of the
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proposed amendments to the By-Laws are set forth in Appendix II attached hereto.
(a) Amendment of By-Laws to Provide for a Staggered Board of Directors
The Board of Directors of the Company has adopted a resolution
proposing an amendment to Article II, Section 2.03 of the Company's By-Laws
under which the Board of Directors will be divided into three classes, as
provided under Section 141 of the GCL.
Section 141 of the GCL allows a corporation to amend its By-Laws to
provide for the election of directors to staggered terms. The amendment to the
By-Laws is intended to parallel the proposed amendments to the Company's
Certificate of Incorporation described in Proposal 1(a) above and the discussion
set forth therein is incorporated herein by reference.
Stockholder Vote Required for Proposal 2(a) and Board Recommendation:
Approval of the amendment to the By-Laws to provide for a staggered
board of directors requires the affirmative vote of the holders of a majority of
the shares of Common Stock issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to Article II, Section 2.03 of the Company's By-Laws in the form
attached to this Proxy Statement as Appendix I.
(b) Amendment of By-laws to Provide for Removal of Directors for Cause
The Board of Directors of the Company has adopted a resolution
proposing an amendment to the Article II, Section 2.12 of the Company's By-Laws
providing for the removal of any director or the entire Board of Directors only
for good cause shown by the holders of a majority of the shares then entitled to
vote at an election and only after a summary of the allegations and evidences
claimed is delivered to such director or directors at least sixty days prior to
any such meeting of stockholders. The Company's Certificate of Incorporation and
Section 2.12 of its By-Laws, as currently constituted, permit the removal of
directors at any time, for or without cause.
Since the proposed amendment will make the removal of directors more
difficult, it will increase the directors' security in their positions and,
since the Board has the power to retain and discharge management, could
perpetuate incumbent management. The notice requirement will ensure that no
director will be removed for cause in an "ambush" at a stockholders meeting. The
Board believes this amendment
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is necessary to fulfill the intent of the other amendments being acted on at
this annual meeting. For example, it would prevent stockholders with a majority
of the Company's stock from avoiding the change of control benefits of a
staggered board by simply discharging the existing board of directors and
replacing them with their own representatives.
Under Delaware law, a director of a corporation with a staggered
board of directors may be removed only for cause, unless the Certificate of
Incorporation otherwise provides. Thus, assuming the stockholders approve
Proposals 1(a) and 2(a), the Company will have a staggered board and
stockholders will no longer be able to remove directors without cause.
Stockholder Vote Required for Proposal 2(b) and Board Recommendation:
Approval of the amendment to the By-Laws to provide for removal of
directors for cause requires the affirmative vote of the holders of a majority
of the shares of Common Stock issued and outstanding.
The Board of Directors unanimously recommends a vote FOR approval of
the amendment to Article II, Section 2.12 of the Company's By-Laws in the form
attached to this Proxy Statement as Appendix I.
ADVANTAGES AND DISADVANTAGES OF PROPOSED AMENDMENTS
The amendments set forth in Proposals 1 and 2 (collectively, the
"Proposed Amendments") have both advantages and disadvantages to stockholders.
The Proposed Amendments do not, and are not intended to, prevent a purchase of
all or a majority of the equity securities of the Company, whether pursuant to
open-market purchases, negotiated purchases from large stockholders or an
unsolicited bid for all or part of the securities of the Company. Rather, the
Board believes that the Proposed Amendments will discourage disruptive tactics
and encourage persons who may seek to acquire control of the Company to initiate
such an acquisition through negotiations with the Board. The Board believes that
it will therefore be in a better position to protect the interests of all the
stockholders. Furthermore, the stockholders of the Company will have a more
meaningful opportunity to evaluate any such action. Although the Proposed
Amendments are intended to encourage persons seeking to acquire control of the
Company to initiate such an acquisition through arm's length negotiations with
the Board, the overall effect of the Proposed Amendments may be to discourage a
third party from making a tender offer for a portion or all of the Company's
Common Stock, or otherwise attempting to obtain a substantial position in the
equity securities of the Company, by preventing such third party from
immediately removing and replacing the incumbent directors.
To the extent any potential acquirors are deterred by the Proposed
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Amendments, the Proposed Amendments may have the effect of preserving the
incumbent management in office. The proposed amendments may also serve to
benefit incumbent management by making it more difficult to remove management
even when the only reason for the proposed change of control of the stockholder
action may be the unsatisfactory performance of the present directors. In
addition, since the Proposed Amendments are in part designed to discourage
accumulations of large blocks of the Company's voting shares by purchasers whose
objective is to have such voting shares repurchased by the Company at a premium,
their adoption could tend to reduce the temporary fluctuations in the market
price of such voting shares that are caused by such accumulations. Accordingly,
stockholders could be deprived of certain opportunities to sell their shares at
a temporarily higher market price.
Takeovers or changes in the board of directors of a company that are
proposed and effected without prior consultation and negotiation with the
company are not necessarily detrimental to the company and its stockholders.
However, the Board feels that the benefits of seeking to protect the ability of
the Company to negotiate effectively, through directors who have previously been
elected by the stockholders as a whole and are familiar with the Company,
outweigh any disadvantage of discouraging such unsolicited proposals.
The Proposed Amendments are not in response to any specific efforts
of which the Company is aware to accumulate shares of Common Stock or obtain
control of the Company. The Board is recommending the adoption of the Proposed
Amendments in order to further continuity and stability in the leadership and
policies of the Company and to discourage certain types of tactics that could
involve actual or threatened changes of control that are not in the best
interests of the stockholders. Because of the time associated with obtaining
stockholder approval, the Company believes it is inadvisable to defer
consideration of the Proposed Amendments until a takeover threat is pending.
Once a specific threat exists, the time required to adopt the Proposed
Amendments may render their adoption impractical prior to the completion of the
takeover. Further, the absence of a specific threat permits stockholders to
consider the merits of the Proposed Amendments outside the pressured atmosphere
of a takeover threat. For these reasons, the Company believes it is prudent to
consider the Proposed Amendments at this time.
On February 26, 1997, the Company and its wholly-owned subsidiary,
South Florida Television, Inc. ("SFTV") entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with BellSouth Corporation ("BellSouth")
and its wholly-owned subsidiary, BellSouth South Florida Merger Subsidiary, Inc.
("BellSouth Sub"), pursuant to which BellSouth Sub will merge into SFTV, SFTV
will become a wholly-owned subsidiary of BellSouth and the Company will receive
an aggregate of $48 million (before expenses), consisting of $7.2 million in
cash and $40.8 million in BellSouth common stock (the "Merger"). The Merger
Agreement provides for usual conditions of closing and receipt of certain
approvals from the Federal Communications Commission. The Merger, which is
expected to close by mid-summer
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1997, will be treated as a tax-free reorganization, except as to the cash
received. If the Merger is completed as proposed, the Company will have in
excess of $60 million in cash and BellSouth securities; a full-service teleport
and satellite uplink facility in Miami; a 50 percent interest in Electronic Data
Submission Systems, Inc., a provider of software which enables physicians to
transmit electronically health care claims to over 350 insurance companies; an
investment in an educational video programming distributor; a specialized
communications trust company; and a strategic alliance with Spike Technologies,
which has developed bidirectional point-to-multipoint microwave antenna
technology. In addition, the Company will no longer be subject to capital
requirements relating to the development of the wireless cable television assets
previously owned through SFTV, and the Company's assets accordingly may be
deemed to have increased liquidity.
Other than as disclosed herein, the Board does not currently
contemplate recommending the adoption of any further amendments to the
Certificate or Bylaws or any other action designed to affect the ability of
third parties to take over or change control of the Company.
EXISTING ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE GCL
In addition to the measures described in Proposals 1 and 2 above,
the Company currently has in place protections which could have the effect of
curtailing or delaying an unsolicited change of control effort.
(a) Issuance of Preferred Stock
The Company's Certificate of Incorporation currently allows the
Board of Directors to issue up to 1,000,000 shares of serial preferred stock,
par value $.01 per share ("Preferred Stock") and to fix the rights, privileges
and preferences of such shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. While the Company has no present intention to
issue shares of Preferred Stock, any such issuance could be used to discourage,
delay or make more difficult a change in control of the Company.
(b) Stockholders Rights Plan
On December 12, 1996, at a meeting of the Board of Directors, the
Company adopted a Stockholders Rights Plan (the "Rights Plan") designed to
ensure that stockholders receive protection against the consequences of an
unsolicited
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proposal to acquire control of the Company that could prevent stockholders from
participating fully in the Company's existing value and in the creation of
additional value through its long-term strategy. To implement the Rights Plan,
the Board declared a dividend of one preferred share purchase right ("Right") to
acquire one share of Common Stock for each share of Common Stock outstanding on
December 24, 1996. 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.
Generally, under the Rights Plan, upon the occurrence of one of
certain specific events involving the accumulation of the Company's Common
Stock, stockholders of the Company would be entitled to exercise their Rights to
receive Company capital stock at a substantial discount from the then prevailing
market for equivalent securities. Accordingly, the existence of the Rights
changes the economics of an unsolicited takeover attempt with the result that a
prospective acquiror would be much more likely to negotiate with the Company,
resulting in a fair price to all stockholders.
The stockholders of the Company are not required to approve the
Rights Plan under the Company's certificate of incorporation, by-laws or under
the GCL, and the Rights Plan has therefore not been submitted to the
stockholders for approval.
The Rights Plan was not adopted in response to any threatened or
perceived takeover threat and the Company has no knowledge of such a threat as
of the date of this Proxy Statement.
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) filed with the Company's Current Report on Form 8-K
dated December 12, 1996 which is hereby incorporated herein by reference. A copy
of the Rights Agreement is available free of charge from the Company.
(c) Section 203 of the Delaware GCL
The Company is subject to Section 203 of the Delaware GCL. Section
203 prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless (i) prior to such date, the board of directors of the
corporation approves either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock (excluding certain shares held by persons who are both
directors and officers of the corporation and certain employee stock plans), or
(iii) on or after the consummation date, the business combination is approved
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by the board of directors and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder. For
purposes of Section 203, a "business combination" includes, among other things,
a merger, asset sale or other transaction resulting in a financial benefit to
the interested stockholder, and an "interested stockholder" is generally a
person who, together with affiliates and associates, owns (or within three
years, owned) 15% or more of the corporation's voting stock.
Section 203 encourages any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also has the effect of limiting the
ability of a potential acquiror to make a two-tiered bid for the Company in
which all stockholders would not be treated equally. The application of Section
203 also confers upon the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
offering a substantial premium for the Company's shares over the then current
market price. Section 203 also discourages certain potential acquirors unwilling
to comply with its provisions.
A Delaware corporation may "opt out" of Section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or bylaws resulting from a stockholder's
amendment approved by at least a majority of the outstanding voting shares. The
Company has not "opted out" of the provisions of Section 203, nor does the
Company currently contemplate recommending to the stockholders approve an
amendment to the Certificate to provide for the "opting out" of Section 203.
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PROPOSAL 3
ELECTION OF DIRECTORS
Five directors are proposed to be elected at the Annual Meeting,
each to hold office for a period of one, two or three years as set forth below,
or in the event the proposed amendments to the Company's Certificate of
Incorporation and By-Laws authorizing a staggered Board of Directors is not
approved, then for a period of one year, and in any event until a successor has
been elected and qualified. It is intended that the accompanying proxy will be
voted in favor of the following persons to serve as directors, unless the
stockholder indicates to the contrary on the proxy. The Company expects that
each of the nominees will be available for election, but if any of them is not a
candidate at the time the election occurs, it is intended that such proxy will
be voted for the election of another nominee to be designated by the Board of
Directors to fill any such vacancy or the number of directors to be elected at
this time may be reduced by the Board of Directors.
Information concerning the current directors and executive officers of the
Company is set forth as follows:
Name Age Position
- --------------------- --- --------------------------------------------
Terrence S. Cassidy 54 President, Chief Executive Officer
and Director
Michael J. Specchio 50 Chairman and Director
Paul J. Sinderbrand 43 Executive Vice President and
General Counsel
Timothy A. Mathews 34 Executive Vice President--Technology
Thomas R. DiBenedetto 47 Director
Louis B. Lloyd 54 Director
Michael A. McManus, Jr. 53 Director
Nominees For Class III Directors to Serve a Three-Year Term
TERRENCE S. CASSIDY Director Since 1993 Age: 54
President and Chief Executive Officer. Mr. Cassidy has been
President, Chief Executive Officer and a director of the Company since its
incorporation in August 1993. He has been an independent financial consultant
since 1988. Prior to 1988, he served as a Vice President and principal of Allen
& Company Incorporated, an investment banking firm, for 15 years with a
concentration in communications. Prior to 1973, he served as co-director of
research at Shields & Company, a brokerage firm. From 1992 to 1993, Mr. Cassidy
acted as the financial advisor to Gemini Equities, Inc. in its acquisition of
Bell Atlantic Computer Products, Inc., a wholly owned computer products
subsidiary of the Bell-Atlantic Corporation. In the fall of 1992, he
participated
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as an advisor to and member of the purchasing group in the acquisition of United
Greenfield, Ltd., a London-based international trading company with operations
in Europe, the Middle East and Africa. Mr. Cassidy was a director of Preferred
Entertainment, Inc. ("Preferred Entertainment"), an operator of a wireless cable
system in Chicago, from August 1993 to January 1995. Mr. Cassidy is a director
of Stock Company Absolute Bank, a Republic of Georgia bank ("Absolute Bank").
THOMAS R. DiBENEDETTO Director Since 1993 Age: 47
Mr. DiBenedetto has been a director of the Company since October
1993. Since 1992, he has been President of Junction Investors, Ltd., an
investment banking firm based in Boston, Massachusetts. From 1989 until April
1993, he was Chairman of Sioux Falls Cellular Communications, Inc. and, from
1989 to February 1993, Chairman of Oklahoma Cellular, Inc., both cellular
telephone companies. From 1982 to 1992, he was President of Boston International
Group Securities Corporation, a broker-dealer. He was a Vice President of Allen
& Company Incorporated, an investment banking firm, from 1976 to 1982. He has
been, since 1985, a director of Alexanders, Inc., a retailing and real estate
company which emerged from bankruptcy in 1994 pursuant to a plan of
reorganization which provides for full payment to all creditors. He is also a
director of Showscan Corporation, a multi-media entertainment company, and
Absolute Bank, a Republic of Georgia bank.
Nominees For Class II Directors to Serve a Two-Year Term
MICHAEL J. SPECCHIO Director Since 1993 Age: 50
Chairman. Mr. Specchio has been Chairman and a director of the
Company since September 1993. He has over 15 years of senior executive
experience in the hardwire cable, private cable and wireless cable industries.
Since 1979, he has developed, operated and sold, for himself and others, over
100 smaller conventional cable systems and over 300 SMATV systems. Mr. Specchio,
through affiliated entities, purchased, leased or entered into joint ventures
for portfolios consisting of an aggregate of approximately 250 wireless cable
channels in major markets representing approximately 30% of the total U.S.
households, including Baltimore, Boston, Dallas, Fort Worth, Houston, Kansas
City, Pittsburgh, Minneapolis, Los Angeles and Chicago. The majority of these
frequency agreements were held by People's Choice TV, a group of companies which
Mr. Specchio founded and for which he served as Chief Executive Officer from
1985 through 1991. In 1986, he built and operated the nation's first fully
addressable multichannel wireless system in Milwaukee, Wisconsin, eventually
selling the 7,000 subscriber system to Warner Communications. In addition, Mr.
Specchio supervised the development and launch of wireless systems in Sacramento
and Tucson. He was active in the founding of the Wireless Cable Association and
currently serves as a member of its Board of Directors. For more than the last
five years, Mr. Specchio served as Chief Executive Officer of various of the
predecessors of Preferred
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Entertainment, all engaged in the development of private wireless cable
businesses. From 1992 until May 1994, Mr. Specchio was Chairman of Preferred
Entertainment and, from August 1993 to January 1995, a director of Preferred
Entertainment.
MICHAEL A. McMANUS, JR. Director Since 1994 Age: 53
Mr. McManus has been a director of the Company since October 1994.
He has been President and Chief Executive Officer of New York Bancorp Inc.
("NYBI") since 1991 and a director of NYBI since 1990. He has also been a
director of Home Federal Savings Bank, NYBI's subsidiary since 1991 and Vice
Chairman since October 1991. He is also a director of RGB Computer Video
Systems, Document Imaging System Corp. and Arrhythmia Research Technology, Inc.
He has served in numerous government capacities, including Assistant to the
President of the United States from 1982 to 1985 and as Special Assistant to the
Secretary of Commerce during the Ford Administration.
Nominee For Class I Director to Serve a One-Year Term
LOUIS B. LLOYD Director Since 1993 Age: 54
Mr. Lloyd has been a director of the Company since October 1993.
Since December 1994 he has been Vice Chairman of Absolute Bank, a Republic of
Georgia bank. Since April 1996, he has been President of Belfinance Securities,
Inc., a broker dealer. He was President and Chief Executive Officer of Republic
New York Securities Corporation, a brokerage firm subsidiary of Republic New
York Corporation, from 1991 to 1994. For more than five years prior to joining
Republic, Mr. Lloyd was a Senior Executive Vice President of Shearson Lehman
Brothers in its Worldwide Institutional Equity Trading and Sales Departments. He
is Chairman of Southhampton Enterprises, an apparel company.
Stockholder Vote Required for Proposal 3 and Board Recommendation:
The election of each of the foregoing nominees for director requires
the affirmative vote of the holders of a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the meeting.
The Board of Directors unanimously recommends a vote FOR each of the
foregoing nominees.
EXECUTIVE OFFICERS OF THE COMPANY
The current Executive Officers of the Company are set forth below,
excluding Messrs. Cassidy and Specchio whose biographies are included above.
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PAUL J. SINDERBRAND Age: 43
Executive Vice President and General Counsel. Mr. Sinderbrand has
been Executive Vice President and General Counsel of the Company since September
1993. He is a partner of Wilkinson, Barker, Knauer & Quinn, a Washington, D.C.
law firm, where he concentrates on communications law and represents a variety
of wireless communications providers. Mr. Sinderbrand was a partner at
Sinderbrand & Alexander, a Washington, D.C. law firm from 1993 to 1995 and a
partner at Keck, Mahin & Cate until 1993, where, in each case, he concentrated
on communications law. During his 16 years as a practicing attorney he has
participated in major regulatory proceedings involving wireless cable television
and drafted many regulations which now govern the industry, including the
proposal pursuant to which the FCC established wireless cable television.
TIMOTHY A. MATHEWS Age: 34
Executive Vice President - Technology. Mr. Mathews has served as the
Company's Executive Vice President - Technology since September 1995. For more
than seven years prior to that time, he has served in a variety of managerial
capacities for other pay television companies, including in construction,
technical, supervisory, contractor, marketing and installation capacities. From
August 1993 to August 1994, he was Vice President of Operations of Preferred
Entertainment. From 1981 to 1993, he served in several capacities in Specchio
Developers, Ltd., an affiliate of Michael J. Specchio, an officer and director
of the Company, primarily operating as a hands-on supervisor. Mr. Mathews
directed many of the Specchio Developers projects, including the addition of
eight frequencies in Chicago and the retrofit of 120 private cable head-end
systems. From 1980 to 1986, he assisted various entities affiliated with Mr.
Specchio in the development and operation of over 100 conventional cable
television systems throughout Florida, Illinois, Indiana, Iowa and Minnesota,
and he was instrumental in the development of the first addressable wireless
system in the nation, with installation of over 7,000 subscribers in Milwaukee,
Wisconsin.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934 requires
the Company's officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC") and each exchange in which its securities are traded. Officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company, all requisite filings were made in 1996.
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BOARD OF DIRECTORS AND COMMITTEES
Audit Committee
The members of this Committee are Messrs. DiBenedetto and Lloyd. The
Committee had one meeting in 1997 to review the 1996 audit. The Audit
Committee's function is to evaluate the adequacy of the Company's internal
accounting controls, review the scope of the audit by Coopers & Lybrand L.L.P.
and related matters pertaining to the examination of the financial statements,
review the nature and extent of any non-audit services provided by the Company's
independent accountants and make recommendations to the Board of Directors with
respect to the foregoing matters as well as with respect to the appointment of
the Company's independent accountants.
Option Committee
The members of this Committee are Messrs. Cassidy and Specchio. The
Option Committee had no meetings during 1996. The Option Committee administers
the Company's 1993 Stock Option Plan. The Option Committee is generally
empowered to interpret the 1993 Stock Option Plan, to prescribe rules and
regulations relating thereto, to determine the terms of the option agreements,
to amend them with the consent of the optionee, to determine the employees to
whom options are to be granted, and to determine the number of shares subject to
each option and the exercise price thereof.
Remuneration of Directors and Related Matters
Each member of the Board of Directors, other than any
employee-director (Messrs. Cassidy and Specchio are the only such
employee-directors), receives a quarterly fee of $1,800.
Meetings and Attendance
During fiscal year ended October 31, 1996, there were two meetings
of the Board of Directors, and all directors attended each meeting.
The two standing Committees of the Board of Directors are the Audit
Committee and the Option Committee. Information with respect to the Audit
Committee and the Option Committee is set forth above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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Paul Sinderbrand, Executive Vice President and General Counsel of
the Company, is a partner of Wilkinson, Barker, Knauer & Quinn, special counsel
to the Company on matters related to communications law. Mr. Sinderbrand owns
80,000 shares of Common Stock of the Company.
All current transactions between the Company, and its officers,
directors and principal stockholders or any affiliates thereof are, and in the
future such transactions will be, on terms no less favorable to the Company than
could be obtained from unaffiliated third-parties.
EXECUTIVE COMPENSATION
The following table sets forth information as to compensation paid
by the Company and its subsidiaries for the fiscal years ended October 31, 1994,
1995 and 1996 to each of the directors and executive officers of the Company:
SUMMARY COMPENSATION TABLE
================================================================================
Annual Compensation
-----------------------
Name and Principal Position Year Salary($) Bonus All Other Compensation($)
- -------------------------------------------------------------------------------
Terrence S. Cassidy, President 1994 225,500 --- ---
and Chief Executive Officer ------------------------------------------------
1995 220,000 --- ---
------------------------------------------------
1996 220,000 --- ---
- -------------------------------------------------------------------------------
Michael J. Specchio, 1994 71,750 --- ---
Chairman ------------------------------------------------
1995 135,000 50,000 ---
------------------------------------------------
1996 180,000 --- ---
- -------------------------------------------------------------------------------
Paul J. Sinderbrand, 1994 35,000 --- ---
Executive Vice President ------------------------------------------------
and General Counsel 1995 20,000 --- ---
------------------------------------------------
1996 60,000(1) --- ---
- -------------------------------------------------------------------------------
Timothy Mathews, Executive 1994 15,000 --- ---
Vice President - ------------------------------------------------
Technology 1995 120,000 45,833 ---
------------------------------------------------
1996 120,000 --- ---
===============================================================================
(1) The Company paid Wilkinson, Barker, Knauer & Quinn, of which Mr. Sinderbrand
is a partner, approximately $63,202 for services rendered to the Company in
fiscal 1996 and paid Sinderbrand & Alexander, of which Mr. Sinderbrand was a
partner until December 1995, approximately $3,803 for services rendered in
fiscal 1996.
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1993 Stock Option Plan
On September 28, 1993, the Company adopted the Company's 1993 Stock Option
Plan (the "1993 Stock Option Plan"), which the Company believes is desirable to
attract and retain consultants, directors, executives and key employees. Under
the 1993 Stock Option Plan, as amended on June 19, 1995, options to purchase an
aggregate of not more than 160,000 shares of Common Stock may be granted from
time to time to key employees, officers, directors, advisors and independent
consultants to the Company or to any of its subsidiaries. Options granted to
employees may be designated as incentive stock options ("ISOs") or non-qualified
stock options ("NQSOs"). Options granted to directors, independent consultants
and other non-employees may only be designated NQSOs. Options to purchase an
aggregate of 50,000 shares have been granted to an employee and 30,000 shares
have been granted to non-employee directors of the Company under the 1993 Stock
Option Plan. See Note 11 to the Financial Statements.
The 1993 Stock Option Plan is currently administered by a committee
consisting of directors Michael J. Specchio and Terrence S. Cassidy. The
committee is generally empowered to interpret the 1993 Stock Option Plan, to
prescribe rules and regulations relating thereto, to determine the terms of the
option agreements, to amend them with the consent of the optionee, to determine
the employees to whom options are to be granted, and to determine the number of
shares subject to each option and the exercise price thereof. The per share
exercise price of options granted under the 1993 Stock Option Plan will be not
less than 100% of the fair market value per share of Common Stock on the date
the options are granted (110% of such fair market value if the grantee owns more
than 10% of the combined voting power of all classes of the Company's stock),
provided that for the two years immediately following the consummation of the
initial public offering in March 1994, the option price shall not be less than
the greater of the fair market value on the grant date or the initial public
offering price established by the initial public offering, unless approved by
the shareholders.
Options will be exercisable for a term that will not be greater than ten
years from the date of grant (five years from the date of grant of an ISO if the
optionee owns more than 10% of the Common Stock of the Company). Options may be
exercised only while the original grantee has a relationship with the Company
which confers eligibility to be granted options or within three months after the
termination of such relationship with the Company, or up to one year after
death, retirement or permanent disability. In the event of the termination of
such relationship between the original grantee and the Company for cause (as
defined in the 1993 Stock Option Plan), all options granted to that original
grantee terminate immediately. ISOs and NQSOs under the 1993 Stock Option Plan
are not transferable other than by will or the laws of descent and distribution.
Options may be exercised during the grantee's lifetime only by the grantee, his
or her guardian or legal representative.
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Options granted pursuant to the 1993 Stock Option Plan which are ISOs will
enjoy the attendant tax benefits provided under Sections 421 and 422 of the
Internal Revenue Code of 1986, as amended. Accordingly, the 1993 Plan provides
that the aggregate fair market value (determined at the time an ISO is granted)
of the Common Stock subject to ISOs exercisable for the first time by an
employee during any calendar year (under all plans of the Company and its
subsidiaries) may not exceed $100,000.
The Board may modify, suspend or terminate the 1993 Stock Option Plan,
provided, however, that certain material modifications affecting the 1993 Stock
Option Plan must be approved by the stockholders, and any change in the 1993
Stock Option Plan that may adversely affect a grantee's rights under an option
previously granted under the 1993 Stock Option Plan requires the consent of the
grantee.
Employment Contracts and Other Arrangements with Executive Officers
Pursuant to an employment agreement, dated September 27, 1993, Terrence S.
Cassidy is employed full-time at an annual salary of $220,000. On December 12,
1996, the Company entered into a Severance Benefit Agreement with Mr. Cassidy.
The agreement extends the term of his employment to September 2001, and provides
that in the event of a change in control of the Company, Mr. Cassidy may in
certain circumstances terminate his employment and receive severance benefit pay
equal to three times such executive's annual compensation, including certain
bonuses, if any.
Pursuant to a consulting agreement dated February 28, 1997 and expiring in
September 2001, between the Company and Michael J. Specchio, Inc. ("MJS Inc."),
a corporation which is affiliated with and employs Michael J. Specchio, MJS Inc.
is obliged to provide consulting services to the Company, including
substantially full-time services to be rendered by Mr. Specchio for an annual
fee of $180,000. The agreement, which terminates in the event of the death or
incapacity of Mr. Specchio, also provides that in the event of a change in
control of the Company, MJS Inc. may in certain circumstances terminate the
consulting agreement and receive severance benefit pay equal to three times the
annual compensation under the consulting agreement, including certain bonuses,
if any. Prior to February 18, 1997, Mr. Specchio was employed full-time by the
Company as an individual on substantially the same terms as provided in the
consulting agreement.
Paul J. Sinderbrand has entered into a five year Consulting and Employment
Agreement, under which he has been providing part-time consulting services to
the Company at a rate of $5,000 per month since April 1, 1994. The agreement
further provides that he may maintain his current law practice subject to his
obligations to the Company.
Timothy Mathews has entered into a three year employment agreement, dated
September 15, 1994, with the Company at an annual salary of $120,000. The
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agreement further provided for a $50,000 loan by the Company to Mr. Mathews
evidenced by a one-year demand note which was forgiven by the Company on
September 15, 1995 in accordance with its terms.
Pursuant to these agreements, each of Messrs. Cassidy, Specchio,
Sinderbrand and Mathews have agreed not to compete with the Company during the
term of this agreement and for a period of one year thereafter, and the Company
has agreed to indemnify each of them against expenses incurred in any proceeding
arising out of their employment to the maximum extent provided by law.
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REPORT OF BOARD OF DIRECTORS REGARDING COMPENSATION
The principal goal of the Company's compensation program is to help the
Company attract, motivate and retain the executive talent required to develop
and achieve the Company's strategic and operating goals with a view to
maximizing stockholder value. The key elements of this program and the
objectives of each element are as follows:
Base Salary:
o Establish base salaries that are competitive with those payable to
executives holding comparable positions at similar-sized wireless cable
companies.
o Provide periodic base salary increases as appropriate, consistent with
the Company's overall operating and financial performance, with a view
to rewarding successful individual performance and keeping pace with
competitive practices.
Long-term Incentive:
o Facilitate the alignment of executives' interests with those of the
Company's shareholders by providing opportunities for meaningful stock
ownership.
Option Grants:
Executive officers are eligible to receive option grants, cash bonuses and
increases in salary based upon the performance of the Company and their
individual progress during the preceding year. Such grants, if any, are
determined by the Board of Directors from time to time during each fiscal year
with the input and recommendation of the Company's Chief Executive Officer.
Although the Board does not have an established policy for measuring performance
and establishing salary, bonuses and option grants, the Board is influenced by
the Company's financial performance and the contributions made by individual
executives to that performance. The Board of Directors believes that such a
retrospective analysis is most appropriate and practicable for a
development-stage wireless cable enterprise like the Company, which operates in
an uncertain environment and without the same sorts of standard measures of
performance as are available to more seasoned companies. In addition, options
may be granted to attract new executives or directors. The Company does not
consider the amount and terms of options and stock already held by executive
officers in its deliberations to determine awards.
Compensation of Chief Executive Officer and Chairman:
The base salary of the Chief Executive Officer and the annual base fee of
MJS Inc., which provides the Chairman's services, are determined according to
the same
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principles described above as applicable to compensation of the Company's other
executive officers. When determining base salaries in 1993 (except in the case
of Mr. Specchio, whose base compensation was revised in 1995 when he became a
full-time employee), the Board of Directors considered salary, bonus and
long-term incentive compensation for other comparable companies in the high
technology sector, in similar geographic areas and at similar stages of growth
and development, as reported in public filings of such comparable companies. The
Board of Directors also had discussions at the time with other industry
executives and financial advisors. The Chief Executive Officer and the Chairman
each have a great deal of experience in building emerging companies, and the
Board views their leadership as a critical factor in the successes the Company
has achieved to date and as very important to realization of the Company's
near-term goals. Although the Board of Directors considers the Merger, if
consummated, an achievement of a significant corporate goal, the Board of
Directors chose to maintain base compensation for these executive officers at
the same level as the prior fiscal year. In December, 1996 the Board of
Directors extended the terms of the Chief Executive Officer's and Chairman's
employment agreements to 2001 and provided for certain severance benefits.
Terrence S. Cassidy
Michael J. Specchio
Thomas R. DiBenedetto
Louis B. Lloyd
Michael A. McManus, Jr.
Summary of Actions Taken
At least once a year, and at more frequent periodic intervals when deemed
necessary in individual cases, the Board of Directors reviews the performance of
the Company's executive officers. The Board of Directors, other than Messrs.
Cassidy and Specchio, also reviews the performance of Messrs. Cassidy and
Specchio at least once a year. On December 12, 1996, the Board of Directors
authorized the execution of Severance Benefit Agreements with Messrs. Cassidy
and Specchio providing for the extension of the terms of their respective
employment agreements to September 2001, and providing that in the event of a
change in control of the Company, each of them may in certain circumstances
terminate his employment and receive severance benefit pay equal to three times
his annual compensation, including certain bonuses. While the Board believes
that cash bonuses or an increase in the Chief Executive Officer's and Chairman's
salary would be justified under ordinary circumstances, the Chief Executive
Officer and the Chairman have been willing to forego immediate increases in his
cash compensation in order to assist the Company to conserve its cash resources.
In February 1997, Mr. Specchio's employment agreement, as amended by his
Severance Benefit Agreement, was replaced by the consulting agreement with MJS
Inc. described above.
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Board of Directors Interlocks and Insider Participation
The Board of Directors consists of Messrs. Cassidy, Specchio, DiBenedetto,
Lloyd and McManus, of which Messrs. Cassidy and Specchio are employees of the
Company. Messrs. DiBenedetto, Lloyd and McManus participated in deliberations of
the Company's Board of Directors concerning executive officer compensation.
There are no interlocks between the Company and other entities involving the
Company's executive officers and Board members who serve as executive officers
or Board members of such other entities, except that Messrs. Cassidy,
DiBenedetto and Lloyd are directors of Absolute Bank, of which Mr. Lloyd is Vice
Chairman.
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PERFORMANCE GRAPH
The following graph provides a comparison of the Company's cumulative
total stockholder return on its Common Stock since the Company's initial public
offering in March 1994, with (a) the Nasdaq Market Index, which is being used as
the required broad entity market index, (b), the total return on a selected peer
group index ("Old Peer Group") used by the Company in previous years consisting
of Cablemaxx Inc., Peoples Choice TV Corp., CAI Wireless Systems Inc., American
Telecasting Inc. and Wireless Cable of Atlanta Inc. and (c) the total return on
a selected peer group within Industry Group 462, the "Cable and Television
Systems" category for which data is compiled by Media General Financial
Services, Inc. ("New Peer Group").* Such stockholder return is the sum of the
dividends paid and the change in the market price of stock. The following graph
assumes $100 invested on March 9, 1994 in the Company's Common Stock, NASDAQ
Composite Index, the Old Peer Group and the New Peer Group. No cash dividends
have been declared on the Company's Common Stock. Although the graph would
normally cover a five-year period, the Company's Common Stock has been publicly
traded only since March 9, 1994, so the graph commences as of such date. The
comparisons in the graph are required by the Commission and are not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN OF
COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
COMPANY 1994 1994 1995 1996
National Wireless Holdings Inc. 100.00 62.00 108.00 118.00
New Peer Group 100.00 93.83 99.99 73.69
Old Peer Group 100.00 60.59 59.51 36.62
Broad Market 100.00 101.09 119.91 140.82
*The current composition of Industry Group 462-Cable and Television Systems is
as follows:
ADELPHIA COMMUNICATIONS (ADLA)
AMERICAN TELECASTING INC. (ATEL)
ASCENT ENTERTAINMENT GROUP INC. (GOAL)
BELL CABLEMEDIA PLC ADR (BCMPY)
BRITISH SKY BROADCASTING GROUP (BSY)
CABLEVISIONS SYSTEMS CL A (CVC)
CAI WIRELESS SYSTEMS INC. (LAWS)
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CELLULARVISION USA INC. (CVUS)
CENTURY COMMUNICATIONS LP CL A (CTYA)
COMCAST SPECIAL STOCK CL A (CMSK)
COMCAST UK CABLE PARTNERS LTD. (CMCAF)
COX COMMUNICATIONS INC. (COX)
CROWN CASINO CORP. (DICE)
DATA BROADCASTING CORP. (DECC)
GENERAL CABLE PLC ADR (GCABY)
HEARTLAND WIRELESS COMMUNICATIONS INC. (HART)
JONES INTERCABLE INC. A (JOINA)
JONES INTERCABLE INVESTORS (JTV)
MATAV-CABLE SYSTEMS MEDIA LTD. (MATVY)
NATIONAL WIRELESS HOLDINGS INC. (NWIR)
NETWORK EVENT THEATER INC. (NETS)
NTN CANADA INC. (NTNC)
ON COMMAND CORPORATION (ONCO)
PEOPLES CHOICE TV CORP. (PCTV)
SOURCE MEDIA INC. (SRCM)
SPECTRA INC. (SSA)
SPICE ENTERTAINMENT COS. INC. (SPZE)
TCA CABLE TV INC. (TCAT)
TEL-COM WIRELESS CABLE TV CP (TCTV)
TELE-COMM INT
TELE-COMM SER A LIBERTY MUTUAL GRP (LBTYA)
TV FILME INC. (PYTV)
UNITED VIDEO SATELLITE INC. (UVSGA)
VIACOM INC. NON-VOT B
VIDEOTRON HLDG PLC (VRONY)
WIRELESS CABLE OF ATLANTA INC. (WCAI)
WIRELESS ONE INC. (WIRL)
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PROPOSAL 4
RATIFICATION OF THE COMPANY'S SELECTION
OF ITS AUDITORS
The Board of Directors recommends to the stockholders that they ratify the
selection of Coopers & Lybrand L.L.P., independent auditors, to audit the
accounts of the Company for fiscal year 1997. If the stockholders do not ratify
this selection, the Board of Directors will reconsider its selection of Coopers
& Lybrand L.L.P. and may appoint new auditors upon recommendation of the Audit
Committee.
A representative of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting and will have the opportunity to make a statement if he or she desires
to do so and will be available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR Proposal No. 4.
OTHER MATTERS
Management does not know of any business to be transacted at the meeting
other than as indicated herein. However, certain stockholders may present topics
for discussion from the floor. Should any such matter properly come before the
meeting for a vote, the persons designated as proxies will vote thereon in
accordance with their best judgment.
You are urged to sign, date and return the enclosed proxy in the prepaid
envelope provided for such purpose. It is hoped that registered stockholders
will give us advance notice of their plans by marking the box provided on the
proxy card.
If you will need special assistance at the Annual Meeting because of a
disability or if you require directions to the Meeting, please contact James
Kardon, the Secretary of the Company at (212) 736-1000.
Deadline for submitting proposals for next year's meeting. Stockholders
who intend to present proposals in connection with the Company's 1997 Annual
Meeting of Stockholders must submit their proposals to the Corporate Secretary
of the Company on or before October 31, 1997.
New York, New York
April 3, 1997
James Kardon
Secretary
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APPENDIX I
PROPOSED
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NATIONAL WIRELESS HOLDINGS INC.
National Wireless Holdings Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
ONE: That the Board of Directors of said corporation, by the unanimous
vote of its members on December 12, 1996, adopted a resolution proposing and
declaring advisable the following amendment to the Certificate of Incorporation
of said corporation:
"RESOLVED, that the Certificate of Incorporation of the Corporation
is hereby amended by striking out Articles SEVENTH and TENTH thereof and
by substituting in lieu of said Articles the following new Articles
SEVENTH and TENTH, respectively:
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and the
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. Number of Directors. The management of the business and the conduct
of the affairs of the Corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board of Directors
shall be fixed by, or in the manner provided in, the By-Laws. The phrase
"whole Board" and the phrase "total number of directors" shall be deemed to
have the same meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies. No election of directors
need be by written ballot.
2. Terms of Directors. Except as otherwise provided in or fixed by or
pursuant to the provisions of Article FOURTH hereof relating to the rights of
the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation or to elect directors under
specified circumstances, the directors shall be classified, with respect to
the time for which they severally hold office, into three classes, as nearly
equal in number as possible, as shall be provided in the manner specified in
the By-Laws of the Corporation. One
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class shall be originally elected for a term expiring at the annual meeting of
stockholders to be held in 1998, another class shall be originally elected for a
term expiring at the annual meeting of stockholders to be held in 1999, and
another class shall be originally elected for a term expiring at the annual
meeting of stockholders to be held in 2000, with each member of each class to
hold office until a successor is elected and qualified. At each annual meeting
of stockholders of the Corporation and except as otherwise provided in or fixed
by or pursuant to the provisions of Article FOURTH hereof relating to the rights
of the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation to elect directors under
specified circumstances, the successors of the class of directors whose term
expires at that meeting shall be elected to hold office for a term of three
years.
3. Newly Created Directorships and Vacancies. Except as otherwise required
by law and except as otherwise provided in or fixed by or pursuant to the
provisions of Article FOURTH hereof relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances:
(i) newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors; (ii) any director elected
in accordance with the preceding clause (i) shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified; and (iii) no decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
4. Removal. Except as otherwise provided in or fixed by or pursuant to the
provisions of Article FOURTH hereof relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
any director may be removed from office only for cause by the affirmative vote
of the holders of at least a majority of the combined voting power of the then
outstanding shares of the Corporation's stock entitled to vote generally, voting
together as a single class. Whenever in this Article SEVENTH hereof, the phrase,
"the then outstanding shares of the Corporation's stock entitled to vote
generally" is used, such phrase shall mean each then outstanding share of any
class or series of the Corporation's stock that is entitled to vote generally in
the election of the Corporation's directors.
5. Amendment or Repeal of this Article. Notwithstanding any other
provisions of this Article SEVENTH or any other Article hereof or of the By-Laws
of the Corporation (and notwithstanding the fact that a lesser percentage may be
specified from time to time by law, this Article SEVENTH, any other Article
hereof, or
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the By-Laws of the Corporation), the provisions of this Article SEVENTH may not
be altered, amended or repealed in any respect, nor may any provision
inconsistent therewith be adopted, unless such alteration, amendment, repeal or
adoption is approved by the affirmative vote of at least 75% of the combined
voting power of the then outstanding shares of the Corporation's capital stock
entitled to vote generally, voting together as a single class.
6. Amendment of Bylaws. After the original or other By-Laws of the
Corporation have been adopted, amended, or repealed, as the case may be, in
accordance with the provisions of ss.109 of the General Corporation Law of the
State of Delaware, and, after the Corporation has received any payment for any
of its stock, the power to adopt, amend, or repeal the By-Laws of the
Corporation may be exercised by the Board of Directors of the Corporation,
unless otherwise provided in the By-Laws.
7. Voting Power. Whenever the Corporation shall be authorized to issue
only one class of stock, each outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any meeting of stockholders. Whenever
the Corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the Certificate of Incorporation shall entitle the holder thereof
to the right to vote at any meeting of stockholders except as the provisions of
paragraph (2) of subsection (b) of ss.242 of the General Corporation Law of the
State of Delaware shall otherwise require; provided, that no share of any such
class which is otherwise denied voting power shall entitle the holder thereof to
vote upon the increase or decrease in the number of authorized shares of said
class.
8. Ballots. Elections of directors need not be by written ballot unless
the By-Laws of the Corporation shall so provide.
"TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of ss.145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, indemnify, and upon request advance
expenses to, any and all persons who is or was a party or is threatened to be
made a party to any threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer of
this Corporation or while a director or officer is or was serving at the request
of this Corporation as a director, officer, partner, trustee, employee or agent
of any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, from and against any
and all of the expenses, liabilities, or other matters referred to in or covered
by said section (including without limitation attorneys fees and expenses);
provided, however, that the foregoing shall not require this Corporation to
indemnify or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such
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person other than solely to enforce rights under this ARTICLE TENTH. The
indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who
has ceased to be a director, officer, employee, or agent and shall inure
to the benefit of the heirs, executors, and administrators of such a
person. Any person seeking indemnification under this Article TENTH shall
be deemed to have met the standard of conduct required for such
indemnification unless the contrary shall be established by a court of
competent jurisdiction. Any repeal or modification of the foregoing
provisions of this Article TENTH shall not adversely affect any right or
protection of a director or officer of the Corporation with respect to any
acts or omissions of such director or officer occurring prior to such
repeal or modification.
; and further
"RESOLVED, that the Certificate of Incorporation is hereby further
amended by adding the following new Articles ELEVENTH, TWELFTH, THIRTEENTH
and FOURTEENTH:
ELEVENTH: If at any time the Corporation shall have a class of stock
registered pursuant to the provisions of the Securities Exchange Act of
1934, for so long as such class is so registered, any action by the
stockholders of such class must be taken at an annual or special meeting
of stockholders and may not be taken by written consent.
TWELFTH: The Board of Directors of the Corporation, when evaluating
any offer of another party (a) to make a tender or exchange offer for any
equity security of the Corporation or (b) to effect a business
combination, shall, in connection with the exercise of its judgment in
determining what is in the best interests of the Corporation as a whole,
be authorized to give due consideration to any such factors as the Board
of Directors determines to be relevant, including, without limitation:
the interests of the Corporation's stockholders;
whether the proposed transaction might violate federal
or state laws;
not only the consideration being offered in the proposed
transaction, in relation to the then current market
price for the outstanding capital stock of this
Corporation, but also to the market price for the
capital stock of the Corporation over a period of years,
the estimated price that might be achieved in a
negotiated sale of the Corporation as a
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whole or in part or through orderly liquidation, the
premiums over market price for the securities of other
corporations in similar transactions, current political,
economic and other factors bearing on securities prices
and the Corporation's financial condition and future
prospects; and
the social, legal and economic effects upon employees,
suppliers, customers and others having similar
relationships with the Corporation, and the communities
in which the Corporation conducts its business.
In connection with any such evaluation, the Board of Directors is
authorized to conduct such investigations and engage in such legal
proceedings as the Board of Directors may determine.
THIRTEENTH: Notwithstanding any other provisions of this Certificate
of Incorporation or the Bylaws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or
the Bylaws of this Corporation), the affirmative vote of 75% of the total
number of votes of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required to amend or repeal,
or to adopt any provision inconsistent with the purpose or intent of
ARTICLES SEVENTH, NINTH, TENTH, ELEVENTH, TWELFTH and this ARTICLE
THIRTEENTH. Notice of any such proposed amendment, repeal or adoption,
shall be contained in the notice of the meeting at which it is to be
considered. Subject to the provisions set forth herein, this Corporation
reserves the right to amend, alter, repeal or rescind any provision
contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by law.
FOURTEENTH: From time to time any of the provisions of this
Certificate of Incorporation may be amended, altered, or repealed, and the
provisions authorized by the laws of the State of Delaware at the time in
force may be added or inserted in the manner and at the time prescribed by
said laws, and all rights at any time conferred upon the stockholders of
the Corporation by this Certificate of Incorporation are granted subject
to the provisions of this Article FOURTEENTH."
TWO: That this Certificate of Amendment was duly adopted in
accordance with Section 242 of the General Corporation Law of the State of
Delaware.
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APPENDIX II
NATIONAL WIRELESS HOLDINGS INC.
PROPOSED AMENDMENT TO BY-LAWS
Article II, Sections 2.03 and 2.12 of the Company's By-Laws (the "By-Laws") is
proposed to be amended to read as follows:
ARTICLE II
Article II Section 2.03 of the By-Laws, is hereby amended in its
entirety to read as follows:
"2.03. Election and Term of Directors. The Directors shall be
appointed initially by the incorporator. All members of the Board of
Directors shall be classified, with respect to the time for which they
each hold office, into three classes, as nearly equal in number as
possible, as determined by the incorporator or incorporators. One class
shall originally be elected for an initial one year term expiring at the
annual meeting of stockholders to be held in 1998, another class shall be
originally elected for an initial two year term expiring at the annual
meeting of stockholders to be held in 1999, and another class shall be
originally elected for an initial three year term expiring at the annual
meeting of stockholders to be held in 2000, with each member of each class
to hold office until a successor is elected and qualified or until his
earlier resignation or removal. Thereafter, at each annual meeting of
stockholders, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a three year term
until their successors are elected and qualified or until their earlier
resignation or removal. If the annual meeting for the election of
Directors is not held on the date designated therefor, the Directors shall
cause the meeting to be held as soon thereafter as convenient. At each
meeting of the stockholders for the election of Directors, provided a
quorum is present, the Directors shall be elected by a plurality of the
votes validly cast in such election.
Any director may resign at any time upon written notice to the
corporation. Except as the General Corporation Law of the State of
Delaware (the "General Corporation Law") may otherwise require, in the
interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal
of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of
directors for cause, shall be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the
sole remaining directors. In the event of a newly created directorship,
any director elected in accordance with the
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preceding clause shall hold office for the remainder of the full term of
the class of directors having the longest remaining term at the time of
the election and until such director's successor shall have been elected
and qualified. In the event of a vacancy, any director elected in
accordance with the preceding clause shall hold office for the remainder
of the full term of the class of directors in which the vacancy occurred
and until such director's successor shall have been elected and qualified.
No decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
Except as otherwise provided in or fixed by or pursuant to the
corporation's Certificate of Incorporation, nominations for the election
of directors may be made by the Board of Directors or by any stockholder
entitled to vote in the election of directors generally. However, such
stockholders may nominate one or more persons for election as director or
directors at a stockholders' meeting only if written notice of intent to
make such nomination or nominations has been given either by personal
delivery or by mail to the Secretary of the Corporation not less than 30
days before the meeting of stockholders at which such election is held.
Each such notice shall state (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had
the nominee been nominated, or intended to be nominated, by the Board of
Directors; and (e) the consent of each nominee to serve as a director of
the corporation if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure."
Article II Section 2.12 of the By-Laws is hereby amended in its
entirety to read as follows:
"2.12. Removal of Directors. Except as may otherwise be provided by
the General Corporation Law, any director or the entire Board of Directors
shall be removed only for good cause shown, by the holders of a majority
of the shares then entitled to vote at an election of directors, voting
together as a single class, but only if notice of such proposal was
contained in the notice of such meeting. Any vacancy in the board of
directors resulting from any such removal shall be filled only by vote of
a majority of the directors then in office, although less than a quorum,
and any director or directors so chosen shall hold office until the next
election of the class for which such directors shall have been chosen and
until their successors shall be elected and qualified or until their
earlier death, resignation or removal. Except
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where a right to receive compensation shall be expressly provided in a
duly authorized written agreement with the Corporation, no director
removed shall have any right to any compensation as such director for any
period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by
the year or otherwise; unless the body acting on the removal shall in its
discretion provide for compensation.
At least sixty days prior to any meeting of stockholders at which
removal for cause shall be considered, each director whose removal is at
issue shall have received a summary of the allegations and evidence
claimed, all in such detail as reasonably calculated to inform the
director in preparing any defense. If a removal for cause is moved without
such notice, the chairman of the stockholders meeting shall determine
whether that issue shall be held over to a date when such notice shall
have been timely received."
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Hahn & Hessen llp
attorneys
Empire State Building
350 fifth avenue
new york, n.y. 10118-0075
(212) 736-1000
James Kardon
Member of the Firm
E-mail: [email protected]
Direct Dial: (212) 946-0220
Facsimile: (212) 584-7167
Facsimile: (212) 505-2428
Mail Stop 3-10
[date]
Sean N. Harrison
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Wireless Holdings Inc. (the "Company")
Preliminary Proxy Statement on Schedule 14A
Filed on March 3, 1997
File No. 0-23598
Dear Mr. Harrison:
As we discussed, I enclose the Company's Definitive Proxy Statement on
Schedule 14A including disclosures in response to your comment letter, dated
April 1, 1997. We have sought to respond (in bold face) to your comments, which
are set forth below.
Proposal 1 (b)
1. It appears to the staff that the differences between this amendment and
DGCL Section 145 that should be disclosed are the following: (i) the amendment
imposes an obligation on the Company to indemnify, and advance expenses to, the
Company's officers; (ii) creates a presumption that the applicable standard of
conduct is automatically satisfied without the Company making a determination as
specified in DGCL Section 145(d); and (iii) does not require an officer who
requests an advance of expenses to make an undertaking as prescribed in DGCL
Section 145(e). Please revise or advise.
The requested disclosure has been provided.
Proposal 1 (d)
2. Please revise this section to include a more detailed discussion of the
effects and disadvantages of the proposal. This would include a discussion of
the matters that shareholders could vote on in lieu of a meeting which will be
eliminated by the proposal, for example, if enacted the proposal would limit
director removal and elections to annual meetings, thereby fortifying current
management's tenure.
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The requested disclosure has been provided.
Proposal 2 (b)
3. Please revise this section to discuss (i) whether the Company's
directors can currently be removed without cause; and (ii) any article or by-law
provision relating to director removal without cause.
The requested disclosure has been provided.
Compensation Committee Report
4. The discussion of the elements of the Company's compensation program
should be revised to include (i) the level which the Company places itself
within the comparative group of wireless cable companies; (ii) what measure of
the Company's financial performance is used in determining the salary increases
and grants of awards; and (iii) the discussion of the Chief Executive Officer's
compensation should be expanded to provide a more detailed discussion of the
specific factors and criteria which are the bases of the CEO's compensation (See
Item 402 (k) of Regulation S-K, and Securities Act Release No. 7009, August 6,
1993).
As we discussed, there has been no change in the levels of compensation
for the principal officers of the Company for two years, and the initial
compensation of the Chief Executive Officer and Chairman was set prior to the
initial public offering in March 1994 and reflects negotiations with the
underwriter. The Chairman's salary was reset two years ago when he became a
full-time employee. Since (i) the Company has been principally engaged in early
stage development of its wireless cable assets in Miami, (ii) currently plans to
sell these assets for substantially more than their cost, and (iii) has not yet
determined in detail a new business plan (other than to continue developing the
other small companies it already owns) and cannot do so until the Merger is
completed, any measures of financial performance will have to be reconsidered.
Subject to the foregoing, the requested disclosure has been provided.
Advantages and Disadvantages of Proposed Amendments
5. The staff notes the discussion of the transaction with BellSouth,
however, the disclosure should address the timing of, and reasons for the
proposals in light of the pending transaction and following the completion of
the transaction.
As we discussed, the Company has sought anti-takeover protection in view
of the enhanced liquidity that will result if the Merger is consummated, but
does not consider it advisable to state publicly its concerns. In addition, the
Company may commit to a new business venture, in which it will commit its
available capital, either before or after the Merger, although there are no
current specific plans for any such venture. The requested disclosure has been
provided in the discussions of the Company's business and liquidity in its
Annual Report on Form 10-K which will be distributed with the proxy statement.
Please call me at 212 946-0226 or Daniel Batterman, Esq. of this office at
212 946-0302 if you have any further questions or comments.
Very truly yours,
James Kardon
cc: National Wireless Holdings Inc.
<PAGE>
PROXY
NATIONAL WIRELESS HOLDINGS INC.
PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 18, 1997
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of National Wireless Holdings Inc. (the "Company") to be
held on April 18, 1997 and the Proxy Statement in connection therewith, each
dated April 3, 1997; (b) appoints Terrence S. Cassidy and Michael J. Specchio as
Proxies, or any of them, each with the power to appoint a substitute; (c)
authorizes the Proxies to represent and vote, as designated hereon, all the
shares of Common Stock of the Company, held of record by the undersigned on
March 17, 1997, at such Annual Meeting and at any adjournment(s) thereof; and
(d) revokes any proxies heretofore given.
/X/ Please mark your votes as in this example
1. Amendment of Certificate of Incorporation
(a) to provide for the election of directors to staggered terms and for
certain related matters.
/ / FOR / / AGAINST / / ABSTAIN
(b) to broaden the indemnity of directors and officers.
/ / FOR / / AGAINST / / ABSTAIN
(c) to provide standards for the Board of Directors in evaluating certain
offers.
/ / FOR / / AGAINST / / ABSTAIN
(d) to require that stockholder actions may only be taken at an annual or
special meeting of stockholders and may not be taken by written consent.
/ / FOR / / AGAINST / / ABSTAIN
(e) to require that certain sections of the Certificate of Incorporation may
only be amended by the affirmative vote of at least 75% of the total number
of the then outstanding shares of capital stock of the Company.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
SEE REVERSE SIDE
<PAGE>
[REVERSE SIDE OF FORM OF PROXY]
2. Amendment of By-Laws
(a) to provide for the election of directors to staggered terms.
/ / FOR / / AGAINST / / ABSTAIN
(b) to provide for the removal of directors only for "cause".
/ / FOR / / AGAINST / / ABSTAIN
3. Election of Directors-Nominees: Terrence S. Cassidy, Michael J. Specchio,
Thomas R. DiBenedetto, Louis B. Lloyd, Michael A. McManus, Jr.
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for
all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual, strike a line
through the nominee's name in the list above. In the event the proposed
amendments to the Company's Certificate of Incorporation and By-Laws authorizing
a staggered Board of Directors are not approved, then each nominee shall serve
for a term of one year.
4. Ratification of Coopers & Lybrand, L.L.P. as the Company's independent
auditors
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED as directed, or, if no contrary direction is indicated,
will be voted FOR the amendments to the Certificate of Incorporation, FOR the
amendments to the By-Laws, FOR the election of directors and FOR the
ratification of Coopers & Lybrand, L.L.P. as independent auditors and as said
proxies deem advisable on such other matters as may properly come before the
meeting.
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SIGNATURE(S)
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SIGNATURE(S)
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NOTE: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH.
DATE
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