SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
</Table>
WARWICK VALLEY TELEPHONE COMPANY
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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WARWICK VALLEY TELEPHONE COMPANY
47 Main Street
Warwick, New York 10990
- --------------------------------------------------------------------------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
April 25, 2003
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Warwick Valley
Telephone Company (the "Company") will be held at 2:00 p.m., local time, on
Friday, April 25, 2003 (the "Meeting"), at Kites Restaurant Atop The Spa at 2
Chamonix Drive, Vernon, New Jersey, for the following purposes, which are more
fully discussed in the accompanying Proxy Statement:
I. To fix the number of Directors at nine until the next Annual
Meeting of Shareholders; and to elect three Class I Directors of
the Company;
II. To approve proposed amendments to and restatement of the
Company's Certificate of Incorporation as recommended by the
Board of Directors, including, without limitation, a 3-for-1
split of the Company's Common Shares and an increase in the
number of authorized Common and Preferred Shares; and
III. To transact such other business as may properly be brought
before the Meeting or any adjournment thereof.
The holders of the Common Shares of the Company of record at the close of
business on March 18, 2003 will be entitled to vote on each of the above
matters.
The holders of the 5% Series Preferred Shares of the Company of record at the
close of business on March 18, 2003 will be entitled to vote on the proposed
amendments to the Company's Certificate of Incorporation that effect an increase
in number and a decrease in par value of the Preferred Shares of the Company, or
otherwise relate to the Preferred Shares of the Company.
IF YOU PLAN TO ATTEND:
PLEASE NOTE THAT ATTENDANCE WILL BE LIMITED TO SHAREHOLDERS AND ONE GUEST.
ADMISSION WILL BE ON A FIRST-COME, FIRST-SERVED BASIS. REGISTRATION WILL BEGIN
AT 12:00 NOON, AND SEATING WILL BEGIN AT 1:00 P.M. EACH SHAREHOLDER MAY BE ASKED
TO PRESENT VALID PICTURE IDENTIFICATION, SUCH AS A DRIVER'S LICENSE OR PASSPORT.
SHAREHOLDERS HOLDING STOCK IN BROKERAGE ACCOUNTS ("STREET NAME" HOLDERS) WILL
NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF
THE RECORD DATE. CAMERAS, RECORDING DEVICES AND OTHER ELECTRONIC DEVICES WILL
NOT BE PERMITTED AT THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Herbert Gareiss, Jr.
-----------------------------------
Herbert Gareiss, Jr., Secretary
March 25, 2003
PROXY STATEMENT
TABLE OF CONTENTS
Page
GENERAL INFORMATION ABOUT VOTING ..........................................1
I. DETERMINATION OF NUMBER OF DIRECTORS AND ELECTION OF DIRECTORS
Proposal IA: Fixing Number of Directors ..............................2
Proposal IB: Election of Class I Directors ...........................2
Information About Directors and Nominees for Election as Directors ...3
Board Meetings and Board Committees ..................................3
Compensation of Directors ............................................4
Security Ownership of Certain Beneficial Owners and Management .......4
Section 16(a) Beneficial Ownership Reporting Compliance ..............5
Executive Compensation ...............................................5
Report of Officers' Compensation Committee with Respect to
Executive Compensation .............................................5
Report of the Audit Committee to Shareholders ........................6
Stock Price Performance Graph ........................................7
Compensation Committee Interlocks and Insider Participation ..........8
Management Retirement Plan ...........................................8
Audit Fees ...........................................................8
II. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
General Description of the Proposed Amendments and Vote Required .....8
Proposal IIA: Approval of Amendment to Increase the Number of Authorized
Common Shares and Change From No-Par to $0.01 Par ....9
Proposal IIB: Approval of Amendment to Effect 3-for-1 Split of the
Company's Common Shares ..............................9
Proposal IIC: Approval of Amendment to Increase the Number of
Authorized Preferred Shares, Change the Par Value of
Unissued Preferred Shares and Increase Flexibility
in Establishing Terms of Series .....................11
Proposal IID: Approval of Amendment to Revise the Purpose Clause ....12
Proposal IIE: Approval of Amendment to Change the Number of
Directors ...........................................12
Proposal IIF: Approval of Right to Remove Directors For Cause .......12
Proposal IIG: Approval of Amendment to Make Various Other Changes to
the Certificate of Incorporation ....................12
III. INDEPENDENT AUDITORS ................................................13
IV. OTHER MATTERS WHICH MAY COME BEFORE THE MEETING .....................13
V. SHAREHOLDER PROPOSALS ...............................................13
APPENDIX A: RESTATED CERTIFICATE OF INCORPORATION .........................I
APPENDIX B: NOTICE OF SHAREHOLDER NOMINEES.................................i
PROXY STATEMENT
Annual Meeting of Shareholders
Warwick Valley Telephone Company
47 Main Street, Warwick, New York 10990
March 25, 2003
This Proxy Statement is furnished to shareholders in connection with a
solicitation of proxies by the Board of Directors of Warwick Valley Telephone
Company (the "Company"), to be used at the Annual Meeting of Shareholders of the
Company which will be held at 2:00 p.m., local time, on Friday, April 25, 2003,
at Kites Restaurant Atop The Spa at 2 Chamonix Drive, Vernon, New Jersey, and at
any adjournments thereof (the "Meeting"), for the purposes set forth in the
preceding notice of the Annual Meeting of Shareholders. Each properly executed
proxy received in time for the Meeting will be voted in the manner set forth
herein unless specifically otherwise directed by the shareholder, in which
case the applicable proxy will be voted as directed. Holders of Common Shares
and holders of Preferred Shares will receive separate forms of proxies, and
holders of both Common and Preferred Shares will receive one form of proxy for
each class of shares. Forms of proxy for holders of Common Shares will be
referred to as "Common Share proxies," and those for holders of Preferred Shares
will be referred to as "Preferred Share proxies." If an enclosed form of proxy
is executed and returned, it may nevertheless be revoked at any time by
delivering a notice of revocation or a duly executed proxy bearing a later
date to the Secretary of the Company before the proxy is voted.
At the close of business on March 18, 2003, the record date for the
Meeting, the Company had outstanding 1,799,862 Common Shares, without par value
("Common Shares"), and 5,000 preferred shares of the series known as "5% Series
Preferred Shares" (the "5% Preferred Shares"). Only holders of record as of the
record date will be entitled to vote on the matters to be considered at the
Meeting or any adjournments thereof. Each holder of Common Shares is entitled to
one vote on all matters for each Common Share owned of record. Each holder of 5%
Preferred Shares is entitled to one vote for each 5% Preferred Share owned of
record with respect to each matter relating to a change in the terms of the
Company's Certificate of Incorporation dealing with the 5% Preferred Shares and
other shares that are part of the class of preferred shares ("Preferred
Shares"), as set forth more fully below.
Votes cast by proxy or in person at the Meeting will be counted by the
persons appointed by the Company to act as tellers for the Meeting. The tellers
will treat shares represented by proxies that reflect abstentions or "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
and with respect to which the broker or nominee does not have discretionary
power to vote on a particular matter) as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the Meeting but not
as votes cast.
A quorum will exist for the election of Directors and the approval of the
amendments being proposed to the Company's Certificate of Incorporation if the
holders of record of a majority of the Common Shares are present at the Annual
Meeting in person or by proxy and, with respect to the amendment (Proposal
IIC) that requires the approval of the holders of 5% Preferred Shares, if the
holders of record of a majority of the 5% Preferred Shares are also present in
person or by proxy.
Pursuant to the Company's By-laws, the election of any director requires an
affirmative vote of a plurality and all other matters, if any, other than the
amendment and restatement of the Company's Certificate of Incorporation, require
a majority of the votes of the Company's Common Shares represented at the
Meeting in person or by proxy and entitled to vote and voting on that proposal.
The proposed amendments to the Company's Certificate of Incorporation are
discussed below. All of those amendments require the affirmative vote of a
majority of the outstanding Common Shares. In addition, the proposed amendments
that relate to the 5% Preferred Shares or the class of Preferred Shares as a
whole require the affirmative vote of a majority of the outstanding 5% Preferred
Shares. Accordingly, with respect to the proposed amendments, abstentions and
broker non-votes will have the same effect as negative votes. In addition, as
described below, certain amendments will not be treated as having been adopted
unless certain others have also been adopted.
The Company is sending only one annual report and proxy statement to
eligible shareholders who share a single address unless the Company has received
instructions to the contrary from any stockholders at that address. This
practice, known as "householding," is designed to reduce the Company's
printing and postage costs. However, if a shareholder of record residing at such
address wishes to receive a separate annual report or proxy statement in the
future, he or she may contact Herbert Gareiss, Jr. at Warwick
1
Valley Telephone Company, 47 Main Street, Warwick, New York 10990, (845)
986-8080. The Company hereby undertakes to deliver promptly, upon written or
oral request, a separate copy of the annual report or proxy statement, as
applicable, upon such request. Eligible shareholders of record receiving
multiple copies of the Company's annual report and proxy statement can request
householding by contacting the Company in the same manner. Shareholders who own
shares through a bank, broker or other nominee can request householding by
contacting the nominee.
The Annual Report to Shareholders for the fiscal year ended December 31,
2002, including financial statements, was mailed together with this Proxy
Statement to all shareholders of record. Such report is not part of the proxy
soliciting material.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO ANY OF ITS SHAREHOLDERS, UPON
SUCH SHAREHOLDER'S WRITTEN REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT TO
THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. REQUESTS FOR SUCH COPIES SHOULD
BE DIRECTED TO: HERBERT GAREISS, JR., WARWICK VALLEY TELEPHONE COMPANY, 47
MAIN STREET, WARWICK, NEW YORK 10990.
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mails, proxies may be solicited by officers, directors and
regular employees of the Company personally, by telephone or telegraph. The
approximate date on which this Proxy Statement and accompanying form(s) of proxy
are first being sent to shareholders is March 25, 2003.
I. DETERMINATION OF NUMBER OF DIRECTORS AND ELECTION OF DIRECTORS
PROPOSAL IA: FIXING NUMBER OF DIRECTORS
Pursuant to the Company's By-laws, the size of the Company's Board of
Directors is fixed at each Annual Meeting of Shareholders until the next Annual
Meeting of Shareholders. The Company's Board of Directors recommends a vote in
favor of fixing the size of the Board of Directors of the Company at nine until
the next Annual Meeting of Shareholders and (unless otherwise instructed
therein) the persons named in the enclosed proxy, if it is a Common Share proxy,
will vote such proxy FOR such proposal.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL IA BY THE
HOLDERS OF THE COMMON SHARES.
PROPOSAL IB: ELECTION OF CLASS I DIRECTORS
The Company's By-laws provide that the Board of Directors of the Company
shall be divided into three classes of at least three Directors each. Such
classes are designated "Class I", "Class II" and "Class III". The Directors in
each Class are elected in alternating years for three-year terms. At the
Meeting three Directors will be elected to Class I for terms which will last
until the 2006 Annual Meeting of Shareholders (and until their respective
successors shall have been elected and qualified).
Unless authority for one or more of the nominees is specifically withheld
according to the instructions, proxies in the enclosed form, if they are Common
Share proxies, will be voted FOR the election of each of the three nominees
named below to the position of Director.
Rafael Collado
Robert J. DeValentino
M. Lynn Pike
All of the above nominees, other than Mr. Rafael Collado, are presently
serving as Directors of the Company, and their terms as such expire upon the
election of Directors at the Meeting. Mr. Rafael Collado replaces Mr. Howard
Conklin, Jr., who is not seeking re-election.
If any of the nominees shall be unable to serve, proxies will be voted
with the discretionary authority for a substitute chosen by the Board of
Directors. The Company has no reason to believe that any nominee will be
unable to serve.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THE THREE
NOMINEES NAMED ABOVE AS CLASS I DIRECTORS BY THE HOLDERS OF THE COMMON SHARES.
2
INFORMATION ABOUT DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
Name, Age and Other Position, Period Served as Director and
if any, with the Company Past Business Experience
- ---------------------------------------------------------------------------------------------------------------------
NOMINEES FOR CLASS I DIRECTORS
(TERM WILL EXPIRE IN 2006)
Rafael Collado, 49 ..........................Chairman and CEO of Phacil, Inc., an information technology company,
since 2000; engineer and IT systems expert, specializing in the
telecommunications and IT industries; founded, built and sold three
companies, Inabox, Bern Associates, Inc. and Sigma Research, from
prior to 1998; instrumental in the development of frame relay
technology and the introduction of Monofrad technology to
companies such as Pacific Bell, US West and GTE.
Robert J. DeValentino, 59 ...................Director since 1998; President/Executive Director of Arden Hill/Horton
Healthcare Foundations since October 2001; Executive Director of the
Horton Healthcare Foundation from 1998 to 2001; District Manager
for Citizens Telecommunications in Middletown, N.Y., prior to 1998.
M. Lynn Pike, 56 ............................Director since 2000; President of the Company since January 2000;
President President and Director of Warwick Valley Mobile Telephone Company,
Inc., Warwick Valley Long Distance Company, Inc., Warwick Valley
Networks, Inc. and Hometown Online, Inc. since 2000; General
Manager of Geneseo Telephone Company and Chief Operating Officer
of Illinois PCS in Geneseo, Ill., from 1996 until January 2000;
Managing Director of United Telecom International in Budapest,
Hungary prior to 1996.
DIRECTORS WHOSE TERMS DO NOT EXPIRE AT THE MEETING
(ELECTED IN 2001 AND 2002)
Wisner H. Buckbee, 66 .......................Director since 1991 (Class II: current term expires in 2004); Chairman
Chairman of the Board of the Board since January 2001; President of Wisner Farms, Inc., an
operating dairy farm, since before 1998.
Joseph E. DeLuca, M.D., 52 ..................Director since 1993 (Class II: current term expires in 2004); Physician,
Vernon Urgent Care Center, Vernon, N.J., since before 1998.
Philip S. Demarest, 66 ......................Director since 1964 (Class III: current term expires in 2005); Vice
President, Secretary and Treasurer of the Company at various times
until retiring in 1998; Secretary and Director of Warwick Valley Mobile
Telephone Company, Inc., Warwick Valley Long Distance Company,
Inc., Warwick Valley Networks, Inc. and Hometown Online, Inc. at
various times until 1998.
Herbert Gareiss, Jr., 57 ....................Director since 1998 (Class III: current term expires in 2005); Assistant
Vice President Secretary and Assistant Treasurer of the Company from 1980 until
1990; Vice President since 1990; Secretary of the Company since
January 2002; Vice President and Director of Warwick Valley Mobile
Telephone Company, Inc., Warwick Valley Long Distance Company,
Inc., Warwick Valley Networks, Inc. and Hometown Online, Inc. since
before 1998.
Fred M. Knipp, 72 ...........................Director since 1989 (Class II: current term expires in 2004); President
of the Company from 1988 until retiring in January 2000; President
and Director of Warwick Valley Mobile Telephone Company, Inc.,
Warwick Valley Long Distance Company, Inc., Warwick Valley
Networks, Inc. and Hometown Online, Inc. from prior to 1998 until
retiring in January 2000.
Corinna S. Lewis, 64 ........................Director since 1994 (Class III: current term expires in 2005);
Retired public relations consultant.
BOARD MEETINGS AND BOARD COMMITTEES
The Board of Directors held twelve regular meetings, three special meetings
and one independent directors' meeting during the year ended December 31, 2002.
It has standing Audit, Officers' Compensation and Nominating Committees. Each
Director attended 75% or more of the meetings of the Board and of the
Committees on which he or she served during such year.
The Audit Committee held four meetings in 2002. Director DeLuca is Chairman
of the Committee and Directors Buckbee,
3
Conklin, Demarest, DeValentino, Lewis and Nielsen are members. All are
independent directors under current NASDAQ rules. The Audit Committee's duties
and responsibilities include recommending to the Board of Directors the
engagement of the Company's independent auditors, approving the plan and scope
of the audit and the fee before the audit begins and, following the audit,
reviewing the results and the independent auditors' comments on the Company's
system of internal accounting controls with the independent auditors, and
recommending the inclusion of the Company's audited financial statements in its
Annual Report on Form 10-K. The Committee also advises the Board as to the
implementation of recommendations which have been made pursuant to suggestions
of the independent auditors.
In carrying out these functions, the Audit Committee represents the Board
in discharging its responsibility of oversight, but the Company's management and
the independent auditors continue to have responsibilities with respect to the
accounting and control functions and financial statement presentation. The
Report of the Audit Committee to the Shareholders relating to the year ended
December 31, 2002 appears on page 6 of this Proxy Statement.
The Officers' Compensation Committee held five meetings in 2002. Director
DeValentino is Chairman of the Committee and Directors Buckbee, Conklin, DeLuca,
Demarest, Knipp, Lewis and Nielsen are members. The Committee makes specific
salary recommendations to the Board concerning executive officers of the
Company and reviews salaries of other management personnel. The Report of the
Officers' Compensation Committee appears on page 5 of this Proxy Statement.
The Nominating Committee held three meetings during 2002. Director Knipp is
Chairman of the Committee and Directors Buckbee and DeLuca are members. The
Nominating Committee recommends to the Board the names of nominees to be
recommended for election or re-election as Directors by the shareholders at
Annual Meetings of Shareholders. The Nominating Committee is not precluded from
considering written recommendations for nominees from shareholders. Pursuant to
the Company's By-laws, such recommendations by Shareholders for the 2004 Annual
Meeting of Shareholders must be received, together with any proposed nominee's
name, age, business and residence address, principal occupation or employment,
class and number of Company Shares beneficially owned and other information
relating to such proposed nominee that is required to be disclosed in
solicitations of proxies for election of directors, by the Secretary of the
Company not later than November 26, 2003. A copy of this By-law is set forth in
Appendix B. Please note that under such By-law no nomination by a Shareholder at
an Annual Meeting is permissable unless it has been received by the Company by
the date set forth above.
COMPENSATION OF DIRECTORS
During the year ended December 31, 2002, the Company paid Directors $450
and the chairman $675 per regular, special or independent directors' meeting for
their services. During the year ended December 31, 2002 such fees paid
aggregated $68,625. Non-employee Board committee members also receive $225 per
committee meeting. During the fiscal year ended December 31, 2002 such fees
aggregated $13,950. The Company had no other compensation arrangements with
non-employee directors during the year ended December 31, 2002.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 18, 2003, certain information
concerning shares of the Company's capital stock held by: (i) each shareholder
known by the Company to own beneficially more than 5% of a class of the
Company's outstanding equity securities; (ii) each Director of the Company;
(iii) each "Named Executive" (see "Executive Compensation"); and (iv) all
Directors and executive officers of the Company as a group. Holders of the
Company's 5% Preferred Shares are entitled to vote those shares at the Meeting
only with respect to the proposed amendments to the Company's Certificate of
Incorporation that relate to Preferred Shares.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER ADDRESS TITLE OF CLASS OWNERSHIP (SHARES) OF CLASS
- ------------------------------------------------------------------------------------------------------------------
Julia S. Barry 20 Fairview Ave., Warwick, NY 10990 Common Shares 120,340 6.69%
Julia S. Barry 20 Fairview Ave., Warwick, NY 10990 5% Preferred 142 2.84%
Wisner H. Buckbee 64B Upper Wisner Rd., Warwick, NY 10990 Common Shares 6,114 0.34%
Wisner H. Buckbee 64B Upper Wisner Rd., Warwick, NY 10990 5% Preferred 20 0.40%
Howard Conklin, Jr. 5 Spanktown Rd., Warwick, NY 10990 Common Shares 9,720(*) 0.54%
Joseph E. DeLuca 5 Stone Ridge Rd., Sussex, NJ 07461 Common Shares 2,000(*) 0.11%
Philip S. Demarest 10 Crescent Ave., Warwick, NY 10990 Common Shares 8,906 0.49%
Philip S. Demarest 10 Crescent Ave., Warwick, NY 10990 5% Preferred 10 0.20%
Robert J. DeValentino 44 Jackson Ave., Middletown, NY 10940 Common Shares 500 0.03%
Larry D. Drake 10 Patriot Way, Glenwood, NJ 07418 Common Shares 101 0.01%
Herbert Gareiss, Jr. 267 Bellvale Lakes Rd, Warwick, NY 10990 Common Shares 14,237(*) 0.79%
Philip A. Grybas 34 Crystal Farm Rd., Warwick, NY 10990 Common Shares 100 0.01%
Fred M. Knipp 15 Almond Tree Lane, Warwick, NY 10990 Common Shares 14,753(*) 0.82%
Fred M. Knipp 15 Almond Tree Lane, Warwick, NY 10990 5% Preferred 85 1.70%
Corinna S. Lewis PO Box 318, Warwick, NY 10990 Common Shares 2,608 0.14%
Corinna S. Lewis PO Box 318, Warwick, NY 10990 5% Preferred 15 0.30%
Henry L. Nielsen, Jr. PO Box 848, Warwick, NY 10990 Common Shares 300 0.02%
M. Lynn Pike 8 Silo Lane, Warwick, NY 10990 Common Shares 1,001 0.06%
Brenda A. Schadt 164 Bushville Rd., Westtown, NY 10998 Common Shares 6,292 0.35%
Brenda A. Schadt 164 Bushville Rd., Westtown, NY 10998 5% Preferred 5 0.10%
4
Total Directors and Executive Officers as a group (13 persons):
Total Common Shares ..................66,632 3.70% of the class
Total 5% Preferred Shares ...............135 2.70% of the class
-----------------------------------------------------------------------------
(*) Includes shares held by spouse.
As of March 18, 2003, the only holder of more than 5% of the Company's
Common Shares known to the Company was Julia S. Barry, Warwick, New York 10990,
who holds 120,340 shares (6.69%).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely and in reliance upon a review of the Forms 3, 4 and 5
submitted to the Company during or with respect to calendar year 2002, copies
of reports filed with the Securities and Exchange Commission and written
representations that no Forms 5 were required, the Company believes that all
such reports were filed on time, except that Mr. M. Lynn Pike, President and
Director, filed late one report on Form 4 reporting IRA dividend reinvestment
purchases for the calendar year 2002. Such report has since been filed, and all
of the Company's Directors and executive officers are now current in such
filings.
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual compensation for
services rendered to the Company in all capacities, for the years ended December
31, 2002, 2001 and 2000, paid by the Company to those persons who were, at the
end of the year ended December 31, 2002, the President of the Company and the
other four highest paid executive officers of the Company in 2002 (collectively,
the "Named Executives"):
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION
NAME AND ------------------- ALL OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(*)
- ---------------------------------------------------------------------------------------------------
M. Lynn Pike 2002 $ 214,326 $ 4,142 $ 18,621
President and Director 2001 $ 203,749 $ 3,653 $ 17,400
2000 $ 182,596 $ -- $ 17,668
Herbert Gareiss, Jr. 2002 $ 166,472 $ 3,238 $ 19,653
Vice President and Director 2001 $ 157,230 $ 2,826 $ 17,453
2000 $ 142,846 $ 2,596 $ 18,621
Larry D. Drake 2002 $ 164,894 $ 3,209 $ 12,136
Vice President 2001 $ 154,474 $ 2,798 $ 12,057
2000 $ 135,999 $ 2,615 $ 10,942
Philip A. Grybas 2002 $ 164,894 $ 3,209 $ 11,219
Vice President and 2001 $ 63,374 $ -- $ 4,476
Chief Financial Officer, Treasurer
Brenda A. Schadt 2002 $ 134,826 $ 2,642 $ 6,815
Vice President 2001 $ 125,288 $ 2,211 $ 6,506
2000 $ 111,538 $ 2,019 $ 5,807
(*) Directors' fees, where applicable, Company match of 401(k)
contributions and Company-paid life insurance premiums.
The following shows the components of All Other Annual Compensation for each
Named Executive for the year 2002:
NAME DIRECTOR FEES 401(k) MATCH LIFE INSURANCE PREMIUM
- ---------------------------------------------------------------------------------------------------
M. Lynn Pike $ 6,750 $ 11,000 $ 871
Herbert Gareiss, Jr. $ 6,750 $ 11,000 $ 1,903
Larry D. Drake $ -- $ 11,000 $ 1,136
Philip A. Grybas $ -- $ 10,203 $ 1,015
Brenda A. Schadt $ -- $ 6,639 $ 175
REPORT OF OFFICERS' COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE
COMPENSATION
April 11, 2002
EXECUTIVE COMPENSATION'S PHILOSOPHY AND POLICY
The Company believes that a compensation program should offer
performance-based compensation to the Company's employees and reward employees
whose results enable the Company to achieve its vision. The executive
compensation program is designed to measure and enhance executive performance.
The Company's executive compensation program has two components:
- Base Salary
- Annual Bonus
5
These components are designed to provide incentives and motivate key
executives, including the Named Executives, whose efforts and job performance
will enhance the strategic well-being of the Company and maximize value to its
shareholders. The program is also structured to attract and retain the highest
caliber executives.
The executive compensation program compensates the individual executive
officers based on the Company's consolidated performance and the individual's
contribution. The program is designed to be competitive with compensation
programs offered by comparable employers.
Public information concerning salaries paid by companies in the
telecommunications and related industries is used to determine what a comparable
firm would consider an appropriate performance-based compensation package for
its executives.
BASE SALARY
The salaries of the Named Executives, including Mr. Pike, were determined
based on each Named Executive's performance and an analysis of base salaries
paid to executive officers having similar responsibilities in other companies.
The level of Mr. Pike's base salary was also based upon a subjective assessment
of his individual performance and responsibilities as well as overall corporate
performance as measured by actual earnings per share, cash flow and growth of
the Company's business. The performance of other Named Executives is measured
similarly, but the criteria used to determine their compensation are based more
on their individual responsibilities. No relative weights are attributed to any
specific measurement factors.
ANNUAL BONUS
The Company's annual bonus plan is designed to reward all Company employees
on the basis of consolidated corporate results during the past year. Employees,
including executive officers, may be entitled to a cash bonus based on the
change in consolidated corporate earnings for the current year as compared to
the immediate previous year. The amount of the bonus has traditionally been up
to one week's salary and is determined each year by the Board of Directors.
COMPENSATION COMMITTEE:
Henry L. Nielsen, Jr., Chairman Philip S. Demarest
Wisner H. Buckbee Robert J. DeValentino
Howard Conklin, Jr. Fred M. Knipp
Dr. Joseph E. DeLuca Corinna S. Lewis
REPORT OF THE AUDIT COMMITTEE TO SHAREHOLDERS
The following report of the Audit Committee of the Board of Directors (the
"Audit Committee") required by the rules of the Securities and Exchange
Commission to be included in this proxy statement shall not be deemed
incorporated by reference by any statement incorporating this proxy statement by
reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under either such Act.
The Audit Committee is comprised of seven members of the Company's Board of
Directors, each of whom is independent pursuant to NASDAQ National Market
listing standards. The duties and responsibilities of the Audit Committee are
set forth in the Audit Committee Charter, as adopted by the Board of Directors
and included in the Company's 2001 Proxy Statement. The Audit Committee, among
other things, recommends to the Board of Directors: (a) whether the audited
financial statements should be included in the Company's Annual Report on Form
10-K; and (b) the selection of the independent auditors to audit the books and
records of the Company.
The Audit Committee has: (a) reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2002 with the
Company's management and with Bush & Germain, P. C., the Company's independent
auditors; (b) discussed with the Company's independent auditors the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards); (c) received and discussed the written disclosures and the letter
from the Company's independent auditors required by Independence Standards Board
Standard No. 1 (Independent Discussions with Audit Committee); and has discussed
with the Company's independent auditors their independence. Based on such review
and discussions with management and the independent auditors, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2002 for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE:
Dr. Joseph E. DeLuca, Chairman Robert J. DeValentino
Wisner H. Buckbee Corinna S. Lewis
Howard Conklin, Jr. Henry L. Nielsen, Jr.
Philip S. Demarest
6
STOCK PRICE PERFORMANCE GRAPH
This graph shows, as a percentage, the Company's cumulative total
shareholder return, assuming reinvestment of dividends, compared against the
Russell 2000, a widely regarded stock market index representing 2000 small cap
companies and a peer group consisting of D&E Communications, Inc., Hector
Communications, Inc., Hickory Tech Corporation, North Pittsburgh Systems, Inc.,
NTELOS, Inc. and Shenandoah Telecommunications. A variety of factors may be used
in order to assess a corporation's performance. This Stock Price Performance
Graph, which reflects the Company's total return against the Russell 2000 and a
peer group of telecommunications companies, reflects one such method. The
shareholder return values for the Company included in the graph for years ended
1998, 1999, 2000, 2001 and 2002 were established by using the closing price on
the last days in December on which the Company's Common Stock traded, which were
December 16, 1998, December 29, 1999, December 26, 2000, December 31, 2001, and
December 31, 2002, respectively.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
(GROWTH CHART - VALUE OF $100 INVESTMENT)
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
WWVY 100.00 172.77 214.60 191.98 284.82 351.44
Index 100.00 97.44 118.16 114.58 117.43 93.38
Peer Group 100.00 94.83 137.48 128.89 153.29 99.10
7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Officers' Compensation Committee at the year ended
December 31, 2002 were Mr. Buckbee, Mr. Conklin, Dr. DeLuca, Mr. Demarest, Mr.
DeValentino, Mr. Knipp, Mrs. Lewis and Mr. Nielsen. None of these persons was,
during 2002, an officer or employee of the Company or any of its subsidiaries.
Mr. Demarest and Mr. Knipp are former officers and employees of the Company,
having retired in 1998 and January 3, 2000, respectively.
MANAGEMENT RETIREMENT PLAN
The Company's Management Retirement Plan (the "Plan") covers all management
employees over the age of 21 who have completed one year of eligible service.
The Plan benefits are fully vested after five years of service. Normal
retirement under the plan is at age 60. An employee's accumulated monthly
retirement benefit equals either: (1) 2-1/2% times years of service times
average monthly earnings (maximum benefit not to exceed the lesser of 25% of
average monthly earnings on a monthly basis or $10,800 annually); or (2) 1%
times years of service times average monthly earnings. Retirement benefits for
employees hired prior to December 1, 1985 are determined by using the
calculation that results in the highest amount. Retirement benefits for
employees hired on or after December 1, 1985 are calculated by using the second
method. Three years of benefit service are currently credited to M. Lynn Pike,
twenty-two years of benefit service are currently credited to Herbert Gareiss,
Jr., four years of benefit service are currently credited to Larry D. Drake,
forty years of benefit service are currently credited to Brenda A. Schadt, and
one year of service is credited to Philip A. Grybas. Average monthly earnings
equal the highest average earnings per month during any three consecutive
twelve-month periods within the last ten twelve-month periods immediately
preceding retirement. The Plan does not provide for any deductions for social
security benefits received.
Annual benefits payable at age 60 to Plan participants are illustrated in
the following table:
AVERAGE ANNUAL SALARY
DURING HIGHEST PAID
PERIOD OF THREE ANNUAL RETIREMENT BENEFITS
CONSECUTIVE YEARS YEARS OF BENEFIT SERVICE
- ------------------------------------------------------------------------------------------------------
5 10 15 20 30 40 45
- ------------------------------------------------------------------------------------------------------
$130,000 6,500 13,000 19,500 26,000 39,000 52,000 58,500
$150,000 7,500 15,000 22,500 30,000 45,000 60,000 67,500
$170,000 8,500 17,000 25,500 34,000 51,000 68,000 76,500
$190,000 9,500 19,000 28,500 38,000 57,000 76,000 85,500
$210,000 10,500 21,000 31,500 42,000 63,000 84,000 94,500
$230,000 11,500 23,000 34,500 46,000 69,000 92,000 103,500
$250,000 12,500 25,000 37,500 50,000 75,000 100,000 112,500
$270,000 13,500 27,000 40,500 54,000 81,000 108,000 121,500
AUDIT FEES
Audit Fees: For professional services rendered in connection with the audit
of the Company's annual financial statements for 2002, and reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for 2002, Bush & Germain, P. C. billed the Company fees in the aggregate amount
of $40,539.
All Other Fees: For professional services other than those described above
rendered for 2002, Bush & Germain, P. C. billed the Company fees in the
aggregate amount of $9,322.
The Audit Committee has concluded that the provision of services described
above under the heading "All Other Fees" is compatible with maintaining the
independence of Bush & Germain, P. C.
II. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
GENERAL DESCRIPTION OF THE PROPOSED AMENDMENTS AND VOTE REQUIRED
On February 19, 2003, the Board of Directors unanimously adopted
resolutions approving a proposal to amend and restate the Company's Certificate
of Incorporation in order to (A) increase the number of Common Shares which the
Company is authorized to issue from 2,160,000 shares to 10,000,000 shares and to
change the Common Shares from no par value to $0.01 par value per share; (B)
effect a 3-for-1 split of the 1,994,423 issued Common Shares, including both
those that are outstanding and those held in treasury; (C) increase the number
of Preferred Shares which the Company is authorized to issue from 7,500 shares,
par value $100 per share, to 10,005,000 shares, of which the 5,000 5% Preferred
Shares currently issued and outstanding would retain their par value of $100 per
share and the remaining 10,000,000 Preferred Shares to be authorized would have
a par value of $0.01, while at the same time granting the Board of Directors
greater flexibility in establishing the terms of any new series of Preferred
Shares and clarifying that the holders of the Company's 5% Preferred Shares do
not have the right to convert such shares into
8
Common Shares; (D) revise the purpose clause to enable the Company to benefit
from increased statutory flexibility; (E) increase the maximum number of
directors to twelve; (F) permit the removal of directors for cause; and (G) make
non-substantive changes to numbering and style, so that, for example, terms such
as "Common Shares" are used consistently throughout the Certificate of
Incorporation, the word "The" is dropped from the beginning of the Company's
name and obsolete provisions are omitted. The Board of Directors determined that
such amendments are advisable and directed that the proposed amendments be
considered at the Annual Meeting of Shareholders to be held April 25, 2003. The
affirmative vote of the holders of a majority of the outstanding Common Shares
is required to approve the proposed amendments. In addition, the affirmative
vote of the holders of a majority of the outstanding 5% Preferred Shares is
required to approve the proposed amendments referred to in clause (C) above and
other non-substantive changes relating to the 5% Preferred Shares that are
described below. If the Company receives proxies without specific voting
instructions as to any of the following Proposals, the persons named in the
proxies will vote such proxies FOR such Proposal.
As is also noted below, the Company will not treat any of the proposed
amendments set forth in clauses A, B and C above, which correspond to Proposals
IIA, IIB, and IIC, respectively, as having been adopted by its shareholders
unless all of them are.
In addition to the votes of holders of Common Shares and 5% Preferred
Shares, as the case may be, certain of the proposed amendments, such as those
affecting the number and terms of the Common Shares and the Preferred Shares,
require the approval of the New York Public Service Commission (the "NYPSC").
The Company does not, however, believe that they require the approval of the New
Jersey Board of Public Utilities (the "NJBPU") before they can become effective.
The text of the proposed amendments that are adopted by the Company's
shareholders and receive the necessary regulatory approvals will be filed with
the New York Secretary of State with any necessary changes in the designation of
articles, sections, paragraphs, clauses, and conforming terminology. If all of
the proposed amendments receive all required approvals, they will be combined
with the text of unamended portions of the Company's Certificate of
Incorporation to produce a Restated and Amended Certificate of Incorporation.
For these purposes, conforming changes to article, paragraph, section or clause
numbers, capitalization or other stylistic changes (such as using consistent
terminology to refer to the Common Shares and the Preferred Shares) will not be
considered amendments to any provision.
The full text of the proposed Restated and Amended Certificate of
Incorporation, including the language describing the proposed stock splits, is
set forth in Appendix A to this Proxy Statement. Provisions of the existing
Certificate of Incorporation that are not being amended are being retained
unchanged in the text of the proposed Restated and Amended Certificate of
Incorporation except for the kinds of conforming and stylistic changes referred
to above. The text shown has been marked to show changes from the current text.
PROPOSAL IIA
APPROVAL OF AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED
COMMON SHARES AND CHANGE FROM NO-PAR TO $0.01 PAR
Proposal IIA would amend the Company's Certificate of Incorporation to
increase the number of authorized Common Shares from 2,160,000 to 10,000,000 and
change the Common Shares from shares without par value to shares with a par
value of $0.01. In addition to increasing the number of authorized Common
Shares, this would also change the 1,799,862 Common Shares, no par value,
currently outstanding and the 194,561 Common Shares, no par value, currently
held in treasury into equal numbers of Common Shares with a par value of $0.01
per share. Proposal IIA would accommodate the 3-for-1 stock split described
below in Proposal IIB and permit the issuance of additional Common Shares for
various purposes. It would also affect the Company's "stated capital" under
the New York Business Corporation Law without affecting stockholders' equity as
shown in the Company's financial statements. These effects are all discussed
in more detail in connection with Proposal IIB below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IIA.
PROPOSAL IIB
APPROVAL OF AMENDMENT TO EFFECT 3-FOR-1 SPLIT OF THE COMPANY'S
COMMON SHARES
Proposal IIB would change the Company's 1,799,862 outstanding Common Shares
and the 194,561 issued but not outstanding Common Shares held in treasury into
5,399,586 outstanding Common Shares and 583,683 Common Shares held in treasury,
respectively. Proposal IIA must also be approved for this split to take effect,
since otherwise there would be insufficient authorized Common Shares to
accommodate the increase in the number of issued Common Shares that would result
from the split. In addition, by virtue of Proposal IIA, the newly split shares
would have a par value of $0.01 rather than having no par value. If Proposals
IIA and IIB were approved, there would be 4,016,731 authorized but unissued
shares of Common Stock, par value $0.01 per share,
9
which would have the same rights and privileges, if issued, as the other Common
Shares. The holders of Common Shares are not entitled to preemptive rights or
cumulative voting.
The Board of Directors anticipates that such an increase in the number of
outstanding shares of Common Shares of the Company would place the market price
of the Common Shares in a range more attractive to investors, particularly
individuals, and may result in a broader market for the shares.
The change from no par value to par value $0.01 would make it easier to
track the Company's "stated capital" under the New York Business Corporation
Law. It would also reduce the Company's stated capital from the current amount,
which equals the dollar amount that has actually been received by the Company
over the years for its Common Shares since such shares first became no-par
shares, plus the par value of Common Shares issued when they previously had a
par value, plus the par value of the 5% Preferred Shares. If Proposals IIA, IIB
and IIC were approved, the Company's stated capital would be an amount equal to
$0.01 times the number of issued shares after the 3-for-1 split ($59,832.69),
plus the stated capital allocated to the Preferred Shares ($500,000), for a
total of $559,832.69. It is probably impossible to calculate the Company's
current stated capital with perfect accuracy because of the age of many of the
relevant sales of Common Shares. Although this reduction in stated capital could
theoretically increase the ability of the Company to pay dividends, that is
not the purpose of the change, and the Company has no plans to change its
dividend payment practices as a result of the reduction. Furthermore, the
reduction has no effect on the Company's stockholders' equity as computed
according to generally accepted accounting principles. As can be seen from the
calculation set forth above, the reduction also would not reduce the Company's
stated capital below the amount necessary to cover the par value of the newly
split Common Shares plus the par value of the 5% Preferred Shares.
Except for the shares proposed to be issued to effectuate the stock split,
the Company currently has no specific plans, understandings or arrangements
for issuing any of the additional Common Shares to be authorized by the proposed
amendment. However, these additional Common Shares will provide the Board of
Directors with flexibility to issue additional shares for proper corporate
purposes, such as stock dividends, stock splits, acquisitions, and other similar
purposes, which could include public offerings or private placements. Moreover,
it is possible that additional Common Shares could be issued for the purpose of
making an acquisition by an unwanted suitor of a controlling interest in the
Company more difficult, time consuming or costly or to otherwise discourage an
attempt to acquire control of the Company. If the shareholder and regulatory
approvals that are described in this Proxy Statement are obtained, the Board of
Directors could authorize the issuance of any authorized but unissued Common
Shares, including those authorized by the proposed amendments, on terms
determined by it without further action by the holders of the Common Shares,
unless the shares were issued in a transaction otherwise requiring their
approval, such as a merger or consolidation. However, regulatory approval
would generally be required for such issuances. Holders of the Common Shares
should also note that issuance of additional Common Shares may tend to
indirectly affect the voting, dividend, liquidation and other rights of the
Common Shares presently outstanding.
If Proposals IIA, IIB and IIC are adopted by the Company's shareholders as
set forth in this Proxy Statement and are approved by the NYPSC and, if it
should prove necessary despite the Company's expectations, the NJBPU, the
Company will file either the relevant amendments or the Restated and Amended
Certificate of Incorporation (as the case may be) with the New York Secretary of
State and then establish and give notice of a record date. Each record owner of
Common Shares at the close of business on that record date would become the
record owner of, and be entitled to receive a new stock certificate
representing, two Common Shares, par value $0.01 per share, for each old Common
Share, no par value, owned as of that date. The Company, through its transfer
agent, will provide instructions to the holders of Common Shares regarding the
procedure which should be followed to obtain new stock certificates representing
such two new Common Shares, par value $0.01 per share, for each Common Share, no
par value, held on the record date. Existing certificates would continue to
represent the number of Common Shares they currently represent, except that each
of those shares would be treated as having a par value of $0.01.
The Company has been advised by tax counsel that if the proposed stock
split is effected after receiving the shareholder and regulatory approvals
described in this Proxy Statement it would result in no gain or loss or
realization of taxable income to owners of Common Shares under existing United
States Federal income tax laws. The cost basis for tax purposes of each Common
Share, par value $0.01 per share, would be equal to one-third of the cost basis
for tax purposes of the corresponding Common Share, no par value, immediately
preceding the stock split. In addition, the holding period for the Common Shares
issued pursuant to the stock split would be deemed to be the same as the holding
period for the original Common Shares. The laws of jurisdictions other than the
United States may impose income taxes on the issuance of the additional shares
and share owners are urged to consult their tax advisors.
The Company will apply to list the additional shares to be issued in the
stock split on NASDAQ, where the Common Shares are currently listed.
If holders of Common Shares dispose of their shares subsequent to the stock
split, they may pay higher brokerage commissions on the same relative interest
in the Company because that interest is represented by a greater number of
shares. Share owners may
10
wish to consult their brokers to ascertain the brokerage commission that would
be charged for disposing of the greater number of shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IIB.
PROPOSAL IIC
APPROVAL OF AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED
PREFERRED SHARES, CHANGE THE PAR VALUE OF UNISSUED PREFERRED SHARES
AND INCREASE FLEXIBILITY IN ESTABLISHING TERMS OF SERIES
Proposal IIC would restate the provisions in the Company's Certificate of
Incorporation regarding Preferred Shares to read as set forth in the relevant
portions of Articles THIRD and FOURTH in the Restated and Amended Certificate of
Incorporation attached as Appendix A. One of the effects of adopting this
amendment would be to increase the number of Preferred Shares which the Company
is authorized to issue from 7,500 shares with a par value of $100 per share to
10,000,000 shares with a par value of $0.01 per share and 5,000 with a par value
of $100 per share. The 5,000 shares with a par value of $100 per share are the
5% Preferred Shares that are currently issued and outstanding. The
characteristics of the 5,000 issued and outstanding 5% Preferred Shares have
been preserved by this amendment, except that a filing made inadvertently with
the New York Secretary of State by the Company in 1982 before obtaining the
required approval of the NJBPU would be removed. That filing related to the
conversion of Preferred Shares to Common Shares. The NJBPU refused to grant
approval, and the Company announced that refusal to its shareholders. As a
result, since that time the Company has treated the filing as being without
effect. In addition, non-substantive language changes in the fifth paragraph of
the terms of the 5% Preferred Shares are being proposed so that within the
proposed framework of the Restated and Amended Certificate of Incorporation
those terms will mean what they currently mean. Furthermore, provisions relating
to the voting power of holders of 5% Preferred Shares which denied those
holders a right to vote with respect to the mortgaging of the Company's property
and the guaranteeing of bonds of another corporation are proposed to be deleted
because they are now without effect. The law once provided preferred
shareholders the right to vote in such circumstances unless that right was
denied by the terms of the relevant shares, as was the case for the 5% Preferred
Shares. Since there is no longer such a general right, there is no longer a need
to deny that right. All references to a series of Preferred Shares that is no
longer outstanding would also be deleted. Despite all the changes just
described, the substantive terms of the 5% Preferred Shares would remain
unchanged and it is not presently contemplated that new certificates would be
issued. The proposed authorized and unissued shares, if and when issued, would
have the rights and privileges established at the time of their issuance by the
Board of Directors. Proposal IIC would also increase the flexibility of the
Board in establishing these rights and privileges in a manner that has become
typical in modern corporations. The holders of 5% Preferred Shares are not
entitled to preemptive rights or cumulative voting.
The additional authorized Preferred Shares being proposed would provide the
Board of Directors of the Company with flexibility to issue additional shares
for proper corporate purposes, such as stock dividends, acquisitions, and other
similar purposes, which include public offerings or private placements. The
change from a par value of $100 to a par value of $0.01 provides the Company
with greater flexibility in structuring the terms of any new series of Preferred
Shares. It is possible that the additional Preferred Shares could be issued for
the purpose of making an acquisition by an unwanted suitor of a controlling
interest in the Company more difficult, time-consuming or costly or to otherwise
discourage an attempt to acquire control of the Company. The Company currently
has no specific plans, understandings or arrangements for issuing any of the
additional Preferred Shares to be authorized by the proposed amendment. If
Proposal IIC is approved by the holders of the Common Shares and the Preferred
Shares, Proposals IIA and IIB are approved by the holders of the Common Shares
and all necessary regulatory approvals are obtained, the Board of Directors
could authorize the issuance of any authorized but unissued shares of Preferred
Shares, including those authorized by the amendment, on terms determined by it
without further action by holders of the Common Shares or the Preferred Shares,
unless the shares were issued in a transaction, such as a merger or
consolidation, otherwise requiring the approval of those holders. Holders of the
5% Preferred Shares should also note that issuance of additional Preferred
Shares may tend to indirectly affect the voting, dividend, liquidation and other
rights of the 5% Preferred Shares presently outstanding.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL IIC BY THE HOLDERS
OF THE PREFERRED SHARES AS WELL AS BY THE HOLDERS OF THE COMMON SHARES.
BECAUSE THE COMPANY BELIEVES IT IS PREFERABLE FOR THE OVERALL STRUCTURE OF
ITS CAPITAL STOCK TO BE CONSISTENT, THE COMPANY WILL NOT AMEND ITS CERTIFICATE
OF INCORPORATION TO REFLECT ANY OF THE PROPOSED CHANGES TO ITS COMMON OR ITS
PREFERRED SHARES SET FORTH ABOVE UNDER PROPOSALS IIA, IIB AND IIC UNLESS ALL OF
THEM ARE APPROVED BY THE COMPANY'S SHAREHOLDERS AND RECEIVE ALL NECESSARY
REGULATORY APPROVALS. THIS MEANS THAT ALL CHANGES MUST BE APPROVED BY THE
HOLDERS OF COMMON SHARES AND ALL CHANGES TO THE PREFERRED SHARES MUST BE
APPROVED AS WELL BY THE HOLDERS OF THE 5% PREFERRED SHARES IF ANY OF THE CHANGES
ARE TO BE EFFECTED.
11
PROPOSAL IID
APPROVAL OF AMENDMENT TO REVISE THE PURPOSE CLAUSE
Proposal IID would replace the Company's current Purpose Clause with a
provision that provides as the Company's purpose any purpose permitted to any
business corporation as set forth in Section 201 of the New York Business
Corporation Law. See Article SECOND of the Restated and Amended Certificate of
Incorporation. This type of broad Purpose Clause has long been common and is
potentially useful for the Company as the scope of the telecommunications
business expands.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IID.
PROPOSAL IIE
APPROVAL OF AMENDMENT TO CHANGE THE NUMBER OF DIRECTORS
Proposal IIE, the terms of which are set forth in Article TENTH, paragraph
1, of the Restated and Amended Certificate of Incorporation, would change the
permissible number of Directors from no less than three and no more than ten to
no less than three and no more than twelve. The increase in the maximum members
of Directors will in the view of the Company provide additional flexibility in
obtaining Directors with various types of knowledge and experience and in
ensuring a sufficient number of Directors that are "independent" within the
meaning of the securities laws and the listing requirements of NASDAQ.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IIE.
PROPOSAL IIF
APPROVAL OF RIGHT TO REMOVE DIRECTORS FOR CAUSE
Proposal IIF would permit the removal of Directors for cause. Its terms are
set forth in Article TENTH, paragraph 2, of the Restated and Amended Certificate
of Incorporation. Subject to the rights of the holders of Preferred Shares under
the Company's Certificate of Incorporation and the New York Business Corporation
Law, Directors could be removed for cause by a majority vote of the outstanding
Common Shares or by a majority vote of the Directors then in office. Without
this provision, the Board could not remove a Director for cause, which is
defined to mean the willful and continuous failure of a Director to
substantially perform his or her duties to the Company (other than by reason of
physical or mental incapacity) or a Director's willful engaging in gross
misconduct materially and demonstrably injurious to the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IIF.
PROPOSAL IIG
APPROVAL OF AMENDMENT TO MAKE VARIOUS OTHER CHANGES TO THE
CERTIFICATE OF INCORPORATION
Proposal IIG would delete miscellaneous provisions of the Company's
Certificate of Incorporation that have become obsolete, such as information
regarding the initial directors and shareholders of the Company and the
provision regarding the calculation of the Company's capital. It would also
formally eliminate the word "The" from the beginning of the Company's name to
conform to long-standing usage, add a technical designation of the New York
Secretary of State as an agent of the Company for service of process and make
various conforming stylistic changes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF THE COMMON
SHARES "FOR" PROPOSAL IIG.
12
III. INDEPENDENT AUDITORS
The Company is not requesting its shareholders to ratify its independent
auditors, Bush & Germain, P.C., because that firm is withdrawing from serving
the Company in that capacity and the Company has not yet engaged a successor.
The report by Bush & Germain on the Company's financial statements for the years
2001 and 2002 did not contain any adverse opinion, disclaimer of opinions, or
qualifications or modifications as to uncertainty, audit scope or accounting
principles. Bush & Germain has decided that it no longer wishes to audit public
companies but has agreed to continue providing review and audit services until
the Company has engaged a successor. For the years 2001 and 2002 and for the
year 2003 until the date hereof, there have not been any disagreements between
the Company and Bush & Germain regarding accounting principles or practices,
financial statement disclosures or auditing scope or procedures. The Company
and its Audit Committee are actively searching for a new audit firm. Our goal is
to conclude this search as soon as possible. Representatives of Bush & Germain
will be present at the Annual Meeting and are expected to be available to
respond to appropriate questions.
The Company provided Bush & Germain a copy of the above disclosure; Bush &
Germain did not submit any statement in response for inclusion in this Proxy
Statement.
IV. OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors knows of no other matters which are likely to be
brought before the Meeting. [However, a shareholder submitted a proposal for
inclusion in this Proxy Statement which the Company omitted pursuant to Rule
14a-8 of the Security and Exchange Commission's proxy rules. That proposal
recommended that the Company spin off its interest in the Orange County-
Poughkeepsie Cellular Partnership. If the shareholder should present the
proposal at the Annual Meeting, it is the intention of the persons named in the
Common Share proxy to vote against such proposal.] In addition, another
shareholder submitted information to the Company that could be taken to mean
that the shareholder would make a motion at the Annual Meeting recommending
that the Company should register as an investment company. Although the Company
does not believe that this information was submitted in time to comply with Rule
14a-4 of the Securities and Exchange Commission, the Company wishes, for the
avoidance of doubt, to state that the persons named in the Common Share proxy
intend to vote against such recommendation. If any other matter should properly
come before the Meeting, it is the intention of the persons named in the Common
Share proxy to vote in accordance with their judgment on such matter.
V. SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with the regulations of the Securities and
Exchange Commission. If a shareholder intends to present a proposal at the
Company's 2004 Annual Meeting of Shareholders, the proposal must be received by
the Secretary of the Company, 47 Main Street, Warwick, New York 10990, not later
than November 26, 2003 in order to be included in the Company's Proxy
Statement and form of proxy relating to such Annual Meeting of Shareholders.
Under the rules of the Securities and Exchange Commission, shareholders
submitting such proposals are required to have held Common Shares of the
Company amounting to at least $2,000 in market value or one percent of the
Common Shares outstanding for at least one year prior to the date on which
such proposals are submitted. Furthermore, such shareholders must continue to
own at least that amount of the Company's Common Shares through the date on
which the Annual Meeting of Shareholders is held.
Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows a
company to exercise discretionary voting authority to vote on matters coming
before an annual meeting of shareholders if the company does not have notice of
the matter at least 45 days before the date corresponding to the date on which
the company first mailed its proxy materials for the prior year's annual
meeting of shareholders or the date specified by an advance notice provision in
the company's by-laws. The By-laws of the Company contain an advance notice
provision that requires notice to be received by the Company no less than the
date that is 120 days prior to the date in 2004 which corresponds to the date in
2003 on which the Company mailed this Proxy Statement to its shareholders. The
date by which shareholders must submit their proposals for the Company's 2004
Annual Meeting of Shareholders for purposes of Rule 14a-4 is November 26, 2003.
BY ORDER OF THE BOARD OF DIRECTORS,
Dated: March 25, 2003 Herbert Gareiss, Jr., Secretary
13
RESTATED AND AMENDED CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
Under Section 807 of the Business Corporation Law
We, the undersigned, M. Lynn Pike and Herbert Gareiss, Jr., being
respectively the President and the Secretary of Warwick Valley Telephone Company
(the "Corporation"), do hereby certify that:
I. The name of the Corporation is Warwick Valley Telephone Company.
II. The Certificate of Incorporation of the Corporation was filed by the
Department of State of the State of New York on January 16, 1902.
III. The Certificate of Incorporation of the Corporation, as amended
heretofore, is hereby further amended to effect the following amendments
authorized by Section 801 of the Business Corporation Law:
A. To replace the purposes clause with a provision that provides
as the Corporation's purposes those purposes permitted to any
business corporation, and to delete the description of the
territory in which the Corporation operated as a telephone
corporation;
B. To delete the paragraph setting forth the calculation for the
calculation of the Corporation's capital;
C. To change the authorized Common Shares from 2,160,000 shares,
no par value, to 10,000,000 shares, par value $0.01 per
share, as follows: change the 1,994,423 shares of Common
Shares, no par value, currently issued, including those held
in treasury, into 5,983,269 shares of Common Shares, par
value $0.01 per share, at the rate of 3 shares of Common
Shares for each share of Common Shares presently issued; and
to change the authorized but unissued shares of Common Shares
of the Corporation from 165,577 shares of Common Shares, no
par value, to 4,016,731 shares, par value $0.01 per share, at
the rate of approximately 24.25899 shares to one.
D. To change the authorized but unissued Preferred Shares from
2,500, par value $100 per share, to 10,000,000 shares, par
value $0.01 per share, that being a ratio of 4,000 Preferred
Shares, par value $0.01 per share, for each authorized but
unissued Preferred Share, par value $100 per share, and to
leave unchanged the 5,000 presently issued and outstanding 5%
Series Preferred Shares, as a consequence of which the
Corporation shall have 10,005,000 authorized Preferred
Shares, namely 10,000,000, par value $0.01 per share and
5,000, par value $100 per share (such 5,000 being the 5%
Series Preferred Shares);
E. To eliminate certain provisions relating to the 5% Series
Preferred Shares that are no longer legally relevant due to
changes in the New York laws relating to business
corporations;
F. To eliminate the apparent right of holders of 5% Series
Preferred Shares to convert such shares at their discretion
into shares of Common Shares, which apparent right was based
on an inadvertent filing made without a required regulatory
approval;
G. To permit the Board of Directors of the Corporation to
establish a new series of Preferred Shares with such terms
and provisions as the Board of Directors deems appropriate,
subject to certain limitations;
H. To provide (i) for the fixing of the number of directors at
no fewer than three (3) and no more than twelve (12), (ii)
for the removal of directors for cause by the shareholders or
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by the Board of Directors, and (iii) for the filling of newly
created directorships and vacancies by the remaining members
of the Board of Directors;
I. To delete certain information with respect to the
Corporation's initial directors and shareholders;
J. To make conforming changes to Article, paragraph, section or
clause numbers, capitalization and other stylistic changes
(such as the consistent use of defined terms); and
K. To delete the word "The" which may or may not be at the
beginning of the Corporation's name to conform to the
Corporation's practice.
IV. This Restatement and Amendment of the Certificate of Incorporation of
the Corporation was authorized by a resolution adopted by the Board of Directors
at a meeting thereof duly called and held, followed by the affirmative votes of
the holders of the requisite percentage of the outstanding shares of Common
Shares, cast in person or by proxy, at the Annual Meeting of the holders of
Common Shares held on April 25, 2003, and, in addition, with respect to the
authorization of additional shares of Preferred Shares, the correction of the
inadvertent filing referred to above and the other changes in the class of
Preferred Shares referred to above, by the affirmative votes of the holders of
the requisite percentage of the outstanding shares of the Preferred Shares, cast
in person or by proxy, at the Annual Meeting of the holders of Preferred Shares
held on April 25, 2003. The aforementioned Annual Meeting was held upon notice,
pursuant to section 605 of the Business Corporation Law, to every shareholder of
record entitled to vote thereon, and neither the Certificate of Incorporation,
as previously amended, nor any other Certificate filed pursuant to law requires
a larger proportion of votes.
V. The text of the Certificate of Incorporation is hereby in its entirety
restated and amended to read as set forth in full below:
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CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
FIRST: The name of the Corporation is Warwick Valley Telephone Company.
SECOND: The purposes for which the Corporation is formed are: To engage
in any lawful act or activity for which corporations may be organized under the
Business Corporation Law of the State of New York, except that the Corporation
is not organized to engage in any act or activity requiring the consent or
approval of any official, department, board, agency or other body of the State
of New York without first obtaining such consent or approval.
THIRD: The total number of shares that the Corporation shall have the
authority to issue is Twenty Million Five Thousand (20,005,000) shares. Of these
Twenty Million Five Thousand (20,005,000) authorized shares:
1. Ten Million (10,000,000) shares shall be Common Shares, and such
Common Shares shall have a par value of $0.01 per share; and
2. Ten Million Five Thousand (10,005,000) shares shall be Preferred
Shares, and of such Preferred Shares:
(a) Ten Million (10,000,000) shares shall have a par value of
$0.01 per share; and
(b) Five Thousand (5,000) shares shall have a par value of $100 per
share, which shares shall be designated as 5% Series Preferred Shares
and shall have the rights, preferences and limitations set forth in
Article FOURTH below.
Subject to any exclusive voting rights which may vest in holders of
Preferred Shares under the provision of any series of Preferred Shares
established by the Board of Directors pursuant to authority herein provided, and
except as otherwise provided by law, the shares of Common Shares shall entitle
the holders thereof to one vote for each share upon all matters upon which
shareholders have the right to vote.
Subject to the limitations and in the manner provided by law, shares of
Preferred Shares may be issued from time to time in series and, subject to the
provisions of Article FOURTH with respect to Preferred Shares, the Board of
Directors is hereby authorized to establish and designate one or more series of
Preferred Shares, to fix the number of shares constituting each such series, and
to fix the designations and the relative rights, preferences and limitations of
the shares of each such series and the variations in the relative rights,
preferences and limitations as between series, and to increase and to decrease
the number of shares constituting each such series.
Subject to the limitations and in the manner provided by law, and
subject to the provisions of Article FOURTH, the authority of the Board of
Directors with respect to each such series shall include but shall not be
limited to the authority to determine the following:
1. The designation of such series;
2. The number of shares initially constituting such series;
3. The increase, and the decrease to a number not less than the number
of the outstanding shares of such series, of the number of shares
constituting such series theretofore fixed;
4. Whether or not the shares of such series shall be redeemable and,
if such shares shall be redeemable, the terms and conditions of
such redemption, including but not limited to the
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date or dates upon or after which such shares shall be redeemable
and the amount per share that shall be payable upon such
redemption, which amount may vary under different conditions and at
different redemption dates;
5. The amount payable on the shares of such series in the event of the
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation; provided, however, that the holders of such shares
shall be entitled to be paid, or to have set apart for payment, not
less than the par value per share before the holders of shares of
Common Shares or the holders of any other class of stock ranking
junior to the Preferred Shares as to rights on liquidation shall be
entitled to be paid any amount or to have any amount set apart for
payment; provided, further, that, if the amounts payable on
liquidation are not paid in full, the shares of all series of the
Preferred Shares (including the 5% Series Preferred Shares) shall
share ratably in any distribution of assets other than by way of
dividends in accordance with the sums which would be payable in
such distribution if all sums payable were discharged in full. A
liquidation, dissolution or winding up of the Corporation, as such
terms are used in this clause (5), shall not be deemed to be
occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations or a
sale, lease or conveyance of all or a part of its assets;
6. Whether or not the shares of such series shall have voting rights,
in addition to the voting rights provided by law and, if such
shares shall have such voting rights, the terms and conditions
thereof, including but not limited to the right of the holders of
such shares to vote as a separate class either alone or with the
holders of shares of one or more other series of Preferred Shares
and the right to have more than one vote per share;
7. Whether or not a sinking fund shall be provided for the redemption
of the shares of such series of Preferred Shares and, if such a
sinking fund shall be provided, the terms and conditions thereof;
8. Whether or not the shares of such series of Preferred Shares shall
have conversion privileges, and, if such shares shall have
conversion privileges, the terms and conditions of conversion,
including but not limited to any provision for the adjustment of
the conversion rate or the conversion price; and
9. Any other relative rights, preferences and limitations which the
Board of Directors, in its discretion, may determine.
FOURTH: The respective rights, preferences and limitations of the shares
of 5% Series Preferred Shares are set forth in the following subdivisions
designated (1) to (5) inclusive which are hereinafter referred to as
subdivisions of this Article FOURTH.
The designations, preferences, privileges, voting powers, restrictions
and qualifications of the 5% Series Preferred Shares are as follows:
1. The holders of the 5% Series Preferred Shares shall be entitled to
cumulative dividends thereon at the rate of five per cent (5%) per
annum on the par value thereof, payable quarterly on March 31, June
30, September 30 and December 31 of each year, in priority to the
payments of dividends on the Common Shares. Said dividends shall be
cumulative so that if the Corporation shall fail in any fiscal year
to pay such dividends upon all the issued and outstanding 5% Series
Preferred Shares, the deficiency shall be fully paid without
interest before any dividends shall be set apart or paid on the
Common Shares. Subject to the foregoing provisions, the 5% Series
Preferred Shares shall not be entitled to participate in any other
or additional surplus or earnings of the Corporation. The Board of
Directors, in its discretion, may
-IV-
declare and pay dividends on the Common Shares concurrently with
dividends on the 5% Series Preferred Shares for any dividend period
for any fiscal year when such dividends are applicable to the
Common Shares, provided, however, that all accumulated dividends on
the 5% Series Preferred Shares for all previous fiscal years and
all dividends for the previous dividend periods for that fiscal
year shall have been paid in full.
2. In case of the liquidation or dissolution or distribution of the
assets of the Corporation, the holders of 5% Series Preferred
Shares shall be paid the par value thereof and the amount of all
unpaid accrued dividends thereon before any amount shall be payable
to the holders of the Common Shares.
3. The 5% Series Preferred Shares may be redeemed in whole or in part
on any day on which a dividend shall be payable upon payment to the
holders thereof the sum of One Hundred Dollars ($100.00) per share,
and the amount of all unpaid accrued dividends thereon at the date
of such redemption. The 5% Series Preferred Shares to be redeemed,
if less than the whole thereof, shall be determined by lot in such
manner as the Board of Directors shall determine. Thirty days'
notice of such redemption shall be mailed to the holder of each
such share to be redeemed at his last known post office address, as
the same appears in the books of the Corporation, and upon the
expiration of such thirty days all the rights and privileges of
such redeemed shares and the holders thereof, except the right to
receive the redemption price and accrued unpaid dividends, shall
cease and terminate.
4. The 5% Series Preferred Shares shall have no voting power except as
otherwise herein specifically provided, however, that upon default
in the payment of six quarterly dividends upon the 5% Series
Preferred Shares, the holders of the 5% Series Preferred Shares
shall thereafter, and until such default shall have been cured, be
entitled to cast one vote for each such share upon all questions
upon which the holders of Common Shares shall have the authority to
vote, and, voting separately as a class together with the holders
of any other series of Preferred Shares to elect the majority of
the Board of Directors, the remaining members of the Board of
Directors to be elected by the holders of the Common Shares.
5. The entire voting power shall be vested in the Common Shares,
except in the event of default in the payment of dividends upon the
5% Series Preferred Shares, in which event said series shall have
voting power as herein provided, and, except as otherwise provided
for the Preferred Shares of another series which may be designated,
the Common Shares shall be vested with the whole interest in the
earnings and assets of the corporation.
FIFTH: The vote of the shareholders of the Corporation required to
approve any Business Combination shall be as set forth in this Article FIFTH.
The term "Business Combination" shall have the meaning ascribed to it in
sub-paragraph 1(b) of this Article FIFTH. Each other capitalized term shall have
the meaning ascribed to it in sub-paragraph 3 of this Article FIFTH.
1.
(a) In addition to any affirmative vote required by law or this
Certificate of Incorporation and except as otherwise expressly provided
in sub-paragraph 2 of this Article FIFTH:
(i) any merger or consolidation of the Corporation or any
Subsidiary with (1) any Interested Shareholder or (2) any other
person (whether or not itself an Interested Shareholder) which is,
or after such merger or consolidation would be, an Affiliate of an
Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
to or with any Interested Shareholder or any
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Affiliate of any Interested Shareholder of assets of the
Corporation or any Subsidiary having an aggregate Fair Market Value
of One Million Dollars ($1,000,000) or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any, Interested
Shareholder or any Affiliate of any Interested Shareholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of One Million
Dollars ($1,000,000) or more, other than the issuance of securities
upon the conversion of convertible securities of the Corporation or
any Subsidiary which were not acquired by such Interested
Shareholder (or such Affiliate) from the Corporation or a
Subsidiary; or
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate of any Interested
Shareholder; or
(v) any transaction involving the Corporation or any Subsidiary
(whether or not with or into or otherwise involving an Interested
Shareholder), and including without limitation, any
reclassification of securities (including any reverse stock split),
or recapitalization or reorganization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any self-tender offer for or repurchase of
securities of the Corporation by the Corporation or any Subsidiary
or any other transaction (whether or not with or into or otherwise
involving an Interested Shareholder), which in any such case has
the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity securities
or securities convertible into equity securities of the Corporation
or any Subsidiary which is directly or indirectly beneficially
owned by any Interested Shareholder or any Affiliate of any
Interested Shareholder;
shall require the affirmative vote of the holders of at least 70 percent
of the combined voting power of the then outstanding shares of the Voting Stock,
in each case voting together as a single class (it being understood that for
purposes of this Article FIFTH each share of the Voting Stock shall have the
number of votes granted to it pursuant to this Certificate of Incorporation or
the terms of any series of the Corporation's Preferred Shares), which vote shall
include the affirmative vote of at least two-thirds (2/3) of the combined voting
power of the outstanding shares of Voting Stock held by shareholders other than
the Interested Shareholder. Such affirmative vote shall be required
notwithstanding any provision of law or any other provision of this Certificate
of Incorporation or any agreement which might permit a lesser vote or no vote
and in addition to any affirmative vote required of the holders of any class or
series of Voting Stock pursuant to law, this Certificate of Incorporation or the
terms of any series of the Corporation's Preferred Shares.
(b) The term "Business Combination" as used in this Article FIFTH
shall mean any transaction that is referred to in any one or more
clauses (i) through (v) of sub-paragraph 1(a) of this Article FIFTH.
2. The provisions of sub-paragraph 1(a) of this Article FIFTH shall
not be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote as
may be required by law, any other provision of this Certificate of
Incorporation, or the terms of any series of the Corporation's
Preferred Shares, if, in the case of a Business Combination that
does not involve any cash or other consideration being received by
the shareholders of the Corporation, solely in their respective
capacities as shareholders of the Corporation, the condition
specified in the following sub-paragraph (a) is met, or, in the
case of any other Business Combination, the conditions specified in
the following sub-paragraph (a) or the conditions specified in the
following sub-paragraph (b) are met:
(a) such Business Combination shall have been approved by a
majority of
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the Disinterested Directors; or
(b) each of the conditions specified in the following clauses (i)
through (v) shall have been met:
(i) the aggregate amount of the cash and Fair Market Value as
of the Consummation Date of any consideration other than cash to be
received per share by the holders of Common Shares in such Business
Combination shall be at least equal to the highest of the following
(it being intended that the requirements of this clause (b)(i)
shall be met with respect to all Common Shares outstanding whether
or not the Interested Shareholder has acquired any Common Shares):
(1) if applicable, the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealer's fees) paid in order to acquire any common shares
beneficially owned by the Interested Shareholder which were
acquired beneficially by such Interested Shareholder (x) within
the two-year period immediately prior to the Announcement Date
or (y) in the transaction in which it became an Interested
Shareholder, whichever is higher; or
(2) the Fair Market Value per Common Share on the
Announcement Date or on the Determination Date, whichever is
higher; or
(3) the amount which bears the same percentage relationship
to the Fair Market Value of the Common Shares on the
Announcement Date as the highest per share price determined in
(b)(i)(1) above bears to the Fair Market Value of the common
shares on the date of the commencement of the acquisition of
Common Shares by such Interested Shareholder; and
(ii) the aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of any consideration other than cash to
be received per share by holders of the shares of any class or
series of outstanding Voting Stock other than Common Shares shall
be at least equal to the highest of the following (it being
intended that the requirements of this clause (b)(ii) shall be met
with respect to every class and series of such Voting Stock,
whether or not the Interested Shareholder has previously acquired
any shares of a particular class or series of such Voting Stock):
(1) if applicable, the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers, fees) paid in order to acquire any shares of such
class or series Voting Stock beneficially owned by the
Interested Shareholder that were acquired beneficially by such
Interested Shareholder (x) within the two-year period
immediately prior to the Announcement Date or (y) in the
transaction in which it became the Interested Shareholder,
whichever is higher; or
(2) if applicable, the highest preferential amount per
share to which the holders of shares of such class or series of
Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company; or
(3) the Fair Market Value per share of such class or series
of Voting Stock on the Announcement Date or the Determination
Date, whichever is higher; or
(4) the amount which bears the same percentage to the Fair
Market Value of such class or series of Voting Stock on the
Announcement Date as the highest per share price in clause
(b)(ii)(1) above bears to the Fair Market Value of such Voting
Stock on the date of the commencement of the acquisition of
such Voting Stock by
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such Interested Shareholder; and
(iii) the consideration to be received by holders of a
particular class or series of outstanding Voting Stock (including
Common Shares) shall be in cash or in the same form as was
previously paid in order to acquire beneficially shares of such
class or series of Voting Stock that are beneficially owned by the
Interested Shareholder and, if the Interested Shareholder
beneficially owns shares of any class or series of Voting Stock
that were acquired with varying forms of consideration, the form of
consideration to be received by each holder of shares of such class
or series of Voting Stock shall be, at the option of such holder,
either cash or the form used by the Interested Shareholder to
acquire beneficially the largest number of shares of such class or
series of Voting Stock beneficially acquired by it prior to the
Announcement Date; and
(iv) after such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business
Combination:
(1) such Interested Shareholder shall not have become the
beneficial owner of any additional shares of Voting Stock of
the Corporation, except as part of the transaction in which it
became an Interested Shareholder or upon conversion of
convertible securities acquired by it prior to becoming an
Interested Shareholder or as a result of a pro rata stock
dividend or stock split; and
(2) such Interested Shareholder shall not have received
the benefit, directly or indirectly (except proportionately as
a shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or tax credits or other tax
advantages provided by the Corporation or any Subsidiary,
whether in anticipation of or in connection with such Business
Combination or otherwise; and
(3) such Interested Shareholder shall not have caused any
material change in the Corporation's business or capital
structure including, without limitation, the issuance of shares
of capital stock of the Corporation to any third party; and
(4) there shall have been (x) no failure to declare and
pay at the regular date therefore the full amount of dividends
(whether or not cumulative) on any outstanding preferred shares
of the Corporation except as approved by a majority of the
Disinterested Directors, (y) no reduction in the annual rate of
dividends paid on Common Shares (except as necessary to reflect
any subdivision of the Common Shares), except as approved by a
majority of the Disinterested Directors, and (z) an increase in
such annual rate of dividends (as necessary to prevent any such
reduction) in the event of any reclassification (including any
reverse stock split), recapitalization, reorganization, self
tender offer or any similar transaction which has the effect of
reducing the number of outstanding Shares of Common Shares,
unless the failure so to increase such annual rate was approved
by a majority of the Disinterested Directors; and
(v) a proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules
and regulations), whether or not the Corporation is then subject to
such requirements, shall be mailed by and at the expense of the
Interested Shareholder at least thirty (30) days prior to the
Consummation Date of such Business Combination to the public
shareholders of the Corporation (whether or not such proxy or
information statement is required to be mailed pursuant to such Act
or subsequent provisions), and may contain at the front thereof in
a
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prominent place (i) any recommendations as to the advisability (or
inadvisability) of the Business Combination which the Disinterested
Directors, if any, may choose to state, and (ii) the opinion of a
reputable national or regional investment banking firm with
expertise in telecommunications as to the fairness (or not) of such
Business Combination from the point of view of the remaining public
shareholders of the Corporation (such investment banking firm to be
engaged solely on behalf of the remaining public shareholders, to
be paid a reasonable fee for its services by the Corporation upon
receipt of such opinion, to be unaffiliated with such Interested
Shareholder, and, if there are at the time any Disinterested
Directors, to be selected by a majority of the Disinterested
Directors).
3. For purposes of this Article FIFTH:
(a) A "person" shall include, without limitation, any individual,
firm, corporation, group (as such term is used in Regulation 13D-G of
the General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on January 1, 1987) or other entity.
(b) "Interested Shareholder" shall mean any person (other than the
Corporation or any Subsidiary or any employee benefit plan of the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of
more than 10 percent of the combined voting power of the then
outstanding shares of Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10 percent or more
of the combined voting power of the then outstanding shares of
Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were at any
time within the two-year period immediately prior to the date in
question beneficially owned by an Interested Shareholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(c) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates
has (1) the right to acquire (whether or not such right is
exercisable immediately) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (2) the right to vote
or direct the vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(d) For the purposes of determining whether a person is an
Interested Shareholder pursuant to sub-paragraph 3(b) of this Article
FIFTH, the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned by such Interested Shareholder through
application of sub-paragraph 3(c) of this Article FIFTH but shall not
include any other shares of Voting Stock that may be issuable pursuant
to any agreement, arrangements or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
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(e) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1987.
(f) "Subsidiary" shall mean any person more than 50 percent of
whose outstanding equity securities having ordinary voting power in the
election of directors is owned, directly or indirectly, by the
Corporation or by a Subsidiary or by the Corporation and one or more
Subsidiaries; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in sub-paragraph 3(b) of this
Article FIFTH, the term "Subsidiary" shall mean only a person of which a
majority of each class of stock ordinarily entitled to vote for the
election of directors is owned, directly or indirectly, by the
Corporation.
(g) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with, and not a nominee
of, the Interested Shareholder and was a member of the Board prior to
the time that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director who is
unaffiliated with, and not a nominee of, the Interested Shareholder and
who is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board of Directors.
(h) "Fair Market Value" shall mean: (1) in the case of stock, the
highest closing sale price during the 30-day period commencing on the
40th day preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks; or, if such
stock is not quoted on the New York Stock Exchange Composite Tape, on
the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed; or if
such stock is not listed on any such exchange, the highest closing sale
price or bid quotation with respect to a share of such stock during the
30-day period commencing on the 40th day preceding the date in question
on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use; or if no such quotations
are available, the fair market value on the date in question of a share
of such stock as determined by a majority of the Disinterested Directors
in good faith; and (2) in the case of property other than cash or stock,
the fair market value of such property on the date in question as
determined by a majority of the Disinterested Directors in good faith.
(i) In the event of any Business Combination in which the
Corporation survives, the phrase "any consideration other than cash to
be received" as used in sub-paragraphs 2(b)(i) and 2(b)(ii) of this
Article FIFTH shall include Common Shares and/or the shares of any other
class or series of outstanding Voting Stock retained by the holders of
such shares.
(j) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Combination.
(k) "Determination Date" shall mean the date on which the
Interested Shareholder became an Interested Shareholder.
(l) "Consummation Date" shall mean the date of the consummation
of the Business Combination.
(m) The term "Voting Stock" shall mean, in any given time, all
outstanding shares of Common Shares of the Corporation and all
outstanding shares of any other classes or series of the corporation's
capital stock, the holders of which are entitled at such time to vote
upon all questions upon which the holders of shares of Common Shares
shall have the authority to vote, in each case voting together as a
single class.
4. A majority of the Disinterested Directors shall have the power and
duty to determine, on the basis of information known to them after
reasonable inquiry, all facts necessary to determine
-X-
compliance with this Article FIFTH including, without limitation:
(a) whether a person is an Interested Shareholder;
(b) the number of shares of Voting Stock or any other stock
beneficially owned by any person;
(c) whether a person is an Affiliate or Associate of another
person;
(d) whether the requirements of sub-paragraph 2(b) of this
Article FIFTH have been met with respect to any Business Combination;
(e) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance
or transfer of securities by the corporation or any Subsidiary in any
Business Combination has, an aggregate Fair Market Value of One Million
Dollars ($1,000,000) or more; and
(f) all other matters with respect to which a determination
is required under this Article FIFTH.
5. Nothing contained in this Article FIFTH shall be construed to
relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
6. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders
of at least 70 percent of the combined voting power of the Voting
Stock shall be required to alter, amend or repeal this Article
FIFTH or to adopt any provision inconsistent therewith; provided,
however, that if there is an Interested Shareholder on the record
date for the meeting at which such action is submitted to the
shareholders for their consideration, such 70 percent vote must
include the affirmative vote of at least two-thirds (2/3) of the
combined voting power of the outstanding shares of Voting Stock
held by shareholders other than the Interested Shareholder.
7. Nothing contained in this Article FIFTH is intended, or shall be
construed, to affect any of the relative rights, preferences or
limitations, within the meaning of such terms under Section
801(b)(12) of the New York Business Corporation Law or any
successor statute, of any shares of any authorized class or series
of the corporation's stock, whether issued or unissued.
SIXTH: The Board of Directors of the Corporation, when evaluating any
offer of another party to (1) purchase, or exchange any securities or property
for, any outstanding equity securities of the Corporation or any subsidiary; (2)
merge or consolidate the Corporation or any subsidiary with another company; or
(3) purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation or any subsidiary, shall, in connection with the
exercise of its judgment in determining what is in the best interest of the
Corporation and its shareholders, give due consideration not only to the price
or other consideration being offered but also to all other relevant factors,
including, without limitation, (i) the financial and managerial resources and
future prospects of the offeror; (ii) the possible effects on the business of
the Corporation and its subsidiaries and on the ratepayers, and other customers,
employees, suppliers and creditors of the Corporation and its subsidiaries; and
(iii) the possible effects on the communities in which the facilities of the
Corporation and its subsidiaries are located. In so evaluating any such offer,
the Board of Directors shall be deemed to be acting in accordance with its duly
authorized duties and in good faith, in the best interests of the Corporation.
SEVENTH: Except as otherwise specifically provided by law or in this
Certificate of Incorporation, the affirmative vote in person or by proxy of the
holders of seventy percent (70%) of the combined voting power of the issued and
outstanding common shares of the Corporation and the issued and outstanding
shares of any other classes or series of the Corporation's capital stock, the
holders of which are entitled at the time to vote upon all questions upon which
the holders of Common Shares shall have the authority to vote, shall be required
to adopt any plan of merger or consolidation (other than any plan of merger
involving the merger into the Corporation of one or more sub-
-XI-
sidiaries of the Corporation, provided the Corporation owns 90% or more of each
class of stock of such subsidiary or subsidiaries) or to approve the sale of all
or substantially all of the Corporation's assets. Any amendment to the
Certificate of Incorporation which amends, deletes or otherwise modifies or
changes this section of the Certificate of Incorporation or any part thereof,
shall be authorized by a like vote of the shareholders. Nothing contained in
this Article SEVENTH is intended, or shall be construed, to affect any of the
relative rights, preferences or limitations, within the meaning of such terms
under Section 801(b)(12) of the New York Business Corporation Law or any
successor statute, of any shares of any authorized class or series of the
Corporation's stock, whether issued or unissued.
EIGHTH: The term of existence of the Corporation shall be
perpetual.
NINTH: To the fullest extent now or hereafter provided for
or permitted by law, no director of the Corporation shall be personally liable
to the Corporation or its shareholders for damages for any breach of duty in
such capacity. Neither the amendment or repeal of this Article nor the adoption
of any provision of this Certificate of Incorporation inconsistent with this
Article shall eliminate or reduce the protection afforded by this Article to a
director of the Corporation in respect to any matter which occurred, or any
cause of action, suit or claim which but for this Article would have accrued or
arisen, prior to such amendment, repeal or adoption.
TENTH: 1. Subject to the rights of holders of Preferred Shares
to elect directors under specified circumstances, the number of directors of the
Corporation shall be not less than three (3) nor more than twelve (12) and shall
be fixed from time to time by the By-laws of the Corporation.
2. Subject to the rights of holders of Preferred Shares,
any director may be removed from office only for cause and (i) by the
affirmative vote of the holders of not less than a majority of the voting power
of all of the outstanding shares of capital stock entitled to vote generally in
the election of such directors or (ii) by the majority vote of the members of
the Board of Directors then in office. For purposes of this Paragraph, "cause"
shall mean the willful and continuous failure of a director to substantially
perform such director's duties to the Corporation (other than any such failure
resulting from incapacity due to physical or mental illness) or the willful
engaging by a director in gross misconduct materially and demonstrably injurious
to the Corporation.
ELEVENTH: Subject to any limitations imposed by this Certificate
or applicable law, the Board of Directors shall have power to adopt, amend or
repeal the By-laws of the Corporation by the affirmative vote of not less than a
majority of the total number of directors. Subject to the provisions of this
Article ELEVENTH, any By-laws made by the directors under the powers conferred
hereby may be amended or repealed by the directors or by the shareholders.
TWELFTH: No holder of any share of stock of this Corporation
shall be entitled as a matter of right to subscribe for, purchase or receive any
part of the unissued stock of the Corporation or any stock of the Corporation to
be issued by reason of any increase of the authorized capital stock of the
Corporation or any stock of the Corporation purchased by the Corporation or by
its nominees, or to subscribe for, purchase or receive any rights to or option
to purchase any such stock or any bonds, certificates of indebtedness,
debentures or other securities convertible into or carrying options or warrants
to purchase stock or other securities of the Corporation, or have any other
pre-emptive rights as now or hereafter defined by the laws of the State of New
York.
THIRTEENTH: The office of the Corporation in the State of New York
is located in the County of Orange. The Secretary of State of the State of New
York is hereby designated as an agent of the Corporation on whom all process in
any action or proceeding against the Corporation may be served within the State
of New York. The address to which the Secretary of State shall mail a copy of
any process that may be served upon him is Warwick Valley Telephone Company,
Attention: President, 47 Main Street, Warwick, New York 10990.
******
-XII-
IN WITNESS WHEREOF, the undersigned have executed and subscribed this
Restated Certificate of Incorporation this ____ day of ___________, 2003.
----------------------------------------------
M. Lynn Pike
President and Chief Executive Officer
----------------------------------------------
Herbert Gareiss, Jr.
Secretary
-XIII-
STATE OF NEW YORK )
) SS:
COUNTY OF ORANGE )
On ______________, 2003, M. Lynn Pike, being duly sworn,
deposes and says that he is the President and Chief Executive Officer of Warwick
Valley Telephone Company, the corporation named in the foregoing Restated and
Amended Certificate of Incorporation, that he has read and signed the foregoing
Restated Certificate of Incorporation, and that the statements contained therein
are true.
------------------------------------------------
Notary Public
STATE OF NEW YORK )
) SS:
COUNTY OF ORANGE )
On _______________, 2003, Herbert Gareiss, Jr., being duly
sworn, deposes and says that he is the Secretary of Warwick Valley Telephone
Company, the corporation named in the foregoing Restated and Amended Certificate
of Incorporation, that he has read and signed the foregoing Restated Certificate
of Incorporation, and that the statements contained therein are true.
------------------------------------------------
Notary Public
-XIV-
NOTICE OF
SHAREHOLDER NOMINEES
Only persons who are nominated in accordance with the
procedures set forth in this Section 6 shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Company may be made at the annual meeting of shareholders by or at the direction
of the Board of Directors, or by any shareholder of the Company entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Section 6. Such nominations, other than those made
by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the Company.
To be timely, a shareholder's notice shall be delivered or
mailed and received at the principal executive offices of the Company not less
than 120 days prior to the date on which the Company first mailed its proxy
materials for the prior year's annual meeting; provided, however, that in the
event the annual meeting is called for a date that is not within 30 days before
or after the anniversary date of the prior year's annual meeting, notice by the
shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure of such date was made by the Company.
The shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a Director, (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of the Company which are beneficially owned by such person, and (iv) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the shareholder giving the notice, (i) the name and
address, as they appear on the Company's books, of such shareholder, and (ii)
the class and number of shares of the Company which are beneficially owned by
such shareholder.
At the request of the Board of Directors, any person nominated
by the Board of Directors for election as a director shall furnish to the
Secretary of the Company that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the Company unless nominated in
accordance with the procedures set forth in this Section 6.
The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the By-laws, and if the chairman
should so determine, the chairman shall so declare to the meeting and the
defective nomination shall be disregarded.
-i-
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
FIRST: The name of the Corporation is, [the] Warwick Valley
Telephone Company.
SECOND: The [general route and points to be connected by said
line are, the residences, business and public places in] purposes for which the
Corporation is formed are: To engage in any lawful act or activity for which
corporations may be organized under the [Village and Town] Business Corporation
Law of [Warwick,] the State of New York, except that the Corporation is not
organized to engage in any act or activity requiring the consent or approval of
any official, department, board, [the County of Orange,] agency or other body of
the State of New York, [and the Counties of Sussex and Passaic, New Jersey]
without first obtaining such consent or approval.
THIRD: The total number of shares [of] that the Corporation
[which may be issued is 2,167,500,] shall have the authority to [consist of
7,500 preferred] issue is Twenty Million Five Thousand (20,005,000) shares
[having a par value of $100.00 each and 2,160,000 common]. Of these Twenty
Million Five Thousand (20,005,000) authorized shares [without par value.]:
[The preferred shares may be issued in series to be known as
"_______ series preferred shares" the blank to be completed by a distinctive
designation for each series which may be issued.]
[The capital of the corporation shall be at least equal to
the sum of the aggregate par value of all issued shares having par value, plus
the aggregate amount the consideration received by the corporation for the
issuance of shares without par value, plus such amounts as from time to time by
resolution of the Board of Directors, may be transferred thereto.]
[The designations, preferences, privileges and voting powers
or restrictions or qualifications of the several classes of shares of Capital
Stock which the Corporation may henceforth have are:]
[2,160,000 shares of Common Stock without par value with full
voting power.]
[1,000 shares of $4. Cumulative Preferred Stock to have the
following preferences, voting powers, or restrictions or qualifications.]
[(a) It will be entitled up to Four Dollars ($4)
per share and no more before Common participates in any
dividends, said dividends to be paid on March 31, June 30,
September 30 and December 31 in each year.]
[(b) In case of dissolution or other distribution of
assets, holders of Preferred Stock will be entitled to
distribution of the assets up to par value of the Preferred
Stock and accumulated dividends prior to holders of Common
Stock.]
[(c) It will have no voting powers except, if default
is made in four quarterly dividend payments the Preferred
Stockholders shall have the right to elect a majority of the
Board of Directors, such voting rights to continue until all
of the dividends in arrears shall have been paid.]
[(d) Any or all of the shares of Preferred Stock may
be called for redemption on any dividend payment date at the
option of the company on not less than 30 days prior published
notice or in writing, at par and accumulated dividends to the
date fixed for redemption, except that, if less than all of
the said shares are to be so redeemed, the shares to be
redeemed shall be drawn by lot.]
[No holder of any share of stock of this Corporation either
common or preferred shall be entitled as a matter of right, to subscribe for,
purchase or receive any part of the unissued stock of the corporation or any
stock of the corporation to be issued by reason of any increase of the
authorized capital stock of the corporation or any stock of the corporation
purchased by the corporation or its nominee or nominees, or to subscribe for,
purchase or receive any rights]
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enclosed in brackets "["and"]" in the electronic format.
[to or options to purchase any such stock or any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the corporation, or
have any other pre-emptive rights as now or hereafter defined by the laws of the
State of New York.]
1. Ten Million (10,000,000) shares shall be Common
Shares, and Common Shares shall have a par value of
$0.01 per share; and
2. Ten Million Five Thousand (10,005,000) shares shall
be Preferred Shares, and of such Preferred Shares:
(a) Ten Million (10,000,000) shares shall have a
par value of $0.01 per share; and
(b) Five Thousand (5,000) shares shall have a
value of $100 per share, which shares shall be designated as
5% Series Preferred Shares and shall have the rights,
preferences and limitations set forth in Article FOURTH below.
Subject to any exclusive voting rights which may vest in
holders of Preferred Shares under the provision of any series of Preferred
Shares established by the Board of Directors pursuant to authority herein
provided, and except as otherwise provided by law, the shares of Common Shares
shall entitle the holders thereof to one vote for each share upon all matters
upon which shareholders have the right to vote.
Subject to the limitations and in the manner provided by law,
shares of Preferred Shares may be issued from time to time in series and,
subject to the provisions of Article FOURTH with respect to Preferred Shares,
the Board of Directors is hereby authorized to establish and designate one or
more series of Preferred Shares, to fix the number of shares constituting each
such series, and to fix the designations and the relative rights, preferences
and limitations of the shares of each such series and the variations in the
relative rights, preferences and limitations as between series, and to increase
and to decrease the number of shares constituting each such series.
Subject to the limitations and in the manner provided by law,
and subject to the provisions of Article FOURTH, the authority of the Board of
Directors with respect to each such series shall include but shall not be
limited to the authority to determine the following:
1. The designation of such series;
2. The number of shares initially constituting such
series;
3. The increase, and the decrease to a number not less
than the number of the outstanding shares of such
series, of the number of shares constituting such
series theretofore fixed;
4. Whether or not the shares of such series shall be
redeemable and, if such shares shall be redeemable,
the terms and conditions of such redemption,
including but not limited to the date or dates upon
or after which such shares shall be redeemable and
the amount per share that shall be payable upon such
redemption, which amount may vary under different
conditions and at different redemption dates;
5. The amount payable on the shares of such series in
the event of the voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation; provided, however, that the holders of
such shares shall be entitled to be paid, or to have
set apart for payment, not less than the par value
per share before the holders of shares of Common
Shares or the holders of any other class of stock
ranking junior to the Preferred Shares as to rights
on liquidation shall be entitled to be paid any
amount or to have any amount set apart for payment;
provided, further, that, if the amounts payable on
liquidation are not paid in full, the shares of all
series of the Preferred Shares (including the 5%
Series Preferred Shares) shall share ratably in any
distribution of assets other than by way of dividends
in accordance with the sums which would be payable in
such distribution if all sums payable were discharged
in full. A liquidation, dissolution or winding up of
the Corporation, as such terms are used in this
clause (5), shall not
-XVI-
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enclosed in brackets "["and"]" in the electronic format.
be deemed to be occasioned by or to include any
consolidation or merger of the Corporation with or
into any other corporation or corporations or a sale,
lease or conveyance of all or a part of its assets;
6. Whether or not the shares of such series shall have
voting rights, in addition to the voting rights
provided by law and, if such shares shall have such
voting rights, the terms and conditions thereof,
including but not limited to the right of the holders
of such shares to vote as a separate class either
alone or with the holders of shares of one or more
other series of Preferred Shares and the right to
have more than one vote per share;
7. Whether or not a sinking fund shall be provided for
the redemption of the shares of such series of
Preferred Shares and, if such a sinking fund shall be
provided, the terms and conditions thereof;
8. Whether or not the shares of such series of
Preferred Shares shall have conversion privileges,
and, if such shares shall have conversion privileges,
the terms and conditions of conversion, including but
not limited to any provision for the adjustment of
the conversion rate or the conversion price; and
9. Any other relative rights, preferences and
limitations which the Board of Directors, in its
discretion, may determine.
FOURTH: [A series of preferred] The respective rights,
preferences and limitations of the shares [to known as] "of 5% Series Preferred
Shares" [is hereby created] are set forth in the following subdivisions
designated (1) to (5) inclusive which are hereinafter referred to as
subdivisions of this Article FOURTH.
The designations, preferences, privileges, voting powers,
restrictions and qualifications of the 5% [series preferred shares] Series
Preferred Shares are as follows:
[5% Series Preferred Shares]
1. The holders of the 5% Series Preferred Shares shall
be entitled to cumulative dividends thereon at the
rate of five per cent (5%) per annum on the par value
thereof, payable quarterly on March 31, June 30,
September [30,] 30 and December 31 of each year, in
priority to the payments of dividends on the [common]
Common [shares] Shares. Said dividends shall be
cumulative so that if the [corporation] Corporation
shall fail in any fiscal year to pay such dividends
upon all the issued and outstanding 5% Series
Preferred Shares, the deficiency shall be fully paid
without interest, before any dividends shall be set
apart or paid on the [common] Common [shares] Shares.
Subject to the foregoing provisions, the 5% Series
Preferred Shares shall not be entitled to participate
in any other or additional surplus or earnings of the
[corporation] Corporation. The Board of Directors, in
its discretion, may declare and pay dividends on the
[common] Common [shares] Shares concurrently with
dividends on the 5% Series Preferred Shares for any
dividend period for any fiscal year when such
dividends are applicable to the [common] Common
[shares] Shares, provided, however, that all
accumulated dividends on the 5% Series Preferred
Shares for all previous fiscal years and all
dividends for the previous dividend periods for that
fiscal year shall have been paid in full.
2. In case of the liquidation or dissolution or
distribution of the assets of the [corporation]
Corporation, the holders of 5% Series Preferred
Shares shall be paid the par value thereof and the
amount of all unpaid accrued dividends thereon before
any amount shall be payable to the holders of the
[common] Common [shares] Shares.
3. The 5% Series Preferred Shares may be redeemed in
whole or in part on any day on which a dividend shall
be payable upon payment to the holders thereof the
sum of One Hundred Dollars ($100.00) per share, and
the amount of all unpaid accrued dividends thereon at
the
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enclosed in brackets "["and"]" in the electronic format.
date of such redemption. The 5% Series Preferred
Shares to be redeemed, if less than the whole
thereof, shall be determined by lot in such manner as
the Board of Directors shall determine. Thirty days'
notice of such redemption shall be mailed to the
holder of each such share to be redeemed at his last
known post office address, as the same appears in the
books of the [corporation] Corporation, and upon the
expiration of such thirty days all the rights and
privileges of such redeemed shares and the holders
thereof, except the right to receive the redemption
price and accrued unpaid dividends, shall cease and
terminate.
4. The 5% Series Preferred Shares shall have no voting
power except as otherwise herein specifically
provided [and shall not vote in a proceeding for the
mortgaging of the property and franchises of the
corporation pursuant to section sixteen of the Stock
Corporation Law, for guaranteeing the bonds of
another corporation pursuant to section nineteen of
the Stock Corporation Law, for the sale of franchises
and property of the corporation pursuant to section
twenty of the Stock Corporation Law for the making of
any amendment to the certificate of incorporation
pursuant to sections thirty-five and thirty-six of
the Stock Corporation Law except when otherwise
required by the provisions of Section fifty-one of
the Stock Corporation Law or any other applicable
provisions of law for consolidation pursuant to
section eighty-six of the Stock Corporation Law, for
voluntary dissolution pursuant to section one hundred
five of the Stock Corporation Law or for change of
name pursuant to the General Corporation Law,
provided], however, that upon default in the payment
of six quarterly dividends upon the 5% Series
Preferred Shares, the holders of the 5% Series
Preferred Shares shall thereafter, and until such
default shall have been cured, be entitled to cast
one vote for each such share upon all questions upon
which the holders of [common] Common [shares] Shares
shall have the authority to vote, and, voting
separately as a class together with the holders of
any other series of Preferred Shares to elect the
majority of the Board of Directors, the remaining
members of the Board of Directors to be elected by
the holders of the [common] Common [shares] Shares.
5. The entire voting power shall be vested in the
[common shares] Common Shares, except in the event of
default in the payment of dividends upon the [series
preferred shares] 5% Series Preferred Shares, in
which event said series shall have voting power as
herein provided, and, except as otherwise provided
for the [preference] Preferred [stock] Shares of [the
several classes and] another series which may be
designated, the [common] Common [shares] Shares shall
be vested with the whole interest in the earnings and
assets of the corporation."
FIFTH: The vote of the shareholders of the [corporation]
Corporation required to approve any Business Combination shall be as set forth
in this [Paragraph] Article [V] FIFTH. The term "Business Combination" shall
have the meaning ascribed to it in [sub-paragraph] sub-paragraph [1.] 1([B]b) of
this [Paragraph] Article [V] FIFTH. Each other capitalized term shall have the
meaning ascribed to it in sub-paragraph 3 of this [Paragraph] Article [V] FIFTH.
1.
(a) [(a)] In addition to any affirmative vote
required by law or this [certificate of incorporation]
Certificate of Incorporation and except as otherwise expressly
provided in sub-paragraph 2 of this [Paragraph] Article [V]
FIFTH:
(i) any merger or consolidation of the
[corporation] Corporation or any Subsidiary with
([i]1) any Interested Shareholder or ([ii]2) any
other person (whether or not itself an Interested
Shareholder) which is, or after such merger or
consolidation would be, an Affiliate of an Interested
Shareholder; or
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with
any Interested Shareholder or any
-XVIII-
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enclosed in brackets "["and"]" in the electronic format.
Affiliate of any Interested Shareholder of assets of
the [corporation] Corporation or any Subsidiary
having an aggregate Fair Market Value of One Million
Dollars ($1,000,000) or more; or
(iii) the issuance or transfer by the
[corporation] Corporation or any Subsidiary (in one
transaction or a series of transactions) of any
securities of the [corporation] Corporation or any
Subsidiary to any, Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange
for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market
Value of One Million Dollars ($1,000,000) or more,
other than the issuance of securities upon the
conversion of convertible securities of the
[corporation] Corporation or any Subsidiary which
were not acquired by such Interested Shareholder (or
such Affiliate) from the [corporation] Corporation or
a Subsidiary; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the [corporation]
Corporation proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested
Shareholder; or
(v) any transaction involving the [corporation]
Corporation or any Subsidiary (whether or not with or
into or otherwise involving an Interested
Shareholder), and including without limitation, any
reclassification of securities (including any reverse
stock split), or recapitalization or reorganization
of the [corporation] Corporation, or any merger or
consolidation of the [corporation] Corporation with
any of its Subsidiaries or any self-tender offer for
or repurchase of securities of the [corporation]
Corporation by the [corporation] Corporation or any
Subsidiary or any other transaction (whether or not
with or into or otherwise involving an Interested
Shareholder), which in any such case has the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity securities or securities convertible
into equity securities of the [corporation]
Corporation or any Subsidiary which is directly or
indirectly beneficially owned by any Interested
Shareholder or any Affiliate of any Interested
Shareholder;
shall require the affirmative vote of the holders of at least
70 percent of the combined voting power of the then outstanding shares of the
Voting Stock, in each case voting together as a single class (it being
understood that for purposes of this [Paragraph V] Article FIFTH each share of
the Voting Stock shall have the number of votes granted to it pursuant to this
[certificate] Certificate of [incorporation] Incorporation or the terms of any
series of the [corporation] Corporation's [preferred] Preferred [shares]
Shares), which vote shall include the affirmative vote of at least two-thirds
(2/3) of the combined voting power of the outstanding shares of Voting Stock
held by shareholders other than the Interested Shareholder. Such affirmative
vote shall be required notwithstanding any provision of law or any other
provision of this [certificate] Certificate of [incorporation] Incorporation or
any agreement which might permit a lesser vote or no vote and in addition to any
affirmative vote required of the holders of any class or series of Voting Stock
pursuant to law, this [certificate] Certificate of [incorporation] Incorporation
or the terms of any series of the [corporation] Corporation's [preferred]
Preferred [shares] Shares.
(b) The term "Business Combination" as used in this
[Paragraph V] Article FIFTH shall mean any transaction that is
referred to in any one or more clauses ([1]i) through ([5]v)
of sub-paragraph [1.]1([A]a) of this [Paragraph] Article [V]
FIFTH.
2. The provisions of sub-paragraph [1.]1([A]a) of this
[Paragraph] Article [V] FIFTH shall not be applicable
to any particular Business Combination, and such
Business Combination shall require only such
affirmative vote as may be required by law, any other
provision of this [certificate] Certificate of
[incorporation] Incorporation, or the terms of any
series of the [corporation] Corporation's [preferred]
Preferred [shares] Shares, if, in the case of a
Business Combination that does not involve any cash or
other consideration being received by the shareholders
of the [corporation] Corporation, solely in their
respective capacities as shareholders of the
[corporation]
-XIX-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
Corporation, the condition specified in the following
sub-paragraph (a) is met, or, in the case of any other
Business Combination, the conditions specified in the
following sub-paragraph ([A]a) or the conditions
specified in the following sub-paragraph ([B]b) are
met:
(a) such Business Combination shall have been
approved by a majority of the Disinterested Directors; or
(b) each of the conditions specified in the following
clauses ([1]i) through ([5]v) shall have been met:
(i) the aggregate amount of the cash and Fair
Market Value as of the Consummation Date of any
consideration other than cash to be received per share
by the holders of [common shares] Common Shares in
such Business Combination shall be at least equal to
the highest of the following (it being intended that
the requirements of this clause ([B]b)([1]i) shall be
met with respect to all [common] Common [shares]
Shares outstanding whether or not the Interested
Shareholder has acquired any [common] Common [shares]
Shares):
(1) if applicable, the highest per
share price (including any brokerage
commissions, transfer taxes and soliciting
[dealers] dealer's fees) paid in order to
acquire any common shares beneficially owned
by the Interested Shareholder which were
acquired beneficially by such Interested
Shareholder (x) within the two-year period
immediately prior to the Announcement Date
or (y) in the transaction in which it became
an Interested Shareholder, whichever is
higher; or
(2) [The] the Fair Market Value per
[common] Common [share] Share on the
Announcement Date or on the Determination
Date, whichever is higher; or
(3) the amount which bears the same
percentage relationship to the Fair Market
Value of the [common shares] Common Shares
on the Announcement Date as the highest per
share price determined in ([B)(1]b)(i)(1)
above bears to the Fair Market Value of the
common shares on the date of the
commencement of the acquisition of [common]
Common [shares] Shares by such Interested
Shareholder; and
(ii) the aggregate amount of the cash and the
Fair Market Value as of the Consummation Date of any
consideration other than cash to be received per share
by holders of the shares of any class or series of
outstanding Voting Stock other than [common shares]
Common Shares shall be at least equal to the highest
of the following (it being intended that the
requirements of this clause ([B]b)([2]ii) shall be met
with respect to every class and series of such Voting
Stock, whether or not the Interested Shareholder has
previously acquired any shares of a particular class
or series of such Voting Stock):
(1) if applicable, the highest per
share price (including any brokerage
commissions, transfer taxes and soliciting
dealers', fees) paid in order to acquire any
shares of such class or series [of] Voting
Stock beneficially owned by the Interested
Shareholder [which] that were acquired
beneficially by such Interested Shareholder
(x) within the two-year period immediately
prior to the Announcement Date or (y) in the
transaction in which it became the
Interested Shareholder, whichever is higher;
or
(2) if applicable, the highest
preferential amount per share to which the
holders of shares of such class or series of
Voting Stock are entitled in the event of
any voluntary or involuntary liquidation,
dissolution or winding up of the Company; or
(3) the Fair Market Value per share
of such class or series of Voting
-XX-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
Stock on the Announcement Date or the
Determination Date, whichever is higher; or
(4) the amount which bears the same
percentage to the Fair Market Value of such
class or series of Voting Stock on the
Announcement Date as the highest per share
price in clause ([B]b)([2]ii)([i]1) above
bears to the Fair Market Value of such
Voting Stock on the date of the commencement
of the acquisition of such Voting Stock by
such Interested Shareholder; and
(iii) the consideration to be received by
holders of a particular class or series of
outstanding Voting Stock (including [common shares]
Common Shares) shall be in cash or in the same form
as was previously paid in order to acquire
beneficially shares of such class or series of Voting
Stock that are beneficially owned by the Interested
Shareholder and, if the Interested Shareholder
beneficially owns shares of any class or series of
Voting Stock that were acquired with varying forms of
consideration, the form of consideration to be
received by each holder of shares of such class or
series of Voting Stock shall be, at the option of
such holder, either cash or the form used by the
Interested Shareholder to acquire beneficially the
largest number of shares of such class or series of
Voting Stock beneficially acquired by it prior to the
Announcement Date; and
(iv) after such Interested Shareholder has
become an Interested Shareholder and prior to the
consummation of such Business Combination:
(1) such Interested Shareholder
shall not have become the beneficial owner
of any additional shares of Voting Stock of
the [corporation] Corporation, except as
part of the transaction in which it became
an Interested Shareholder or upon conversion
of convertible securities acquired by it
prior to becoming an Interested Shareholder
or as a result of a pro rata stock dividend
or stock split; and
(2) such Interested Shareholder
shall not have received the benefit,
directly or indirectly (except
proportionately as a shareholder), of any
loans, advances, guarantees, pledges or
other financial assistance or tax credits or
other tax advantages provided by the
[corporation] Corporation or any Subsidiary,
whether in anticipation of or in connection
with such Business Combination or otherwise;
and
(3) such Interested Shareholder
shall not have caused any material change
in the [corporation] Corporation's business
or capital structure including, without
limitation, the issuance of shares of
capital stock of the [corporation]
Corporation to any third party; and
(4) there shall have been (x) no
failure to declare and pay at the regular
date therefore the full amount of dividends
(whether or not cumulative) on any
outstanding preferred shares of the
[Company] Corporation except as approved by
a majority of the Disinterested Directors,
(y) no reduction in the annual rate of
dividends paid on [common] Common [shares]
Shares (except as necessary to reflect any
subdivision of the Common [shares] Shares),
except as approved by a majority of the
Disinterested Directors, and (z) an increase
in such annual rate of dividends (as
necessary to prevent any such reduction) in
the event of any reclassification (including
any reverse stock split), recapitalization,
reorganization, self tender offer or any
similar transaction which has the effect of
reducing the number of outstanding [common
shares] Common Shares, unless the failure so
to increase such annual rate was approved by
a majority of the Disinterested Directors;
and
(v) a proxy or information statement
describing the proposed Business
-XXI-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
Combination and complying with the requirements of
the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions
replacing such Act, rules and regulations), whether
or not the [corporation] Corporation is then subject
to such requirements, shall be mailed by and at the
expense of the Interested Shareholder at least thirty
(30) days prior to the Consummation Date of such
Business Combination to the public shareholders of
the [corporation] Corporation (whether or not such
proxy or information statement is required to be
mailed pursuant to such Act or subsequent
provisions), and may contain at the front thereof in
a prominent place (i) any recommendations as to the
advisability (or inadvisability) of the Business
Combination which the Disinterested Directors, if
any, may choose to state, and (ii) the opinion of a
reputable national or regional investment banking
firm with expertise in telecommunications as to the
fairness (or not) of such Business Combination from
the point of view of the remaining public
shareholders of the [corporation] Corporation (such
investment banking firm to be engaged solely on
behalf of the remaining public shareholders, to be
paid a reasonable fee for its services by the
[corporation] Corporation upon receipt of such
opinion, to be [unaffilated] unaffiliated with such
Interested Shareholder, and, if there are at the time
any Disinterested Directors, to be selected by a
majority of the Disinterested Directors).
3. For purposes of this [Paragraph V] Article FIFTH:
(a) A "person" shall include, without limitation, any
individual, firm, corporation, group (as such term is used in
Regulation 13D-G of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on January
1, 1987) or other entity.
(b) "Interested Shareholder" shall mean any person
(other than the [corporation] Corporation or any Subsidiary or
any employee benefit plan of the [corporation] Corporation or
any Subsidiary) who or which:
(i) is the beneficial owner, directly or
indirectly, of more than 10 percent of the combined
voting power of the then outstanding shares of Voting
Stock; or
(ii) is an Affiliate of the [corporation]
Corporation and at any time within the two-year
period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10
percent or more of the combined voting power of the
then outstanding shares of Voting Stock; or
(iii) is an assignee of or has otherwise
succeeded to the beneficial ownership of any shares
of Voting Stock that were at any time within the
two-year period immediately prior to the date in
question beneficially owned by an Interested
Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or
series of transactions not involving a public
offering within the meaning of the Securities Act of
1933.
(c) A person shall be a "beneficial owner" of any
Voting Stock:
(i) which such person or any of its
Affiliates or Associates beneficially owns, directly
or indirectly; or
(ii) which such person or any of its
Affiliates or Associates has ([a]1) the right to
acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise, or ([b]2) the right to vote or direct the
vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly
or indirectly, by any other person with which such
person or any of its Affiliates or Associates has any
agreement, arrangement
-XXII-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting
Stock.
(d) For the purposes of determining whether a person
is an Interested Shareholder pursuant to sub-paragraph
[3.]3([B]b) of this [Paragraph] Article [V] FIFTH, the number
of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned by such Interested Shareholder
through application of [subparagraph] sub-paragraph
[3.]3([C]c) of this [Paragraph] Article [V] FIFTH but shall
not include any other shares of Voting Stock that may be
issuable pursuant to any agreement, arrangements or
understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
(e) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on January 1, 1987.
(f) "Subsidiary" shall mean any person more than 50
percent of whose outstanding equity securities having ordinary
voting power in the election of directors is owned, directly
or indirectly, by the [corporation] Corporation or by a
Subsidiary or by the [corporation] Corporation and one or more
Subsidiaries; provided, however, that for the purposes of the
definition of Interested Shareholder set forth in
sub-paragraph [3.]3([B]b) of this [Paragraph] Article [V]
FIFTH, the term "Subsidiary" shall mean only a person of which
a majority of each class of stock ordinarily entitled to vote
for the election of directors is owned, directly or
indirectly, by the [corporation] Corporation.
(g) "Disinterested Director" shall mean any member of
the Board of Directors of the [corporation] Corporation who is
unaffiliated with, and not a nominee of, the Interested
Shareholder and was a member of the Board prior to the time
that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director who
is unaffiliated with, and not a nominee of, the Interested
Shareholder and who is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the
Board of Directors.
(h) "Fair Market Value" shall mean: (1) in the case
of stock, the highest closing sale price during the 30-day
period commencing on the 40th day preceding the date in
question of a share of such stock on the Composite Tape for
New York Stock Exchange-Listed Stocks[,]; or, if such stock is
not quoted on the New York Stock Exchange Composite Tape, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock
is listed[,]; or if such stock is not listed on any such
exchange, the highest closing sale price or bid quotation with
respect to a share of such stock during the 30-day period
commencing on the 40th day preceding the date in question on
the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use[,]; or if no such
quotations are available, the [Fair Market Value] fair market
value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in
good faith; and (2) in the case of property other than cash or
stock, the [Fair Market Value] fair market value of such
property on the date in question as determined by a majority
of the Disinterested Directors in good faith.
(i) In the event of any Business Combination in which
the [corporation] Corporation survives, the phrase "any
consideration other than cash to be received" as used in
sub-paragraphs [2.]2([B]b)([1]i) and [2.]2([B]b)([2]ii) of
this [Paragraph] Article [V] FIFTH shall include [the common
shares] Common Shares and/or the shares of any other class or
series of outstanding Voting Stock retained by the holders of
such shares.
(j) "Announcement Date" shall mean the date of first
public announcement of the proposed Business Combination.
(k) "Determination Date" shall mean the date on
which the Interested Shareholder became an Interested
Shareholder.
-XXIII-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
(l) "Consummation Date" shall mean the date of the
consummation of the Business Combination.
(m) The term "Voting Stock" shall mean, in any given
time, all outstanding [common shares] [of] Common Shares of
the [corporation] Corporation and all outstanding shares of
any other classes or series of the corporation's capital
stock, the holders of which are entitled at such time to vote
upon all questions upon which the holders [of] [common shares]
of Common Shares shall have the authority to vote, in each
case voting together as a single class.
4. A majority of the Disinterested Directors shall have
the power and duty to determine, on the basis of
information known to them after reasonable inquiry,
all facts necessary to determine compliance with this
[Paragraph V] Article FIFTH including, without
limitation:
(a) whether a person is an Interested Shareholder;
(b) the number of shares of Voting Stock or any
other stock beneficially owned by any person;
(c) whether a person is an Affiliate or Associate
of another person;
(d) whether the requirements of sub-paragraph
[2.]2([B]b) of this [Paragraph V] Article FIFTH have been
met with respect to any Business Combination;
(e) whether the assets which are the subject of any
Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the corporation
or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of One Million Dollars
($1,000,000) or more; and
(f) all other matters with respect to which a
determination is required under this [Paragraph V] Article
FIFTH.
5. Nothing contained in this [Paragraph V] Article
FIFTH shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by
law.
6. Notwithstanding anything contained in this
[certificate] Certificate of [incorporation]
Incorporation to the contrary, the affirmative vote
of the holders of at least 70 percent of the combined
voting power of the Voting Stock shall be required to
alter, amend or repeal this [Paragraph] Article [V]
FIFTH or to adopt any provision inconsistent
therewith; provided, however, that if there is an
Interested Shareholder on the record date for the
meeting at which such action is submitted to the
shareholders for their consideration, such 70 percent
vote must include the affirmative vote of at least
two-thirds (2/3) of the combined voting power of the
outstanding shares of Voting Stock held by
shareholders other than the Interested Shareholder.
7. Nothing contained in this [Paragraph V] Article
FIFTH is intended, or shall be construed, to affect
any of the relative rights, preferences or
limitations, within the meaning of such terms under
Section 801(b)(12) of the New York Business
Corporation Law or any successor statute, of any
shares of any authorized class or series of the
corporation's stock, whether issued or unissued.
SIXTH: The Board of Directors of the [corporation]
Corporation, when evaluating any offer of another party to ([i]1) purchase, or
exchange any securities or property for, any outstanding equity securities of
the [corporation] Corporation or any subsidiary; ([ii]2) merge or consolidate
the [corporation] Corporation or any subsidiary with another company; or
([iii]3) purchase or otherwise acquire all or substantially all of the
properties and assets of the [corporation] Corporation or any subsidiary, shall,
in connection with the exercise of its judgment in determining what is in the
best interest of the [corporation] Corporation and its shareholders, give due
consideration not only to the price or other
-XXIV-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
consideration being offered but also to all other relevant factors, including,
without limitation, (i) the financial and managerial resources and future
prospects of the offeror; (ii) the possible effects on the business of the
[corporation] Corporation and its subsidiaries and on the ratepayers, and other
customers, employees, suppliers and creditors of the [corporation] Corporation
and its subsidiaries; and (iii) the possible effects on the communities in which
the facilities of the [corporation] Corporation and its subsidiaries are
located. In so evaluating any such offer, the Board of Directors shall be deemed
to be acting in accordance with its duly authorized duties and in good faith, in
the best interests of the [corporation] Corporation.
SEVENTH: Except as otherwise specifically provided by law or
in this [certificate] Certificate of [incorporation] Incorporation, the
affirmative vote in person or by proxy of the holders of seventy percent (70%)
of the combined voting power of the issued and outstanding common shares of the
[corporation] Corporation and the issued and outstanding shares of any other
classes or series of the [corporation] Corporation's capital stock, the holders
of which are entitled at the time to vote upon all questions upon which the
holders of [common] Common [shares] Shares shall have the authority to vote,
shall be required to adopt any plan of merger or consolidation (other than any
plan of merger involving the merger into the [corporation] Corporation of one or
more subsidiaries of the [corporation] Corporation, provided the [corporation]
Corporation owns 90% or more of each class of stock of such subsidiary or
subsidiaries) or to approve the sale of all or substantially all of the
[corporation] Corporation's assets. Any amendment to [this] the [certificate]
Certificate of [incorporation] Incorporation which amends, deletes or otherwise
modifies or changes this section of [this] the [certificate] Certificate of
[incorporation] Incorporation or any part thereof, shall be authorized by a like
vote of the shareholders. Nothing contained in this [Paragraph] Article [VII]
SEVENTH is intended, or shall be construed, to affect any of the relative
rights, preferences or limitations, within the meaning of such terms under
Section 801(b)(12) of the New York Business Corporation Law or any successor
statute, of any shares of any authorized class or series of the [corporation]
Corporation's stock, whether issued or unissued.
EIGHTH: The [duration of this corporation] term of existence
of the Corporation shall be perpetual.
NINTH: To the fullest extent now or hereafter provided for or
permitted by law, no director of the [Company] Corporation shall be personally
liable to the [Company] Corporation or its shareholders for damages for any
breach of duty in such capacity. Neither the amendment or repeal of this
[Paragraph IX,] Article nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this [Paragraph IX,] Article shall eliminate or
reduce the protection afforded by this [Paragraph IX] Article to a director of
the [Company] Corporation in respect to any matter which occurred, or any cause
of action, suit or claim which but for this [Paragraph IX] Article would have
accrued or arisen, prior to such amendment, repeal or adoption.
TENTH: [The]1. Subject to the rights of holders of Preferred
Shares to elect directors under specified circumstances, the number of [its]
directors of the corporation shall be not less than three (3) nor more than
[ten] twelve (12) and shall be fixed from time to time by the By-laws of the
Corporation.
1. Subject to the rights of holders of Preferred Shares, any
director may be removed from office only for cause and
(i) by the affirmative vote of the holders of not less
than a majority of the voting power of all of the
outstanding shares of capital stock entitled to vote
generally in the election of such directors or (ii) by
the majority vote of the members of the Board of
Directors then in office. For purposes of this Paragraph,
"cause" shall mean the willful and continuous failure of
a director to substantially perform such director's
duties to the Corporation (other than any such failure
resulting from incapacity due to physical or mental
illness) or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the
Corporation.
ELEVENTH: Subject to any limitations imposed by this
Certificate or applicable law, the Board of Directors shall have power to adopt,
amend or repeal the By-laws of the Corporation by the affirmative vote of not
less than a majority of the total number of directors. Subject to the provisions
of this Article ELEVENTH, any By-laws made by the directors under the powers
conferred hereby may be amended or repealed by the directors or by the
shareholders.
-XXV-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
[The names and residences of the directors for the first year
are Michael N. Kane, George F. Ketchum, Frank M. Cummins, Fred C. Cary, William
E. Bailey, Sidney H. Sanford, William A. Hynard, Wilbur C. Lazear, and George H.
Strong, all of Warwick, Orange County, New York.]
TWELFTH: No holder of any share of stock of this Corporation
shall be entitled as a matter of right to subscribe for, purchase or receive any
part of the unissued stock of the Corporation or any stock of the Corporation to
be issued by reason of any increase of the authorized capital stock of the
Corporation or any stock of the Corporation purchased by the Corporation or by
its nominees, or to subscribe for, purchase or receive any rights to or option
to purchase any such stock or any bonds, certificates of indebtedness,
debentures or other securities convertible into or carrying options or warrants
to purchase stock or other securities of the Corporation, or have any other
pre-emptive rights as now or hereafter defined by the laws of the State of New
York.
THIRTEENTH: The office of the Corporation in the State of New
York is located in the County of Orange. The Secretary of State of the State of
New York is hereby designated as an agent of the Corporation on whom all process
in any action or proceeding against the Corporation may be served within the
State of New York. The address to which the Secretary of State shall mail a copy
of any process that may be served upon him is Warwick Valley Telephone Company,
Attention: President, 47 Main Street, Warwick, New York 10990.
******
[Twelfth: The Post Office Address of each subscriber, the number of
shares of stock which each agrees to take in said Corporation, are]
PLEASE NOTE:
The following language is not shown as having been deleted
because the Corporation believes that it has never been in effect:
"The 5% Series Preferred Shares may be converted into an equal
number of shares of the Corporation's common stock at the option of the
preferred holder."
-XXVI-
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "["and"]" in the electronic format.
WARWICK VALLEY TELEPHONE COMPANY
47 Main Street
Warwick, NY 10990
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Herbert Gareiss, Jr. and Colleen Shannon
as proxies, each with full power of substitution, to represent and
vote as designated on the reverse side, all the Common Shares of
Warwick Valley Telephone Company held of record by the undersigned on
March 18, 2003 at the Annual Meeting of Stockholders to be held at
Kites Restaurant Atop The Spa, at 2 Chamonix Drive, Vernon, New Jersey
on April 25, 2003 at 2:00 p.m. local time, and at any
adjournments thereof.
(Continued and to be signed on the reverse side)
COMMENTS:
ANNUAL MEETING OF SHAREHOLDERS OF
WARWICK VALLEY TELEPHONE COMPANY
APRIL 25, 2003
Please date, sign and mail your COMPANY NUMBER
proxy card in the envelope ----------------------------------
provided as soon as possible.
ACCOUNT NUMBER
----------------------------------
COMMON
Please detach and mail in the envelope provided
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
FOR DIRECTOR AND "FOR" PROPOSALS IA AND IIA THROUGH IIG. PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK
INK AS SHOWN HERE X
I. The Board of Directors has nominated the persons listed below to serve as
directors until 2006:
/ / FOR ALL NOMINEES / / Rafael Collado
/ / WITHHOLD AUTHORITY / / Robert J. DeValentino
FOR ALL NOMINEES
/ / M. Lynn Pike
/ / FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: / /
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered names(s) on the account may not be submitted
via this method. /X/
FOR AGAINST ABSTAIN
IA. PROPOSAL TO FIX THE NUMBER OF DIRECTORS AT NINE / / / / / /
UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS.
IIA. PROPOSAL TO APPROVE AMENDMENT TO INCREASE THE / / / / / /
NUMBER OF AUTHORIZED COMMON SHARES AND CHANGE
FROM NO-PAR TO $0.01 PAR.
IIB. PROPOSAL TO APPROVE AMENDMENT TO EFFECT / / / / / /
3 FOR 1 SPLIT OF THE COMPANY'S COMMON SHARES.
IIC. PROPOSAL TO APPROVE AMENDMENT TO INCREASE / / / / / /
AUTHORIZED PREFERRED SHARES, CHANGE PAR
VALUE OF UNISSUED PREFERRED SHARES AND
INCREASE FLEXIBILITY IN ESTABLISHING
TERMS OF SERIES.
IID. PROPOSAL TO APPROVE AMENDMENT TO REVISE / / / / / /
THE PURPOSE CLAUSE.
IIE. PROPOSAL TO APPROVE AMENDMENT TO CHANGE / / / / / /
THE NUMBER OF DIRECTORS.
IIF. PROPOSAL TO APPROVE RIGHT TO REMOVE / / / / / /
DIRECTORS FOR CAUSE.
IIG. PROPOSAL TO APPROVE AMENDMENT TO MAKE / / / / / /
VARIOUS OTHER CHANGES TO THE CERTIFICATE
OF INCORPORATION.
III. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
Please check here if you plan to attend the meeting. / /
Optional Field. / /
Signature of Shareholder ________________________ Date: __________________
Signature of Shareholder ________________________ Date: __________________
Note: This proxy must be signed exactly as the name appears hereon. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer giving full title as such. If
signer is a partnership, please sign in partnership name by authorized
person.
WARWICK VALLEY TELEPHONE COMPANY
47 Main Street
Warwick, NY 10990
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Herbert Gareiss, Jr. and Colleen Shannon as
proxies, each with full power of substitution, to represent and vote as
designated on the reverse side, all the Preferred Shares of Warwick Valley
Telephone Company held of record by the undersigned on March 18, 2003 at the
Annual Meeting of Stockholders to be held at
Kites Restaurant Atop The Spa at 2 Chamonix Drive, Vernon, New Jersey
on April 25, 2003 at 2:00 p.m. local time, and at any adjournments thereof.
(Continued and to be signed on the reverse side)
COMMENTS:
ANNUAL MEETING OF SHAREHOLDERS OF
WARWICK VALLEY TELEPHONE COMPANY
APRIL 25, 2003
Please date, sign and mail your COMPANY NUMBER
proxy card in the envelope -------------------------------------
provided as soon as possible.
ACCOUNT NUMBER
-------------------------------------
PREFERRED
Please detach and mail in the envelope provided
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL IIC. PLEASE SIGN,
DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE X
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered names(s) on the account may not be submitted via this method.
FOR AGAINST ABSTAIN
IIC. PROPOSAL TO APPROVE AMENDMENT TO INCREASE / / / / / /
AUTHORIZED PREFERRED SHARES, CHANGE THE PAR
VALUE OF UNISSUED PREFERRED SHARES AND
INCREASE FLEXIBILITY IN ESTABLISHING
TERMS OF SERIES.
Please check here if you plan to attend the meeting. / /
Optional Field. / /
Signature of Shareholder_______________________________ Date:_______________
Signature of Shareholder_______________________________ Date:_______________
Note: This proxy must be signed exactly as the name appears hereon. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer giving full title as such. If
signer is a partnership, please sign in partnership name by authorized
person.