SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No.___]
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material under U 240.14a-12
USURF AMERICA, INC
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): No fee required. Fee computed
on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________
2) Aggregate number of securities to which transaction applies:
____________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
5) Total fee paid:
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|_| Fee paid previously with written preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________________________________
2) Form Schedule or Registration Statement No.:________________________
3) Filing Party:_______________________________________________________
4) Date Filed: _______________________________________________________
USURF America, Inc.
390 Interlocken Crescent, Suite 900
Broomfield, Colorado 80021
Telephone (303) 285-5379
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
IN LIEU OF AN ANNUAL MEETING
TO BE HELD JUNE 9, 2005
To Our Shareholder:
The Special Meeting of Shareholders of USURF America, Inc. (the "Company")
will be held on Thursday, June 9, 2005, at 10:00 a.m. (Local Time), at the Omni
Interlocken Resort, 500 Interlocken Boulevard, Broomfield, Colorado 80021, for
the following purposes:
(1) ELECTION OF FIVE DIRECTORS. To elect the five persons listed in the
Proxy Statement that accompanies this Notice to serve as directors
of the Company until our next annual meeting of shareholders, or
until their respective successors are elected and qualified.
(2) RATIFICATION AND APPROVAL OF AUDITORS. To ratify the selection of
AJ. Robbins, PC as the Company's independent auditors for the fiscal
years ending December 31, 2004 and December 31, 2005.
(3) APPROVAL OF AMENDMENT TO INCREASE OUR AUTHORIZED COMMON SHARES. To
amend our Articles of Incorporation to increase the common shares we
have authority to issue from 400,000,000 shares of common stock to
800,000,000 shares of common stock.
(4) APPROVAL OF REVERSE COMMON STOCK SPLIT. To give our Board of
Directors the discretionary authority, prior to the next annual
meeting of shareholders, if the Board deems it in the best interest
of the Shareholders, to amend our Articles of Incorporation to
effect a reverse stock split of one of the following amounts: i) one
share of common stock for three shares of common stock; ii) one
share of common stock for five shares of common stock, iii) one
share of common stock for seven shares of common stock or iv) one
share of common stock for ten shares of common stock
(5) APPROVAL OF FORWARD COMMON STOCK SPLIT. To give our Board of
Directors the discretionary authority, prior to the next annual
meeting of shareholders, if the Board deems it in the best interest
of the Shareholders, to amend our Articles of Incorporation to
effect a forward stock split of two common shares of common stock
for each one share of common stock.
(6) APPROVAL OF THE CHANGE OF THE COMPANY'S NAME. To amend our Articles
of Incorporation to change the name of the Company from USURF
America, Inc. to Cardinal Communications, Inc.
(7) OTHER BUSINESS. To transact such other business as may properly come
before the meeting or any adjournment or adjournments thereof.
Shareholders of record at the close of business on Thursday, April 21,
2005 are entitled to notice of and to vote at the Special Meeting and at any
continuation or adjournments thereof.
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All shareholders are cordially invited to attend the Special Meeting in
person. Your vote is important. Please fill in, date, sign and return the
enclosed proxy in the return envelope as promptly as possible, whether or not
you plan to attend the Special Meeting. Your promptness in returning the proxy
will assist in the expeditious and orderly processing of the proxies and will
assist in ensuring that a quorum is present or represented. Even though you
return your proxy, you may nevertheless attend the Special Meeting and vote your
shares in person if you wish. If you want to revoke your proxy at a later time
for any reason, you may do so in the manner described in the attached Proxy
Statement.
By Order of the Board of Directors
/s/ David A. Weisman
----------------------------------------
President & CEO
May 4, 2005
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USURF America, Inc.
390 Interlocken Crescent, Suite 900
Broomfield, Colorado 80021
Telephone (303) 285-5379
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS IN LIEU OF AN ANNUAL MEETING
TO BE HELD ON JUNE 9, 2005
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VOTING AND PROXY
This Proxy Statement is furnished to holders of Common Stock, par value
$.0001 per share (the "Common Stock"), Series A Preferred Stock, par value
$.0001 per share (the "Series A Stock") and Series B Preferred Stock, par value
$.0001 per share (the "Series B Stock"), of USURF America, Inc., a Nevada
corporation (the "Company"), in connection with the solicitation of the
accompanying proxy on behalf of the Board of Directors of the Company (the
"Board") for use at the 2005 special meeting of the Company's shareholders in
lieu of an annual meeting (the "Special Meeting") and at any adjournment(s) or
postponement(s) thereof. The Special Meeting will be held at the Omni
Interlocken Resort, 500 Interlocken Boulevard, Broomfield, Colorado 80021, on
June 9, 2005, at 10:00 a.m. (local time), for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders (the "Notice").
When proxies in the accompanying form are properly executed and received,
the shares represented thereby will be voted at the Special Meeting in
accordance with the directions noted thereon. If no direction is indicated on
the proxy, the shares represented thereby will be voted (i) for the election of
the Board's nominees as directors as set forth in the Proxy Statement; (ii) for
the ratification of the selection of AJ. Robbins, PC as the Company's
independent auditors for the fiscal years ending December 31, 2004 and December
31, 2005; (iii) for an amendment of the Articles of Incorporation of the Company
to increase the authorized number of common shares from 400,000,000 to
800,000,000; (iv) to give our Board of Directors the discretionary authority, if
the Board deems it in the best interest of the Shareholders, to amend our
Articles of Incorporation to effect a reverse stock split prior to the next
annual meeting of shareholders of one of the following amounts: a)one share of
common stock for three shares of common stock; b) one share of common stock for
five shares of common stock, c) one share of common stock for seven shares of
common stock or d) one share of common stock for ten shares of common stock; (v)
to give our Board of Directors the discretionary authority, if the Board deems
it in the best interest of the Shareholders, prior to the next annual meeting of
shareholders, to amend our Articles of Incorporation to effect a forward stock
split of two common shares of common stock for each one share of common stock;
and vi) to change the name of our Company from Usurf America, Inc. to Cardinal
Communications, Inc.
ADP Investor Communications Services. Inc. (ADP) and Securities Transfer
Corporation ("STC") are assisting us in this solicitation of proxies. Questions
or requests for proxy materials can be directed to them at:
Securities Transfer Corporation ADP Investor Communications Services, Inc.
2591 Dallas Parkway, Suite 102 51 Mercedes Way
Frisco, Texas 75034 Edgewood, NY 11717
Or call: (469) 633-0101 (631) 254-7447
Or Fax: (469) 633-0088
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Many of the Company's shareholders hold their shares in "street-name" in the
name of a brokerage firm or bank. If you hold your shares in "street-name,"
please note that only your brokerage firm or bank can sign a proxy on your
behalf, and only upon receipt of your specific instructions. The Board urges you
to contact the person responsible for your account today, and instruct them to
execute a proxy in favor of the proposals described in this Proxy Statement.
If you hold your shares in more than one type of account or if your shares
are registered differently, you may receive more than one proxy. Please sign and
return all proxies that you receive.
This Proxy Statement and the accompanying proxy are first being mailed to
shareholders on or about May 12, 2005.
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REVOCABILITY OF PROXY AND VOTING OF SHARES
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised. The proxy may be revoked before it is exercised by
sending a written revocation or a duly executed proxy bearing a later date to
the Company's Secretary at our principal executive offices at 390 Interlocken
Crescent, Suite 900, Broomfield, Colorado 80021.The proxy may also be revoked by
attending the meeting and voting in person.
If it is not revoked, the proxy will be voted at the meeting in accordance
with the shareholder's instructions indicated on the proxy card. If no
instructions are indicated, the proxy will be voted FOR the approval of all of
the proposals set forth herein. We currently know of no other matters to be
considered at the Special Meeting of Shareholders. If, however, any other
matters come before the Special Meeting of Shareholders, or any adjournment or
adjournments thereof, the persons named in the proxy will vote the proxy in
accordance with their best judgment on any such matter.
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
The record date for the determination of shareholders entitled to notice
of and to vote at the Special Meeting was the close of business on April 21,
2005 (the "Record Date").
Each share of Common Stock outstanding on the Record Date will be entitled
to one vote on all matters to be acted upon at the Special Meeting. On the
Record Date, there were 238,638,297 shares of Common Stock outstanding.
Each share of Series A Stock will be entitled to vote on all matters to be
acted upon at the Special Meeting. The Series A Stock holders vote as if their
shares have been converted to Common Stock as of the Record Date according to
the conversion features of the Series A Stock contained in the Company's
Articles of Incorporation. Accordingly, the Series A Stockholders are entitled
to 1,695 votes per share. On the Record Date, there were 10,000 shares of Series
A Stock outstanding, entitled to cast 16,949,153 votes at the Special Meeting or
by Proxy.
Each share of Series B Stock will be entitled to vote on all matters to be
acted upon at the Special Meeting. The Series B Stock holders vote as if their
shares have been converted to Common Stock as of the Record Date according to
the conversion features of the Series B Stock contained in the Company's
Articles of Incorporation. Accordingly, the Series B Stockholders are entitled
to 100 votes per share of Series B Stock. On the Record Date, there were 100,000
shares of Series B Stock outstanding, entitled to cast 10,000,000 votes at the
Special Meeting or by Proxy.
Therefore, as of the Record Date, there are a total of 265,587,450 votes
represented by the holders of Common Stock, Series A Stock and Series B Stock.,
therefore a total of 132,793,726 votes in person or by proxy will constitute a
quorum at the meeting.
There are no cumulative voting rights with respect to the Common Stock the
Series A Stock, or the Series B Stock. The presence, in person or by proxy, of
holders of a majority of the outstanding shares of Common Stock, Series A Stock
and Series B Stock entitled to vote at the Special Meeting is necessary to
constitute a quorum to transact business. Assuming the presence of a quorum,
directors will be elected by a plurality of the votes cast. To approve any other
matter to be presented at the Special Meeting, the number of votes cast in favor
of the matter must exceed the number of votes cast in opposition to the matter.
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Certain of our members of our Board of Directors and other shareholders of
the Company are parties to an agreement that contain certain voting covenants
with respect to the election of directors. That agreement and the voting
covenants are disclosed in the Proxy Statement under the Section "Certain
Relationships and Related Transactions."
When the proxy is properly executed, dated and returned, the shares it
represents will be voted in accordance with any directions noted on it. Votes
cast by proxy or in person at the Special Meeting will be tabulated by the
Inspectors of Election, in conjunction with information received from our
transfer agent. The Inspectors of Election will also determine whether or not a
quorum is present.
Shares which abstain from voting as to the proposals, and shares held in
"street name" by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote such shares as to the proposals
("broker non-votes"), will be counted for purposes of determining whether the
affirmative vote of a majority of the shares present at the meeting and entitled
to vote on the proposals has been obtained, but will have the effect of reducing
the number of affirmative votes required to achieve the majority vote on the
proposals.
SOLICITATION
The Company is soliciting your proxy. The cost of this solicitation,
including expenses in connection with preparing and mailing this Proxy
Statement, will be borne by the Company. In addition to original solicitation of
proxies by mail, our directors, officers and other employees may, without
additional compensation, solicit proxies by telephone, facsimile and personal
interviews. Proxies may not be returned through the Internet. The directors and
executive officers who may participate in the solicitation will not be
additionally compensated but will be reimbursed for out-of-pocket expenses. The
Company has engaged ADP and STC to serve as its proxy solicitors. Pursuant to
the Company's agreement with ADP and STC, ADP and STC will provide various proxy
advisory and solicitation services for the Company in exchange for a fee not to
exceed $10,000 plus expenses. The Company has also agreed to indemnify ADP and
STC against certain liabilities in connection with this solicitation. The
Company may also request, and reimburse the reasonable fees and expenses of,
banking institutions, brokerage firms, custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of Common Stock, Series
A Stock, and Series B Stock that those companies hold of record.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
The Company will only deliver one Proxy Statement to multiple shareholders
sharing an address unless we have received contrary instructions from one or
more of the shareholders. The Company will promptly deliver a separate copy of
this Proxy Statement to shareholders at a shared address to which a single copy
of the document was delivered upon oral or written request to:
USURF America, Inc.
Attn: Corporate Secretary
390 Interlocken Crescent, Suite 900
Broomfield, Colorado 80021
Telephone (303) 285-5379
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to us regarding
beneficial ownership of our common stock as of March 31, 2005 by (i) each person
who is known to us to be beneficial owners of more than 5% of our common stock,
(ii) each of our directors and the executive officers named in the Summary
Compensation Table below, and (iii) our executive officers and directors as a
group. Except as otherwise noted below, the address of each persons is 390
Interlocken Crescent, Suite 900, Broomfield, Colorado 80021.
Number of Shares Percentage of Shares
Name and Address of Beneficial Owner Beneficially Owned(1) Beneficially Owned(1)
- ------------------------------------ --------------------- ---------------------
Crestview Capital Master LLC (2) 40,000,000 14.9%
Evergreen Venture Partners, LLC(3) 15,000,000 6.5%
Monarch Pointe Fund, Ltd. (4) 25,400,000 10.0%
David A. Weisman(5) 17,500,000 7.1%
Douglas O. McKinnon(6) 8,650,000 3.7%
Richard E. Wilson(7) 1,200,000 *
Ed Garneau(8) 18,503,520 8.0%
Byron T. Young 5,750,000 2.5%
Jeff Fiebig(9) 716,667 *
Craig Cook(10) 716,667 *
All executive officers and directors as a group
(5 persons) 53.036,853 20.9%
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* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
subject to options and warrants currently exercisable or convertible, or
exercisable or convertible within 60 days of March 31, 2005, are deemed
outstanding for computing the percentage of the person holding such option
or warrant but are not deemed outstanding for computing the percentage of
any other person. Except as pursuant to applicable community property
laws, the persons named in the table have sole voting and investment power
with respect to all shares of common stock beneficially owned. Percentages
are based on 229,155,297 shares of common stock outstanding as of March
31, 2005.
(2) Includes 40,000,000 shares issuable upon conversion of convertible
debentures held by Crestview Capital Master LLC. Crestview's business
address is 95 Revere Dr., Suite A, Northbrook, Illinois, 60062.
(3) Evergreen Venture Partners, LLC's business address is 1535 Grant Street,
Suite 140, Denver, CO 80203.
(4) Includes 20,000,000 shares issuable upon conversion of Series A Preferred
Shares and 5,400,000 shares issuable upon exercise of warrants held by
Monarch Pointe Fund, Ltd .Monarch's business address is 555 South Flower
St., Suite 4500, Los Angeles, California 90071.
(5) Includes 17,500,000 shares issuable upon exercise of warrants.
(6) Includes 3,000,000 shares issuable upon exercise of options.
(7) Includes 750,000 shares issuable upon exercise of options. Mr. Wilson's
address is P.O. Box 2844, Kirkland, Washington 98083.
(8) Includes: (i) 5,203,870 shares were issued to, and owned by five
affiliated limited liability companies for which Mr. Garneau serves as
Manager, and in his capacity as Manager, Mr. Garneau exercises voting
control over the 5,203,870 common shares. Mr. Garneau disclaims beneficial
ownership of all such shares: (ii) 600,000 shares and 200,000 shares
issuable upon exercise of warrants issued in a private placement
transaction to September Serenade Ltd., a family owned partnership of
which Mr. Garneau serves as a general partner and in which he shares
voting control over the shares with his wife. Each of Mr. Garneau and his
wife own a 0.5% interest in the partnership. Mr. Garneau disclaims
beneficial ownership of all but 0.5% of the shares and warrants owned by
the partnership; and (iii) 9,721,950 common shares and 2,777,700 common
shares issuable upon conversion of Series B Preferred Stock issued to and
owned by DD Family Properties LLC, a family owned LLC of which Mr. Garneau
owns a 21% interest and for which he serves as Manager. Mr. Garneau
exercises voting control over all of the common shares and preferred
shares owned by the LLC. Mr. Garneau disclaims beneficial ownership of all
but 21% of the common shares and preferred shares owned by the family LLC.
(9) Includes 100,000 shares issuable upon conversion of Series B Preferred
Shares and 66,667 shares issuable upon exercise of warrants.
(10) Includes 100,000 shares issuable upon conversion of Series B Preferred
Shares and 66,667 shares issuable upon exercise of warrants.
AUTHORIZED CAPITAL STOCK
Our authorized capital stock consists of 400,000,000 shares of Common
Stock, $.0001 par value per share and 100,000,000 shares of Preferred Stock,
issuable in series, $.0001 par value per share. The following description of
certain provisions of our Common Stock and Preferred Stock does not purport to
be complete and is subject to, and qualified in its entirety by, the provisions
of the our Articles of Incorporation, as amended.
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DESCRIPTION OF COMMON STOCK
As of April 21, 2005 there are 238,638,297 shares of our Common Stock
outstanding. Additional shares of common stock have been reserved for issuance
as follows: 51,220,091 shares pursuant to various warrants; 41,887,500 shares
pursuant to various convertible debentures; 30,000,000 shares pursuant to the
Series A and Series B convertible preferred stock; and 6,650,000 shares pursuant
to various options. Each share of Common Stock is entitled to one vote at all
meetings of shareholders. All shares of Common Stock are equal to each other
with respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional shares of common stock nor are there any
subscription, conversion or redemption rights applicable to the Common Stock.
Our Articles of Incorporation, as amended, prohibit cumulative voting in the
election of directors. The absence of cumulative voting means that holders of
more than 50% of the shares voting for the election of directors can elect all
directors if they choose to do so. In such event, the holders of the remaining
shares of Common Stock will not be entitled to elect any director. A majority of
the shares entitled to vote, represented in person or by proxy, constitutes a
quorum at a meeting of shareholders. In the event of liquidation, dissolution or
winding up, holders of shares of Common Stock will be entitled to receive, on a
pro rata basis, all assets remaining after satisfaction of all liabilities and
all preferences payable to the Preferred Stock, if any.
DESCRIPTION OF PREFERRED STOCK
As of April 21, 2005 there were 10,000 shares of our Series "A"
Convertible Preferred Stock and 100,000 shares of our Series "B" Convertible
Preferred Stock outstanding.
The Series A Stock is convertible into the Company's common stock at a
conversion price ranging from $0.05 to $0.075 as calculated in accordance with
the Certificate of Designation under our Articles of Incorporation, filed with
the State of Nevada. The conversion price per share for the Series A Stock shall
be equal to eighty-five percent (85%) of the Market Price provided, however,
that subject to certain provisions, in no event shall the conversion price be
less than $0.05 per share (the "Floor Price") or exceed $0.075 (the "Ceiling
Price"). Each holder of the Series A Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, out of any assets of the Company
legally available therefore, such dividends as may be declared from time to time
by the Board of Directors. Except as provided by Nevada law, the holder of
shares of Series A Stock shall not have the right to vote on matters that come
before the shareholders. The holders of shares of Series A Stock have a payment
preference over the Series B Stock and the Common Stock upon the liquidation,
dissolution or winding up of the Company.
The Series B Convertible Preferred Stock includes the right on the part of
the Company or the holders to effect the conversion of the Series B Stock to
Common Stock from time to time when there is sufficient authorized but unissued
shares of Common Stock available for issuance upon conversion in accordance with
the Certificate of Designation under our Articles of Incorporation, filed with
the State of Nevada. The Series B Stock is convertible into Common Stock at the
conversion rate of 100 to 1, assuming there is sufficient authorized Common
Stock. In the event the Company fails to increase the number of authorized
shares of Common Stock to a level sufficient to allow for the conversion of all
of the Series B Stock into Common Stock by June 30, 2006, the Company will be
obligated, at the request of the holders of the Series B Stock, to redeem the
Series B Stock at the then fair market value of the underlying Common Stock into
which the Series B Stock would otherwise be convertible. The Series B Stock
designation also provides that the Series B Stock will be senior to the Common
Stock with respect to rights upon liquidation, winding up or dissolution of the
Company, but will be junior to the Company's Series A Stock. The Series B Stock
will vote together with the Common Stock as a single class on an as-converted to
Common Stock basis.
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Any and all descriptions of the Certificate of Designations of the Series
A Stock and Series B Stock as described in this Proxy Statement are qualified in
their entirety by reference to the full text of the Certificate of Designations
as filed with the State of Nevada.
LEGAL PROCEEDINGS
There are no material proceeding to which a director or officer is a party
adverse to the Company or any of its subsidiaries or that may be material and
adverse to the Company or any of its subsidiaries.
IDENTIFICATION OF DIRECTORS AND/OR EXECUTIVE OFFICERS
The following table represents the Company's Executive Officers and
Directors as of April 21, 2005.
Name Age Title(s)
---- --- --------
David A. Weisman(2) (4)(6) 42 Director, Chairman of the Board of
Directors and Chief Executive
Officer
Douglas O. McKinnon (1) (3) 54 Director
Edouard A. Garneau(2) (5) 43 Director, Chief Operating Officer
Richard E. Wilson (1) (2) (4)(5) 62 Director
Byron Young 31 Director
Jeffrey W. Fiebig 44 Director
Ronald S. Bass(3) 38 Principal Accounting Officer
Craig A. Cook(3) 59 Vice President Operations
- ----------
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Disclosure Committee of the Board of Directors.
(4) Member of the Nominating Committee of the Board of Directors.
(5) Member of the Compensation Committee of the Board of Directors.
(6) Mr. Weisman replaced Mr. McKinnon as Chief Executive Officer effective
April 18, 2005 as reported on the Current Report on Form 8-K, filed with
the SEC on April 20, 2005.
The Audit Committee consists of Mr. Weisman, Mr. Wilson and Mr. Garneau.
Mr. Weisman and Mr. Garneau are not considered to be independent. The audit
committee does not have a financial expert on the committee.
Dave Weisman. Mr. Weisman joined us in October 2004 as the Chairman of Usurf
America's Board of Directors and appointed Chief Executive Officer on April 18,
2005. Mr. Weisman also currently serves as Chairman and CEO of a broadband and
communications technology and services company, Eagle Broadband, where he has
led a highly successful corporate restructuring and turnaround that has
established us as a broadband market leader and created more than $200 Million
in shareholder value. Before Eagle Broadband, he was: Vice President, Sales &
Marketing for IP Dynamics; co-founder and Vice President, Sales and Marketing
for Canyon Networks; Vice President, Marketing and Customer Service for ACT
Networks; co-founder and Vice President, Sales & Marketing for Thomson
Enterprise Networks. Mr. Weisman also served as a pilot with the United States
Air Force Reserve and saw active combat duty in Central America and Operation
Desert Storm. He holds a B.A. in Economics and International Relations from
U.C.L.A.
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Douglas O. McKinnon. Mr. McKinnon joined us in April 2002 as a director and our
president and chief executive officer until April 18, 2005. Prior to joining us,
he served as chief executive officer of IP Services, Inc., a next-generation
communications services provider using broadband Internet Protocol (IP) and
Asynchronous Transfer Mode (ATM) based networks, from April 1999 to April 2002.
From February 1998 to March 1999 he served as executive vice president and chief
financial officer of AVIRNEX Communications Group, Inc., a provider of retail
telecommunications service including domestic and international long distance
and enhanced services to small and medium-sized business customers. From
November 1994 to January 1998, Mr. McKinnon served as vice president of ICG
Communications, Inc, one of the country's largest competitive local exchange
carriers offering local, long distance, ATM and frame relay services with a
nationwide fiber optic infrastructure. Mr. McKinnon is a former practicing CPA
with the SEC practice section of Coopers & Lybrand.
Richard E. Wilson. Mr. Wilson has served as a member of our Board of Directors
since March 2003. Since 2002, Mr. Wilson has served as a principal and executive
vice president of business development of NetPort-Datacom, Inc., a privately
held Mukilteo, Washington-based provider of international voice service. Mr.
Wilson was co-founder of The Association of Communications Enterprises (ASCENT)
(formerly the Telecommunications Resellers Association), a leading trade group
representing entrepreneurial and small business communications companies. He
served on that organization's Board of Directors in 1992 and 1993 and is
currently Chairman Emeritus of ASCENT. During 2001 and 2002, Mr. Wilson was a
principal in SigBioUSA, LLC, a Mulkiteo, Washington-based telecommunications
consulting firm with expertise in both wireline and wireless telecommunications
applications. From May 2000 to April 2001, Mr. Wilson was president and chief
executive officer of Open Telecommunications North America, a wholly owned
subsidiary of Open Telecommunications Australia, a publicly traded company in
Australia that provides telecommunications-network-infrastructure related
products and services. Also, from 2000 through January 2002, Mr. Wilson served
as a director of GlobalNet International Telecommunications, Inc., an
Illinois-based provider of global telecommunications services. GlobalNet was
publicly traded under the symbol GBNE, until acquired by Titan Corporation in
2002.
Ed Garneau. Mr. Garneau joined our Board of Directors December 20, 2004 and
appointed as Chief Operating Officer on February 21, 2005. Mr. Garneau will also
serve as a member of our audit committee. Mr. Garneau is the founder and, since
1994, has been the Chief Executive Officer of Sovereign Companies, a diversified
real estate development company with broadband telecommunications installation
and operations in 4 states currently representing 10 major developments or
approximately 1100 homes. Prior to founding Sovereign, Mr. Garneau served eight
years in the US Air Force as a fighter pilot.
Jeffrey W. Fiebig. Mr. Fiebig joined us as a member of our Board March 2005. Mr.
Fiebig joined the Sovereign Companies (recently acquired by the Company on
February 18, 2005) as Vice President in August of 2004. Mr. Fiebig has spent the
last twenty-one years in the US Air Force on active duty or in the reserves. He
was a combat fighter pilot in Desert Storm and flew the Slot Position for the
world famous US Air Force Thunderbirds. From January 2001 to January 2004, Mr.
Fiebig was the Group Commander of six Squadrons and supervised over 500
personnel at Luke Air Force Base, Arizona. In addition to his US Air Force
duties Mr. Fiebig was an instructor and evaluator for United Airlines from May
of 1997 to September 2004.
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Byron Young. Mr. Young joined us as a member of our Board of Directors in August
2004. Concurrently, Mr. Young will remain active as President of USURF's newly
acquired Texas subsidiary, Connect Paging Inc. d/b/a/ Get-A-Phone ("GAP"). Mr.
Young purchased GAP in 2000, sold off all paging assets and refocused the
company on dial tone. GAP has grown to over 14,000 customers to date and
revenues exceeding $9 million annually. Prior to Connect Paging, Young founded
Phone America in 1997 which was merged with Trans National Telecommunications,
Inc. in 1999 and prior to Phone America, founded Paging Express, Inc. in 1994.
Ronald S. Bass. Mr. Bass joined us as principal accounting officer in November
2003. Prior to joining us, Mr. Bass served as chief financial officer of Phantom
Group from January 2002 to October 2003, chief financial officer of Knovada from
May 2001 to October 2003, director of finance and operations at Vista Travel
Ventures from March 1999 to May 2001, and manager administration at Group
Voyagers from July 1993 to March 1999. Mr. Bass brings more than 13 years of
executive finance and operations experience including experience in equity
funding, treasury management, financial analysis, tax planning, accounting
system design and implementation, process engineering and risk management.
Craig A. Cook. Mr. Cook joined us as Vice President of Operations starting in
December 2004. He comes to Usurf from Sovereign Companies, having served as the
Chief Operating Officer from 2001 to 2004. Concurrently, Mr. Cook will act as
President of Usurf Communications, Inc. Previously, he was the Chief Operating
Officer for Denver Public Schools from 1994 to 2001 and the Assistant
Superintendent of Kansas City Public Schools, Kansas City, Missouri from 1988 to
1994. A retired Lieutenant Colonel in the U.S. Army, Cook served in various
accounting and finance positions during his military service. He brings the
discipline of an MBA from the University of Nevada, Reno, combined with a BSBA
from the University of Idaho to his job.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Sovereign Acquisition.
On December 20, 2004, Mr. Ed Garneau became a member of our Board of
Directors. On February 18, 2005, we closed on the acquisition of Sovereign
Partners LLC (the "Acquisition"). At the time the Acquisition was negotiated,
signed and closed, Mr. Garneau was both an indirect shareholder and director of
our company and the Manager of Sovereign Partners LLC ("Sovereign"). Mr. Garneau
also owned direct and indirect economic interests in Sovereign at and prior to
the closing of the Acquisition, as described below. Upon the closing of the
Acquisition, Mr. Garneau assumed the title of Chief Operating Officer of our
company and entered into an Employment Agreement with the Company.
On January 26, 2005, the Company entered into a Securities Purchase
Agreement (the "Acquisition Agreement") with Sovereign Partners, LLC, a Colorado
limited liability company ("Sovereign") and each of the members of Sovereign
(the "Members") (the "Acquisition"). The Acquisition Agreement provides, among
other things, for the acquisition by the Company of 100% of the membership
interests of Sovereign from the Members in exchange for the issuance of shares
of our Common Stock and shares of our newly created Series B Convertible
Preferred Stock, $0.0001 par value per share (the "Preferred Stock"). As a
result of the Acquisition, Sovereign is now owned and operated as a wholly owned
subsidiary of our Company.
The Company closed on the Acquisition Agreement on February 18, 2005 (the
"Closing"). At the Closing, the Members were issued an aggregate of 35,000,000
shares of our Common Stock and 100,000 shares of our Series B Preferred Stock.
12
Under the terms of the Acquisition Agreement, the Members are to be issued
shares of our Common Stock and Preferred Stock, as follows: (i) 35,000,000
shares of Common Stock and 100,000 shares of Series B Preferred Stock (which
were issued at the Closing of the Acquisition); (ii) 125,000 shares of Series B
Preferred Stock on each of January 1, 2006 and July 1, 2006; (iii) 250,000
shares of Series B Preferred Stock at such time as the Net Operating Income of
Sovereign after January 1, 2005 is equal to or greater than $6,000,000; and (iv)
400,000 shares of Series B Preferred Stock if the average Net Operating Income
of Sovereign ending on the period twenty-four months following the closing of
the acquisition is equal to or greater than $5,000,000. For the purposes of the
Acquisition Agreement, Net Operating Income means for any period the "EBITDA" on
a consolidated basis for Sovereign and all of its subsidiaries, in accordance
with generally accepted accounting principles. "EBITDA" means earnings before
interest, taxes, depreciation and amortization.
In addition, the Members may earn additional shares of our Common Stock or
Series B Preferred Stock if the average annualized Net Operating Income for the
period commencing on the closing and ending on the twenty-four month anniversary
date of the closing is: (A) greater than $5,000,000, but less than or equal to
$6,000,000, then the Members will receive in the aggregate an additional 0.05
shares of Series B Preferred Stock for each dollar that the average annualized
Net Operating Income for that period exceeds $5,000,000; (B) greater than
$6,000,000 but less than or equal to $7,000,000, then the Members will receive
in the aggregate an additional 0.10 shares of Series B Preferred Stock for each
dollar that the average annualized Net Operating Income for that period exceeds
$5,000,000; (C) greater than $7,000,000 but less than or equal to $8,000,000,
then the Members will receive in the aggregate 0.15 shares of Series B Preferred
Stock for each dollar that the average annualized Net Operating Income for that
period exceeds $5,000,000; or (D) greater than $8,000,000 for that period, then
the Members will receive in the aggregate 0.20 shares of Series B Preferred
Stock for each dollar that the average annualized Net Operating Income for that
period exceeds $5,000,000 (collectively, the "Twenty-Four Month Issuances").
In addition, the Members may earn additional shares of our Common Stock or
Series B Preferred Stock as follows: if the average annualized Net Operating
Income for the period commencing on the Closing and ending on the thirty-six
month anniversary date of the closing is: (A) greater than $5,000,000, but less
than or equal to $6,000,000, the Members will receive in the aggregate an
additional 0.10 shares of Series B Preferred Stock for each dollar that the
average annualized Net Operating Income for that period exceeds $5,000,000; (B)
greater than $6,000,000 but less than or equal to $7,000,000, then the Members
will receive in the aggregate an additional 0.20 shares of Series B Preferred
Stock for each dollar that the average annualized Net Operating Income for that
period exceeds $5,000,000; (C) greater than $7,000,000 but less than or equal to
$8,000,000, then the Members will receive in the aggregate 0.30 shares of Series
B Preferred Stock for each dollar that the average annualized Net Operating
Income for that period exceeds $5,000,000; or (D) greater than $8,000,000 for
that period, then the Members will receive in the aggregate 0.40 shares of
Series B Preferred Stock for each dollar that the average annualized Net
Operating Income for that period exceeds $5,000,000. Such issuances will be
reduced by the number of shares of Common Stock or Series B Preferred Stock
received pursuant to the Twenty-Four Month Issuances, if any.
In addition, the Company entered into a Management Agreement which will
provide that Mr. Ed Garneau, the current manager of Sovereign, will continue to
serve as manager of Sovereign and that the Members will continue to elect the
manager of Sovereign after the closing for a period of three years. The
Management Agreement also provides that while the Company may use Sovereign's
cash on hand following the closing, should there be an objection to such use,
our Board of Directors shall determine whether the cash may be used for the
Company's corporate purposes.
In addition, in connection with the Acquisition, the Company entered into
an Employment Agreement with Mr. Ed Garneau. The Employment Agreement provides
that Mr. Garneau will be employed as the Chief Operating Officer of the Company
for an initial period of three years following the Closing of the Acquisition.
13
Voting Agreement with Respect to Directors
In connection with the Acquisition Agreement, the Company, each member of
our Board of Directors including David Weisman, Edouard Garneau, Douglas
McKinnon, Richard Wilson and Byron Young, and each of the persons who were
Members of Sovereign immediately prior to the Closing entered into an Investor
Rights Agreement. Pursuant to the Investor Rights Agreement, each of such
persons agree to take all steps necessary, including the exercise of their
voting rights as a shareholder of our Company, to ensure the Mr. Ed Garneau and
one other person selected by the Members, is elected to the Company's Board of
Directors and serves as a Director until all of the shares of Common Stock
issued to the Members have either been registered and sold on an effective
registration statement or are eligible for resale under Rule 144 of the
Securities Act of 1933. Mr. Garneau and Mr. Fiebig are each designated as
nominees for election to our Board of Directors under this Proxy Statement. If
all such persons who are parties to the Investors Rights Agreement vote in favor
of these two nominees, a total of 53,053,870 shares of Common Stock and
10,000,000 shares of Series B Stock (voting on an as converted basis) will be
voted in favor of each of Mr. Garneau and Mr. Fiebig. Such shares would provide
for 63,053,870 votes in favor of these nominees.
The Investor Rights Agreement also provides that should certain events
happen, each party to the Investor Rights Agreement will take all steps
necessary to increase the number of Directors of our Company and grant the
Members the right to fill all such newly created Board of Director vacancies. In
addition, the Investor Rights Agreement provides for certain protective
operating covenants that prohibit the Company from taking certain extraordinary
actions absent the prior consent of the Members.
INDEBTEDNESS OF MANAGEMENT
None
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT
Section 16(a) of the Securities Act requires our directors, executive
officers and persons who own more than 10% of our Common Stock to file reports
of ownership and changes in ownership of our Common Stock with the Securities
and Exchange Commission. Directors, executive officers and persons who own more
than 10% of our Common Stock are required by Securities and Exchange Commission
regulations to furnish to us copies of all Section 16(a) forms they file.
The Company has determined that not all of the reports required to have
been filed during 2004 were filed on a timely basis. Based solely on a review of
Forms 3, 4 and 5 and amendments thereto furnished to the Company under Rule
16a-3(e) of the Exchange Act, the Company has determined that all officers,
directors and beneficial owners of more than 10% of the Common Stock have filed
reports as follows:
- --------------------------------------------------------------------------------
Name Form Date Filed
- --------------------------------------------------------------------------------
Douglas O. McKinnon Form 5 2/15/05
- --------------------------------------------------------------------------------
David A. Weisman Form 5 2/22/05
- --------------------------------------------------------------------------------
Craig A. Cook Form 5 2/22/05
- --------------------------------------------------------------------------------
Ed Garneau Form 5 2/24/05
- --------------------------------------------------------------------------------
Ed Garneau Form 4 2/24/05
- --------------------------------------------------------------------------------
Jeff Fiebig Form 3 3/21/05
- --------------------------------------------------------------------------------
14
CORPORATE GOVERNANCE; BOARD COMMITTEES; MEETINGS
Executive Committee
Our Board of Directors created an executive committee to facilitate
management between meetings of the full Board of Directors. The executive
committee is composed of Douglas O. McKinnon and Richard E. Wilson. Pursuant to
our Bylaws, between meetings of the full Board, the executive committee has the
full power and authority of the Board in the management of our business and
affairs, except to the extent limited by Nevada law. Pursuant to the Bylaws of
the executive committee, as adopted by the full Board, the executive committee
has the authority to exercise all powers of the Board, except the power:
-to declare dividends;
-to sell or otherwise dispose of all or substantially all of our assets;
-to recommend to our shareholders any action requiring their approval; and
-to change the membership of any committee, fill the vacancies thereon or
discharge any committee.
During 2004, the Executive Committee did not meet in person; however, it
took action by unanimous written consent in lieu of a meeting on numerous
occasions.
On September 30, 2004 the Board of Directors adopted new corporate
governance initiatives including: (i) the establishment of a Compensation and
Stock Committee, a Nominating Committee, a Disclosure Committee and their
respective charters, (ii) the adoption of a Code of Business Conduct and Ethics
and a Code of Ethics for Senior Financial Officers, (iii) the adoption of an
Insider Trading Compliance Program and (iv) the adoption of a new charter for
the Audit Committee.
Audit Committee
The Audit Committee of our Board of Directors is composed of Richard E.
Wilson, David Weisman and Ed Garneau. Our Board appointed Messrs. Wilson,
Weisman and Garneau to the Audit Committee effective as of December 15, 2004.
Mr. Weisman and Mr. Garneau are not considered to be independent. Our Board has
determined that the audit committee does not have a member with the requisite
education, background or experience to be considered an "audit committee
financial expert" as that term is defined by the Securities and Exchange
Commission. The purposes of the Audit Committee are:
-to oversee the quality and integrity of the financial statements and
other financial information we provide to any governmental body or the public;
-to oversee the independent auditors' qualifications and independence;
-to oversee the performance of our independent auditors;
-to oversee our systems of internal controls regarding finance,
-accounting, legal compliance and ethics that management and the Board
have established or will establish in the future;
-to establish procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls, and other auditing matters
and for the confidential, anonymous submission by our employees of concerns
regarding questionable accounting or auditing matters;
-to provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing department, and
the Board, always emphasizing that the independent auditors are accountable to
the Audit Committee; and
-to perform such other duties as are directed by the Board.
A copy of the Charter of the Audit Committee is attached hereto as
Appendix D
15
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed with management the audited
Financial statements of the Company for the year ended December 31, 2004 (the
""Audited Financial Statements"), management's assessment of the effectiveness
of the Company's internal control over Financial reporting, and the independent
auditors' evaluation of the Company's system of internal control over Financial
reporting.
In addition, the Audit Committee has discussed with AJ. Robbins, PC, who
reports directly to the Audit Committee, the matters required by Statement on
Auditing Standards Nos. 61 and 90 (Communication with Audit Committees). The
Audit Committee also has discussed with AJ. Robbins, PC its independence from
the Company, including the matters contained in the written disclosures and
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). The Audit Committee also has discussed with
management of the Company and AJ. Robbins, PC such other matters and received
such assurances from them as it deemed appropriate. The Audit Committee
considered whether the rendering of non-audit services by AJ. Robbins, PC to the
Company is compatible with maintaining the independence of AJ. Robbins, PC from
the Company.
Following the foregoing review and discussions, 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-KSB for the year ended
December 31, 2004 for Filling with the Securities and Exchange Commission.
The Audit Committee
Richard E. Wilson
David A. Weisman
Nominating Committee
The Nominating Committee is composed of David Weisman and Richard Wilson.
The general purposes of the committee are:
-to assist the Board by identifying individuals qualified to become Board
members, and to recommend to the Board the director nominees for the next annual
meeting of shareholders;
-to develop and recommend to the Board the corporate governance guidelines
applicable to the Company;
-to lead the Board in its annual review of the Board's performance;
-to conduct an annual assessment of each committee; and
-to recommend to the Board director nominees for each committee.
A copy of the Charter of the Nominating Committee is attached hereto as
Appendix E
Nominating Committee Report
During 2004 and through April 20, 2005 the Nominating Committee evaluated
potential candidates for positions on the Board of Directors and its committees,
in accordance with the criteria set forth in the Charter of the Nominating
Committee. The Nominating Committee approved and recommended to the Board of
Directors the five director nominees currently standing for election or
re-election at the Special Meeting of the Shareholders.
16
The Nominating Committee
Dave Weisman
Richard Wilson
Disclosure Committee
The Disclosure Committee is composed of Douglas McKinnon, Craig Cook
and Ron Bass. The general purpose of the committee is to design, establish and
maintain a system of controls and other procedures to ensure that information
required to be disclosed in the reports and statements filed by the Company
pursuant to the Exchange Act, is recorded, processed, summarized and reported in
conformity with the rules and forms of the Securities and Exchange Commission
A copy of the Charter of the Disclosure Committee is attached hereto as Appendix
F.
EXECUTIVE COMPENSATION
Director Compensation
Non-employee directors do not receive annual payments for their service as
directors, nor has the Board established a per-meeting stipend. At such time as
the Company's cash position improves, it is likely that the Board will begin to
compensate non-employee directors. However, no determination of the amount of
any such payment amounts has been made. Directors who are also employees of the
Company receive no additional compensation for their service on the Board and
its committees.
Executive Compensation
The following table sets forth in summary form the compensation
received during each of the last three completed fiscal years by our Chief
Executive Officer and each executive officer who received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.
Annual Compensation Long Term Compensation
----------------------------------------------- ------------------------------
Name, Principal Fiscal Salary $ Bonus $ Other Securities All
Position Year Annual Underlying Other
Compensation $ Options Compensation $
- ---------------------------------------------------------------------------------------------------------------------
Douglas O. McKinnon 2004 180,000(A)
Former Chief 2003 180,000 (1) $0 $0 0 $0
Executive Officer 2002 127,500 (2) 310,456 (2) $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
Richard W. Koontz 2004 62,500 (B) $0 $0 0 $0
Former Vice President 2003 $0 $0 $0 0 $0
Corporate Development 2002 $0 $0 $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
David M. Loflin 2004 $0
Former Chairman of the 2003 75,000 (3) $0 0 $0
Board and former President 2002 150,000 (4) 200,000 (4) $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
Waddell Loflin 2004 $0
Former Vice President 2003 (C)
and Secretary 2002 79,167 (5) 200,000 (6) $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
James Kaufman 2004 $0
Former Vice President 2003 (D)
Corporate Development 2002 95,000 (7) 200,000 (8) $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
Kenneth J. Upcraft 2004 109,142 (9)
Former Executive Vice 2003 150,000 (9) $0 0 $0
President 2002 62,500 (10) 58,220 (10) $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
Christopher K. Brenner 2004 (E)
Former Vice President 2003 120,000 (11) $0 $0 0 $0
Finance 2002 (12) $0 $0 0 $0
- ---------------------------------------------------------------------------------------------------------------------
17
(A) Mr. McKinnon terminated his agreement effective April 19, 2005.
(B) Mr. Koontz entered into an agreement in which his employment contract was
terminated effective December 15, 2004. In connection with the agreement, Mr.
Koontz received 5,000,000 warrants with an exercise price of $0.10 and 2,000,000
warrants with an exercise price of $0.12 exercisable into common stock of the
Company.
(C) Mr. Loflin resigned effective March 31, 2003.
(D) Mr. Kaufman was not employed by us during this fiscal year.
(E) Mr. Brenner was not employed by us during this fiscal year
(1) $95,500 of Mr. McKinnon's salary amount was paid by the issuance of
1,450,000 shares of our common stock, a per share value of $.07 per share, the
last closing price of our common stock, as reported by AMEX, on the date of
issuance.
(2) $91,044 of Mr. McKinnon's salary amount and $10,456 of his bonus amount were
paid by the issuance of 1,450,000 shares of our common stock, a per share value
of $.07 per share, the last closing price of our common stock, as reported by
AMEX, on the date of issuance. $300,000 of Mr. McKinnon's bonus amount was paid
by the issuance of 3,000,000 shares of our common stock, upon his executing his
employment agreement, which shares were valued at $.10 per share, the last
closing price of our common stock, as reported by AMEX, on the date of issuance.
(3) $75,000 of Mr. Loflin's salary amount was paid by the issuance of 1,300,000
shares of our common stock, a per share value of $.07 per share, the last
closing price of our common stock, as reported by AMEX, on the date of issuance.
(4) $42,750 of Mr. Loflin's salary amount was accrued; Mr. Loflin waived payment
of this amount, in connection with the Evergreen transaction (described
elsewhere herein). $107,250 of Mr. Loflin's salary amount was paid by the
issuance of 618,000 shares of our common stock, a per share value of $.173 per
share, a per share price higher than the market price that was negotiated by us
with Mr. Loflin. Mr. Loflin's bonus amount was paid by the issuance of 2,000,000
shares of our common stock, upon his executing an amendment to his employment
agreement, which shares were valued at $.10 per share, the last closing price of
our common stock, as reported by AMEX, on the date of issuance.
(5) $29,167 of Mr. Loflin's salary amount was accrued; Mr. Loflin waived payment
of this amount, in connection with the Evergreen transaction (described
elsewhere herein). $50,000 of Mr. Loflin's salary amount was paid by the
issuance of 600,000 shares of our common stock, a per share value of $.083 per
share, a per share price higher than the market price that was negotiated by us
with Mr. Loflin.
18
(6) This bonus was paid by the issuance of 2,000,000 shares to Mr. Loflin in
connection with the Evergreen transaction (described elsewhere herein), which
shares were valued at $.10 per share, the last closing price of the Common
Stock, as reported by AMEX, prior to their issuance.
(7) $35,000 of Mr. Kaufman's salary amount was accrued; Mr. Kaufman waived
payment of this amount, in connection with the Evergreen transaction (described
elsewhere herein). $60,000 of Mr. Kaufman's salary amount was paid by the
issuance of 600,000 shares of our common stock, a per share value of $.10 per
share, a per share price higher than the market price that was negotiated by us
with Mr. Kaufman.
(8) This bonus was paid by the issuance of 2,000,000 shares to Mr. Kaufman in
connection with the Evergreen transaction (described elsewhere herein), which
shares were valued at $.10 per share, the last closing price of the Common
Stock, as reported by AMEX, prior to their issuance.
(9) $70,000 of Mr. Upcraft's salary amount was paid by the issuance of 1,150,000
shares of our common stock, a per share value of $.07 per share, the last
closing price of our common stock, as reported by AMEX, on the date of issuance.
(10) $47,500 of Mr. Upcraft's salary amount and $22,220 of his bonus amount were
paid by the issuance of 996,000 shares of our common stock, a per share value of
$.07 per share, the last closing price of our common stock, as reported by AMEX,
on the date of issuance. $36,000 of Mr. Upcraft's bonus amount was paid by the
issuance of 600,000 shares of our common stock, upon his executing his
employment agreement, which shares were valued at $.06 per share, the last
closing price of our common stock, as reported by AMEX, on the date of his
executing his employment agreement.
(11) $66,500 of Mr. Brenner's salary amount was paid by the issuance of
1,100,000 shares of our common stock, a per share value of $.07 per share, the
last closing price of our common stock, as reported by AMEX, on the date of
issuance.
(12) During 2002, Mr. Brenner served as a consultant to the Company.
2005 Stock Ownership Plan
In December 2004, our Board adopted a stock ownership plan for our
officers, directors and consultants known as the 2005 Stock Ownership Plan. The
2005 Plan was established by the Board as a means to promote our success and
enhance our value by linking the personal interests of participants to our
shareholders, and by providing participants with an incentive for outstanding
performance. The 2004 Plan is further intended to aid us in attracting and
retaining the services of persons upon whose judgment, interest and special
efforts our successful operation and our subsidiaries' operations is dependent.
Persons who are officers, directors or consultants are eligible to participate
in the 2005 Plan. The Board may, at any time and from time to time, grant shares
of our Common Stock, and options to purchase our Common Stock, in such amounts
and upon such terms and conditions as it may determine. A total of 20,000,000
shares of our Common Stock have been reserved for issuance under the 2005 Plan.
The Plan and shares underlying the Plan are registered on a registration
statement on Form S-8 (SEC File No.333-121916) that was filed with the
Commission on January 7, 2005. At March 31, 2005, an aggregate of 8,380,109
shares of Common Stock and options to purchase Common Stock have been issued
under the Plan; 11,619,891 shares of our Common Stock remain available for
issuance under the Plan.
Stock Appreciation Rights
We have never granted any stock appreciation rights (SARs), nor do we
expect to grant any SARs in the foreseeable future.
19
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
The following table summarizes certain provisions of the employment agreements.
- ------------------------------------------------------------------------------------------------------------------
Name of Officer Position(s) Term Annual Salary Date
- ------------------------------------------------------------------------------------------------------------------
Ed Garneau Chief Operating 3 Years $185,000.00 2/21/05
Officer
- ------------------------------------------------------------------------------------------------------------------
Effective April 18, 2005 Mr. David Weisman became Chief Executive Officer
of the Company. The Company and Mr. Weisman have not completed negotiations as
to his compensation package and as such Mr. Weisman is serving at will.
In connection with each of their respective employment agreements, the
executive officers entered into confidentiality agreements and agreements not to
compete with the Company during the term of employment and for a period of one
year thereafter.
Under Mr. McKinnon's employment agreement, should the Company (1)
experience a change in control or (2) change Mr. McKinnon's responsibilities
with the Company, Mr. McKinnon has the right, in his sole discretion, to
terminate his employment with the Company and the Company would be liable for
all compensation remaining to be paid during the then-current term of his
employment agreement, plus an additional period of one year. Effective April 19,
2005 Mr. McKinnon gave notice to the Company that he was terminating his
employment.
Under each employment agreement, if the executive is terminated by the
Company other than for cause, he will be entitled to continue to receive his
base salary for the unexpired term of his employment contract.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held two meeting during the 2004 fiscal year. In
addition, action was taken by the Board of Directors by unanimous written
consent in lieu of a meeting numerous times. Each director attended all of the
meetings of the Board during the fiscal year ended December 31, 2004.
COMMUNICATIONS WITH MEMBERS OF THE BOARD OF DIRECTORS
The Board of Directors has not established a formal process for
shareholders to send communications to its members. Any stockholder may send a
communication to any member of the Board of Directors, in care of the Company's
address 390 Interlocken Crescent, Suite 900, Broomfield, Colorado, 80021. The
Company will forward any such communication to the Board member. If the
stockholder would like the communication to be confidential, it should be so
marked.
ATTENDANCE OF BOARD MEMBERS AT SPECIAL SHAREHOLDERS' MEETING
Each of the members of the Board of Directors will be required to
attend the meeting.
PROPOSAL #1 - ELECTION OF FIVE DIRECTORS
20
The Bylaws of the Company provide that the Board of Directors shall be
comprised of not less than three nor more than nine members, and that each
director shall be elected to serve until the next Annual Meeting of Shareholders
(or Special Meeting for the purpose of electing directors) and until his or her
successor shall be elected and shall qualify. Any vacancies on the Board may be
filled by a majority vote of the Board and any director so elected shall hold
office for the unexpired term of his or her predecessor or until the next
election of directors by the shareholders of the Company.
The names of the nominees for directors and other information about them
appears below. All of the nominees are currently directors of the Company. All
of the nominees have consented to serve if elected. If for any unforeseen reason
a nominee is unable to serve if elected, the persons named in the accompanying
proxy may exercise their discretion to vote for a substitute nominee selected by
the Board. The Board, however, has no reason to anticipate that any of the
nominees will not be able to serve, if elected.
Dave Weisman - 42. Mr. Weisman joined us in October 2004 as the Chairman of
Usurf America's Board of Directors and appointed Chief Executive Officer on
April 18, 2005. Mr. Weisman also currently serves as Chairman and CEO of a
broadband and communications technology and services company, Eagle Broadband,
where he has led a highly successful corporate restructuring and turnaround that
has established us as a broadband market leader and created more than $200
Million in shareholder value. Before Eagle Broadband, he was: Vice President,
Sales & Marketing for IP Dynamics; co-founder and Vice President, Sales and
Marketing for Canyon Networks; Vice President, Marketing and Customer Service
for ACT Networks; co-founder and Vice President, Sales & Marketing for Thomson
Enterprise Networks. Mr. Weisman also served as a pilot with the United States
Air Force Reserve and saw active combat duty in Central America and Operation
Desert Storm. He holds a B.A. in Economics and International Relations from
U.C.L.A.
Richard E. Wilson - 62. Mr. Wilson has served as a member of our Board of
Directors since March 2003. Since 2002, Mr. Wilson has served as a principal and
executive vice president of business development of NetPort-Datacom, Inc., a
privately held Mukilteo, Washington-based provider of international voice
service. Mr. Wilson was co-founder of The Association of Communications
Enterprises (ASCENT) (formerly the Telecommunications Resellers Association), a
leading trade group representing entrepreneurial and small business
communications companies. He served on that organization's Board of Directors in
1992 and 1993 and is currently Chairman Emeritus of ASCENT. During 2001 and
2002, Mr. Wilson was a principal in SigBioUSA, LLC, a Mulkiteo, Washington-based
telecommunications consulting firm with expertise in both wireline and wireless
telecommunications applications. From May 2000 to April 2001, Mr. Wilson was
president and chief executive officer of Open Telecommunications North America,
a wholly owned subsidiary of Open Telecommunications Australia, a publicly
traded company in Australia that provides
telecommunications-network-infrastructure related products and services. Also,
from 2000 through January 2002, Mr. Wilson served as a director of GlobalNet
International Telecommunications, Inc., an Illinois-based provider of global
telecommunications services. GlobalNet was publicly traded under the symbol
GBNE, until acquired by Titan Corporation in 2002.
Ed Garneau - 43. Mr. Garneau joined our Board of Directors December 20, 2004 and
appointed as Chief Operating Officer on February 21, 2005. Mr. Garneau will also
serve as a member of our audit committee. Mr. Garneau is the founder and, since
1994, has been the Chief Executive Officer of Sovereign Companies, a diversified
real estate development company with broadband telecommunications installation
and operations in 4 states currently representing 10 major developments or
approximately 1100 homes. Prior to founding Sovereign, Mr. Garneau served eight
years in the US Air Force as a fighter pilot.
Jeffrey W. Fiebig - 44. Mr. Fiebig joined us as a member of our Board March
2005. Mr. Fiebig joined the Sovereign Companies (recently acquired by the
Company on February 18, 2005) as Vice President in August of 2004. Mr. Fiebig
has spent the last twenty-one years in the US Air Force on active duty or in the
reserves. He was a combat fighter pilot in Desert Storm and flew the Slot
Position for the world famous US Air Force Thunderbirds. From January 2001 to
January 2004, Mr. Fiebig was the Group Commander of six Squadrons and supervised
over 500 personnel at Luke Air Force Base, Arizona. In addition to his US Air
Force duties Mr. Fiebig was an instructor and evaluator for United Airlines from
May of 1997 to September 2004.
21
Byron Young - 31. Mr. Young joined us as a member of our Board of Directors in
August 2004. Concurrently, Mr. Young will remain active as President of USURF's
newly acquired Texas subsidiary, Connect Paging Inc. d/b/a/ Get-A-Phone ("GAP").
Mr. Young purchased GAP in 2000, sold off all paging assets and refocused the
company on dial tone. GAP has grown to over 14,000 customers to date and
revenues exceeding $9 million annually. Prior to Connect Paging, Young founded
Phone America in 1997 which was merged with Trans National Telecommunications,
Inc. in 1999 and prior to Phone America, founded Paging Express, Inc. in 1994.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
ABOVE-NAMED NOMINEES FOR DIRECTORS.
PROPOSAL #2 - RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification and approval by the shareholders, the Board has
selected the firm of AJ. Robbins, PC as the Company's independent auditors for
its fiscal years ending December 31, 2004 and December 31, 2005.
Prior to engaging AJ. Robbins, PC, the Company had not consulted AJ.
Robbins, PC regarding the application of accounting principles to a specified
transaction, completed or proposed, the type of audit opinion that might be
rendered on the Company's financial statements or a reportable event, nor did
the Company consult with AJ. Robbins, PC regarding any disagreements with its
prior auditor on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the prior auditor, would have caused it to
make a reference to the subject matter of the disagreements in connection with
its reports.
Representatives of AJ. Robbins, PC will be present at the Special Meeting
of Shareholders, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
shareholders.
Hein + Associates LLP was the Company's independent auditors for the prior
years ended December 31, 2002 and December 31, 2003. For the audited years ended
December 31, 2002 and December 31, 2003, and during the year 2004 through and
2005 through January 20, 2005 (the effective date of the dismissal of Hein +
Associates LLP), there were no disagreements with Hein + Associates LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of the
former accountant would have caused the accountants to make reference to the
subject matter of such disagreement in their reports. In addition, the dismissal
of Hein + Associates LLP was not caused by, or related to, any disagreements on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to the
satisfaction of the former accountant would have caused the accountants to make
reference to the subject matter of such disagreement in their reports.
22
Audit and Audit Related Fees.
The following table sets forth fees billed to us by our auditors during
the fiscal years ended December 31, 2003 and December 31, 2004 for: (i) services
rendered for the audit of our annual financial statements and the review of our
quarterly financial statements, (ii) services by our auditor that are reasonably
related to the performance of the audit or review of our financial statements
and that are not reported as Audit Fees, (iii) services rendered in connection
with tax compliance, tax advice and tax planning, and (iv) all other fees for
services rendered.
- --------------------------------------------------------------------------------
December 31, 2004 December 31, 2003
- --------------------------------------------------------------------------------
(i) Audit fees $55,065 $73,600
- --------------------------------------------------------------------------------
(ii) Audit related fees $5,000 $4,496
- --------------------------------------------------------------------------------
(iii) Tax $0.00 $0.00
- --------------------------------------------------------------------------------
(iv) All other fees $0.00 $0.00
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" the RATIFICATION AND
APPROVAL OF AJ. ROBBINS, P.C. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEARS ENDING DECEMBER 31, 2004 AND DECEMBER 31, 2005.
PROPOSAL #3 - APPROVAL OF AMENDMENT TO INCREASE AUTHORIZED COMMON SHARES.
The Board has approved an amendment to the Company's Articles of
Incorporation to increase the number of shares of authorized common stock from
400,000,000 shares of Common Stock to 800,000,000 shares of Common Stock. The
Articles of Incorporation currently authorize the issuance of 400,000,000 shares
of Common Stock and 100,000,000 shares of Preferred Stock. If approved at the
Special Meeting, this proposal will be effected immediately.
The proposed amendment to the Articles of Incorporation would increase the
number of shares of Common Stock, which the Company is authorized to issue from
400,000,000 to 800,000,000. The aggregate number of shares which the Corporation
shall have the authority to issue will be Nine Hundred Million (900,000,000)
shares, including 100,000,000 shares of Preferred Stock. You are urged to read
carefully the full text of the proposed amendment to the Articles of
Incorporation, a copy of which is attached to this Proxy Statement as Appendix
A. You are urged to consider this proposal in light of our Proposal No. 4 to
effect a reverse stock split of our Common Stock prior to the next annual
meeting and our Proposal No. 5 to effect a forward stock split of our Common
Stock prior to the next annual meeting. In the event the amendment to increase
our authorized shares of Common Stock is approved, the Company will file the
amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada.
The Company recognizes that its current capitalization structure does not
presently facilitate raising significant additional equity capital due to the
limitation of 400 million authorized shares of common stock and the large number
of shares issuable upon conversion of its various convertible instruments.
Therefore in order to facilitate raising capital in the future, the Company
proposes to raise authorized shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE INCREASE
IN AUTHORIZED COMMON SHARES.
23
PROPOSAL #4 - APPROVAL OF AMENDMENT TO AUTHORIZE A REVERSE
SPLIT OF OUR COMMON STOCK.
The Company's shareholders are being asked to authorize the Board of
Directors, in its discretion, to amend the Company's Articles of Incorporation
to effect a "reverse split" of its issued and outstanding Common Stock (the
"Reverse Split") at any time prior to the next annual meeting of shareholders.
By approving this proposal, the Board of Directors will be empowered to reverse
split the Company's Common Stock by choosing one of four ratios (the "split
ratio"), namely one shares for three shares, one share for five shares, one
share for seven shares or one share for ten share. If the Board of Directors
decides to approve the Reverse Split, the determination of the ratio to be used
will be made on the date of approval.
Reasons for the Reverse Split
The Company believes that the decrease in the number of shares of Common
Stock outstanding may make it more attractive to possible merger or acquisition
candidates and may enhance its ability to raise capital through the financial
markets and to return the Company's share price to a level that is typical of
other public companies.
Criteria for Determining the Split Ratio
The criteria for determining the split ratio will be based upon a review,
by the Board, of the capital structure of the Company including, shares and
convertible instruments outstanding, shares price, general market conditions and
the potential benefits from each of the options available..
There can be no assurance that the market price of the Common Stock
immediately after the Reverse Split will be maintained for any period of time,
or that the market price of the Common Stock after the proposed Reverse Split
will exceed the current market price.
Effectiveness of the Reverse Stock Split and Mechanism for Share Exchange
If the Reverse Split is approved by the shareholders and effected by the
Board of Directors, the Board of Directors will fix a record date for
determination of shares subject to the Reverse Split. As of the date of this
Proxy Statement, the Board of Directors has not fixed a record date for the
Reverse Split.
If approved by the shareholders, the Reverse Split would become effective
with the filing of an amendment to the Company's Articles of Incorporation with
the Nevada Secretary of State on any date selected by the Board of Directors on
or prior to the Company's next annual meeting of shareholders. However, the
Board of Directors reserves the right, even after shareholder approval, to
forego or postpone filing the amendment if such action is determined not to be
in the best interests of the Company and its shareholders. If the Reverse Split
is not implemented by the Board of Directors and effected by the next annual
meeting of shareholders, the authority to file the amendment and effect the
reverse split will lapse. In such case, the Board of Directors will again seek
shareholder approval at a future date for a reverse stock split if it deems it
to be advisable at that time. A proposed "form" of amendment is attached hereto
as Appendix B.
If the Reverse Split is approved and the Board of Directors elects to
effect the Reverse Split, then each share of Common Stock outstanding as of the
record date chosen for the Reverse Split will immediately and automatically be
changed, as of the effective date of the amendment, into a number which reflects
the split ratio chosen by the Board of Directors. For example, if the Board of
Directors approves a Reverse Split of one share for five shares, than each share
of outstanding Common Stock will automatically be changed, as of the effective
date of the Amendment, into one fifth of a share of Common Stock. In addition,
proportional adjustments will be made to the maximum number of shares issuable
under the Company's equity plans, as well as the number of shares issuable upon
exercise and the exercise price of the Company's outstanding options and
conversion of the Company's Series A Stock and Series B Stock.
24
The Corporation shall not recognize on its stock record books any
purported transfer of any fractional share of Common Stock of the Corporation.
Instead, any fractional shares shall be rounded to the nearest whole share.
Management does not anticipate that the Company's financial condition, the
percentage ownership of management, the number of our shareholders, or any
aspect of the Company's business will materially change as a result of the
Reverse Split. Because the Reverse Split will apply to all issued and
outstanding shares of Common Stock and outstanding rights to purchase Common
Stock or to convert other securities into Common Stock, the proposed Reverse
Split will not alter the relative rights and preferences of existing
shareholders.
Provided that the Reverse Split is approved by the shareholders and the
Board of Directors fixes a record date and effects the Reverse Split, then it
will notify each holder of record with instructions for the surrender and
exchange of certificates.
Based on the foregoing discussion, the Board of Directors requests that
shareholders approve the following resolutions in connection with the proposed
Reverse Split:
RESOLVED, that the shareholders of the Company hereby authorize the Board
of Directors, at any time prior to the next annual meeting of shareholders, to
amend the Company's Articles of Incorporation to affect a combination of the
Company's issued and outstanding Common Stock using the ratio x:1, with x
equaling three, five, seven or ten, which number shall be chosen by the Board of
Directors in its discretion (the "Reverse Split"); and it is further
RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized and empowered (any one of them acting alone), in the name of and on
behalf of the Company, to procure any authorizations or approvals or to do or
cause to be done all such acts or things and to sign and deliver or cause to be
signed and delivered, all such documents, including but not limited to, an
amendment to the Articles of Incorporation, stock certificates, federal and
state securities forms, filings, applications or other documents, with such
amendments, additions and other modifications thereto, as such officer may deem
appropriate, which shall be deemed conclusively evidenced by the execution and
delivery thereof, and to carry out and fully perform the terms and provisions of
such documents in order to carry into effect the foregoing resolutions and to
fully effect the transactions contemplated in such resolutions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AUTHORIZATION TO
EFFECT A REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK.
PROPOSAL #5 - APPROVAL OF AMENDMENT TO AUTHORIZE A FORWARD
SPLIT OF OUR COMMON STOCK.
The Company's shareholders are being asked to authorize the Board of
Directors, in its discretion, to amend the Company's Articles of Incorporation
to effect a "forward split" of its issued and outstanding Common Stock (the
"Forward Split") at any time prior to the next annual meeting of shareholders.
By approving this proposal, the Board of Directors will be empowered to forward
split the Company's Common Stock in the ratio of two shares for each one
outstanding share.
Reasons for the Forward Split
The Company believes that the increase in the number of shares of Common
Stock outstanding may make it more attractive to possible merger or acquisition
candidates and may enhance its ability to raise capital through the financial
markets.
25
There can be no assurance that the market price of the Common Stock
immediately after the Forward Split will be maintained for any period of time,
or that the market price of the Common Stock after the proposed Forward Split
will exceed the current market price.
Effectiveness of the Forward Stock Split and Mechanism for Share Exchange
If the Forward Split is approved by the shareholders and effected by the
Board of Directors, the Board of Directors will fix a record date for
determination of shares subject to the Forward Split. As of the date of this
Proxy Statement, the Board of Directors has not fixed a record date for the
Forward Split.
If approved by the shareholders, the Forward Split would become effective
with the filing of an amendment to the Company's Articles of Incorporation with
the Nevada Secretary of State on any date selected by the Board of Directors on
or prior to the Company's next annual meeting of shareholders. However, the
Board of Directors reserves the right, even after shareholder approval, to
forego or postpone filing the amendment if such action is determined not to be
in the best interests of the Company and its shareholders. If the Forward Split
is not implemented by the Board of Directors and effected by the next annual
meeting of shareholders, the authority to file the amendment and effect the
forward split will lapse. In such case, the Board of Directors will again seek
shareholder approval at a future date for a forward stock split if it deems it
to be advisable at that time. A proposed "form" of amendment is attached hereto
as Appendix B.
If the Forward Split is approved and the Board of Directors elects to
effect the Forward Split, then each share of Common Stock outstanding as of the
record date chosen for the Forward Split will immediately and automatically be
changed, as of the effective date of the amendment. If the Board of Directors
approves the Forward Split, than each share of outstanding Common Stock will
automatically be changed, as of the effective date of the Amendment, into two
shares of Common Stock. In addition, proportional adjustments will be made to
the maximum number of shares issuable under the Company's equity plans, as well
as the number of shares issuable upon exercise and the exercise price of the
Company's outstanding options and conversion of the Company's Series A Stock and
Series B Stock.
Management does not anticipate that the Company's financial condition, the
percentage ownership of management, the number of our shareholders, or any
aspect of the Company's business will materially change as a result of the
Forward Split. Because the Forward Split will apply to all issued and
outstanding shares of Common Stock and outstanding rights to purchase Common
Stock or to convert other securities into Common Stock, the proposed Forward
Split will not alter the relative rights and preferences of existing
shareholders.
Provided that the Forward Split is approved by the shareholders and the
Board of Directors fixes a record date and effects the Forward Split, then it
will notify each holder of record with instructions for the surrender and
exchange of certificates.
Based on the foregoing discussion, the Board of Directors requests that
shareholders approve the following resolutions in connection with the proposed
Forward Split:
RESOLVED, that the shareholders of the Company hereby authorize the Board
of Directors, at any time prior to the next annual meeting of shareholders, to
amend the Company's Articles of Incorporation to affect a combination of the
Company's issued and outstanding Common Stock using the ratio 1:2, and it is
further
RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized and empowered (any one of them acting alone), in the name of and on
behalf of the Company, to procure any authorizations or approvals or to do or
cause to be done all such acts or things and to sign and deliver or cause to be
signed and delivered, all such documents, including but not limited to, an
amendment to the Articles of Incorporation, stock certificates, federal and
state securities forms, filings, applications or other documents, with such
amendments, additions and other modifications thereto, as such officer may deem
appropriate, which shall be deemed conclusively evidenced by the execution and
delivery thereof, and to carry out and fully perform the terms and provisions of
such documents in order to carry into effect the foregoing resolutions and to
fully effect the transactions contemplated in such resolutions.
26
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AUTHORIZATION TO
EFFECT A FORWARD STOCK SPLIT OF THE COMPANY'S COMMON STOCK.
PROPOSAL #6 - APPROVAL TO CHANGE THE NAME OF THE COMPANY TO
CARDINAL COMMUNICATIONS, INC.
The Board of Directors has adopted a resolution changing the name of the
Company from Usurf America, Inc. to Cardinal Communications, Inc., subject to
shareholder approval. The name change will be effected by amending the Articles
of Incorporation and filing the amendment in the State of Nevada. The form of
amendment setting forth the name change is attached hereto as Appendix A.
REASONS FOR CHANGE OF COMPANY NAME
The Board of Directors is of the opinion that the proposed new name,
Cardinal Communications, Inc. will provide a strong platform for the Company's
future growth, both locally and in markets nationwide, as the new name expands
the intended message of the name brand from an Internet supplier to a broad
communications provider that offers a full spectrum of communication tools and
technology. The Board considers that the proposed new name will effectively
reflect the Company's core focus as a provider of voice (telephone), video
(cable television) and data (Internet) services to business and residential
customers, and will position the company as a strong competitor as it seeks to
serve communities nationwide. The Board believes that the proposed change of
name of the Company and the adoption of the new name of the Company are in the
best interests of the Company and the Shareholders as a whole.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO CHANGE THE
NAME OF THE COMPANY FROM USURF AMERICA, INC. TO CARDINAL COMMUNICATIONS, INC.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
Your cooperation in giving this matter your immediate attention and
returning your proxies will be appreciated.
27
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, any
shareholder who intends to present a proposal at the next Annual Meeting of
Shareholders in the year 2006 must deliver the proposal, including the name of a
proposed nominee to the Board of Directors, or to our principal executive office
no later than the close of business on December 29, 2005.
Notice of intention to present a proposal at the 2006 Annual Meeting
should be addressed to Corporate Secretary, USURF America, Inc., 390 Interlocken
Crescent, Suite 900 Broomfield, Colorado 80021. The Company reserves the right
to vote against, reject, rule out of order, or take other appropriate action
with respect to any proposal that does not comply with these requirements.
28
PROXY
USURF AMERICA, INC.
This proxy is solicited on behalf of the Board of Directors for the
Special Meeting of Shareholders in Lieu of Annual Meeting, on June 9 2005
This proxy will be voted as specified by the stockholder. If no
specification is made, all shares will be voted "FOR" the approval of the six
proposals set forth in the proxy statement.
The undersigned hereby appoints David Weisman and Edouard A. Garneau, each
of them, Proxies for the undersigned, with full power of substitution, to vote
all shares of USURF America, Inc. Common Stock which the undersigned may be
entitled to vote at the Special Meeting of Shareholders of USURF America, Inc.
to be held on Thursday, June 9, 2005, or at any adjournment thereof, upon the
matters set forth on the reverse side and described in the accompanying Proxy
Statement and upon such other business as may properly come before the meeting
or any adjournment thereof.
PROPOSAL #1: ELECTION OF DIRECTORS:
DAVID A. WEISMAN FOR |_| AGAINST |_| ABSTAIN |_|
EDOUARD A. GARNEAU FOR |_| AGAINST |_| ABSTAIN |_|
RICHARD E. WILSON FOR |_| AGAINST |_| ABSTAIN |_|
JEFFEREY W. FIEBIG FOR |_| AGAINST |_| ABSTAIN |_|
BYRON T. YOUNG FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL #2: APPROVAL AND RATIFICATION OF AJ.
ROBBINS, PC AS THE COMPANY'S
INDEPENDENT AUDITORS FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL #3: APPROVAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL #4: AUTHORIZATION FOR REVERSE STOCK
SPLIT OF THE COMMON STOCK
PRIOR TO THE NEXT ANNUAL MEETING FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL #5: AUTHORIZATION FOR A FORWARD STOCK
SPLIT OF THE COMMON STOCK
PRIOR TO THE NEXT ANNUAL MEETING FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL #6: APPROVE NAME CHANGE
OF THE COMPANY FOR |_| AGAINST |_| ABSTAIN |_|
Please mark, date and sign your proxy card and mail it in the enclosed envelope
as soon as possible.
In their discretion, proxies are entitled to vote upon such other matters as may
properly come before the meeting, or any adjournment thereof.
Signature_________________________ Date_________________
Class and number of shares held_________________________
Signature_________________________ Date_________________
Class and number of shares held_________________________
Note: Please mark, date and sign this proxy card and return it in the enclosed
envelope. Please sign as your name appears hereon. If shares are registered in
more than one name, all owners should sign. If signing in a fiduciary or
representative capacity, please give full title and attach evidence of
authority. Corporations please sign with full corporate name by a duly
authorized officer and affix corporate seal.
29
APPENDIX A
FORM OF ARTICLES OF AMENDMENT TO INCREASE THE AUTHORIZED COMMON STOCK AND CHANGE
THE NAME OF THE COMPANY
Article One is hereby amended and restated in its entirety as follows: "
The name of the Corporation is Cardinal Communications, Inc."
Article Four, Section 4.1, is hereby amended and restated in its entirety as
follows: " 4.1 The aggregate number of shares which the Corporation shall have
the authority to issue is Nine Hundred Million (900,000,000) shares. Of such
900,000,000 shares, Eight Hundred Million (800,000,000), are classified as
common stock, $.0001 par value per share ("Common Stock"), and One Hundred
Million (100,000,000), are classified as preferred stock, $.0001 par value per
share ("Preferred Stock"). All shares of Common Stock and Preferred Stock, when
issued shall be non-assessable and fully paid."
30
APPENDIX B
FORM OF AMENDMENT TO ARTICLES OF INCORPORATION TO EFFECT A REVERSE SPLIT OF THE
COMMON STOCK
Article Four, Section 4.1 is hereby amended to include at the end of such
Section, the following language: "Upon the filing of this Certificate of
Amendment to Articles of Incorporation, (the "Split Effective Date"), each
______ shares of common stock, par value $.0001 per share, of the Corporation
issued and outstanding or held as treasury shares immediately prior to the Split
Effective Date (the "Old Common Stock") shall automatically without any action
on part of the holder thereof, be reclassified and changed into one share of
common stock, par value $.0001 per share, which the Corporation shall be
authorized to issue immediately subsequent to the Split Effective Date (the "New
Common Stock"). Each holder of a certificate or certificates which immediately
prior to the Split Effective Date represented outstanding shares of Old Common
Stock (the "Old Certificates") shall, from and after the Split Effective Date,
be entitled to receive upon surrender of such Old Certificates to the
Corporation's transfer agent for cancellation, a certificate or certificates
(the "New Certificates") representing the shares of New Common Stock into which
the shares of Old Common Stock formerly represented by such Old Certificates so
surrendered are reclassified under the terms hereof. No fractional shares of New
Common Stock of the Corporation shall be issued. No stockholder of the
Corporation shall transfer any fractional shares of Common Stock of the
Corporation. The Corporation shall not recognize on its stock record books any
purported transfer of any fractional share of Common Stock of the Corporation.
Instead, any fractional shares shall be rounded to the nearest whole share."
31
APPENDIX C
FORM OF AMENDMENT TO ARTICLES OF INCORPORATION TO EFFECT A FORWARD
SPLIT OF THE COMMON STOCK
Article Four, Section 4.1 is hereby amended to include at the end of such
section, the following language: "Immediately upon the filing of this
Certificate of Amendment to the Articles of Incorporation (the "Filing Date"),
each one outstanding share of the Corporation's Common Stock will be split,
automatically and without further action into two shares of Common Stock. Such
split shall be effected on a certificate-by-certificate basis, and any
fractional shares resulting from such split shall be rounded up to the nearest
whole share."
32
APPENDIX D
USURF AMERICA, INC.
CHARTER OF THE AUDIT COMMITTEE
PURPOSE AND AUTHORITY
The Audit Committee (the "Committee") assists the Board of Directors (the
"Board") of USURF America, Inc. (the "Company") in fulfilling its
responsibilities as to the quality and integrity of the Company's financial
records and reports. The Committee's purpose is to prepare the report that rules
of the Securities and Exchange Commission ("SEC") require be included in the
Company's annual proxy statement and to assist Board oversight of:
o the integrity of the Company's financial statements by overseeing
the Company's accounting and financial reporting processes and the
audits of the Company's financial statements;
o the Company's compliance with legal and regulatory requirements;
o the independent auditor's qualifications and independence; and
o the performance of the Company's internal audit function and
independent auditors.
COMMITTEE MEMBERSHIP
The Committee shall consist of no fewer than 3 members all of whom meet
the independence requirements of The American Stock Exchange. No Committee
member may receive any consulting, advisory or other fees from the Company other
than director and committee fees. No Committee member may simultaneously serve
on the audit committee of more than two other public company audit committees.
Each Committee member must be financially literate, as determined by the Board,
and at least one member shall have accounting or related financial management
expertise and must be a "financial expert," as defined by the SEC.
The Committee shall have at least three members and shall be appointed by
the Board, on the recommendation of the Nominating Committee, to serve an annual
term. Committee members may be replaced by the Board. One Committee member shall
be designated as the Chair.
The Company shall provide the Committee with such funding as the Committee
determines to be necessary or appropriate to carry out its duties.
DUTIES AND RESPONSIBILITIES
General:
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. These are the responsibilities of
management and the independent auditors.
33
The operation of the Committee shall be subject to the Bylaws of the
Company, as in effect from time to time. The Committee shall have the full power
and authority to carry out the following responsibilities:
A. INDEPENDENT AUDIT
1. Establish a clear understanding with management and the
independent auditors that the independent auditors are
ultimately accountable to the Board and the Committee, as
representatives of the Company's shareholders.
2. Select the independent auditing firm to be engaged for the
purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company,
including with respect to conducting the annual audit of the
financial statements of the Company and its subsidiaries for
the ensuing year (subject, if applicable, to shareholder
ratification).
3. Approve the compensation of the independent auditors engaged
for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the
Company, including with respect to their annual examination
and quarterly reviews, examine the contents of their
engagement letter and approve and oversee all such audit,
review or attest services to be provided to the Company.
4. At least annually, obtain and review a report by the
independent auditors describing (a) the firm's internal
quality-control procedures, (b) any material issues raised by
the most recent internal quality-control review or peer review
of the firm or by any inquiry or investigation by governmental
or professional authorities within the preceding five years
respecting one or more independent audits carried out by the
firm and (c) any steps taken to deal with any such issues.
Consider whether, in the interest of independence, there
should be regular rotation of the audit firm. Confirm that the
lead audit partner and the audit partner responsible for
reviewing the audit are rotated at least once every five
years. Present its conclusions on the foregoing matters to the
Board.
5. Review with the independent auditors, prior to the beginning
of their audit, the scope of their examination and planning
and staffing of the audit.
6. Meet with the independent auditors, without management
present, and inquire as to:
o whether there were any audit problems or difficulties
encountered during their audit, including any
restrictions on the scope of activities or access to
requested information, and management's response;
o whether there were accounting or disclosure issues not
resolved to their satisfaction; and
34
o whether there were any other matters (including matters
affecting their independence) that should be discussed
with the Committee that have not been raised or covered
elsewhere.
7. Report the results of the audit to the Board and, if the
Committee is satisfied with all of its reviews and
discussions, recommend that the audited financial statements
be included in the Annual Report on Form 10-K/10-KSB filed
with the SEC.
8. Obtain from the independent auditors an annual written
communication that is prepared in accordance with Standard No.
1 of the Independence Standards Board delineating all
relationships of the independent auditors with the Company as
well as the nature and extent of the professional advisory
services provided to the Company and take (or recommend that
the Board take) appropriate action to oversee the independence
of the independent auditors..
9. Resolve any disagreements between the independent auditors and
management, including with respect to financial reporting.
10. Review and evaluate the independent auditors' qualifications,
independence and performance, including a review and
evaluation of the lead partner of the auditor, taking into
account the opinions of Company management and personnel
responsible for the Company's internal audit function, and, if
necessary, terminate and replace the independent auditor.
B. Interim and Annual Financial Reports
1. Review and discuss the Company's interim and annual financial
statements with management and the independent auditors,
including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
2. Generally discuss earnings press releases, including the use
of "pro forma" or "adjusted" non-GAAP information, as well as
financial information and earnings guidance provided to
analysts and rating agencies. The Committee need not discuss
in advance each earnings release or each instance in which the
Company provides earnings guidance.
3. Discuss with the independent auditors the results of their
review of the interim financial results in accordance with
Statement on Auditing Standards No. 71, such that the results
are communicated:
o prior to the filing with the SEC of the Company's
Quarterly Report on Form 10-Q/10-QSB; and
o either to all members of the Committee or to the Chair
of the Committee.
4. Discuss with outside counsel and other members of management
the substance of any significant litigation, contingencies or
claims that had, or may have, a significant impact on the
financial statements.
35
5. Obtain timely reports from the independent auditors regarding:
o the appropriateness and consistent application of the
Company's critical accounting policies and practices;
o all alternative treatments of financial information
within generally accepted accounting principles
discussed between the independent auditors and
management, the ramifications of the use of such
alternative treatments and the independent auditors'
preferred treatment;
o the reasonableness of significant estimates and
judgments;
o the clarity and completeness of the Company's financial
disclosure practices;
o any other material written communication between the
auditors and management, such as any management letter
or schedule of unadjusted differences; and
o discuss with management and the independent auditors the
quality, not just the acceptability, of the Company's
accounting principles.
C. Internal Controls
1. Review and discuss the activities of management to provide
reasonable assurance as to the adequacy and effectiveness of
the Company's internal accounting and financial controls,
including those related to the security of its information
systems and risk assessment and risk management.
2. Review the independent auditors' letter to management
containing suggestions for improvements in the Company's
accounting policies, procedures and internal controls, and
ascertain that management has adequately responded to the
letter.
3. Review the appointment and replacement of the senior internal
auditing executive.
4. Receive quarterly reports from management on the Company's
risk exposure to floating rate debt, and review the terms and
market value of all derivative instruments used to manage
interest rate and other financial risks.
5. Obtain reports from management, the Company's senior internal
auditing executive and independent auditors that the Company
and its subsidiaries are in compliance with applicable laws
and regulations, as well as the Company's Code of Business
Conduct and Ethics. Review reports and disclosures of insider
and affiliated party transactions.
D. Other
1. Pre-approve all non-audit services to be provided to the
Company by the independent auditors and confirm that such
services are not prohibited by law or the rules of The
American Stock Exchange and are disclosed in the Company's SEC
filings.
2. Engage any outside advisors, including independent counsel and
other advisors that the Committee determines to be necessary
or appropriate to carry out its duties and approve the
compensation and other retention terms of such advisors.
36
3. Review the adequacy of the professional qualifications of the
Company's accounting personnel and assess succession planning
within the Company's accounting organization.
4. Establish hiring policies for employees and former employees
of the independent auditors. Confirm that within the year
preceding the start of each year's audit, none of the
Company's Chief Executive Officer, Chief Financial Officer,
Controller, Chief Accounting Officer or any person serving in
an equivalent position for the Company was employed by the
auditors or participated in any capacity in the Company's
audit.
5. Receive explanations from management or the independent
auditors of changes in, or adoption of, accounting principles
and reporting and auditing standards that have had, or may
have, an effect on the financial statements.
6. Review the Company's major financial exposures and the steps
management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management
policies.
7. Review the effect of regulatory and accounting initiatives as
well as off-balance sheet structures on the Company's
financial statements.
8. Receive briefings on other accounting and financial matters on
a regular basis to expand each member's knowledge of matters
impacting the Company.
9. Review and approval all related party transactions and review
all disclosures of such transactions.
10. Investigate any other matter brought to the Committee's
attention within the scope of its duties and retain outside
legal counsel and other experts for this purpose if, in the
Committee's judgment, that is appropriate.
11. Obtain from the independent auditors assurance that Section
10A of the Securities Exchange Act of 1934 has not been
implicated.
12. Establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the
confidential, anonymous submission by Company employees of
concerns regarding questionable accounting or auditing
matters.
13. Review and reassess this Charter as circumstances dictate, but
no less frequently than annually.
14. Review and evaluate its performance at least annually.
MEETINGS
The Committee shall meet at least quarterly, unless otherwise agreed. The
Committee may establish its own schedule and notify the Board. The Committee
shall meet separately, periodically, with management, the internal auditors (or
other personnel responsible for the internal audit function) and the independent
auditors.
37
MINUTES
The Committee will maintain written minutes of its meeting which minutes
will be filed with the minutes of the meetings of the Board.
38
APPENDIX E
USURF AMERICA, INC.
CHARTER OF THE NOMINATING COMMITTEE
PURPOSE AND AUTHORITY
The Nominating Committee (the "Committee") is appointed by the Board of
Directors (the "Board") of USURF America, Inc. (the "Company") to (i) assist the
Board by identifying individuals qualified to become Board members, and to
recommend to the Board the director nominees for the next annual meeting of
stockholders; (ii) develop and recommend to the Board the corporate governance
guidelines applicable to the Company; (iii) lead the Board in its annual review
of the Board's performance; (iv) conduct an annual assessment of each committee;
and (v) recommend to the Board director nominees for each committee.
The Committee shall have the sole authority to retain and terminate any
search firm to be used to identify director candidates and shall have sole
authority to approve the search firm's fees and other retention terms. The
Committee shall also have the authority to obtain advice and assistance from
internal or external legal, accounting or other advisors. The Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Committee shall also undertake those specific duties and
responsibilities listed below and such other duties as the Board may from time
to time prescribe.
COMMITTEE MEMBERSHIP
The Committee shall consist of no fewer than two members. The members of
the Committee shall meet the independence requirements of The American Stock
Exchange.
The members of the Committee and its Chairperson shall be appointed by the
Board at the recommendation of the Chairman of the Board to serve an annual
term. Committee members may be replaced by the Board. The Chairman of the Board
of Directors will be an ex-officio member of the Committee.
If the Chairperson is not present, the members may designate an acting
Chairperson by majority vote of the membership present.
DUTIES AND RESPONSIBILITIES
The Committee shall report, at least annually, to the Board. Further, the
Committee shall:
1. Actively seek and identify individuals qualified to become Board
members and recommend to the Board the director nominees for the
next annual meeting of shareholders. In nominating a slate of
directors, the Committee's objective is to select individuals with
skills and experience that can assist the Company and the Board
achieve their objectives.
39
2. Monitor the size and composition of the Board.
3. Receive comments from all directors and report annually to the Board
with an assessment of the Board's performance, to be discussed with
the full Board following the end of each fiscal year of the Company.
4. Review and reassess the adequacy of the Statement on Corporate
Governance of the Company at least annually and recommend any
proposed changes to the Board for approval.
5. Form and delegate authority to subcommittees when appropriate. Any
such subcommittees must adopt and publish appropriate charters.
6. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
7. Review its own performance at least annually.
MEETINGS
The Committee will meet at least two times each year. The Committee may
establish its own schedule and notify the Board.
MINUTES
The Committee will maintain written minutes of its meetings, which minutes
will be filed with the minutes of the meetings of the Board.
40
APPENDIX F
USURF AMERICA, INC.
DISCLOSURE COMMITTEE CHARTER
PURPOSE AND AUTHORITY
The Disclosure Committee (the "Committee") is appointed by the Audit
Committee (the "Audit Committee") of the Board of Directors of USURF America,
Inc. (the "Company") to assist the Audit Committee in discharging its
responsibilities relating to the reports and statements filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). This Charter (the "Charter") has been adopted by the Chief Executive
Officer and the Chief Accounting Officer of the Company (each, a "Senior
Officer" and collectively, the "Senior Officers") and ratified by the Audit
Committee.
Subject to the guidance and supervision of the Senior Officers, the
Committee will:
(11) Design, establish and maintain controls and other procedures (the
"Disclosure Controls and Procedures") to ensure that:
a. information required to be disclosed in the reports and
statements filed by the Company pursuant to the Exchange Act,
is recorded, processed, summarized and reported in conformity
with, and within the time periods specified by, the Exchange
Act and the rules and forms of the Securities and Exchange
Commission (the "SEC");
b. information required to be disclosed in registration
statements and prospectuses filed by the Company pursuant to
the Securities Act of 1933, as amended (the "Securities Act"),
is recorded, processed, summarized and disclosed in conformity
with the Securities Act and the rules and forms of the SEC;
c. information included in the documents identified in clauses
A.1 and A.2 (collectively, "Disclosure Documents") is
recorded, processed, summarized and disclosed so that:
i. Disclosure Documents do not contain any untrue statement
of a material fact or omit to state a material fact
necessary to make the statements made therein, in light
of the circumstances under which such statements were
made, not misleading; and
ii. any financial statements and other financial information
included in Disclosure Documents fairly present in all
material respects the financial condition, results of
operations and cash flows of the Company as of and for
the periods presented therein; and
d. all information to be included in any Disclosure Document is
communicated to the Company's management, including, without
limitation, the Senior Officers, as appropriate to allow
timely decisions regarding required disclosure.
41
(12) Evaluate the effectiveness of the Disclosure Controls and Procedures
on a regular basis, but in no event later than as of a date within
90 days prior to the filing date of any Annual Report on Form 10-K
and each Quarterly Report on Form 10-Q and, in each case,
communicate to the Company's management, including, without
limitation, the Senior Officers:
a. the Committee's conclusions regarding the effectiveness of the
Disclosure Controls and Procedures;
b. all significant deficiencies in the design or operation of the
Disclosure Controls and Procedures which could adversely
affect the Company's ability to record, process, summarize and
report information identified in clauses A.l through A.3
above;
c. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Disclosure Controls and Procedures, including, without
limitation, internal controls; and
d. any significant changes in the Disclosure Controls and
Procedures, including, without limitation, internal controls,
or in other factors that could significantly affect the
Disclosure Controls and Procedures, including, without
limitation, internal controls, subsequent to the date of the
Committee's most recent evaluation, including, without
limitation, any corrective actions with regard to significant
deficiencies and material weaknesses.
(13) Design, establish and maintain a process pursuant to which the
Committee shall be responsible for preparing and approving the
disclosure included in the Disclosure Documents.
(14) Maintain written records of the Disclosure Controls and Procedures
followed in connection with the preparation and approval of
Disclosure Documents.
(15) Undertake any other responsibilities delegated to it from time to
time by any Senior Officer to assist that Senior Officer in
fulfilling his or her responsibility for oversight of compliance
with the Disclosure Controls and Procedures.
In discharging its duties, the Committee shall have access to all
Company books, records, facilities and personnel, as well as the
Company's outside auditors and outside counsel.
I. Membership, Process
The Committee shall consist of officers or employees of the Company
appointed from time to time by the Senior Officers; provided, however,
that at least one member of the Committee shall be an accountant with
expertise in accounting and SEC financial reporting. Notwithstanding the
foregoing, the Senior Officers at their option may from time to time
assume any or all of the responsibilities of the Committee set forth in
this Charter or may appoint two or more members (who among themselves
shall have the expertise described in the proviso in the preceding
sentence) to approve Disclosure Documents when time or other circumstances
do not permit the full Committee to meet, all in order to ensure
compliance with the objectives stated in clause A. above.
42
The members of the Committee may be appointed or removed by any Senior
Officer or by a majority vote of the Audit Committee or the Company's
Board of Directors.
One member of the Committee shall be appointed by a Senior Officer as
Chairperson. The Chairperson shall be responsible for scheduling and
presiding over the Committee's meetings, preparing agendas for such
meetings and supervising the work of the Committee.
(16) The Committee shall meet regularly and shall meet with the Senior
Officers, the Audit Committee and the Company's outside auditors, in
each case as necessary, appropriate or desirable to discharge the
responsibilities set forth in this Charter. The Committee may invite
to its meetings any director, member of management and such other
persons as it deems appropriate in order to carry out its
responsibilities.
(17) No member of the Committee shall receive compensation for serving on
the Committee.
III. Periodic Evaluation
The Committee shall perform a review and evaluation, at least annually, of
the performance of the Committee and its members, including by reviewing
compliance of the Committee with this Charter. In addition, the Committee
shall review and reassess, at least annually, the adequacy of this Charter
and recommend to the Senior Officers any improvements to this Charter that
the Committee considers necessary or valuable. The Committee shall conduct
such evaluations and reviews in such manner as it deems appropriate.
43
INSTRUCTIONS TO REVIEWERS
Please find enclosed a draft disclosure document relating to the Company.
We encourage you to read this document in its entirety. The portions of such
document that you are particularly responsible for reviewing have been
highlighted for your convenience. [IF APPLICABLE: We have enclosed a copy of the
SEC rules that set forth the information that needs to be disclosed in the
sections of the enclosed document you are requested to review.] After completing
your review but in any event not later than [DATE], please contact [INSERT NAME
OF MEMBER OF DISCLOSURE COMMITTEE] and inform [HIM/HER] as to whether or not:
a. the information you are required to review contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading and, if yes,
identify such untrue statement(s) or omission(s);
b. [IF APPLICABLE: such information complies with the enclosed SEC
rules and, if not, in what respects such information needs to be
modified in order to comply with such SEC rules; and]
c. [IF APPLICABLE: the enclosed financial statements (including
footnote and schedule disclosure) and other financial information
fairly present in all material respects the financial condition,
results of operations and cash flows of the Company as of and for
the periods presented and, if not, in what respects such financial
statements (including footnote and schedule disclosure) and other
financial information need to be modified in order to fairly present
in all material respects the financial condition, results of
operations and cash flows of the Company as of and for the periods
presented.]
With respect to clause (1) above, "material" means information that is
important to an investor in deciding whether or not to buy, hold or sell
securities of the Company. However, you are not required to evaluate materiality
as to the Company as a whole. Rather, you are requested to evaluate materiality
as to your particular business unit, segment or geographic region, as
applicable. The Disclosure Committee will then evaluate the materiality of any
disclosure issue you raise as to the Company as a whole. A member of the
Disclosure Committee will then contact you to inform you of the results of the
Disclosure Committee's evaluation.
[IF APPLICABLE: with respect to (3) above, "fairly present" is not limited
to the financial statements and other financial information having been
presented in accordance with GAAP. Rather, the term "fairly present" encompasses
the selection of appropriate accounting policies, the appropriate application of
appropriate accounting policies, disclosure of financial information that is
informative and reasonably reflects the underlying transactions and events and
the inclusion of any additional disclosure necessary to provide investors with a
materially accurate and complete picture of the Company's financial condition,
results of operations and cash flows.]
Please note that you will be required to sign the enclosed form of
certification with respect to the final version of the portions of the enclosed
disclosure document that you are responsible for reviewing.
Please be advised that any material defects in the Company's disclosure
could result in civil and/ or criminal liability for the Company and its
officers and directors. It is, therefore, critically important that you conduct
your review in a diligent manner.
Please feel free to contact [INSERT NAME OF MEMBER OF DISCLOSURE
COMMITTEE] with respect to any questions you may have in conducting your review.
THE DISCLOSURE COMMITTEE
CERTIFICATION OF OFFICERS AND/OR
EMPLOYEES
The undersigned, being [INSERT TITLE OF OFFICER OR EMPLOYEE] of USURF America,
Inc. (the "Company"), hereby certifies that:
I have reviewed the enclosed disclosure; and
d. I have complied in all material respects with the provisions set
forth in "Instructions to Reviewers" with respect to the enclosed
disclosure; and
e. I have disclosed to Company's Disclosure Committee each incident of
fraud that I am aware of, whether or not material, that occurred in
[identify region, business segment or unit, as applicable] and
involves any employee or agent of the Company.
The undersigned acknowledges that the Company's Chief Executive Officer and
Chief Financial Officer will rely on this certification in connection with their
certification of the enclosed disclosure pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and the SEC rules and regulations promulgated
thereunder.
IN WITNESS WHEREOF, I have signed this certification on this __ day of
__________, 20_.
----------------------------------------
[INSERT NAME OF INDIVIDUAL]
CERTIFICATION OF OFFICERS AND/OR EMPLOYEES
The undersigned, being [INSERT TITLE OF OFFICER OR EMPLOYEE] of USURF America,
Inc. (the "Company"), hereby certifies that:
To my knowledge, the enclosed financial statements for which I am
responsible [fairly present)(1) in all material respects the financial
condition, results of operations and cash flows of the Company's [INSERT NAME OF
BUSINESS UNIT] (the "Unit") as of, and for, the periods presented in those
financial statements;
f. The statements made by me to the Company's Disclosure Committee
during the [MEETING/TELEPHONE CONFERENCE] held on [INSERT DATE] are
true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading;
g. I have disclosed to the Company's Disclosure Committee any and all
material developments, whether positive or negative, relating to the
Unit; and
h. I have disclosed to the Company's Disclosure Committee each incident
of fraud that I am aware of, whether or not material, that occurred
in the Unit and involves any employee or agent of the Company.
With respect to clauses (1) through (4) above, I have evaluated
materiality as to the Unit.
With respect to (1) above, "fairly present" is not limited to the
financial statements and other financial information having been presented in
accordance with GAAP. Rather, the term "fairly present" encompasses the
selection of appropriate accounting policies, the appropriate application of
appropriate accounting policies, disclosure of financial information that is
informative and reasonably reflects the underlying transactions and events and
the inclusion of any additional disclosure necessary to provide investors with a
materially accurate and complete picture of the Unit's financial condition,
results of operations and cash flows.
- ----------
(1) This certification would not be applicable in circumstances where the
financial information is so summary as to not admit a "fairly present" standard.
In that case, the standard to be used should be determined based on the kind of
financial statements available and their level of detail. As an example, an
alternative certification could be as follows:
"To my knowledge, the enclosed financial statements of the Unit for which
I am responsible are true and correct in all material respects and have
been prepared in accordance with GAAP in all material respects. I have
fully and accurately communicated to the Company's Disclosure Committee
any risks, contingencies, transactions, arrangements, trends,
uncertainties or other similar or related information of which I am aware
that could affect the financial condition, results of operations or cash
flows of the Unit in any material respect and which are not expressly
identified in the enclosed financial statements."
The undersigned acknowledges that the Company's Chief Executive Officer
and Chief Financial Officer (together, the " Certifying Officers") will rely on
this certification in connection with their certification of the Company's
periodic reports pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended.
IN WITNESS WHEREOF, I have signed this certification on this ___ day of
_____________, 20_.
----------------------------------------
[INSERT NAME OF INDIVIDUAL]