<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 1998
REGISTRATION NO. 333-64773
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRICE COMMUNICATIONS WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4812 13-3956941
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of Classification Code Number) identification
incorporation or organization) number)
</TABLE>
SUBSIDIARY GUARANTOR REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
EXACT NAME OF STANDARD I.R.S.
GUARANTOR REGISTRANTS STATE INDUSTRIAL EMPLOYER
AS SPECIFIED IN OF CLASSIFICATION IDENTIFICATION
THEIR RESPECTIVE CHARTERS FORMATION CODE NUMBER NUMBER
- ------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C>
Panama City Communications, Inc. Florida 4812 59-2863688
Panama City Cellular Telephone Florida 4812 59-2881586
Company, Ltd.
Panhandle Cellular Partnership Florida 4812 65-0083886
Savannah Cellular Limited Partnership Delaware 4812 58-1896629
CEI Communications, Inc. Delaware 4812 94-3032437
Macon Cellular Telephone Systems, New 4812 02-0414924
L.P. Hampshire
Columbus Cellular Telephone Company Georgia 4812 58-1802141
Albany Cellular Partners Georgia 4812 22-2918690
Cellular Dynamics Telephone Company Georgia 4812 58-1761830
of Georgia
Montgomery Cellular Holding Co., Inc. Delaware 4812 42-1330618
Montgomery Cellular Telephone Alabama 4812 63-0972220
Company, Inc.
<CAPTION>
PRIMARY
EXACT NAME OF STANDARD I.R.S.
GUARANTOR REGISTRANTS STATE INDUSTRIAL EMPLOYER
AS SPECIFIED IN OF CLASSIFICATION IDENTIFICATION
THEIR RESPECTIVE CHARTERS FORMATION CODE NUMBER NUMBER
- ------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C>
Cellular Systems of Southeast Delaware 4812 63-0964897
Alabama, Inc.
Dothan Cellular Telephone Company, Alabama 4812 63-0964898
Inc.
Palmer Wireless Holdings, Inc. Delaware 4812 65-0477815
Price Communications Wireless II, Delaware 4812 13-3966848
Inc.
Price Communications Wireless III, Delaware 4812 13-3970561
Inc.
Price Communications Wireless IV, Delaware 4812 13-3970562
Inc.
Price Communications Wireless V, Inc. Delaware 4812 13-3970564
Price Communications Wireless VI, Delaware 4812 13-3970565
Inc.
Price Communications Wireless VII, Delaware 4812 13-3970566
Inc.
Price Communications Wireless VIII, Delaware 4812 13-3970567
Inc.
Price Communications Wireless IX, Delaware 4812 13-3970569
Inc.
</TABLE>
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
ROBERT PRICE
PRICE COMMUNICATIONS WIRELESS, INC.
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
RICHARD D. TRUESDELL, JR.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box:/ /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 22, 1998
PROSPECTUS
DECEMBER , 1998
$525,000,000
OFFER TO EXCHANGE
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on [ ], 1998 unless extended
----------------------------------
Price Communications Wireless, Inc. ("the Company" or "PCW") and the
Guarantors (as defined herein), hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000
principal amount at maturity of 9 1/8% Series B Senior Secured Notes due 2006
(the "New Notes") of the Company for each $1,000 principal amount at maturity of
the issued and outstanding 9 1/8% Series A Senior Secured Notes due 2006 (the
"Old Notes" and, together with the New Notes, the "Notes") of the Company. As of
the date of this Prospectus there were outstanding $525,000,000 principal amount
at maturity of Old Notes. The terms of the New Notes are identical in all
material respects to the Old Notes, except that the offer of the New Notes will
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related liquidated damage
provisions applicable to the Old Notes.
Interest on the Notes is payable semi-annually on June 15 and December 15 of
each year. The Notes will mature on December 15, 2006. The Notes will be
redeemable, in whole or in part, at the option of the Company, at any time on or
after June 15, 2002, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. In addition, at any time and
from time to time on or prior to the third anniversary of the Issue Date (as
defined), the Company may, subject to certain requirements, redeem up to 35% of
the originally issued aggregate principal amount of the Notes with the cash
proceeds received from one or more Equity Offerings (as defined) of the Company
or any Parent (as defined) at a redemption price equal to 109.125% of the
principal amount to be redeemed, together with accrued and unpaid interest, if
any, to the date of redemption, provided that at least 65% of the original
aggregate principal amount of the Notes remains outstanding thereafter. See
"Description of Notes."
The Notes are senior obligations of the Company guaranteed by each
Restricted Subsidiary (as defined) of the Company (other than any Non-Recourse
Restricted Subsidiary (as defined)) on the Issue Date (the "Guarantors"). The
obligations of the Company under the Notes and the Guarantors under the
Guarantees (as defined) are secured on the Issue Date by a first priority lien,
subject to certain Permitted Liens (as defined), on (i) the capital stock of
Restricted Subsidiaries (other than Non-Recourse Restricted Subsidiaries) owned
by the Company or any Guarantor and certain other assets of the Restricted
Subsidiaries (other than the Non-Recourse Restricted Subsidiaries) as can be
perfected by the filing of a UCC-1 financing statement and (ii) certain cash
collateral and Eligible Investments (as defined) from time to time pledged by
the Company or the Guarantors. See "Description of Notes-- Security and Ranking
of the Notes."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Guarantors under the Registration Rights
Agreement, dated June 9, 1998, among the Company, the Guarantors and the initial
purchasers (the "Registration Rights Agreement"). Based upon interpretations
contained in letters issued to third parties by the staff of the Securities and
Exchange Commissions (the "SEC"), including Exxon Capital Holdings Corporation,
SEC No-Action Letter (avail. May 13, 1988), Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (avail. June 5, 1991) and Shearman & Sterling, SEC
No-Action Letter (avail. July 2, 1993) (collectively, the "Exchange Offer
No-Action Letters"), the Company believes that the New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by each Holder thereof (other than a broker-dealer, as
set forth below, and any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the Letter
of Transmittal that such conditions have been met. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange of
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Company will promptly return tendered
Old Notes to the Holders thereof. See "The Exchange Offer."
Prior to this Exchange Offer, there has been no public market for the Notes.
The Company does not currently intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active public market for the New Notes
will develop.
The Notes will not be subject to any sinking fund requirement. Upon the
occurrence of a Change of Control (as defined), (i) the Company will have the
option, prior to June 15, 2002 to redeem the Notes, in whole, at a redemption
price equal to 100% of the principal amount thereof, plus the Applicable Premium
(as defined), together with accrued and unpaid interest, if any, to the date of
redemption, and (ii) if the Company has not redeemed the Notes, the Company will
be required to make an offer to repurchase all outstanding Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the Change of Control Purchase Date (as
defined). See "Description of Notes--Optional Redemption" and "--Certain
Covenants--Repurchase of Notes at the Option of the Holder upon a Change of
Control."
The Notes are expected to be designated for trading in the PORTAL Market.
----------------------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES IN THE EXCHANGE OFFER.
---------------------
THESE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus (this "Prospectus") in connection with the offer made hereby and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any other person. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained or incorporated
by reference herein is correct as of any time subsequent to its date. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy the securities offered hereby by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation.
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Those statements appear in a number of places in this Prospectus and
include statements regarding the intent, belief or current expectations of PCW,
its directors or officers primarily with respect to the future operating
performance of PCW. Holders considering participating in this Exchange Offer are
cautioned that any such forward-looking statements are not guarantees of future
performance and may involve risks and uncertainties, and that actual results may
differ from those in the forward-looking statements as a result of factors, many
of which are outside the control of PCW. The accompanying information contained
in this Prospectus, including, without limitation, the information set forth
below and the information under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations," identifies important
factors that could cause such differences.
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION (INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO) INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE INDICATED, ALL REFERENCES HEREIN TO
"PCW" OR THE "COMPANY" REFER TO PRICE COMMUNICATIONS WIRELESS, INC. AND ITS
SUBSIDIARIES AND PREDECESSORS. ALL REFERENCES TO "HOLDINGS" REFER TO PRICE
COMMUNICATIONS CELLULAR HOLDINGS, INC. ALL REFERENCES HEREIN TO "PCC" REFER TO
PRICE COMMUNICATIONS CORPORATION AND, UNLESS THE CONTEXT REQUIRES OTHERWISE, ITS
SUBSIDIARIES. REFERENCES HEREIN TO THE "ACQUISITION" REFER TO THE ACQUISITION BY
PCW, A WHOLLY OWNED DIRECT SUBSIDIARY OF HOLDINGS, OF PALMER WIRELESS, INC.
("PALMER") AND THE RELATED SALE OF THE FORT MYERS AND GEORGIA-1 SYSTEMS OF
PALMER, AS DESCRIBED BELOW UNDER "THE PALMER ACQUISITION." AS USED IN THIS
PROSPECTUS, THE TERM "PALMER" INCLUDES ITS SUBSIDIARIES AND PREDECESSORS. EXCEPT
FOR HISTORICAL FINANCIAL INFORMATION AND UNLESS OTHERWISE INDICATED, ALL
INFORMATION PRESENTED BELOW RELATING TO THE COMPANY, PCC AND HOLDINGS INCLUDING
POPS AND NET POPS (EACH AS DEFINED) AND THE SYSTEMS, GIVES EFFECT TO THE
CONSUMMATION OF THE ACQUISITION (INCLUDING THE SALE OF THE FORT MYERS AND
GEORGIA-1 SYSTEMS). ALL INFORMATION RELATING TO PCC SHARES (AS DEFINED) HAS BEEN
ADJUSTED TO GIVE EFFECT TO STOCK SPLITS.
THE COMPANY
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At September 30, 1998, the Company provided cellular telephone
service to 364,189 subscribers in Georgia, Alabama, Florida and South Carolina
in a total of 16 licensed service areas composed of eight Metropolitan
Statistical Areas ("MSAs") and eight Rural Service Areas ("RSAs"), with an
aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories,
including pagers, principally through its network of retail stores. The Company
markets all of its products and services under the nationally recognized service
mark CELLULARONE-Registered Trademark-.
OPERATIONS
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies of
scale, including centralized marketing and administrative functions as well as
multi-system capital expenditures. The Company devotes considerable attention to
engineering, maintenance and improvement of its cellular telephone systems in an
effort to deliver high-quality service to its subscribers and to implement new
technologies as soon as economically practicable. Through its participation in
the North American Cellular Network ("NACN"), the Company is able to offer
ten-digit dialing access to its subscribers when they travel outside the
Company's service areas, providing them with convenient roaming access
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants. By marketing its products and services under
the CELLULARONE-Registered Trademark- name, the Company also enjoys the benefits
of association with a nationally recognized service mark.
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of
September 30, 1998, with respect to each service area in which the Company owns
a cellular telephone system, the estimated population, the Company's beneficial
ownership percentage, the Net Pops (as defined) and the date of initial
operation of such system by Palmer or a predecessor operator.
1
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
CELLULAR SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
Albany, GA.................................................. 118,527 86.5% 102,526 4/88
Augusta, GA................................................. 439,116 100.0 439,116 4/87
Columbus, GA................................................ 254,150 85.2 216,518 11/88
Macon, GA................................................... 313,686 99.2 311,234 12/88
Savannah, GA................................................ 283,978 98.5 279,718 3/88
Georgia-6 RSA............................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA............................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA............................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA............................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.............................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.............................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.............................................. 147,392 86.5 127,494 10/90
Dothan, AL.................................................. 136,160 94.6 128,807 2/89
Montgomery, AL.............................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.............................................. 171,993 100.0 171,993 7/93
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Subtotal.................................................... 3,155,624 3,037,705
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Panama City, FL............................................. 146,018 78.4 114,493 9/88
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Total....................................................... 3,301,642 3,152,198
<CAPTION>
------------ ----------
------------ ----------
</TABLE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has interim operating authority ("IOA"). IOA is granted for an area
to a license holder in an adjacent area when there are no license holders in
such area. The Company has no subscribers in the South Carolina-7 RSA, but
instead provides roaming access to its own subscribers and others when they
travel in this service area, utilizing its existing cell sites. Construction
permits were granted to third parties ("Permittees") for the Alabama-5 RSA
and South Carolina-7 RSA. The Permittees are required to complete
construction of their respective RSA within 18 months. After completing
construction, a Permittee may give the Company thirty days prior written
notice, at which point the Company would be required to sell all of its
subscribers of its other systems who reside within the boundaries of the
markets to the Permittee at cost. The Company, along with others, is
currently in negotiations to purchase the South Carolina-7 RSA. No assurance
can be given, however, that the Company will be successful in consummating
such purchase.
(2) Based on population estimates for 1996 from the fall 1997 edition of The
Wireless Communication Industry published by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") (the "DLJ Pop Book").
COMPANY STRATEGY
The Company's four strategic objectives are to: (1) expand its revenue base
by increasing penetration in existing service areas and encouraging greater
usage among its existing customers; (2) provide high-quality customer service to
create and maintain customer loyalty; (3) enhance performance by aggressively
pursuing opportunities to increase operating efficiencies; and (4) expand its
regional cellular communications presence by selectively acquiring additional
interests in cellular telephone systems (including minority interests).
Specifically, the Company strives to achieve these objectives through
implementation of the following:
AGGRESSIVE, DIRECT MARKETING. The Company employs a two-tier direct sales
force. A retail sales force handles walk-in traffic at the Company's 37 retail
outlets, and a targeted sales staff solicits certain industries and government
subscribers. The Company's management believes that its internal sales force is
far more likely than independent agents to successfully select and screen new
subscribers and select pricing plans that realistically match subscriber means
and needs and to personally keep in contact with new customers.
2
<PAGE>
FLEXIBLE, VALUE-ORIENTED PRICING PLANS. The Company provides a range of
pricing plans, each of which includes a monthly access fee and, in most cases, a
bundle of "free" minutes. Additional home rate minutes are charged at rates
ranging from $0.05 per minute to $1.25 per minute depending on the customer's
usage plan and the time of day. In addition, the Company offers wide area home
rate roaming in the Company's systems and low flat rate roaming in a six state
region in the southeastern United States.
The Company believes that its bundled minute offerings will encourage
greater customer usage. By bundling the number of minutes a customer can use for
one flat rate, subscribers perceive greater value in their cellular service and
become less usage sensitive, i.e., they can increase their cellular phone usage
without seeing large corresponding increases in their cellular bill.
CONTINUALLY ADOPTING STATE OF THE ART SYSTEM DESIGN. The Company's network
allows the delivery of full personal communication services ("PCS")
functionality to its digital cellular customers, including primarily caller ID,
short message paging and extended battery life. The Company's network provides
for "seamless handoff" between digital cellular and PCS operators that, like the
Company, employ Time Division Multiple Access ("TDMA") technology, one of three
industry standards and the one employed by AT&T, SBC and others; i.e, the
Company's customers may leave the Company's service area and enter an area
serviced by a PCS provider using TDMA technology without noticing the
difference, and vice versa. The Company believes this innovation will allow the
Company to be the roaming partner of choice for such PCS operators. The Company
has a favorable agreement with AT&T with respect to PCS roaming and expects that
other PCS operators may choose, like AT&T, to concentrate PCS buildout in urban
centers rather than the more rural areas in which the Company concentrates.
FOCUSING ON CUSTOMER SERVICE. Customer service is an essential element of
the Company's marketing and operating philosophy. The Company is committed to
attracting new subscribers and retaining existing subscribers by providing
consistently high-quality customer service. In each of its cellular service
areas, the Company maintains a local staff, including a market manager, customer
service representatives, technical and engineering staff, sales representatives
and installation and repair facilities. Each cellular service area handles its
own customer-related functions such as credit evaluations, customer evaluations,
account adjustments and rate plan changes. In addition, subscribers are able to
report cellular telephone service or account problems 24 hours a day. To ensure
high-quality service, Cellular One Group authorizes a third-party marketing
research firm to perform customer satisfaction surveys of each of its licensees.
Licensees must achieve a minimum satisfaction level in order to continue using
the CELLULARONE-Registered Trademark- service mark. The Company has repeatedly
ranked number one in certain customer satisfaction categories among all Cellular
One operators (#1 MSA in its category in 1997, 1996, 1995, 1993, and 1992; #1
RSA in its category in 1995).
AGGRESSIVE COST CONTROL EFFORTS. The Company believes that its monthly
operating costs per subscriber rank among the lowest in the industry. The
Company's management attributes this competitive advantage to a variety of
factors, including the efficiencies associated with its direct sales force,
extensive use of in-house technical and engineering staff, and maintenance of
aggressive fraud control procedures, as well as general efforts to reduce
corporate general and administrative expenses. The Company has also realized
substantial savings on its interconnection charges from landline carriers by
using its own microwave and fiber optic network to connect cellular switching
equipment to cell sites without the use of landline carriers.
The Company was incorporated in the State of Delaware in 1997. The address
of the Company is 45 Rockefeller Plaza, New York, New York 10020. The Company's
phone number is (212) 757-5600.
3
<PAGE>
THE PALMER ACQUISITION
Prior to the Merger described below, PCW had no assets, liabilities or
operations other than the proceeds from the issuance of the 11 3/4% PCW Notes
(as such term is defined below) and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). On October 6, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase plans
for an aggregate price of $486.4 million. In addition, as a result of the
Merger, the Company assumed all outstanding indebtedness of Palmer of
approximately $378.0 million ("Palmer Existing Indebtedness"), making the
aggregate purchase price for Palmer (including transaction fees and expenses)
approximately $880.0 million. The Company refinanced all of the Palmer Existing
Indebtedness concurrently with the consummation of the Merger.
PCW entered into an agreement (the "Fort Myers Sale Agreement") to sell
Palmer's Fort Myers, Florida MSA covering approximately 382,000 Pops for $168.0
million (the "Fort Myers Sale"). On October 6, 1997, the Fort Myers Sale was
consummated, and generated proceeds to the Company of approximately $166.0
million. The proceeds of the Fort Myers Sale were used to fund a portion of the
acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into an Asset Purchase Agreement
with MJ Cellular Company, L.L.C. (the "Georgia Sale Agreement") which provided
for the sale by PCW, for approximately $25.0 million, of substantially all of
the assets of the non-wireline cellular telephone system serving the Georgia-l
Whitfield RSA ("Georgia-1"), including the FCC licenses to operate Georgia-1
(the "Georgia-1 Sale"). The sale of the assets of Georgia-1 was consummated on
December 30, 1997 and generated proceeds to the Company of approximately $24.2
million. A portion of the proceeds from the Georgia Sale were used to retire a
portion of the debt used to fund the acquisition of Palmer. The Merger, the Fort
Myers Sale and the Georgia-1 Sale are collectively referred to as the
"Acquisition."
In order to fund the Acquisition and pay related fees and expenses, PCW
issued $175.0 million aggregate principal amount of 11 3/4% Senior Subordinated
Notes due 2007 (the "11 3/4% PCW Notes") and entered into a syndicated senior
loan facility providing for term loan borrowings in the aggregate principal
amount of $325.0 million and revolving loan borrowings of $200.0 million (the
"Credit Facility"). On October 6, 1997, PCW borrowed all terms loans available
thereunder and approximately $120.0 million of revolving loans. The Company used
the net proceeds from the Offering to retire amounts outstanding under the
Credit Facility, for accrued interest and for collateralization of outstanding
interest rate swaps. As of the date of retirement there was $425.1 million of
borrowings outstanding under the Credit Facility. See "Use of Proceeds."
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC (the "PCC Equity Contribution") which was in the form of
cash and common stock of Palmer. An additional amount of the purchase price for
the Acquisition was raised out of the proceeds from the issuance and sale for
$80.0 million (the "Holdings Offering") by Holdings, the direct parent of the
Company, of units consisting of $153.4 million principal amount at maturity of
13 1/2% Senior Secured Discount Notes due 2007 of Holdings (the "13 1/2%
Holdings Notes") and warrants (the "Warrants") to purchase shares of PCC common
stock, par value $.01 per share (the "PCC Shares").
4
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........................... Up to $525,000,000 principal amount of 9 1/8%
Series B Senior Secured Notes due 2006. The
terms of the New Notes and the Old Notes are
identical in all material respects, except
that the offer of the New Notes will have
been registered under the Securities Act and
therefore, the New Notes will not be
subjected to certain transfer restrictions,
registration rights and related liquidated
damage provisions applicable to the Old
Notes.
The Exchange Offer........................... The Company is offering, upon the terms and
subject to the conditions of the Exchange
Offer, to exchange $1,000 principal amount at
maturity of New Notes for each $1,000
principal amount at maturity of Old Notes.
See "The Exchange Offer" for a description of
the procedures for tendering Old Notes. The
Exchange Offer is intended to satisfy
obligations of the Company under the
Registration Rights Agreement.
Tenders, Expiration Date; Withdrawal......... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on [ ], 1998,
or such later date and time to which it is
extended. The tender of Old Notes pursuant to
the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any Old
Notes not accepted for exchange for any
reason will be returned without expense to
the tendering Holder thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Federal Income Tax Consequences.............. The exchange pursuant to the Exchange Offer
will not result in any income, gain or loss
to the Holders for federal income tax
purposes. See "United States Federal Income
Tax Consequences of the Exchange Offer."
Use of Proceeds.............................. There will be no proceeds to the Company from
the issuance of the New Notes pursuant to the
Exchange Offer.
Exchange Agent............................... Bank of Montreal Trust Company is serving as
Exchange Agent in connection with the
Exchange Offer.
</TABLE>
5
<PAGE>
CONSEQUENCE OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, the
Company believes that, generally, any Holder of Old Notes (other than a
broker-dealer, as set forth below, and any Holder who is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who exchanges
Old Notes for New Notes pursuant to the Exchange Offer may offer such New Notes
for resale, resell such New Notes, or otherwise transfer such New Notes without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided such New Notes are acquired in the ordinary course of
the Holder's business and such Holder has no arrangement or understanding with
any person to participate in a distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the Letter
of Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than the Holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes must represent that the Old Notes tendered in exchange therefor were
acquired as a result of market-making activities or other trading activities and
must acknowledge that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution." To comply with the securities
laws of certain jurisdictions, it may be necessary to qualify for sale or
register the New Notes prior to offering or selling such New Notes. The Company
does not currently intend to take any action to register or qualify the New
Notes for resale in any such jurisdictions. If a Holder of Old Notes does not
exchange such Old Notes for New Notes pursuant to the Exchange Offer, such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. Any Holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of New Notes
could not rely on the position of the staff of the SEC enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988) or similar no-action
letters and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such Holder incurring liability
under the Securities Act for which the Holder is not indemnified by the Company.
See "The Exchange Offer-Consequences of Failure to Exchange" and "Description of
Notes-Registration Rights; Liquidated Damages."
6
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except that the offer of the New Notes will have been registered under
the Securities Act and, therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related provisions applicable to
the Old Notes.
<TABLE>
<S> <C>
Notes Offered..................... $525,000,000 aggregate principal amount of 9 1/8% Series
B Senior Secured Notes due 2006.
Maturity Date..................... December 15, 2006.
Interest Payment Dates............ June 15 and December 15 of each year, commencing
December 15, 1998.
Sinking Fund...................... None.
Ranking........................... The Notes will rank (i) senior in right of payment to
all subordinated Indebtedness of the Company and (ii)
effectively senior in right of payment to all unsecured
Indebtedness of the Company to the extent of the value
of the Collateral (as defined) available for the payment
of the Notes.
Guarantees and Security........... The Notes will be unconditionally guaranteed on a joint
and several basis (each, a "Guarantee") by each
Restricted Subsidiary of the Company (other than any
Non-Recourse Restricted Subsidiary (as defined)) on the
Issue Date (the "Guarantors"). The obligations of the
Company under the Notes and the Guarantors under the
Guarantees will be secured on the Issue Date by a first
priority lien, subject to certain Permitted Liens, on
(a) the Capital Stock of Restricted Subsidiaries (other
than Non-Recourse Restricted Subsidiaries) owned by the
Company or any Guarantor and certain other assets of the
Restricted Subsidiaries (other than Non-Recourse
Restricted Subsidiaries) as can be perfected by the
filing of a UCC-1 financing statement with filing
offices in the relevant jurisdictions (the assets
subject to such security interests will not include,
without limitation, the FCC licenses, real property or
leases relating to transmitting towers or any cash or
Eligible Investments not deposited with the Trustee) and
(b) certain cash collateral and Eligible Investments
from time to time pledged by the Company or its
Restricted Subsidiaries to the Trustee or a collateral
agent for the Trustee (the property described in the
foregoing clauses (a) and (b), the "Collateral"). The
Collateral will be permitted to be released to the
Company (i) in the event of certain asset sales and (ii)
to the extent that the aggregate Secured Indebtedness
(as defined) does not exceed the Minimum Collateral
Value (as defined).
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Optional Redemption............... The Notes will be redeemable in whole or in part at the
option of the Company, at any time on or after June 15,
2002 at the redemption prices set forth herein, plus
accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time and from time to
time on or prior to the third anniversary of the Issue
Date (as defined), PCW may, subject to certain
requirements, redeem up to 35% of the originally issued
aggregate principal amount of the Notes with the cash
proceeds received from one or more Equity Offerings of
the Company or any Parent at a redemption price equal to
109.125% of the principal amount to be redeemed,
together with accrued and unpaid interest, if any, to
the date of redemption, provided that at least 65% of
the original aggregate principal amount of the Notes
remains outstanding thereafter. See "Description of
Notes--Optional Redemption."
Change of Control................. In the event of a Change of Control (as defined), (i)
the Company will have the option, prior to June 15,
2002, to redeem the Notes, in whole, at a redemption
price equal to 100% of the principal amount thereof,
plus the Applicable Premium (as defined), together with
accrued and unpaid interest, if any, to the date of
redemption, and (ii) if the Company has not redeemed the
Notes, the Company will be required to make an offer to
repurchase all outstanding Notes at a purchase price
equal to 101% of the aggregate principal amount thereof,
together with accrued and unpaid interest, if any to the
Change of Control Purchase Date. There can be no
assurance that the Company will have sufficient funds to
repurchase the Notes in the event of a Change of
Control. See "Risk Factors--Possible Inability to
Purchase Notes upon a Change of Control; Possible Effect
of a Change of Control," "Description of Notes--
Optional Redemption," "--Certain Covenants--Repurchase
of Notes at the Option of the Holder upon a Change of
Control."
Certain Covenants................. The Indenture (as defined below) will impose certain
limitations on the ability of the Company and its
subsidiaries to, among other things, incur Indebtedness
(as defined), make Restricted Payments (as defined),
effect certain Asset Sales (as defined), enter into
certain transactions with Related Persons (as defined),
merge or consolidate with any other person or transfer
all or substantially all of their properties and assets.
See "Description of Notes--Certain Covenants."
</TABLE>
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by Holders prior to tendering their Old Notes in the Exchange Offer.
8
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
FINANCIAL AND OPERATING DATA
The following table sets forth summary historical data for the Company and
its predecessor, Palmer and the unaudited pro forma and financial data for the
Company for the periods and as of the dates indicated. The unaudited pro forma
data is not designed to represent and does not represent what the Company's
financial position or results of operations actually would have been had the
transactions described herein under "Unaudited Pro Forma Condensed Consolidated
Financial Statements" been completed as of the date or at the beginning of the
periods indicated, or to project the Company's financial position or results of
operations at any future date or for any future period. The following data
should be read in conjunction with "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Condensed Consolidated Financial Statements"
and the consolidated financial statements and notes thereto of the Company
included elsewhere herein.
The following table also sets forth certain summary operating data for
Palmer and the Company as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
COMPANY COMPANY PALMER
-------------------------- ---------------------------- -------------------------
(UNAUDITED)
-----------------------------------------
PERIOD FROM YEAR
NINE MONTHS ENDED MAY 29 ENDED
SEPTEMBER 30, PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
-------------------------- YEAR ENDED THROUGH ENDED 31,
PRO FORMA DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998(1) 1998 1997(1) 1997(2) 1997(3) 1996
-------------- ---------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
INCOME STATEMENT DATA:
Revenue:
Service............................. $ 134,938 $ 134,938 $ 152,854 $ 41,365 $ 134,123 $ 151,119
Equipment sales and installation.... 9,175 9,175 8,615 2,348 7,613 8,624
-------------- ---------- ------------- ------------- -------------- ---------
Total revenue..................... 144,113 144,113 161,469 43,713 141,736 159,743
-------------- ---------- ------------- ------------- -------------- ---------
Engineering, technical and other
direct expenses..................... 21,980 21,980 24,884 5,978 23,301 28,717
Cost of equipment..................... 17,401 17,401 18,269 5,259 16,112 17,944
Selling, general and administrative
expenses............................ 39,988 39,988 50,423 12,805 41,014 46,892
Depreciation and amortization......... 33,721 33,721 42,962 11,055 25,498 25,013
-------------- ---------- ------------- ------------- -------------- ---------
Operating income...................... 31,023 31,023 24,931 8,616 35,811 41,177
Other income (expense):
Interest, net(4).................... (74,698) (60,786) (94,017) (22,198) (24,467) (31,462)
Other, net.......................... (98) (98) 222 15 208 (429)
-------------- ---------- ------------- ------------- -------------- ---------
Total other expense............... (74,796) (60,884) (93,795) (22,183) (24,259) (31,891)
Minority interest share of (income)
loss................................ (1,715) (1,715) (1,724) (414) (1,310) (1,880)
Income tax expense (benefit).......... (16,674) (11,566) (26,187) (5,129) 4,153 2,724
-------------- ---------- ------------- ------------- -------------- ---------
Net income (loss) before extraordinary
item................................ $ (28,814) $ (20,010) $ (44,401) $ (8,852) $ 6,089 $ 4,682
------------- ------------- -------------- ---------
------------- ------------- -------------- ---------
Extraordinary item--write-off of
deferred finance costs, and premium
on early extinguishment of debt, net
of income tax benefit of $11,246.... NA (19,148)
-------------- ----------
Net income (loss)..................... NA $ (39,158)
-------------- ----------
-------------- ----------
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Service............................. $ 96,686 $ 61,021 $ 35,173
Equipment sales and installation.... 8,220 7,958 6,285
--------- --------- ---------
Total revenue..................... 104,906 68,979 41,458
--------- --------- ---------
Engineering, technical and other
direct expenses..................... 18,184 12,776 7,343
Cost of equipment..................... 14,146 11,546 7,379
Selling, general and administrative
expenses............................ 30,990 19,757 13,886
Depreciation and amortization......... 15,004 9,817 10,689
--------- --------- ---------
Operating income...................... 26,582 15,083 2,161
Other income (expense):
Interest, net(4).................... (21,213) (12,715) (9,006)
Other, net.......................... (687) (70) (590)
--------- --------- ---------
Total other expense............... (21,900) (12,785) (9,596)
Minority interest share of (income)
loss................................ (1,078) (636) 83
Income tax expense (benefit).......... 2,650 0 0
--------- --------- ---------
Net income (loss) before extraordinary
item................................ $ 954 $ 1,662 $ (7,352)
--------- --------- ---------
--------- --------- ---------
Extraordinary item--write-off of
deferred finance costs, and premium
on early extinguishment of debt, net
of income tax benefit of $11,246....
Net income (loss).....................
</TABLE>
- ------------------------------
(1) Pro forma adjustments give effect to the following transactions as if each
had occurred on January 1, 1997: (i) the Acquisition (including the sale of
the Fort Myers and Georgia-1 systems) and related financings and (ii) the
issuance and sale of the Notes in the Offering and the applications of net
proceeds therefrom. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements" and "The Palmer Acquisition."
(2) Includes results of operations for the period October 1, 1997 through
December 31, 1997.
(3) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
(4) Net interest included in the pro forma and historical financial data of the
Company includes non-cash interest expense related to the 13 1/2% Holdings
Notes issued in August 1997 and the 11 1/4% Holdings Notes (as defined
herein) issued in July 1998 both of which are obligations of Holdings and
are included in the Company's consolidated financial statements solely
pursuant to "push down" accounting rules.
9
<PAGE>
<TABLE>
<CAPTION>
COMPANY COMPANY PALMER
-------------------- ---------------------------- -------------------------
PERIOD FROM
(UNAUDITED)
----------------------------------- YEAR
MAY 29 ENDED
NINE MONTHS ENDED PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
SEPTEMBER 30, YEAR ENDED THROUGH ENDED 31,
-------------------- DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998 1997(1) 1997(2) 1997(3) 1996
-------------------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
OTHER DATA:
Capital expenditures........................ $ 5,544 $ 55,256 $ 14,499 $ 40,757 $ 41,445
Operating income before depreciation and
amortization ("EBITDA")(5)................ $ 64,744 $ 67,893 $ 19,671 $ 61,309 $ 66,190
EBITDA margin on service revenue............ 48.0% 44.4% 47.6% 45.7% 43.8%
Penetration(6).............................. 11.0% 9.40% 9.40% 8.60% 7.45%
Subscribers at end of period(7)............. 364,189 309,606 309,606 337,345 279,816
Cost to add a gross subscriber(8)........... $ 219 $ 220 $ 188 $ 231 $ 216
Cost to add a net subscriber(8)............. $ 447 $ 461 $ 370 $ 514 $ 407
Average monthly service revenue per
subscriber(9)............................. $ 45.08 $ 46.24 $ 47.47 $ 47.52 $ 52.20
Average monthly churn(10)................... 1.88% 1.88% 1.84% 1.89% 1.84%
BALANCE SHEET DATA (AT END OF PERIOD):
Cash........................................ $ 189,737 $ 27,926 $ 27,926 $ 3,581 $ 1,698
Working capital (deficit)................... 176,076 3,080 3,080 7,011 296
Property, plant and equipment, net.......... 141,566 151,141 151,141 161,351 132,438
Licenses, other intangibles and other
assets, net............................... 923,737 937,986 937,986 406,828 387,067
Total assets................................ 1,294,804 1,144,479 1,144,479 599,815 549,942
Total debt.................................. 700,000 613,000 613,000 378,000 343,662
Stockholder's equity (deficit).............. (3,995) 35,163 35,163 172,018 164,930
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
OTHER DATA:
Capital expenditures........................ $ 36,564 $ 22,541 $ 13,304
Operating income before depreciation and
amortization ("EBITDA")(5)................ $ 41,586 $ 24,900 $ 12,850
EBITDA margin on service revenue............ 43.0% 40.8% 36.5%
Penetration(6).............................. 6.41% 4.58% 3.48%
Subscribers at end of period(7)............. 211,985 117,224 65,761
Cost to add a gross subscriber(8)........... $ 183 $ 178 $ 156
Cost to add a net subscriber(8)............. $ 276 $ 247 $ 203
Average monthly service revenue per
subscriber(9)............................. $ 56.68 $ 60.02 $ 62.69
Average monthly churn(10)................... 1.55% 1.55% 1.37%
BALANCE SHEET DATA (AT END OF PERIOD):
Cash........................................ $ 3,436 $ 2,998 $ 1,670
Working capital (deficit)................... (1,435) 2,490 799
Property, plant and equipment, net.......... 100,936 51,884 23,918
Licenses, other intangibles and other
assets, net............................... 332,850 199,265 114,955
Total assets................................ 462,871 273,020 150,054
Total debt.................................. 350,441 245,609 131,361
Stockholder's equity (deficit).............. 74,553 4,915 3,244
</TABLE>
- ------------------------------
(5) EBITDA should not be considered in isolation or as an alternative to net
income (loss), operating income (loss) or any other measure of performance
under generally accepted accounting principles ("GAAP"). The Company
believes that EBITDA is viewed as a relevant supplemental measure of
performance in the cellular telephone industry and in other
telecommunication and media companies.
(6) Determined by dividing the aggregate number of subscribers by the estimated
population.
(7) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(8) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(9) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(10) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER MATTERS DESCRIBED IN THIS PROSPECTUS, HOLDERS OF
THE OLD NOTES SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE
ACCEPTING THE EXCHANGE OFFER.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Eligible Holders wishing to accept the Exchange Offer must represent to
the Company in the Letter of Transmittal that such conditions have been met and
must represent, if such Holder is not a broker-dealer, or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes, that
neither such Holder nor the person receiving such New Notes, if other than the
Holder, is engaged in or intends to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must represent that the Old Notes tendered in exchange
therefor were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), they will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution." However, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdiction or an exemption from registration or qualification
is available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price of
the Old Notes due to a reduction in liquidity.
EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and avoid the restrictions on Old
Notes, each Holder of Old Notes must transmit a properly completed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to Bank of Montreal Trust Company (the "Exchange Agent") at the
address set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry
11
<PAGE>
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. See "The Exchange Offer."
LEVERAGE, LIQUIDITY AND ABILITY TO MEET REQUIRED DEBT SERVICE
On a pro forma basis, after giving effect to the Offering and the
application of the net proceeds therefrom, its ratio of EBITDA to cash interest
expense (excluding non-cash interest related to the 13 1/2% Holdings Notes
issued in August 1997, the 11 1/4% Holdings Notes issued in July 1998 and
amortization of deferred debt financing costs) would have been 0.99 to 1.00 for
the year ended December 31, 1997 and 1.26 to 1.00 for the nine months ended
September 30, 1998. The Company's high degree of leverage could limit
significantly its ability to make acquisitions, withstand competitive pressures
or adverse economic conditions, obtain necessary financing or take advantage of
business opportunities that may arise.
The Credit Facility has been retired. The Company currently does not intend
to enter into a new credit facility. In addition, borrowings under a new credit
facility may be subject to significant conditions, including compliance with
certain financial ratios and the absence of any material adverse change. The
Company intends to pursue opportunities to acquire additional cellular telephone
systems which, if successful, will require the Company to issue or obtain
additional equity or debt financing to fund such acquisitions. There can be no
assurances as to the availability or terms of any such financing or that the
terms of the Notes, the Holdings PIK Notes (as defined below), the 11 3/4% PCW
Notes (as defined below) or any credit facility will not restrict or prohibit
any such debt financing.
The Company's ability to meet its debt service requirements, including those
represented by the Notes, will require significant and sustained growth in the
Company's cash flow. In addition, the Company expects to fund its growth
strategy from cash from operations. There can be no assurance that the Company
will be successful in improving its cash flow by a sufficient magnitude or in a
timely manner or in raising additional equity or debt financing to enable the
Company to meet its debt service requirements or to sustain its growth strategy.
There can be no assurances that the Company would be successful in procuring any
such financing. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
POSSIBLE INABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL; POSSIBLE EFFECT
OF A CHANGE OF CONTROL
Upon a Change of Control, each holder of Notes will have the right to
require the Company to repurchase all outstanding Notes held by such holder.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control to make any required repurchases of Notes
tendered, especially after giving effect to provisions of the 11 3/4% PCW
Indenture (as defined below) and the indenture governing the new Holdings PIK
Notes which require repayment or repurchase, as the case may be, upon such a
Change of Control. In certain circumstances, it is possible that holders of the
11 3/4% PCW Notes would have the right to require PCW to repurchase the 11 3/4%
PCW Notes while holders of the Notes would not have a similar right to require
the Company to repurchase the Notes. See "Description of Notes--Optional
Redemption."
GUARANTEES AND SECURITY FOR THE NOTES
The Company's obligations under the Notes will be unconditionally guaranteed
on a joint and several basis (each, a "Guarantee") by the Guarantors. The
Guarantees will rank PARI PASSU in right of payment with all other senior
indebtedness of each Guarantor and senior in right of payment to all
subordinated indebtedness of such Guarantor. The obligations of the Company
under the Notes and the obligations of the Guarantors under the Guarantees will
be secured by a first priority lien, subject to certain Permitted Liens, on and
security interest in the capital stock of the Restricted Subsidiaries owned by
the Company or any Guarantor and certain other assets of the Restricted
Subsidiaries. No appraisals of the assets of the
12
<PAGE>
Company or the Restricted Subsidiaries of the Company have been prepared by or
on behalf of the Company. There can be no assurance that the proceeds of any
sale of the Collateral pursuant to the Indenture following an Event of Default
would be sufficient to satisfy payments due on the Notes. Further, any transfer
of the power to vote the capital stock of the Restricted Subsidiaries, including
as a result of foreclosure on the Collateral, will require FCC approval. In
addition, the ability of the Holders of Notes to realize upon the Collateral may
be subject to FCC approval as described above and certain bankruptcy law
limitations in the event of a bankruptcy. See "--Certain Other Bankruptcy
Considerations." Absent an acceleration of the Notes, the Company and Restricted
Subsidiaries of the Company will have the right to remain in possession and
retain exclusive control of their assets, to operate their assets and to
collect, invest and dispose of any income thereon.
NET LOSSES
On a pro forma basis after giving effect to the Offering and the Acquisition
and related financing, the Company would have incurred accounting net losses of
approximately $44.4 million for the year ended December 31, 1997 and $28.8
million for the nine months ended September 30, 1998. There can be no assurance
that the Company's future operations will generate sufficient cash flow to pay
its obligations. The Company expects to incur accounting net losses for several
years. See "Selected Consolidated Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
COMPETITION
Although current policies of the FCC authorize only two licensees to operate
cellular telephone systems in each cellular market, there is, and the Company
expects there will continue to be, competition from various wireless technology
licensees authorized to serve each market in which the Company operates, as well
as from resellers of cellular service. Competition for subscribers between the
two cellular licensees in each market is based principally upon the services and
enhancements offered, the technical quality of the cellular telephone system,
customer service, system coverage and capacity and price. The Company competes
with a wireline licensee in each of its cellular markets, some of which are
larger and have access to more substantial capital resources than the Company.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, specialized mobile
radio ("SMR") and enhanced specialized mobile radio ("ESMR") systems, paging
services and, to a limited extent, satellite systems for mobile communications.
ESMR is a digital transmission system providing for "cellular-like"
communications service. The Company also faces limited competition from and may
in the future face increased competition from PCS. Broadband PCS involves a
network of small, low-powered transceivers placed throughout a neighborhood,
business complex, community or metropolitan area to provide customers with
mobile and portable voice and data communications. PCS may be capable of
offering, and PCS operators claim to offer additional services not offered by
cellular providers. PCS subscribers could have dedicated personal telephone
numbers and communicate using small digital radio handsets carried in a pocket
or purse. There can be no assurances that the Company will be able to provide
nor that it will choose to pursue, depending on the economics thereof, all such
services and features. The FCC has also completed or announced plans for
auctions in wireless services such as narrowband PCS, local multipoint
multichannel distribution service ("LMDS"), interactive video distribution
service ("IVDS"), wireless communications service ("WCS") and general wireless
communications service ("GWCS") spectrum. Some of this spectrum might be used
for services competitive in some manner with cellular service. The Company
cannot predict the effect of these proceedings and auctions on the Company's
business. However, the Company currently believes that traditional tested
cellular is economically proven unlike many of these other technologies and
therefore does not intend to pursue such other technologies.
13
<PAGE>
Although the Company believes that the technology, financing and engineering
of these other technologies is not as advanced as their publicity would suggest,
there can be no assurance that one or more of the technologies currently
utilized by the Company in its business will not become obsolete at some time in
the future. See "Business of the Company--Competition."
The Company also faces competition from "resellers." The FCC requires all
cellular licensees to provide service to resellers. A reseller provides wireless
service to customers but does not hold an FCC license or own facilities.
Instead, the reseller buys blocks of wireless telephone numbers and capacity
from a licensed carrier and resells service through its own distribution network
to the public.
POTENTIAL FOR REGULATORY CHANGES AND NEED FOR REGULATORY APPROVALS
The licensing, construction, operation, acquisition, assignment and transfer
of cellular telephone systems, as well as the number of licensees permitted in
each market, are regulated by the FCC. Changes in the regulation of cellular
activities could have a material adverse effect on the Company's operations. In
addition, all cellular licenses in the United States are granted for an initial
term of up to 10 years and are subject to renewal. The Company's cellular
licenses expire in the following years with respect to the following number of
service areas: 1998 (three); 2000 (two); 2001 (four); 2002 (two); 2006 (one);
and 2007 (four). While the Company believes that each of these licenses will be
renewed based upon FCC rules establishing a renewal expectancy in favor of
licensees that have complied with their regulatory obligations during the
relevant license period, there can be no assurance that all of the Company's
licenses will be renewed in due course. In the event that a license is not
renewed, the Company would no longer have the right to operate in the relevant
service area. The non-renewal of licenses could have a material adverse effect
on the Company's results of operations. See "Business of the
Company--Regulation."
FLUCTUATIONS IN MARKET VALUE OF LICENSES
A substantial portion of the Company's assets consists of its interests in
cellular licenses. The assignment of interests in such licenses is subject to
prior FCC approval and may also be subject to contractual restrictions, future
competition and the relative supply and demand for radio spectrum. The future
value of the Company's interests in its cellular licenses will depend
significantly upon the success of the Company's business. While there is a
current market for the Company's licenses, such a market may not exist in the
future or the values obtainable may be significantly lower than at present. As a
consequence, in the event of the liquidation or sale of the Company's assets,
there can be no assurance that the proceeds would be sufficient to pay the
Company's obligations, and a significant reduction in the value of the licenses
could require a charge to the Company's results of operations.
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company currently uses the registered service mark
CELLULARONE-Registered Trademark- to market its services. The Company's use of
this service mark is, and has historically been, governed by separate five-year
contracts between the Company and Cellular One Group, the owner of the service
mark, for each of the markets in which the Company operates. Such contracts
currently in effect expire at different times, ranging from July 6, 1998 to
December 1, 2001. If for some reason beyond the Company's control, the name
CELLULARONE-Registered Trademark- were to suffer diminished marketing appeal,
the Company's ability both to attract new subscribers and retain existing
subscribers could be materially affected. AT&T Wireless Services, Inc., which
has been the single largest user of the CELLULARONE-Registered Trademark-
service mark, has significantly reduced its use of the service mark as a primary
service mark, as has Centennial Cellular. There can be no assurance that such
reduction in use by any of such parties will not have an adverse effect on the
marketing appeal of the brand name.
14
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company's affairs are managed by a small number of key management and
operating personnel, the loss of whom could have an adverse impact on the
Company. The success of the Company's operations and expansion strategy depends
on its ability to retain and to expand its staff of qualified personnel in the
future.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to certain types of cancer. In
addition, recently a limited number of lawsuits have been brought, not involving
the Company, alleging a connection between cellular telephone use and certain
types of cancer. Concerns over RF emissions and interference may have the effect
of discouraging the use of cellular telephones, which could have an adverse
effect upon the Company's business. As required by the Telecom Act, in August
1996, the FCC adopted new guidelines and methods for evaluating RF emissions
from radio equipment, including cellular telephones. While the new guidelines
impose more restrictive standards on RF emissions from low power devices such as
portable cellular telephones, the Company believes that all cellular telephones
currently marketed and in use comply with the new standards.
The Company carries $2.0 million in general liability insurance and $25.0
million in umbrella liability coverage. This insurance would cover (subject to
coverage limits) any liability suits with respect to human exposure to radio
frequency emissions.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness and other obligations in connection with
the Acquisition, including the issuance of the Notes and the provision of the
Guarantees by the Guarantors. If a court were to find in a lawsuit by an unpaid
creditor or representative of creditors of the Company or the Guarantors that
the Company or the Guarantors did not receive fair consideration or reasonably
equivalent value for incurring such indebtedness or obligation or providing the
Guarantees and, at the time of such incurrence, any of the Company or the
Guarantors (i) was insolvent; (ii) was rendered insolvent by reason of such
incurrence; (iii) was engaged in a business or transaction for which the assets
remaining in the Company or the Guarantors constituted unreasonably small
capital; or (iv) intended to incur or believed it would incur obligations beyond
its ability to pay such obligations as they mature, such court, subject to
applicable statutes of limitation, could determine to invalidate, in whole or in
part, such indebtedness and obligations as fraudulent conveyances or subordinate
such indebtedness and obligations to existing or future creditors of the Company
or the Guarantors.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company or the Guarantors would be considered insolvent at a particular time if
the sum of its debts was then greater than all of its property at a fair
valuation or if the present fair saleable value of its assets was then less than
the amount that would be required to pay its probable liabilities on its
existing debts as they became absolute and matured. On the basis of its
historical financial information, its recent operating history as discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other factors, the Company's management believes that, after
giving effect to the Offering and the application of net proceeds therefrom, the
Company will not be rendered insolvent, it will have sufficient capital for the
businesses in which it was engaged and it will be able to pay its debts as they
mature; however, management has not obtained any independent opinion regarding
such issues. There can be no assurance as to what standard a court would apply
in making such determinations.
15
<PAGE>
In addition, the Guarantees may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of the Guarantors.
In such a case, the analysis set forth above would generally apply, except that
the Guarantees could also be subject to the claim that, since the Guarantee was
incurred for the benefit of the Company (and only indirectly for the benefit of
the Guarantors), the obligations of the Guarantors thereunder were incurred for
less than reasonably equivalent value or fair consideration. A court could avoid
the Guarantor's obligation under the Guarantees, subordinate the Guarantee to
other indebtedness of the Guarantors or take other action detrimental to the
holders of the Notes.
To the extent the Guarantees were avoided as a fraudulent conveyance,
limited as described above, or held unenforceable for any other reason, holders
of the Notes would, to such extent, cease to have a claim in respect of the
Guarantees and, to such extent, would be creditors solely of the Company. In
such event, the claims of the holders of the Notes against the Guarantors would
be subject to the prior payment of all liabilities of the Guarantors. There can
be no assurance that, after providing for all prior claims, there would be
sufficient assets to satisfy the claims of the holders of the Notes.
CERTAIN OTHER BANKRUPTCY CONSIDERATIONS
The right of the Trustee to repossess and dispose of the Collateral upon the
occurrence of an Event of Default (as defined) is likely to be significantly
impaired by applicable bankruptcy law if a bankruptcy proceeding were to be
commenced by or against the Company or any Guarantor prior to the Trustee's
having disposed of the Collateral. Under Title 11 of the United States Code (the
"Bankruptcy Code"), a secured creditor such as the Trustee is prohibited from
disposing of a security repossessed from a debtor in a bankruptcy case without
bankruptcy court approval. Moreover, the Bankruptcy Code prohibits a secured
creditor from disposing of collateral even though the debtor is in default under
the applicable debt instruments if the secured creditor is given "adequate
protection." The meaning of the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value of the secured
creditor's interest in the collateral and may include cash payments or the
granting of additional security, if and at such times as the court in its
discretion determines, for any diminution in the value of the collateral as a
result of the stay of disposition during the pendency of the bankruptcy case. In
view of the lack of a precise definition of the term "adequate protection" and
the broad discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the Notes could be delayed following
commencement of a bankruptcy case, whether or when the Trustee could dispose of
the Collateral, or whether or to what extent Holders of the Notes would be
compensated for any delay in payment or loss of value of the Collateral through
the requirement of "adequate protection."
EQUIPMENT FAILURE; NATURAL DISASTER
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting any one of the Company's
central switching offices or certain of its cell sites could have a significant
adverse effect on the Company's operations.
LACK OF PUBLIC MARKET
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on June 16, 1998 to a limited number of investors. The New
Notes are new securities for which there currently is no market. The Company
does not intend to apply for listing of the Notes on any securities exchange or
for quotation through the National Association of Securities Dealers Automated
Quotation System. There can be no assurance that an active trading market for
the New Notes will develop. If a trading market develops for the New Notes,
future trading prices of such securities will depend on many factors, including
prevailing interest rates, the Company's results of operations and financial
condition and the market for similar securities.
16
<PAGE>
YEAR 2000
The Company is in the process of reviewing the full impact that the year
2000 could have on its operational and financial systems. The Company has chosen
our current billing provider, to coordinate the testing of all of the operating
and financial systems that could affect the Company's operations. Several of
these systems such as the point of sale system, the prepaid calling system, wide
area network and local area network, and the general ledger system are currently
integrated into the billing system.
Our current billing vendor has committed to test the compliance of the above
systems with the year 2000 requirements by reviewing each system's upgrade
releases which these third party providers maintain will make the year 2000
compliant. Most of our system party providers deal with other cellular companies
and, therefore, enable us to leverage their knowledge obtained from servicing
other cellular and telecommunications companies. We anticipate that this will
reduce the testing and validation time necessary for a comprehensive review.
In addition to the testing of third party provided systems, our current
billing provider will review their own internal operating systems to verify year
2000 compliance. They will then test the integration of the updated year 2000
versions with their upgraded version to ensure compliance.
The Company, with the billing provider's guidance, has formulated its
strategy after analyzing all systems that could have an effect on our operations
and prioritizing the impact into high, medium and low risk. The Company
estimates that the total costs of these testing and upgrading procedures will
cost less than $2 million. However, the Company is unable to predict all of the
implications of the year 2000 issue as it relates to its suppliers and other
entities. It is anticipated that the substantial portion of these costs will be
incurred during 1999 and will be expensed when incurred.
The Company has investigated the possibility of establishing a contingency
plan in the event the above is not successful. The dependence on a few key third
party providers for most companies in the industry and therefore the lack of
accessability of alternative systems make a contingency plan impractical.
17
<PAGE>
THE PALMER ACQUISITION
Prior to the Merger described below, PCW had no assets, liabilities or
operations other than the proceeds from the issuance of the 11 3/4% PCW Notes
and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into the Merger Agreement. The
Merger Agreement provided, among other things, for the Merger of PCW with and
into Palmer with Palmer as the surviving corporation. On October 6, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
director stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, the Company assumed all outstanding
indebtedness of Palmer of approximately $378.0 million ("Palmer Existing
Indebtedness"), making the aggregate purchase price for Palmer (including
transaction fees and expenses) approximately $880.0 million. The Company
refinanced all of the Palmer Existing Indebtedness concurrently with the
consummation of the Merger.
PCW entered into the Fort Myers Sale Agreement to sell Palmer's Fort Myers,
Florida MSA covering approximately 382,000 Pops for $168.0 million. On October
6, 1997, the Fort Myers Sale was consummated, and generated proceeds to the
Company of approximately $166.0 million. The proceeds of the Fort Myers Sale
were used to fund a portion of the acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into the Georgia Sale Agreement
which provided for the sale by PCW, for approximately $25.0 million, of
substantially all of the assets of the non-wireline cellular telephone system
serving Georgia-l, including the FCC licenses to operate Georgia-1. The sale of
the assets of Georgia-1 was consummated on December 30, 1997 and generated
proceeds to the Company of approximately $24.2 million. A portion of the
proceeds from the Georgia Sale were used to retire a portion of the debt used to
fund the acquisition of Palmer.
In order to fund the Acquisition and pay related fees and expenses, PCW
issued $175.0 million aggregate principal amount of 11 3/4% Senior Subordinated
Notes due 2007 (the "11 3/4% PCW Notes") and entered into a syndicated senior
loan facility providing for term loan borrowings in the aggregate principal
amount of $325.0 million and revolving loan borrowings of $200.0 million (the
"Credit Facility"). On October 6, 1997, PCW borrowed all term loans available
thereunder and approximately $120.0 million of revolving loans. The Company used
the net proceeds from the Offering to retire amounts outstanding under the
Credit Facility, for accrued interest and for collateralization of outstanding
interest rate swaps. As of the date of retirement there was $425.1 million of
borrowings outstanding under the Credit Facility. See "Use of Proceeds."
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC which was in the form of cash and common stock of Palmer.
An additional amount of approximately $76 million of the purchase price for the
Acquisition was raised out of the proceeds from the issuance and sale for $80.0
million of units consisting of $153.4 million aggregate principal amount at
maturity of the 13 1/2% Holdings Notes and Warrants to purchase the PCC Shares.
18
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The net proceeds from the sale of the Notes, after
deducting the expenses of the Offering, were approximately $510.0 million. The
net proceeds from the sale of the Notes were used in their entirety to retire
outstanding indebtedness under the Credit Facility (including the payment of
accrued interest).
19
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statements of operations for
the year ended December 31, 1997 and the nine month period ended September 30,
1998 of PCW give effect to the following transactions as if they occurred at the
beginning of the relevant period:
(i) The Acquisition of Palmer. On October 6, 1997, Holdings acquired
Palmer, with Palmer as the surviving corporation. Pursuant to the Merger
Agreement, PCC acquired each issued and outstanding share of common stock of
Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase
plans for an aggregate price of $486.4 million. In addition, the Company
assumed the Palmer Existing Indebtedness. As a result, the aggregate
purchase price was approximately $880 million. See "The Palmer Acquisition."
The Acquisition was recorded pursuant to the purchase method of accounting.
The excess of cost over the fair value of Palmer's assets and liabilities
has been allocated to the FCC licenses. Certain of the acquired assets
related to the Fort Myers and Georgia operations were sold pursuant to the
Fort Myers and Georgia-1 Sales. See "The Palmer Acquisition." These assets
have been assigned values based on the net proceeds from such sales.
(ii) The Fort Myers Sale (the proceeds of which were used to pay a
portion of the Palmer Existing Indebtedness). On October 6, the Fort Myers
Sale was consummated and generated proceeds of approximately $166.0 million.
(iii) The Georgia-1 Sale. On December 30, 1997, the Company sold
substantially all of the assets used or useful in the operation of the
non-wireline cellular telephone system serving Georgia-1. A portion of the
$25.0 million in proceeds was used to retire a portion of the debt used to
fund the acquisition of Palmer.
(iv) The following transactions represent the proceeds raised for the
acquisition of Palmer:
1. The issuance and sale by PCW of the 11 3/4% PCW Notes.
2. The financing of PCW under the Credit Facility, which provides
for term loan borrowings in the aggregate principal amount of
approximately $325.0 million and revolving loan borrowings of $200.0
million. On October 6, 1997, PCW borrowed all term loans available
thereunder and approximately $120.0 million of revolving loans. The
Company applied the net proceeds of the Offering of the Old Notes to
retire amounts outstanding under the Credit Facility. See "Use of
Proceeds."
3. The issuance and sale by Holdings of 153,400 Units in the
Holdings Offering. The Units consisted of $153.4 million in aggregate
principal amount at maturity of the 13 1/2% Holdings Notes, together with
Warrants to purchase 1,030,656 shares of PCC Shares.
4. The PCC Equity Contribution, a $44.0 million contribution from
PCC in the form of cash and common stock of Palmer, was contributed by
PCC to fund a portion of the acquisition of Palmer.
(v) The sale of the Notes in the Offering, at an interest rate of
9.125%. The Offering of the Old Notes was consummated on June 16, 1998. In
connection with the Offering of the Old Notes on June 16, 1998, PCW
wrote-off deferred financing costs associated with the term loan borrowings
and credit facility. PCW recorded the nonrecurring charge as an
extraordinary item for approximately $5.9 million, net of an income tax
benefit of approximately $3.9 million. This nonrecurring charge is not
considered in the preparation of the pro forma financial statements.
(vi) The net proceeds from the sale of the Old Notes of approximately
$510.0 million were used to retire outstanding indebtedness under the Credit
Facility (including the payment of accrued interest and the
collateralization of outstanding interest rate swaps) in June 1998.
20
<PAGE>
(vii) The issuance in August, 1998 by Holdings of $200.0 million of
11 1/4% Senior Exchangeable Payable-in-Kind Notes due 2008 and the
utilization of the proceeds to redeem the outstanding 13 1/2% Holdings Notes
described in (iv) 3 above.
The unaudited pro forma condensed consolidated financial statements have
been prepared by management of PCW. The unaudited pro forma data is not designed
to represent and does not represent what the results of operations or financial
position of PCW would have been had the above transactions been completed on or
as of the dates assumed, and are not intended to project results of operations
of PCW for any future period or as of any future date. The unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
the audited and unaudited consolidated financial statements and notes of PCW,
included elsewhere in this Prospectus.
21
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
FORT MYERS ACQUISITION
FORT MYERS SALE AND AND THE
SALE AND GEORGIA-1 RELATED PALMER AS THE
PALMER(1) GEORGIA-1 SALE(2) SALE FINANCING ADJUSTED COMPANY(3)
----------- ----------------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................. $141,736 $23,980 $-- $ -- $117,756 $ 43,713
Cost and expenses:
Cost of cellular service/operating
expenses................................ 23,301 4,395 -- -- 18,906 5,978
Cost of equipment......................... 16,112 3,102 -- -- 13,010 5,259
Selling, general and administrative....... 41,014 5,836 2,440(a) -- 37,618 12,805
Depreciation and amortization............. 25,498 2,521 -- 8,930(c) 31,907 11,055
----------- ------- ----------- ------------ ----------- -----------
Operating income (loss)................... 35,811 8,126 (2,440) (8,930) 16,315 8,616
Other income (expense):
Interest income (expense) (net)........... (24,467) 332 -- (23,375)(d) (48,174) (22,198)
Other, net................................ 208 1 -- -- 207 15
----------- ------- ----------- ------------ ----------- -----------
Total other income (expense).............. (24,259) 333 -- (23,375) (47,967) (22,183)
Minority interest share of income......... (1,310) -- -- -- (1,310) (414)
----------- ------- ----------- ------------ ----------- -----------
Income (loss) before income tax expense... 10,242 8,459 (2,440) (32,305) (32,962) (13,981)
Income tax expense (benefit)(4)........... 4,153 3,430 (988) (b) (11,958)(e) (12,223) (5,129)
----------- ------- ----------- ------------ ----------- -----------
Net income (loss)......................... $ 6,089 $ 5,029 $(1,452) $(20,347) $(20,739) $ (8,852)
----------- ------- ----------- ------------ ----------- -----------
----------- ------- ----------- ------------ ----------- -----------
<CAPTION>
PRO FORMA
ADJUSTMENT
FOR THE
OFFERING
AND THE PRO FORMA
REFINANCING THE COMPANY
---------------- ------------
<S> <C> <C>
Revenues.................................. -- $161,469
Cost and expenses:
Cost of cellular service/operating
expenses................................ -- 24,884
Cost of equipment......................... -- 18,269
Selling, general and administrative....... -- 50,423
Depreciation and amortization............. -- 42,962
-------- ------------
Operating income (loss)................... -- 24,931
Other income (expense):
Interest income (expense) (net)........... (23,645)(f)(h) (94,017)
Other, net................................ -- 222
-------- ------------
Total other income (expense).............. (23,645) (93,795)
Minority interest share of income......... -- (1,724)
-------- ------------
Income (loss) before income tax expense... (23,645) (70,588)
Income tax expense (benefit)(4)........... (8,835)(g)(i) (26,187)
-------- ------------
Net income (loss)......................... $(14,810) $(44,401)
-------- ------------
-------- ------------
</TABLE>
- ------------------------
(1) Includes the results and operations of Palmer for the nine months ended
September 30, 1997. The Company purchased Palmer on October 6, 1997.
(2) Includes the operating results of the Fort Myers and Georgia-1 operations
sold in the fourth quarter of 1997 net of operating results for one month of
the GA-13 RSA operations acquired by Palmer on January 31, 1997.
(3) Includes the results of operations for the Company for the period October 1,
1997 through December 31, 1997.
(4) Calculated using an effective tax rate of approximately 38%.
22
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT
FOR THE PRO FORMA
THE COMPANY OFFERING THE COMPANY
------------ ------------ ------------
<S> <C> <C> <C>
Revenues..................................... $ 144,113 $ -- $144,113
Cost and expenses:
Cost of cellular service/operating
expenses................................... 21,980 -- 21,980
Cost of equipment............................ 17,401 -- 17,401
Selling, general and administrative.......... 39,988 -- 39,988
Depreciation and amortization................ 33,721 -- 33,721
------------ ------------ ------------
Operating income (loss)...................... 31,023 -- 31,023
Other income (expense):
Interest expense (net)....................... (60,786) (13,912)(f)(h) (74,698)
Other, net................................... (98) -- (98)
------------ ------------ ------------
Total other income (expense)................. (60,884) (13,912) (74,796)
Minority interest share of income............ (1,715) -- (1,715)
------------ ------------ ------------
Income (loss) before income tax expense and
extraordinary item......................... (31,576) (13,912) (45,488)
Income tax expense (benefit)................. (11,566) (5,108)(g)(i) (16,674)
------------ ------------ ------------
Net income (loss) before extraordinary
item....................................... $ (20,010) $ (8,804) $(28,814)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
23
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions described
above on the condensed consolidated statements of operations of PCW for the nine
months ended September 30, 1998 and the year ended December 31, 1997, the
following adjustments have been made:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------------- -----------------
<S> <C> <C> <C>
(a) SELLING, GENERAL AND ADMINISTRATIVE
Represents a portion of the operating expenses charged to Fort Myers and
Georgia-1 operations by Palmer which might not be eliminated upon the Fort
Myers Sale and the Georgia-1 Sale........................................... $ -- $ 2,440
------- --------
------- --------
(b) INCOME TAX BENEFIT
Represents the tax impact of the adjustment to selling general and
administrative expenses indicated above..................................... $ -- $ 988
------- --------
------- --------
(c) DEPRECIATION AND AMORTIZATION
Represents the excess of the purchase price over the historical cost of the
assets acquired allocated to FCC licenses and amortized over 40 years for
nine months................................................................. $ -- $ 8,930
------- --------
------- --------
(d) INTEREST EXPENSE, NET, RELATED TO THE PALMER ACQUISITION
Interest expense on $425 million of Indebtedness under the Credit Facility at
an assumed interest rate of 8.5% per annum.................................. $ -- $ 36,125
Interest expense on $175 million of the 11 3/4% PCW Notes at an interest rate
of 11.75% per annum......................................................... -- 20,563
Interest expense on $80 million of the 13 1/2% Holdings Notes at an interest
rate of 13.50%.............................................................. -- 10,617
Interest expense related to the accretion of 13 1/2% Holdings Notes due to
Warrant value*.............................................................. -- 579
Represents current amortization expense related to deferred debt financing
costs....................................................................... -- 2,156
Elimination of previously recorded interest expense for Palmer (9 months)..... -- (24,467)
Elimination of previously recorded interest expense for the Company
(3 months).................................................................. (22,198)
------- --------
$ -- $ 23,375
------- --------
------- --------
(e) INCOME TAX EXPENSE (BENEFIT)
To record deferred tax benefit resulting from the amortization of the acquired
FCC licenses and the additional benefit arising from the pro forma
adjustments................................................................. $ -- $ (11,958)
------- --------
------- --------
(f) INTEREST EXPENSE, NET
To record interest for the Offering at an interest rate of 9.125%............. $ 23,953 $ 47,906
Less interest previously reflected as pro forma adjustment or actual as to
1998, related to the Credit Facility........................................ (17,081) (36,125)
------- --------
Net adjustment related to the Offering........................................ 6,872 11,781
To record additional amortization of deferred financing costs associated with
the Offering................................................................ 280 560
------- --------
$ 7,152 $ 12,341
------- --------
------- --------
(g) INCOME TAX EXPENSE (BENEFIT)
To record tax benefit arising from the pro forma adjustments regarding the
Offering.................................................................... $ (2,626) $ (4,653)
------- --------
------- --------
(h) INTEREST EXPENSE, NET
To record interest for the $200 million 11 1/4% Holdings Notes ("11 1/4%
Holdings Notes")............................................................ $ 16,875 $ 22,500
Less interest previously reflected as pro forma adjustment or actual, as to
1998, related to the Holdings Notes including interest on the Warrants...... (10,115) (11,196)
------- --------
------- --------
$ 6,760 $ 11,304
------- --------
------- --------
(i) INCOME TAX EXPENSE (BENEFIT)
To record tax benefit arising from the pro forma adjustments regarding
Holdings' Notes............................................................. $ (2,482) $ (4,182)
------- --------
------- --------
</TABLE>
- ------------------------
* Represents the accretion over 10 years of the 13 1/2% Holdings Notes
resulting from the allocation of proceeds of the Holdings Offering between
the 13 1/2% Holdings Notes and the Warrants.
24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for the period May 29, 1997
(inception) through December 31, 1997 have been derived from the audited
consolidated financial statements of the Company and the selected consolidated
financial data for each of the four years ended December 31, 1996 and for the
nine months ended September 30, 1997 have been derived from the audited
consolidated financial statements of the Company's predecessor, Palmer. The
unaudited selected consolidated results of operations of Palmer and of the
Company for the nine months ended September 30, 1997 and 1998, respectively, are
unaudited and not necessarily indicative of the Company's results of operations
for the full year. The unaudited condensed consolidated financial data reflects
all adjustments (consisting of normal, recurring adjustments) which are, in the
opinion of management, necessary for a fair summary of Palmer's or the Company's
financial position, results of operations and cash flows for and as of the end
of the periods presented.
The following data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
COMPANY
--------------------------------
(UNAUDITED)
------------------ PALMER
PERIOD FROM ----------------------------------------------
NINE MONTHS MAY 29, 1997 NINE
ENDED (INCEPTION) MONTHS
SEPTEMBER 30, THROUGH ENDED YEAR ENDED DECEMBER 31,
------------------ DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997(1) 1997(2) 1996 1995 1994
------------------ ------------ ------------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Service......................................... $ 134,938 $ 41,365 $ 134,123 $ 151,119 $ 96,686 $ 61,021
Equipment sales and installation................ 9,175 2,348 7,613 8,624 8,220 7,958
---------- ------------ ------------- --------- --------- ---------
Total revenue............................... 144,113 43,713 141,736 159,743 104,906 68,979
Engineering, technical and other direct
expenses...................................... 21,980 5,978 23,301 28,717 18,184 12,776
Cost of equipment............................... 17,401 5,259 16,112 17,944 14,146 11,546
Selling, general and administrative expenses.... 39,988 12,805 41,014 46,892 30,990 19,757
Depreciation and amortization................... 33,721 11,055 25,498 25,013 15,004 9,817
---------- ------------ ------------- --------- --------- ---------
Operating income................................ 31,023 8,616 35,811 41,177 26,582 15,083
Other income (expense):
Interest, net(3)................................ (60,786) (22,198) (24,467) (31,462) (21,213) (12,715)
Other, net...................................... (98) 15 208 (429) (687) (70)
---------- ------------ ------------- --------- --------- ---------
Total other expense............................. (60,884) (22,183) (24,259) (31,891) (21,900) (12,785)
Minority interest share of (income) loss........ (1,715) (414) (1,310) (1,880) (1,078) (636)
Income tax expense (benefit).................... (11,566) (5,129) 4,153 2,724 2,650 0
---------- ------------ ------------- --------- --------- ---------
Net income (loss) before extraordinary item..... (20,010) (8,852) 6,089 4,682 954 1,662
Extraordinary item - write-off of deferred
finance costs, and premium on early
extinguishment of debt, net of income tax
benefit of $11,246............................ (19,148) -- -- -- -- --
---------- ------------ ------------- --------- --------- ---------
Net income (loss)............................... $ (39,158) $ (8,852) $ 6,089 $ 4,682 $ 954 $ 1,662
---------- ------------ ------------- --------- --------- ---------
---------- ------------ ------------- --------- --------- ---------
OTHER DATA:
Capital expenditures............................ $ 5,544 $ 14,449 $ 40,757 $ 41,445 $ 36,564 $ 22,541
EBITDA(4)....................................... $ 64,744 $ 19,671 $ 61,309 $ 66,190 $ 41,586 $ 24,900
EBITDA margin on service revenue................ 48.0% 47.6% 45.7% 43.8% 43.0% 40.8%
Penetration(5).................................. 11.0% 9.4% 8.60% 7.45% 6.51% 4.58%
Subscribers at end of period(6)................. 364,189 309,606 337,345 279,816 211,985 117,224
Cost to add a gross subscriber(7)............... $ 219 $ 188 $ 231 $ 216 $ 183 $ 178
Cost to add a net subscriber(7)................. $ 447 $ 370 $ 514 $ 407 $ 276 $ 247
Average monthly service revenue per
subscriber(8)................................. $ 45.08 $ 47.47 $ 47.52 $ 52.20 $ 56.68 $ 60.02
Average monthly churn(9)........................ 1.88% 1.88% 1.89% 1.84% 1.55% 1.55%
Ratio of earnings to fixed charges(10).......... N/A N/A 1.45x 1.28x 1.21x 1.17x
<CAPTION>
1993
---------
<S> <C>
INCOME STATEMENT DATA:
Revenue:
Service......................................... $ 35,173
Equipment sales and installation................ 6,285
---------
Total revenue............................... 41,458
Engineering, technical and other direct
expenses...................................... 7,343
Cost of equipment............................... 7,379
Selling, general and administrative expenses.... 13,886
Depreciation and amortization................... 10,689
---------
Operating income................................ 2,161
Other income (expense):
Interest, net(3)................................ (9,006)
Other, net...................................... (590)
---------
Total other expense............................. (9,596)
Minority interest share of (income) loss........ 83
Income tax expense (benefit).................... 0
---------
Net income (loss) before extraordinary item..... (7,352)
Extraordinary item - write-off of deferred
finance costs, and premium on early
extinguishment of debt, net of income tax
benefit of $11,246............................ --
---------
Net income (loss)............................... $ (7,352)
---------
---------
OTHER DATA:
Capital expenditures............................ $ 13,304
EBITDA(4)....................................... $ 12,850
EBITDA margin on service revenue................ 36.5%
Penetration(5).................................. 3.48%
Subscribers at end of period(6)................. 65,761
Cost to add a gross subscriber(7)............... $
Cost to add a net subscriber(7)................. $ 203
Average monthly service revenue per
subscriber(8)................................. $ 62.69
Average monthly churn(9)........................ 1.37%
Ratio of earnings to fixed charges(10).......... N/A
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
COMPANY
--------------------------------
(UNAUDITED)
------------------ PALMER
PERIOD FROM ----------------------------------------------
NINE MONTHS MAY 29, 1997 NINE
ENDED (INCEPTION) MONTHS
SEPTEMBER 30, THROUGH ENDED YEAR ENDED DECEMBER 31,
------------------ DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997(1) 1997(2) 1996 1995 1994
------------------ ------------ ------------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash..................................... $ 189,737 $ 27,926 $ 3,581 $ 1,698 $ 3,436 $ 2,998
Working capital (deficit)................ 176,076 3,080 7,011 296 (1,435) 2,490
Property, plant and equipment, net....... 141,566 151,141 161,351 132,438 100,936 51,884
Licenses, other intangibles and other
assets, net............................ 923,737 937,986 406,828 387,067 332,850 199,265
Total assets............................. 1,294,804 1,144,479 599,815 549,942 462,871 273,020
Total debt............................... 700,000 613,000 378,000 343,662 350,441 245,609
Stockholder's (deficit) equity........... (3,995) 35,163 172,018 164,930 74,553 4,915
<CAPTION>
1993
---------
<S> <C>
BALANCE SHEET DATA:
Cash..................................... $ 1,670
Working capital (deficit)................ 799
Property, plant and equipment, net....... 23,918
Licenses, other intangibles and other
assets, net............................ 114,955
Total assets............................. 150,054
Total debt............................... 131,361
Stockholder's (deficit) equity........... 3,244
</TABLE>
- ------------------------
(1) Includes results of operations for the period October 1, 1997 through
December 31, 1997.
(2) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
(3) Net interest included in the pro forma and historical financial data of the
Company includes non-cash interest expense related to the 13 1/2% Holdings
Notes issued in August 1997 and the 11 1/4% Holdings Notes issued in July
1998 both of which are obligations of Holdings and are included in the
Company's consolidated financial statements solely pursuant to "push down"
accounting rules.
(4) EBITDA should not be considered in isolation or as an alternative to net
income (loss), operating income (loss) or any other measure of performance
under GAAP. The Company believes that EBITDA is viewed as a relevant
supplemental measure of performance in the cellular telephone industry and
in other telecommunication and media companies.
(5) Determined by dividing the aggregate number of subscribers by the estimated
population.
(6) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(7) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(8) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(9) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
(10) The ratio of earnings to fixed charges is determined by dividing the sum of
earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest by
the sum of interest expense and a portion of rent expense representative of
interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the period May 29, 1997 through
December 31, 1997 and the nine months ended September 30, 1998, as well as
the year ended December 31, 1993 the deficit of earnings to fixed charges
was approximately $8,852, $39,158 and $7,352 respectively.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements and related
Notes thereto. References to the Company where appropriate also include PCW's
predecessor, Palmer.
Results for the Company for the years ended December 31, 1995 and December
31, 1996 are based solely on the historical operations of Palmer prior to the
Merger. The discussion for the year ended December 31, 1997 is based upon the
operating results of Palmer through September 30, 1997 and the operating results
of the Company from October 1, 1997 to December 31, 1997. The audited financial
statements of the Company do not include such combined financial statements as
this would not be in conformity with GAAP.
OVERVIEW
On May 23, 1997, PCC, PCW and Palmer entered the Merger Agreement. The
Merger Agreement provided, among other things, for the merger of PCW with and
into Palmer with Palmer as the surviving corporation. In October, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
direct stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, PCW assumed all outstanding indebtedness of
Palmer of approximately $378.0 million. As a result, the aggregate purchase
price for Palmer (including transaction fees and expenses) was approximately
$880.0 million. PCW refinanced all of the Palmer Existing Indebtedness
concurrently with the consummation of the Merger.
In October 1997, the Fort Myers Sale, which covered approximately 382,000
Pops for $168.0 million was consummated, and generated proceeds to the Company
of approximately $166.0 million. The proceeds of the Fort Myers Sale were used
to fund a portion of the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Fort Myers Sale.
On October 21, 1997, PCC and PCW entered the "Georgia Sale Agreement" which
provided for the sale by PCW, for $25 million, of substantially all of the
assets of the non-wireline cellular telephone system serving Georgia-1,
including the FCC licenses to operate Georgia-1. The sale of the assets of
Georgia-1 was consummated on December 30, 1997 for $24.2 million. A portion of
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Georgia-1 Sale.
In order to fund the Acquisition and pay related fees and expenses, in July
1997, PCW issued $175.0 million aggregate principal amount of the 11 3/4% PCW
Notes and entered into a syndicated senior loan facility providing for term loan
borrowings in the aggregate principal amount of $325.0 million and revolving
loan borrowings of $200.0 million. On October 6, 1997, PCW borrowed all term
loans available thereunder and approximately $120.0 million of revolving loans.
The acquisition of Palmer was also funded in part through a $44.0 million
equity contribution from PCC which was in the form of cash and common stock of
Palmer. An additional amount of the purchase price for the Acquisition was
raised out of the proceeds from the issuance and sale for $80.0 million of units
consisting of $153.4 million principal amount at maturity of the 13 1/2%
Holdings Notes and Warrants.
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
September 30, 1998, the Company provided cellular telephone service to 364,189
subscribers in Georgia, Alabama, Florida and South Carolina in a
27
<PAGE>
total of 16 licensed service areas, composed of eight MSA's and eight RSA's with
an aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories
principally through its network of retail stores. The Company markets all of its
products and services under the nationally-recognized service mark
CELLULARONE-Registered Trademark-.
MARKET OWNERSHIP
The following is a summary of the Company's ownership interest in the
cellular telephone system in each licensed service area to which the Company
provided service at September 30, 1998 and December 31, 1997.
<TABLE>
<CAPTION>
SEPTEMBER 30,
CELLULAR SERVICE AREA 1998
- --------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Albany, GA......................................................................................... 86.5%
Augusta, GA........................................................................................ 100.0
Columbus, GA....................................................................................... 85.2
Macon, GA.......................................................................................... 99.2
Savannah, GA....................................................................................... 98.5
Georgia-6 RSA...................................................................................... 96.3
Georgia-7 RSA...................................................................................... 100.0
Georgia-8 RSA...................................................................................... 100.0
Georgia-9 RSA...................................................................................... 100.0
Georgia-10 RSA..................................................................................... 100.0
Georgia-12 RSA..................................................................................... 100.0
Georgia-13 RSA..................................................................................... 86.5
Alabama-8 RSA...................................................................................... 100.0
Dothan, AL......................................................................................... 94.6
Montgomery, AL..................................................................................... 92.8
Panama City, FL.................................................................................... 78.4
</TABLE>
On February 1, 1997, one of the Company's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving Georgia RSA Market No. 383, otherwise known as
Georgia-13 RSA, for a total purchase price of $31.5 million, subject to certain
adjustments.
On October 6, 1997, as part of the Acquisition of Palmer by the Company, the
Fort Myers MSA was sold for approximately $168.0 million.
On December 30, 1997, the Company sold the assets of and license to operate
the non-wireline cellular telephone system serving Georgia RSA Market No. 371,
otherwise known as Georgia-1 RSA for a total price of $24.2 million, subject to
certain adjustments.
28
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the Company, for the periods indicated,
the percentage which certain amounts bear to total revenue.
<TABLE>
<CAPTION>
COMPANY
-------------------------------- PALMER
MAY 29, 1997 -------------------------------------
NINE MONTHS (INCEPTION) NINE MONTHS YEAR ENDED
ENDED THROUGH ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, --------------------
1998 1997 1997 1996 1995
--------------- --------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
Service........................................... 93.6% 94.6% 94.6% 94.6% 92.2%
Equipment sales and installation.................. 6.4 5.4 5.4 5.4 7.8
------ ------ ------ --------- ---------
Total Revenue................................... 100.0 100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Engineering, technical and other direct:
Engineering and technical(1)...................... 7.8 7.2 8.0 7.9 7.6
Other direct costs of services(2)................. 7.4 6.5 8.4 10.1 9.7
Cost of equipment(3).............................. 12.1 12.0 11.4 11.2 13.5
SELLING, GENERAL AND ADMINISTRATIVE:
Selling and marketing(4).......................... 10.2 8.9 8.4 8.6 8.7
Customer service(5)............................... 6.5 6.2 6.3 5.9 6.0
General and administrative(6)..................... 11.1 14.2 14.2 14.9 14.9
Depreciation and amortization..................... 23.4 25.3 18.0 15.7 14.3
------ ------ ------ --------- ---------
Total Operating Expenses:......................... 78.5 80.3 74.7 74.3 74.7
------ ------ ------ --------- ---------
Operating income.................................... 21.5% 19.7% 25.3% 25.7% 25.3%
------ ------ ------ --------- ---------
EBITDA(7)........................................... 44.9% 45.0% 43.3% 41.4% 39.6%
</TABLE>
- ------------------------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of subscriber roaming, costs of long distance, costs
of interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions, and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing billings generated in-house.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) EBITDA should not be considered in isolation or as an alternative to net
income, operating income or any other measure of performance under generally
accepted accounting principles. The Company believes that operating income
before depreciation and amortization is viewed as a relevant supplemental
measure of performance in the cellular telephone industry and in other
telecommunications and media companies.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997
REVENUE. Service revenues totaled $135.0 million for the first nine months
of 1998, a slight increase from $134.1 million for the same period in 1997. The
increase is primarily attributable to an increase in the average number of
subscribers to 336,763 in the first nine months of 1998 from 270,335 in 1997
after adjusting for the sale of the Fort Myers and GA-1 markets. Offsetting this
increase is the loss of service revenues of the cellular telephone systems sold
in the Ft. Myers Sale and the Georgia Sale which totaled $22.1 million for the
first nine months of 1997.
29
<PAGE>
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $9.2 million for the first
nine months of 1998 compared to $7.6 million for the first nine months of 1997.
The increase is primarily due to a 35.0% increase in gross subscriber
activations for the period in 1998 compared to 1997 (adjusted for the sale of
the two markets). As a percentage of revenue, equipment sales and installation
revenue increased to 6.4% in the first nine months of 1998 from 5.4% for the
same period in 1997.
OPERATING EXPENSES. Engineering and technical expenses decreased slightly
to $11.3 million for the first nine months of 1998 from $11.5 million in the
first nine months of 1997. As a percentage of revenue, engineering and technical
expenses decreased to 7.8% from 8.0% for the comparable nine month periods in
1998 and 1997, respectively. Engineering and technical expenses attributable to
the cellular telephone systems sold in the Ft. Myers Sale and Georgia Sale
totaled $1.4 million for the first nine months of 1997.
Other direct costs of service decreased to $10.7 million for the first nine
months of 1998 from $11.8 million for the same period in 1997, reflecting the
decrease in interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the local exchange carriers in most of the
Company's markets. As a percentage of revenue, these costs of service declined
to 7.4% from 8.0%, reflecting improved interconnection agreements, as well as
efficiencies gained from the growing subscriber base. Other direct costs of
service attributable to the cellular telephone systems sold in the Ft. Myers
Sale and Georgia Sale totaled $3.1 million for the first nine months of 1997.
The cost of equipment increased 8.0% to $17.4 million for the nine moth
period ending September 30, 1998 from $16.1 million for the same period in 1997,
primarily as a result of an increase in gross subscriber activations for the
same period. Equipment sales resulted in losses of $8.2 million in 1998 versus
$8.5 million in 1997. The Company sells equipment below its costs in an effort
to address market competition and improve market share. Cost of equipment
attributable to the cellular telephone systems sold in the Ft. Myers Sale and
Georgia Sale totaled $2.9 million for the comparable period in 1997.
Selling, general and administrative expenses decreased 2.4% to $40.0 million
for the first nine months of 1998 from $41.0 million for the same period in
1997. These expenses are comprised of (i) sales and marketing costs, (ii)
customer service costs and (iii) general and administrative expenses.
Sales and marketing costs increased 23.5% to $14.7 million for the first
nine months of 1998 from $11.9 million for the same period in 1997. This
increase is primarily due to the 35.0% increase in gross subscriber activations
and the costs to acquire them, including advertising and commissions. As a
percentage of total revenue, sales and marketing costs increased to 10.2% for
the first nine months of 1998 compared to 8.4% for the same period in 1997. The
Company's cost to add a net subscriber, including loss on telephone sales,
decreased to $420 for the first nine months of 1998 from $510 for the first nine
months of 1997. This decrease in cost to add a net subscriber was caused
primarily by decreased losses from the Company's sales of cellular telephones.
Sales and marketing expenses attributable to the cellular telephone systems sold
in the Ft. Myers Sale and Georgia Sale totaled $1.2 million for the same period
in 1997.
Customer service costs increased to $9.3 million for the first nine months
of 1998 compared to $8.9 million for the same period in 1997. The increase in
subscribers attributes to the increase in customer service costs. As a
percentage of revenue, customer service costs increased to 6.5% from 6.3%.
Customer service expenses attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $1.1 million for the first nine
months of 1997.
General and administrative expenditures decreased 20.8% to $16.0 million for
the first nine months of 1998 from $20.2 million for the comparable period in
1997, due primarily to expense savings and reorganization efforts. General and
administrative expenses decreased as a percentage of revenue to 11.1% in the
first nine months of 1998 from 14.2% for the same period in 1997. As the Company
continues to add more subscribers and generates associated revenue, general and
administrative expenses should decrease as a percentage of total revenues. There
can be no assurance, however, that this forward-looking
30
<PAGE>
statement will not differ materially from actual results due to unforeseen
general and administrative expenses and other factors. General and
administrative expenses attributable to the cellular telephone systems sold in
the Ft. Myers Sale and Georgia Sale totaled $1.2 million for the nine month
period in 1997.
Depreciation and amortization increased 32.2% to $33.7 million for the first
nine months of 1998 from $25.5 million for the same period in 1997. This
increase was primarily due to the depreciation and amortization associated with
the new carrying value of assets as a result of the "push down" of the purchase
price to the Company. As a percentage of revenue, depreciation and amortization
increased to 23.4% for the first nine months of 1998 compared to 18.0% for the
first nine months of 1997. Depreciation and amortization attributable to the
cellular telephone systems sold in the Ft. Myers Sale and Georgia Sale totaled
$2.3 million for the period in 1997.
Operating income decreased 13.4% to $31.0 million for the first nine months
of 1998 from $35.8 million for the same period in 1997. This decrease in
operating results is attributable primarily to the increase in depreciation and
amortization expense.
NET INTEREST EXPENSE, INCOME TAXES AND NET INCOME. Net interest expense
increased to $60.8 million for the nine month period ending September 30, 1998
from $24.5 million for the first nine months of 1997 primarily due to additional
borrowings incurred as a result of the recent merger and some rate increases.
Income tax benefit was $11.6 million for the first nine months of 1998
representing utilization of the net operating losses carried back against
previous earnings. Income tax expense was $4.2 million in the first nine months
of 1997 principally based on earnings.
Net loss for the first nine months of 1998 was $39.2 million compared to net
income of $6.1 million for the comparable period in 1997. The decrease in net
income is primarily attributable to increases in interest expense, depreciation
and amortization expense and the $19.1 million net write-off of deferred finance
costs and the premium associated with the early extinguishment of debt (both net
of taxes) recorded as an extraordinary item.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUE. Service revenues totaled $175.5 million for 1997, an increase of
16.1% over $151.1 million for 1996. This increase was due to a 29.8% increase in
the average number of subscribers to 313,042 for 1997 versus 241,255 for 1996.
The increase in subscribers is the result of internal growth, which the Company
attributes primarily to its strong sales and marketing efforts, and the recent
acquisitions. In addition to the subscriber base growth, service revenues also
increased because of a 35.3% increase in outcollect roaming revenues.
Average monthly revenue per subscriber decreased 10.5% to $46.72 for 1997
from $52.20 for 1996. This is due to a common trend in the cellular telephone
industry, where on average, new customers use less airtime than existing
subscribers. Therefore, service revenues generally do not increase
proportionately with the increase in subscribers. In addition, the decline
reflects more competitive rate plans introduced into the Company's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $10.0 million for 1997 from
$8.6 million for 1996. As a percentage of total cellular revenue, equipment
sales and installation revenue remained flat at 5.4% for both 1997 and 1996,
reflecting the increased recurring revenue base as well as lower cellular
equipment prices charged to customers.
OPERATING EXPENSES. Engineering and technical expenses increased by 16.0%
to $14.6 million for 1997 from $12.6 million in 1996, due primarily to the
increase in subscribers and in cell site locations. As a percentage of revenue,
engineering and technical expenses remained flat at 7.9% for both 1997 and 1996.
This reflects the increased fixed costs associated with additional cell sites
constructed. As revenue grows the Company expects engineering and technical
expenses to decrease as a percentage of revenue due to its
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large component of fixed costs. There can be no assurance, however, that this
forward-looking statement will not differ materially from actual results due to
unforeseen engineering and technical expenses.
Other direct costs of services declined to $14.7 million for 1997 from $16.1
million in 1996. As a percentage of revenue, other direct costs of service
decreased to 7.9% in 1997 from 10.1% in 1996, reflecting the decrease in
interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the LECs in most of the Company's markets,
offset somewhat by more competitive roaming rates for Company's customer roaming
in adjacent areas.
The cost of equipment increased 19.1% to $21.4 million for 1997 from $17.9
million for 1996, due primarily to the increase in gross subscriber activations.
Equipment sales resulted in losses of $11.4 million in 1997 versus $9.3 million
in 1996. The Company sells equipment below its costs in an effort to address
market competition and improve market share. The Company sold more telephones
below cost in 1997 than in 1996.
Selling, general and administrative expenses increased 14.8% to $53.8
million in 1997 from $46.9 million in 1996. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 15.5% to $15.8 million for 1997 from
$13.7 million for 1996. This increase is primarily due to a 13.5% increase in
gross subscriber activations and the costs to acquire them and higher
advertising costs in response to market competition. As a percentage of total
revenue, sales and marketing costs decreased to 8.5% for 1997 compared to 8.6%
for 1996. The Company's cost to add a net subscriber, including loss on
telephone sales, increased to $469 for 1997 from $407 for 1996 due primarily to
increased losses from the Company's sales of cellular telephones and an increase
in commissions
Customer service costs increased 23.6% to $11.7 million for 1997 from $9.4
million for 1996. As a percentage of revenue, customer service costs increased
to 6.3% for 1997 from 5.9% for 1996. The increase was due primarily to an
increase in license and maintenance costs for the Company's billing systems.
General and administrative expenditures increased 10.8% to $26.3 million for
1997 from $23.8 million for 1996. General and administrative expenses decreased
as a percentage of total revenue to 14.2% in 1997 from 14.9% in 1996. As the
Company continues to add more subscribers, and generates associated revenue,
general and administrative expenses should continue to decrease as a percentage
of total revenues. There can be no assurance, however, that this forward-looking
statement will not differ materially from actual results due to unforeseen
general and administrative expenses and other factors.
Depreciation and amortization increased 46.1% to $36.6 million for 1997 from
$25.0 million for 1996. This increase was primarily due to the depreciation and
amortization associated with the new carrying value of assets as a result of the
"push down" of the purchase price of the Acquisition to the Company, recent
acquisitions and additional capital expenditures. As a percentage of revenue,
depreciation and amortization increased to 19.7% from 15.7% for 1997 compared to
1996.
Operating income increased 7.9% to $44.4 million in 1997, from $41.2 million
for 1996. This improvement in operating results is attributable primarily to
increases in revenue which exceeded increases in operating expenses.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
REVENUE. Service revenues totaled $151.1 million for 1996, an increase of
$54.4 million or 56.3% over $96.7 million for 1995. This increase was primarily
due to a 69.7% increase in the average number of subscribers to 241,255 in 1996
from 142,147 in 1995. The increase in subscribers is the result of internal
growth, which the Company attributes primarily to its strong sales and marketing
efforts, and recent acquisitions. The GTE Acquisition accounted for 41,163
subscribers at December 31, 1996. Service
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revenue attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $24.6 million for 1996 as compared to $2.0 million for the
one month ended December 31, 1995.
Average monthly revenue per subscriber decreased to $52.20 for 1996 from
$56.68 for 1995. This decrease occurred because, on average, new subscribers use
less airtime and generate less revenue per subscriber than existing subscribers
as is customary in the cellular telephone industry. Therefore, airtime usage and
service revenue did not increase in proportion to the increase in subscribers.
In addition, the Company entered into revised roaming agreements with certain of
its neighboring carriers. These agreements provide for reciprocal lower roaming
rates per minute of use, resulting in lower roaming revenue for the Company, but
offset by lower direct costs of services when the Company's subscribers were
roaming on these neighboring systems.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.6 million for 1996 from
$8.2 million for 1995, a 4.9% increase, primarily due to the increase in gross
subscriber activations, partially offset by lower cellular phone prices. While
equipment sales and installation revenue increased slightly for 1996 from 1995,
it decreased as a percentage of total cellular revenue to 5.4% for 1996 from
7.8% for 1995, reflecting the increased recurring annual revenue base as well as
lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $1.0 million for 1996 as compared to $0.1 million
for the one month ended December 31. 1995.
OPERATING EXPENSES. Engineering and technical expenses increased by 57.5%
to $12.6 million for 1996 from $8.0 million for 1995, due primarily to the 32.0%
increase in the number of subscribers. As a percentage of revenue, engineering
and technical expenses increased to 7.9% 1996 from 7.6% for 1995 due to
additional costs incurred for the recent acquisitions and recurring costs
associated with the Company's system development and expansion. Such development
is done for the purpose of increasing capacity and improving coverage.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $2.8 million for 1996 as
compared to $0.2 million for the one month ended December 31, 1995.
Other direct costs of services increased 58.3% to $16.1 million for 1996
from $10.2 million for 1995. As a percentage of revenue, other direct costs of
services increased to 10.1% for 1996 from 9.7% for 1995. This increase in other
direct costs of services as a percentage of revenue was due primarily to the
Company subsidizing more roaming costs for competitive reasons. Other direct
costs of service attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $1.6 million for 1996 as compared to $0.2 million for
the one month ended December 31, 1995.
Cost of equipment increased 26.8% to $17.9 million for 1996 from $14.1
million for 1995, due primarily to the increase in gross subscriber activations
for the same period. Equipment sales resulted in losses of $9.3 million in 1996
versus $5.9 million in 1995. The Company sells equipment below its costs in an
effort to address market competition and improve market share. The Company sold
more telephones below cost in 1996 than in 1995. The cost of equipment
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $3.1 million for 1996 as compared to $0.2 million for the one month
ended December 31, 1995.
Selling, general and administrative expenses increased 51.3% to $46.9
million in 1996 from $31.0 million in 1995. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 50.2% to $13.7 million for 1996 from
$9.1 million for 1995. This increase is primarily due to the 28.1% increase in
gross subscriber activations and the resulting increase in costs to acquire
them. As a percentage of total revenue, sales and marketing costs remained
relatively flat at 8.6% for 1996 and 8.7% for 1995. The Company's cost to add a
net subscriber, including losses on telephone sales, increased to $407 in 1996
from $276 in 1995. This increase in cost to add a net subscriber
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was caused primarily by additional advertising and fixed marketing overhead
associated with the systems acquired in the GTE Acquisition, which are not yet
generating the offsetting gains in net subscribers. In addition, there were
increased losses from the Company's sales of cellular telephones. Sales and
marketing costs attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $2.8 million in 1996 as compared to $0.2 million for the
one month ended December 31, 1995.
Customer service costs increased 49.9% to $9.4 million for 1996 from $6.3
million for 1995. As a percentage of revenue, customer service costs remained
relatively flat at 5.9% and 6.0% for 1996 and 1995, respectively. Customer
service costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $1.9 million in 1996 as compared to $0.2 million in for the
one month ended December 31, 1995.
General and administrative expenses increased 52.5% to $23.8 million for
1996 from $15.6 million for 1995 and remained flat as a percentage of revenue at
14.9% for 1996 and 1995. As the Company continues to add more subscribers and
generate associated revenue, general and administrative expenses should decrease
as a percentage of total revenues. There can be no assurance, however, that this
forward-looking statement will not differ materially from actual results due to
unforeseen general and administrative expenses and other factors. The general
and administrative costs attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $3.4 million for 1996 as compared to $0.4 million
for the one month ended December 31, 1995.
Depreciation and amortization increased 66.7% to $25.0 million for 1996 from
$15.0 million for 1995. This increase is primarily due to the depreciation and
amortization associated with recent acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $6.2 million for 1996
as compared to $0.5 million for the one month ended December 31, 1995.
Operating income for 1996 increased 54.9% to $41.2 million, an increase of
$14.6 million over operating income for 1995. This improvement in operating
results is attributable primarily to increases in revenue which exceeded
increases in operating expenses. Operating income attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $3.8 million for 1996
as compared to $0.2 million for the one month ended December 31, 1995.
NET INTEREST EXPENSE, INCOME TAXES, AND NET INCOME
Net interest expense increased 48.3% to $46.7 million for 1997 from $31.5
million for 1996 primarily due to rate increases and additional borrowings
incurred as a result of the recent Merger. For 1996, net interest expense
increased 48.3% to $31.5 million from $21.2 million for 1995 due primarily to
debt incurred for acquisitions and amortization of deferred financing fees
related to the Predecessor credit agreement.
Income tax benefit was $976,000 in 1997 compared to income tax expense of
$2.7 million in 1996 and 1995. The $2.7 million income tax expense in 1995 was a
non-recurring deferred income tax charge related to the difference between the
financial statement and income tax return based on certain assets and
liabilities of Palmer Cellular Partnership. See Note 6 to the Company's
Consolidated Financial Statements.
Net loss for 1997 was $2.8 million compared to net income in 1996 of $4.7
million. The loss was due to increased interest and amortization incurred as a
result of the Merger. Net income for 1996 was $4.7 million, compared to net
income of $1.0 million for 1995. The increase in net income is primarily
attributable to increases in revenue which exceeded increases in operating
expenses.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions, and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank debt, and
to a lesser extent, operating cash flow.
In August 1998, the Company redeemed all of its outstanding 13 1/2% Senior
Secured Discount Notes due 2007 at the redemption price per $1000 aggregate
principal amount of $711.61. The accreted value of the notes approximated $91.0
million. In addition, the Company was required to pay a premium of approximately
20% of the outstanding balance or approximately $18.2 million. The Company
financed the redemption out of the net proceeds of a new offering of 11 1/4%
Senior Exchangeable Payable-in-Kind notes due 2008. Cash interest begins to
accrue on the notes on February 15, 2003.
In June 1998, PCW issued $525 million of 9.125% Senior Secured Notes
("9.125% Notes") due June 15, 2002 with interest payable semi-annually
commencing December 15, 1998. The 9.125% Notes contain covenants that restrict
the payment of dividends, incurrence of debt and sale of assets. These Notes
replaced the existing credit facility which approximated $425.1 million as of
the redemption date.
In July 1997, PCW issued $175 million of 11.75% Senior Subordinated Notes
("11.75% Notes") due July 15, 2007 with interest payable semi-annually
commencing January 15, 1998. The 11.75% Notes contain covenants that restrict
the payment of dividends, incurrence of debt and sale of assets.
In August 1997, Holdings issued 153,400 units, consisting of Notes and
Warrants, in exchange for $80 million. The Notes accreted at a rate of 13 1/2%
compounded semi-annually to an aggregate principal amount of approximately
$153.4 million by August 1, 2002. These notes were redeemed in August 1998 (see
above).
ACCOUNTING POLICIES
For financial reporting purposes, the Company reports 100% of revenues and
expenses for the markets for which it provides cellular telephone service.
However, in several of its markets, the Company holds less than 100% of the
equity ownership. The minority stockholders' and partners' share of income or
losses in those markets are reflected in the consolidated financial statements
as "minority interest share of (income) loss", except for losses in excess of
their capital accounts and cash call provisions which are not eliminated in
consolidation. For financial reporting purposes, the Company consolidates each
subsidiary and partnership in which it or its predecessor has a controlling
interest (greater than 50%). From 1992 through September 30, 1998, the Company
had controlling interests in each of its subsidiaries and partnerships.
YEAR 2000 IMPACT
The Company is in the process of reviewing the full impact that the year
2000 could have on its operational and financial systems. The Company has chosen
our current billing provider, to coordinate the testing of all of the operating
and financial systems that could affect the Company's operations. Several of
these systems such as the point of sale system, the prepaid calling system, wide
area network and local area network, and the general ledger system are currently
integrated into the billing system.
Our current billing vendor has committed to test the compliance of the above
systems with the year 2000 requirements by reviewing each system's upgrade
releases which these third party providers maintain will make the year 2000
compliant. Most of our system party providers deal with other cellular companies
and, therefore, enable us to leverage their knowledge obtained from servicing
other cellular and telecommunications companies. We anticipate that this will
reduce the testing and validation time necessary for a comprehensive review.
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In addition to the testing of third party provided systems, our current
billing provider will review their own internal operating systems to verify year
2000 compliance. They will then test the integration of the updated year 2000
versions with their upgraded version to ensure compliance.
The Company, with the billing provider's guidance, has formulated its
strategy after analyzing all systems that could have an effect on our operations
and prioritizing the impact into high, medium and low risk. The Company
estimates that the total costs of these testing and upgrading procedures will
cost less than $2 million. However, the Company is unable to predict all of the
implications of the year 2000 issue as it relates to its suppliers and other
entities. It is anticipated that the substantial portion of these costs will be
incurred during 1999 and will be expensed when incurred.
The Company has investigated the possibility of establishing a contingency
plan in the event the above is not successful. The dependence on a few key third
party providers for most companies in the industry and therefore the lack of
accessability of alternative systems make a contingency plan impractical.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on [ ], 1998; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $525,000,000 aggregate principal amount
at maturity of the Old Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about the date set forth on the
cover page to all Holders of Old Notes at the addresses set forth in the
security register with respect to Old Notes maintained by the Trustee. The
Company's obligations to accept Old Notes for exchange pursuant to the Exchange
Offer is subject to certain conditions as set forth under "Certain Conditions to
the Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent and notice of such extension to the Holders
as described below. During any such extension, all Old Notes previously tendered
will remain subject to the Exchange Offer and may be accepted for exchange by
the Company. Any Old Notes not accepted for exchange for any reason will be
returned without expense to the tendering Holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to [Bank of Montreal Trust Company] (the
"Exchange Agent") at one of the addresses set forth below under "Exchange Agent"
on or prior to the Expiration Date. In addition, (i) certificates for such Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's
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account at The Depository Trust Company (The "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (iii) the Holder
must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than
the person signing the Letter of Transmittal, the Old Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered Holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its reasonable discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer as to any particular Old Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with the tenders of
Old Notes for exchange must be cured within such reasonable period of time as
the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered Holder or Holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of its authority to so act
must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, (ii) neither the Holder nor
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any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in the distribution of such New Notes
and (iv) neither the Holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company. If the tendering
Holder is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "Certain Conditions to the Exchange Offer" below. For purposes of
the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering Holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from June 16, 1998, payable semiannually on
June 15 and December 15 of each year, commencing on December 15, 1998, at the
rate of 9 1/8% per annum. Holders of Old Notes whose Old Notes are accepted for
exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Notes accrued from June 16, 1998 until the date
of the issuance of the New Notes. Consequently, holders who exchange their Old
Notes for New Notes will receive the same interest payment on December 15, 1998
(the first interest payment date with respect to the Old Notes and the New
Notes) that they would have received had they not accepted the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP") procedures for transfer. However, the exchange for the Old
Notes so tendered will only be made after timely confirmation of such book-entry
transfer of Old Notes into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term
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"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgement from a participant tendering Old Notes that are the
subject of such Book-Entry Confirmation that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and that the
Company may enforce such agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the Holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates of all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes), and (where certificates for
Old Notes have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the withdrawing Holder. If certificates
for Old Notes have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing Holder must
also submit the serial numbers of the particular certificates to be withdrawn
and a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such Holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer described above,
any note of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the Holder thereof without cost to such Holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may
40
<PAGE>
be retendered by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the Expiration Date, such acceptance or issuance would violate applicable
law or any interpretation of the staff of the SEC. The foregoing condition is
for the sole benefit of the Company and may be asserted by the Company
regardless of the circumstances giving rise to such condition or may be waived
by the Company in whole or in part at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA").
EXCHANGE AGENT
Bank of Montreal Trust Company has been appointed as the Exchange Agent for
the Exchange Offer. All executed Letters of Transmittal should be directed to
the Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent, addressed as follows:
Deliver To:
Bank of Montreal Trust Company, Exchange Agent
By Mail, by Overnight Courier or By Hand:
Wall Street Plaza
88 Pine Street, 19th floor
New York, New York 10005
Attention:
Corporate Trust Department
By Facsimile:
Confirm by Telephone:
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Company and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders. The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
41
<PAGE>
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$[ ].
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that Holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer to be returned to, a person other
than the registered tendering Holder will be responsible for the payment of any
applicable transfer tax thereon and if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer tax (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. If any Holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes must acknowledge that it will deliver a prospectus in connection with
any resale of such New Notes. See "Plan of Distribution." In addition, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdiction.
BUSINESS OF THE COMPANY
GENERAL
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At September 30, 1998, the Company provided cellular telephone
service to 364,189 subscribers in Georgia, Alabama, Florida and South Carolina
in a total of 16 licensed service areas composed of eight MSAs and eight RSAs,
with an aggregate estimated population of 3.3 million. The Company sells its
cellular telephone service as well as a full line of cellular products and
accessories, including pagers, principally through its network of retail stores.
The Company markets all of its products and services under the nationally
recognized service mark CELLULARONE-Registered Trademark-.
42
<PAGE>
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies of
scale, including centralized marketing and administrative functions as well as
multi-system capital expenditures. The Company devotes considerable attention to
engineering, maintenance and improvement of its cellular telephone systems in an
effort to deliver high-quality service to its subscribers and to implement new
technologies as soon as economically practicable. Through its participation in
the NACN, the Company is able to offer ten-digit dialing access to its
subscribers when they travel outside the Company's service areas, providing them
with convenient roaming access throughout large areas of the United States,
Canada, Mexico and Puerto Rico served by other NACN participants. By marketing
its products and services under the CELLULARONE-Registered Trademark- name, the
Company also enjoys the benefits of association with a nationally recognized
service mark.
MARKETS AND SYSTEMS
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of
September 30, 1998, with respect to each service area in which the Company owns
a cellular telephone system, the estimated population, the Company's beneficial
ownership percentage, the Net Pops and the date of initial operation of such
system by Palmer or a predecessor operator.
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
CELLULAR SERVICE AREA (1) POPULATION (2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------ ----------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Albany, GA...................................... 118,527 86.5% 102,526 4/88
Augusta, GA..................................... 439,116 100.0 439,116 4/87
Columbus, GA.................................... 254,150 85.2 216,518 11/88
Macon, GA....................................... 313,686 99.2 311,234 12/88
Savannah, GA.................................... 283,978 98.5 279,718 3/88
Georgia-6 RSA................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.................................. 147,392 86.5 127,494 10/90
Dothan, AL...................................... 136,160 94.6 128,807 2/89
Montgomery, AL.................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.................................. 171,993 100.0 171,993 7/93
----------------- ----------
Subtotal........................................ 3,155,624 3,037,705
----------------- ----------
Panama City, FL................................. 146,018 78.4 114,493 9/88
----------------- ----------
Total........................................... 3,301,642 3,152,198
----------------- ----------
----------------- ----------
</TABLE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has IOA. IOA is granted for an area to a license holder in an
adjacent area when there are no license holders in such area. The Company
has no subscribers in the South Carolina-7 RSA, but instead provides roaming
access to its own subscribers and others when they travel in this service
area, utilizing its existing cell sites. Construction permits were granted
to Permittees for the Alabama-5 RSA and South Carolina-7 RSA. The Permittees
are required to complete construction of their respective RSA within 18
months. After completing construction, a Permittee may give the Company
thirty days prior written notice, at which point the Company would be
required to sell all of its subscribers of its other systems who reside
within the boundaries of the markets to the Permittee at cost. The Company,
along with others, is currently in negotiations to purchase the South
Carolina-7 RSA. No assurance can be given, however, that the Company will be
successful in consummating such purchase.
(2) Based on population estimates for 1996 from the Fall 1997 edition of the DLJ
Pop Book.
43
<PAGE>
GEORGIA/ALABAMA
In 1988, the Company acquired controlling interests in the licenses to
operate cellular telephone systems in the four MSAs (Montgomery and Dothan,
Alabama and Columbus and Albany, Georgia) that make up the core of its
Georgia/Alabama cluster. Since 1989, the Company has continued to increase its
presence in this market by acquiring additional cellular service areas. The
Augusta, Georgia MSA includes Aiken County in South Carolina. In the aggregate,
these markets (excluding the Alabama-5 RSA and South Carolina-7 RSA where the
Company has only an IOA) now cover a contiguous service area of approximately
38,000 square miles that includes Montgomery, the state capital of Alabama,
prominent resort destinations in Jekyll Island, St. Simons Island and Sea
Island, Georgia, and over 710 miles of interstate highway, including most of
I-95 from Savannah, Georgia to Jacksonville, Florida. The Company collects
substantial roaming revenue from cellular telephone subscribers from other
systems traveling in these markets from nearby population centers such as
Atlanta and Birmingham, as well as from vacation and business traffic in the
southeastern United States. Due in part to the favorable labor environment,
moderate weather and relatively low cost of land, during the last several years
there has been an influx of new manufacturing plants in this market. As of
September 30, 1998 the Company utilized 216 cell sites in this cluster
(including three cell sites in Alabama-5 RSA).
PANAMA CITY
The Company acquired control of the non-wireline cellular license for the
Panama City, Florida market in 1991. The Company collects substantial roaming
revenue in this market from subscribers from other systems who visit Panama
City, a popular spring and summer vacation destination. As of September 30,
1998, the Company utilized 13 cell sites in this market.
OPERATIONS
GENERAL
The Company has concentrated its efforts on creating an integrated network
of cellular telephone systems in the southeastern United States, principally to
date in Georgia, Alabama, Florida and South Carolina. At September 30, 1998, the
Company provided cellular telephone service to 364,189 subscribers in a total of
16 licensed service areas composed of eight MSAs and eight RSAs. The Company
also participates in the NACN, a nationwide consortium of nonwireline cellular
telephone companies, with the goal of providing seamless regional and national
cellular telephone service to its subscribers. Participation in the NACN allows
ten-digit dialing access to the Company's subscribers when they travel outside
the Company's service areas, providing them with convenient call delivery
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants.
44
<PAGE>
The following table sets forth information, at the dates indicated after
giving effect to the Acquisition, regarding the Company's subscribers,
penetration rate, cost to add a net subscriber, cost to add a gross subscriber,
average monthly churn rate and average monthly service revenue per subscriber.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Subscribers at end of period(1)........ 364,189 309,606 243,204 187,870 99,626 54,382
Penetration at end of period(2)........ 11.0% 9.40% 7.73% 6.41% 4.54% 3.57%
Cost to add a gross subscriber(3)...... $ 219 $ 220 $ 216 $ 183 $ 178 $ 156
Cost to add a net subscriber(3)........ $ 447 $ 461 $ 436 $ 275 $ 247 $ 198
Average monthly churn(4)............... 1.88% 1.88% 1.89% 1.51% 1.54% 1.32%
Average monthly service revenue per
subscriber(5)........................ $ 45.08 $ 46.24 $ 50.23 $ 53.80 $ 56.54 $ 56.70
</TABLE>
- ------------------------
(1) Each billable telephone number in service represents one subscriber. Amounts
at December 31, 1993 include 2,576 subscribers in the Alabama-7 RSA where
the Company had interim operating authority through July 1994.
(2) Determined by dividing the aggregate number of subscribers by the estimated
population.
(3) Determined for the periods, by dividing (i) all costs of sales and
marketing, including salaries, commissions and employee benefits and all
expenses incurred by sales and marketing personnel, agent commissions,
credit reference expenses, losses on cellular telephone sales, rental
expenses allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges for such period including fees
paid for use of the CELLULARONE-Registered Trademark- service mark, by (ii)
the gross or net, as applicable, subscribers added during such period.
(4) Determined for the periods by dividing total subscribers discontinuing
service by the average number of subscribers for such period, and divided by
the number of months in the relevant period.
(5) Determined for the periods by dividing the (i) sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in the relevant period.
SUBSCRIBERS AND SYSTEM USAGE
The Company's subscribers have increased from 17,148 at January 1, 1992 to
364,189 at September 30, 1998. Reductions in the cost of cellular telephone
services and equipment at the retail level have led to an increase in cellular
telephone usage by general consumers for non-business purposes. As a result, the
Company believes that there is an opportunity for significant growth in each of
its existing service areas. The Company will continue to broaden its subscriber
base for basic cellular telephone services as well as to increase its offering
of customized services. The sale of custom calling features typically results in
increased usage of cellular telephones by subscribers, thereby further enhancing
revenues. In 1997, cellular telephone service revenues represented 94.6% of the
Company's total revenues, with equipment sales and installation representing the
balance. For the quarter ended September 30, 1998, cellular telephone service
revenues represented 93.6% of the Company's total revenues.
MARKETING
The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate lower
than average deactivations and delinquent accounts, while simultaneously
maintaining a low cost of adding net subscribers. Management has implemented its
marketing strategy by training and compensating its sales force in a manner
designed to
45
<PAGE>
stress the importance of high penetration levels and minimum costs per net
subscriber addition. The Company's sales staff has a two-tier structure. A
retail sales force handles walk-in traffic, and a targeted sales staff solicits
certain industries and government subscribers. The Company believes its use of
an internal sales force keeps marketing costs low, both because commissions are
lower and because subscriber retention is higher than if it used independent
agents. The Company believes its cost to add a net subscriber will continue to
be among the lowest in the cellular telephone industry, principally because of
its in-house direct sales and marketing staff.
The Company also maintains an after-sale telemarketing program implemented
through its sales force and a telemarketing service specializing in cellular
customer services. This program not only enhances customer loyalty, but also
increases add-on sales and customer referrals. The telemarketing program allows
the sales staff to check customer satisfaction as well as to offer additional
calling features, such as voicemail, call waiting and call forwarding.
The Company's sales force works principally out of retail stores in which
the Company offers its cellular products and services. As of September 30, 1998,
the Company maintained 35 retail stores and 4 offices. Retail stores, which
range in size up to 11,000 square feet are fully equipped to handle customer
service and the sale of cellular services, telephones and accessories. Eight of
the newer and larger stores are promoted by the Company as "Superstores," seven
of which are located in the Company's Georgia/ Alabama service areas, and one in
the Panama City, Florida service area. Each Superstore has an authorized
warranty repair center and provides cellular telephone installation and
maintenance services. Most of the Company's larger markets currently have at
least one Superstore. In addition, to enhance convenience for its customers, the
Company has begun to open smaller stores in locations such as shopping malls.
The Company's stores provide subscriber-friendly retail environments--extended
hours, a large selection of phones and accessories, an expert sales staff, and
convenient locations--which make the sales process quick and easy for the
subscriber.
The Company markets all of its products and services under the name
CELLULARONE-Registered Trademark-. The national advertising campaign conducted
by Cellular One Group enhances the Company's advertising exposure at a fraction
of what could be achieved by the Company alone. The Company also obtains
substantial marketing benefits from the name recognition associated with this
widely used service mark, both with existing subscribers traveling outside the
Company's service areas and with potential new subscribers moving into the
Company's service areas. In addition, travelers who subscribe to
CELLULARONE-Registered Trademark- service in other markets may be more likely to
use the Company's service when they travel in the Company's service areas.
Cellular telephones of non-wireline subscribers are either programmed to select
the non-wireline carrier (such as the Company) when roaming, unless the
non-wireline carrier in the roaming area is not yet operational, or the
subscriber dials a special code or has a cellular telephone equipped with an
"A/B" (non-wireline/wireline) switch and selects the wireline carrier.
Through its membership in NACN and other special networking arrangements,
the Company provides extended regional and national service to its subscribers,
thereby allowing them to make and receive calls while in other cellular service
areas without dialing special access codes. This service distinguishes the
Company's call delivery features from those of many of its competitors.
PRODUCTS AND SERVICES
In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. Several rate plans are presented to prospective
subscribers so that they may choose the plan that will best fit their expected
calling needs. Generally, these rate plans include a high user plan, a medium
user plan, a basic plan and an economy plan. Most rate plans combine a fixed
monthly access fee, per minute usage charges and additional charges for
custom-calling
46
<PAGE>
features in a package that offers value to the subscriber while enhancing
airtime use and revenues for the Company. In general, rate plans which include a
higher monthly access fee typically include a lower usage rate per minute. An
ongoing review of equipment and service pricing is maintained to ensure the
Company's competitiveness. As appropriate, revisions to pricing of service plans
and equipment are made to meet the demands of the local marketplace. In
addition, the Company has recently added paging as an accessory to its offered
services.
The following table sets forth a breakdown of the Company's revenues after
giving effect to the Fort Myers and Georgia-1 Sales from the sale of its
services and equipment for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PALMER
---------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS OCTOBER 1, NINE MONTHS
ENDED 1997 THROUGH ENDED FOR THE YEAR ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------------- ---------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Service revenue:
Access and usage(1)............ $ 103,468 $ 31,786 $ 89,339 $ 105,006 $ 61,607 $ 37,063 $ 20,324
Roaming(2)..................... 19,163 5,691 14,447 13,099 11,157 5,844 3,075
Long distance(3)............... 8,995 2,014 5,949 6,632 3,634 2,218 1,309
Other(4)....................... 3,312 891 2,061 2,596 2,585 2,745 1,230
------------- ------------- ------------- ---------- --------- --------- ---------
Total service revenue...... 134,938 40,382 111,796 127,333 78,983 47,870 25,938
Equipment sales and
installation(5)................ 9,175 2,308 6,242 7,027 6,830 6,381 5,238
------------- ------------- ------------- ---------- --------- --------- ---------
Total...................... $ 144,113 $ 42,690 $ 118,038 $ 134,360 $ 85,813 $ 54,251 $ 31,176
------------- ------------- ------------- ---------- --------- --------- ---------
------------- ------------- ------------- ---------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Access and usage revenues include monthly access fees for providing service
and usage fees based on per minute usage rates.
(2) Roaming revenues are fees charged for providing services to subscribers of
other systems when such subscribers or "roamers" place or receive a
telephone call within one of the Company's service areas.
(3) Long distance revenue is derived from long distance telephone calls placed
by the Company's subscribers.
(4) Other revenue includes, among other things, connect fees charged to
subscribers for initial activation on the cellular telephone system and fees
for feature services such as voicemail, call forwarding and call waiting.
(5) Equipment sales and installation revenue includes revenue derived from the
sale of cellular telephones and fees for the installation of such
telephones.
Reciprocal roaming agreements between each of the Company's cellular
telephone systems and the cellular telephone systems of other operators allow
their respective subscribers to place calls in most cellular service areas
throughout the country. Roamers are charged usage fees which are generally
higher than a given cellular telephone system's regular usage fees, thereby
resulting in a higher profit margin on roaming revenue. Roaming revenue is a
substantial source of incremental revenue for the Company. For 1997, roaming
revenues accounted for 13.2% of the Company's service revenues and 12.5% of the
Company's total revenue. For the nine months ended September 30, 1998, roaming
revenues accounted for 14.2% of the Company's service revenues and 13.6% of the
Company's total revenue. This level of roaming revenue is due in part to the
fact that the Company's market in Panama City, Florida is a regional shopping
and vacation destination and a number of the Company's cellular telephone
systems in the Georgia and Alabama market are located along major interstate
travel corridors.
47
<PAGE>
In order to develop the market for cellular telephone service, the Company
provides retail distribution of cellular telephones and maintains inventories of
cellular telephones. The Company negotiates volume discounts for the purchase of
cellular telephones and, in many cases, passes such discounts on to its
customers. The Company believes that earning an operating profit on the sale of
cellular telephones is of secondary importance to offering cellular telephones
at competitive prices to potential subscribers. To respond to competition and to
enhance subscriber growth, Palmer has historically sold cellular telephones
below cost.
The Company is currently developing several new services which it believes
will provide additional revenue sources. Packet-switching technology uses the
intervals between voice traffic on cellular channels to send packets of data
instead of tying up dedicated cellular channels, allowing data to be transmitted
more quickly and efficiently. The packets of information, which may be
transmitted using several different channels, are subsequently reassembled and
directed to the correct party at the receiving end. It is expected that the
development of this technology will make it possible for cellular carriers to
offer a broad range of cost-effective wireless data services, including
facsimile and electronic mail transmissions, point-of-sale credit
authorizations, package tracking, remote meter reading, alarm monitoring and
communications between laptop computer units and local area computer networks or
other computer databases. During 1997 Palmer began the use of microcells.
Microcells are low powered transmitters, typically constructed on a pole or the
roof of a building, which provide reduced radius service within a specific area,
such as large office buildings, underground facilities or areas shielded by
topographical obstructions. Microcell service could be used, for instance, to
provide wireless service within an office environment that was also integrated
with wireless service to the home.
CUSTOMER SERVICE
The Company is committed to attracting new subscribers and retaining
existing subscribers by providing consistently high-quality customer service. In
each of its cellular service areas, the Company maintains a local staff,
including a market manager, customer service representatives, technical and
engineering staff, sales representatives and installation and repair facilities.
Each cellular service area handles its own customer-related functions such as
customer activations, account adjustments and rate plan changes. Local offices
and installation and repair facilities enable the Company to better service
customers, schedule installations and repairs and monitor the technical quality
of the cellular service areas.
In addition, subscribers are able to report cellular telephone service or
account problems to the Company 24 hours a day. Through the use of sophisticated
monitoring equipment, technicians at the Company's headquarters are able to
monitor the technical performance of its service areas.
To ensure high-quality customer service, the Cellular One Group authorizes a
third-party marketing research firm to perform customer satisfaction surveys of
each of its licensees. Licensees must achieve a minimum customer satisfaction
level in order to be permitted to continue using the
CELLULARONE-Registered Trademark- service mark. In 1997, the Company was awarded
the #1 MSA in certain categories in CELLULARONE-Registered Trademark-'s National
Customer Satisfaction Survey. The Company has held number one rankings in
certain categories in five out of the last six years. The Company believes it
has achieved this first place ranking through effective implementation of its
direct sales and customer service support strategy.
The Company has implemented a new software package to combat cellular
telephone service fraud. This new software system can detect counterfeit
cellular telephones while they are being operated and enables the Company to
terminate service to the fraudulent user of the counterfeit cellular telephone.
The Company also helps protect itself from fraud with pre-call customer
validation and subscriber profiles specifically designed to combat the
fraudulent use of subscriber accounts.
48
<PAGE>
NETWORKS
The Company strives to provide its subscribers with virtually seamless
coverage throughout its cellular service market areas, thereby permitting
subscribers to travel freely within this region and have their calls and custom
calling features, such as voicemail, call waiting and call forwarding, follow
them automatically without having to notify callers of their location or to rely
on special access codes. The Company has been able to offer virtually seamless
coverage by implementing a switch interconnection plan to mobile telephone
switching offices ("MTSO") located in adjoining markets. The Company's equipment
is built by NORTEL, formerly Northern Telecom, Inc. ("NTI"), and interconnection
between MTSOs has been achieved using NTI's internal software and hardware.
Through its participation in NACN since 1992 and other special networking
arrangements, the Company has pursued its goal of offering seamless regional and
national cellular service to its subscribers. NACN is the largest wireless
telephone network system in the world--linking non-wireline cellular operators
throughout the United States and Canada. Membership in NACN has aided the
Company in integrating its cellular telephone systems within its region and has
permitted the Company to offer cellular telephone service to its subscribers
throughout a large portion of the United States, Canada, Mexico and Puerto Rico.
NACN has provided the Company with a number of distinct advantages: (i) lower
costs for roaming verification; (ii) increased roaming revenue; (iii) more
efficient roaming service; and (iv) integration of Palmer's markets with over
4,600 cities in more than 40 states in the United States, Canada, Mexico and
Puerto Rico.
SYSTEM DEVELOPMENT AND EXPANSION
The Company develops its service areas by adding channels to existing cell
sites and by building new cell sites. Such development is done for the purpose
of increasing capacity and improving coverage in direct response to projected
subscriber demand. Projected subscriber demand is calculated for each cellular
service area on a cell by cell basis. These projections involve a traffic
analysis of usage by existing subscribers and an estimation of the number of
additional subscribers in each such area. In calculating projected subscriber
demand, the Company builds into its design assumptions a maximum call "blockage"
rate of 2.0% (percentage of calls that are not connected on first attempt at
peak usage time during the day).
The following table sets forth, by market, at the dates indicated, the
number of the Company's operational cell sites (including cell sites where the
Company has interim operating authority).
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT SEPTEMBER 30, -------------------------------------
1998 1997 1996 1995
------------------- ----- ----- -----
<S> <C> <C> <C> <C>
Georgia/Alabama.............................................. 216 207 181 121
Panama City, FL.............................................. 13 12 11 9
--- --- --- ---
Total........................................................ 229 219 192 130
--- --- --- ---
--- --- --- ---
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Georgia/Alabama.............................................. 70 39
Panama City, FL.............................................. 7 7
-- --
Total........................................................ 77 46
-- --
-- --
</TABLE>
The Company estimates that in 1997 the capacity of its existing cellular
telephone systems increased 30%. During 1997, the Company spent $55.3 million of
which $3.5 million related to properties which were sold and approximately $6.0
million related to purchases of equipment for cell sites to be completed in 1998
and, based on projected growth in subscriber demand, expects to spend
approximately $16 million in 1998 in order to build out its cellular service
areas, install an additional microwave network and implement certain digital
radio technology. The Company constructed 27 new cell sites in 1997 and
increased capacity in many of its other systems and plans to construct 30
additional cell sites with respect to its existing cellular systems during 1998
to meet projected subscriber demand and improve the quality of service. Cell
site expansion is expected to enable the Company to continue to add subscribers,
enhance use of its
49
<PAGE>
cellular telephone systems by existing subscribers, increase services used by
subscribers of other cellular telephone systems due to the larger geographic
area covered by the cellular telephone network and further enhance the overall
efficiency of the network. The Company believes that the increased cellular
telephone coverage will have a positive effect on market penetration and
subscriber usage.
Microwave networks enable the Company to connect switching equipment and
cell sites without making use of local landline telephone carriers, thereby
reducing or eliminating fees paid to landline carriers. During 1996, the Company
spent $1.0 million to build additional microwave connections. In addition, in
1996 the Company spent $2.6 million to build a fiber optic network between
Dothan, Alabama and Panama City, Florida. The installation of this network
resulted in savings to the Company from a reduction in fees paid to telephone
companies for landline charges, as well as giving the Company the ability to
lease out a significant portion of capacity.
DIGITAL CELLULAR TECHNOLOGY
Over the next decade, it is expected that cellular telephones will gradually
convert from analog to digital technology. This conversion is due in part to
capacity constraints in many of the largest cellular markets, such as Los
Angeles, New York and Chicago. As carriers reach limited capacity levels,
certain calls may be unable to be completed, especially during peak hours.
Digital technology increases system capacity and offers other advantages over
analog technology, including improved overall average signal quality, improved
call security, potentially lower incremental costs for additional subscribers
and the ability to provide data transmission services. The exact timing and
overall costs of such conversion from analog to digital are not yet known.
The Company began offering TDMA standard digital service, one of three
standards for digital service, during 1997. This digital network allows the
Company to offer advanced cellular features and services such as caller-ID,
short message paging and extended battery life. The Company is adding digital
channels to the network incrementally based on the relative demand for digital
and analog channels. Where cell sites are at full capacity, analog channels are
being removed and redeployed to expand capacity elsewhere within the network and
replaced in such cell sites by digital channels. The implementation of digital
cellular technology over a period of several years will involve modest
incremental expenditures for switch software and possible significant cost
reductions as a result of reduced purchases of radio channels and a reduced
requirement to split existing cells. However, the extent of any implementation
of digital radio channels and the amount of any cost savings ultimately to be
derived therefrom will depend primarily on subscriber demand. In the ordinary
course of business, equipment upgrades at the cell sites have involved
purchasing dual mode radios capable of using both analog and digital technology.
The benefits of digital radio channels can only be achieved if subscribers
purchase cellular telephones that are capable of transmitting and receiving
digital signals. Currently, such telephones are more costly than analog
telephones. The widespread use of digital cellular telephones is likely to occur
only over a substantial period of time and there can be no assurance that this
technology will replace analog cellular telephones. In addition, since most of
the Company's existing subscribers currently have cellular telephones that
exclusively utilize analog technology, it will be necessary to continue to
support, and if necessary increase, the number of analog radio channels within
the network for many years.
50
<PAGE>
ACQUISITIONS
The Company will continue to evaluate expansion through acquisitions of both
(i) contiguous cellular properties and other strategically located RSAs and
small to mid-sized MSAs and (ii) minority interests in its existing cellular
properties. In evaluating acquisition targets, the Company considers, among
other things, demographic factors, including population size and density,
geographic proximity to existing service areas, traffic patterns, cell site
coverage and required capital expenditures.
Palmer entered the cellular telephone business in 1987, when it constructed
a cellular telephone system for the Fort Myers, Florida MSA. Palmer acquired
control of this system in March 1988 and rapidly expanded its cellular telephone
holdings, acquiring control of the non-wireline cellular licenses for the
Columbus and Albany, Georgia and Dothan and Montgomery, Alabama MSAs in 1988.
In 1991, Palmer acquired control of the non-wireline cellular license for
the Panama City, Florida MSA. In 1992 and 1993, Palmer acquired two non-wireline
cellular licenses for RSAs contiguous to Palmer's MSAs in Georgia and Alabama:
the Georgia-9 RSA in June 1992 and the Alabama-8 RSA in April 1993. The
Georgia-9 RSA acquisition added the geographic territory between the Columbus,
Macon and Albany, Georgia MSAs to Palmer's service area coverage. The Alabama-8
RSA expanded Palmer's service areas around three MSAs served by Palmer, covering
a substantial portion of the geographic territory between the Montgomery,
Alabama, Columbus, Georgia and Dothan, Alabama MSAs and the Georgia-9 RSA. In
1993, Palmer also increased its majority position in its MSAs in Albany, Georgia
and in Dothan and Montgomery, Alabama, through the purchase of certain minority
interests for an aggregate purchase price of $2.9 million.
During 1994, Palmer continued to acquire minority interests in six of its
MSAs for an aggregate purchase price of $3.1 million. Also, on October 31, 1994,
Palmer acquired the cellular telephone systems of Southeast Georgia Cellular
Limited Partnership ("SGC") and Georgia 12 Cellular Limited Partnership
("Georgia 12" and together with SGC, the "Georgia Partnerships") for an
aggregate purchase price of $91.7 million (the "Georgia Acquisition"). The
assets acquired by Palmer from SGC included the non-wireline cellular telephone
systems for the Georgia-7 RSA, Georgia-8 RSA and Georgia-10 RSA. The assets
acquired by Palmer from Georgia 12 included the non-wireline cellular telephone
system located in the Georgia-12 RSA. The cellular telephone systems in the
acquired RSAs serve a geographic territory in southeast Georgia that is adjacent
to Palmer's Georgia-9 RSA and Macon, Georgia MSA.
In December 1995, Palmer acquired interests in cellular telephone systems by
purchasing Georgia Metronet, Inc. ("GMI") and Augusta Metronet, Inc. ("AMI" and
together with GMI, the "GTE Companies") for an aggregate purchase price of
$158.4 million (the "GTE Acquisition"). The assets acquired by Palmer in the GTE
Acquisition included the non-wireline cellular telephone system located in the
Savannah MSA and Augusta MSA, respectively. The cellular telephone systems in
the newly-acquired MSAs serve a geographic territory in eastern Georgia and a
portion of South Carolina that is adjacent to Palmer's existing markets in the
Georgia-8 RSA and Georgia-12 RSA. In addition, Palmer also acquired the interim
operating authority to provide cellular service to the southern portions of the
South Carolina-7 RSA, which serves a geographic territory that is adjacent to
Palmer's existing markets in the Georgia-8 RSA as well as the Savannah, and
Augusta, Georgia MSAs. In addition, during 1995, Palmer acquired additional
minority interests in six of its MSAs for an aggregate purchase price of $2.0
million.
On June 20, 1996, Palmer acquired the cellular telephone system of Georgia-1
for an aggregate purchase price of $31.6 million. The cellular telephone system
in the acquired RSA serves a geographic territory of northwest Georgia between
Chattanooga and Atlanta. Georgia-1 was sold in October 1997 in connection with
the Acquisition.
On July 5, 1996, two of Palmer's majority-owned subsidiaries acquired the
cellular telephone system of Horizon Cellular Telephone Company of Spalding,
L.P. ("Horizon") for an aggregate purchase price of $36.0 million. The assets
acquired by Palmer from Horizon include the cellular telephone system in the
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<PAGE>
Georgia-6 RSA. The cellular telephone system in the acquired RSA serves a
geographic territory of west central Georgia adjacent to Palmer's Macon and
Columbus, Georgia MSAs.
On January 31, 1997, a majority-owned subsidiary of Palmer acquired the
cellular telephone system serving the Georgia-13 RSA from Mobile Communications
Systems L.P. for a total purchase price of $31.5 million. The cellular telephone
system in the acquired RSA serves a geographic territory of southwest Georgia
adjacent to Palmer's Albany, Georgia and Dothan, Alabama MSAs.
COMPETITION
The cellular telephone service industry in the United States is highly
competitive. Cellular telephone systems compete principally on the basis of
services and enhancements offered, the technical quality of the cellular system,
customer service, coverage capacity and price of service and equipment.
Currently, the Company's primary competition in each of its service areas is the
other cellular licensee--the wireline carrier. The table below lists the
wireline competitor in each of the Company's existing service areas:
<TABLE>
<CAPTION>
MARKET WIRELINE COMPETITOR
- ----------------------------------------------- ---------------------------------------------
<S> <C>
Albany, GA..................................... ALLTEL
Augusta, GA.................................... ALLTEL
Columbus, GA................................... Public Service Cellular
Macon, GA...................................... BellSouth
Savannah, GA................................... ALLTEL
Georgia-6 RSA.................................. BellSouth and Intercel (1)
Georgia-7 RSA.................................. Cellular Plus (2) and BellSouth (1)
Georgia-8 RSA.................................. ALLTEL
Georgia-9 RSA.................................. ALLTEL and Public Service Cellular (1)
Georgia-10 RSA................................. Cellular Plus (2) and ALLTEL (1)
Georgia-12 RSA................................. ALLTEL
Georgia-13 RSA................................. ALLTEL
Dothan, AL..................................... BellSouth
Montgomery, AL................................. ALLTEL
Alabama-8 RSA.................................. ALLTEL
Panama City, FL................................ 360 DEG. Communications Company (2)
</TABLE>
- ------------------------
(1) The wireline service area has been subdivided into two service areas by the
purchasers of the authorization for the RSA.
(2) Currently under contract to be acquired by ALLTEL.
The Company also faces limited competition from and may in the future face
increased competition from broadband PCS. Broadband PCS involves a network of
small, low-powered transceivers placed throughout a neighborhood, business
complex, community or metropolitan area to provide customers with mobile and
portable voice and data communications. PCS subscribers communicate using
digital radio handsets.
The FCC allocated 120 MHZ of spectrum for licensed broadband PCS. The
allocations for licensed PCS services are split into six blocks of frequencies--
blocks "A" and "B" being two 30 MHZ allocations for each of the 51 Major Trading
Areas ("MTAs") throughout the United States; block "C" being one 30 MHZ
allocation in each of 493 Basic Trading Areas ("BTAs") in the United States; and
blocks "D," "E" and "F" being three 10 MHZ allocations in each of the BTAs. The
FCC has concluded the auction of all broadband PCS frequency blocks.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, SMR and ESMR systems
and paging services.
In addition, the FCC has licensed operators to provide mobile satellite
service in which transmissions from mobile units to satellites would augment or
replace transmissions to land-based stations. Although such a system is designed
primarily to serve remote areas and is subject to transmission delays inherent
in satellite communications, a mobile satellite system could augment or replace
communications with
52
<PAGE>
segments of land-based cellular systems. Based on current technologies, however,
satellite transmission services are not expected to be competitively priced with
cellular telephone services.
In order to grow and compete effectively in the wireless market, the Company
plans to follow a strategy of increasing its bundled minute offerings. By
increasing the number of minutes a customer can use for one flat rate,
subscribers perceive greater value in their cellular service and become less
usage sensitive, i.e., they can increase their cellular phone usage without
seeing large corresponding increases in their cellular bill. These factors
translate into more satisfied customers, greater customer usage and lower churn
among existing subscribers. The perceived greater value also increases the
number of potential customers in the marketplace. The Company believes that this
strategy will enable it to increase its share of the wireless market.
SERVICE MARKS
CELLULARONE-Registered Trademark- is a registered service mark with the U.S.
Patent and Trademark Office. The service mark is owned by Cellular One Group, a
Delaware general partnership of Cellular One Marketing, Inc., a subsidiary of
Southwestern Bell Mobile Systems, Inc., together with Cellular One Development,
Inc., a subsidiary of AT&T and Vanguard Cellular Systems, Inc. The Company uses
the CELLULARONE-Registered Trademark- service mark to identify and promote its
cellular telephone service pursuant to licensing agreements with Cellular One
Group. In 1997, the Company paid $303,000 in licensing and advertising fees
under these agreements. See "Risk Factors--Reliance on Use of Third-Party
Service Mark."
DESCRIPTION OF CELLULAR ONE AGREEMENTS
The Company is currently party to sixteen license agreements with Cellular
One Group, which cover separate cellular telephone system areas. The terms of
each agreement (each, a "Cellular One Agreement" and collectively, the "Cellular
One Agreements") are substantially identical. Pursuant to each Cellular One
Agreement, Cellular One Group has granted a license to use the
"CELLULARONE-Registered Trademark-" mark (the "Mark") in its FCC-licensed
territory (the "Licensed Territory") to promote its cellular telephone service.
Cellular One Group has agreed not to license such Mark in connection with
cellular telephone service to any other cellular telephone service provider in
such territory during the term of the agreement. Cellular One Group may,
however, license the Mark to other persons in such territory in connection with
cellular telephone equipment and other products and services other than the type
licensed by the Company.
In connection with each Cellular One Agreement, the Company has agreed to
pay an annual licensing fee equal to $0.02 per person in the Licensed Territory
based on the total population of the market, subject to a minimum payment of
$3,000, and, in certain circumstances, will pay an annual advertising fee not in
excess of $0.05 per person in the Licensed Territory.
Each Cellular One Agreement has a term of five years and is renewable,
subject to the conditions described herein, at the option of the Company for
three additional five-year terms subject to provision of advanced written notice
by the Company. In connection with any renewal, the Company must execute
Cellular One Group's then-current form of license renewal agreement, which form
may contain provisions materially different than those in the Cellular One
Agreement.
Cellular One Group may terminate the Cellular One Agreements at any time
without written notice to the Company upon certain events, including bankruptcy,
insolvency and dissolution of the Company.
In addition, Cellular One Group may terminate the Cellular One Agreements at
any time, without giving the Company an opportunity to cure the event giving
rise to Cellular One Group's right of termination subject to delivery of written
notice (i) if the Company, while on probation pursuant to a Cellular One
Agreement, fails to achieve 85% customer satisfaction (or such higher percentage
established by Cellular One Group) for a prescribed amount of time, (ii) if the
Company fails to achieve 65% customer satisfaction in any survey other than an
initial customer satisfaction survey by Cellular One Group, (iii) if any
principal stockholder or officer of the Company is convicted of a felony, fraud
or other
53
<PAGE>
crime that Cellular One Group believes is reasonably likely to have an adverse
effect on the Mark, (iv) if a threat or danger to public health or safety
results from the operation of the Company's cellular telephone business, (v) if
the Company violates certain undertakings in the Cellular One Agreement,
including limitations on assignment and confidentiality restrictions, (vi) if
the Company knowingly submits false reports or information to Cellular One Group
or any other entity conducting a customer satisfaction survey or (vii) if the
Company contests in any proceeding the validity or registration of, or Cellular
One Group's ownership of, the Mark. The Company's customer satisfaction ratings
have consistently far exceeded the minimum requirements of such Agreements.
Finally, after notice of a default to the Company, Cellular One Group may
terminate the Cellular One Agreements if the Company does not cure the default
within a specified period of time because it (i) fails to pay any amounts
thereunder when due or fails to submit information required to be provided
pursuant to the Cellular One Agreement when due or makes a false statement in
connection therewith, (ii) fails to operate its business in conformity with FCC
directives, technical industry standards and other standards specified from time
to time by Cellular One Group, (iii) misuses, makes unauthorized use of, or
materially impairs the goodwill of, the Mark, (iv) engages in any business under
a name that is confusingly similar to the Mark, or (v) permits a continued
violation of any law or regulation applicable to it, in each case subject to a
thirty-day cure period.
The Cellular One Agreements are terminable by the Company at any time
subject to 120 days' written notice.
The Company has agreed to indemnify Cellular One Group and its employees and
affiliates, including its constituent partners, against all claims arising from
the operation of its cellular phone business and the costs, including attorneys
fees, of defending against them.
REGULATION
As a provider of cellular telephone services, the Company is subject to
extensive regulation by the federal government.
The licensing, construction, operation, acquisition and transfer of cellular
telephone systems in the United States are regulated by the FCC pursuant to the
Communications Act of 1934, as amended (the "Communications Act"). The FCC has
promulgated rules governing the construction and operation of cellular telephone
systems and licensing and technical standards for the provision of cellular
telephone service ("FCC Rules"). For cellular licensing purposes, the United
States is divided into MSAs and RSAs. In each market, the frequencies allocated
for cellular telephone use are divided into two equal blocks designated as Block
A and Block B. Block A licenses were initially reserved for non-wireline
companies, such as the Company, while Block B licenses were initially reserved
for entities affiliated with a local wireline telephone company. Under current
FCC Rules, a Block A or Block B license may be transferred with FCC approval
without restriction as to wireline affiliation, but generally, no entity may own
any substantial interest in both systems in any one MSA or RSA. The FCC may
prohibit or impose conditions on sales or transfers of licenses.
Initial operating licenses are generally granted for terms of up to 10
years, renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. The Company's cellular licenses expire in the following years with
respect to the following number of service areas: 1998 (three); 2000 (two); 2001
(four); 2002 (two); 2006 (one); and 2007 (four). The FCC has issued a decision
confirming that current licensees will be granted a renewal expectancy if they
have complied with their obligations under the Communications Act during their
license terms and provided substantial public service. A potential challenger
will bear a heavy burden to demonstrate that a license should not be renewed if
the licensee's performance merits a renewal expectancy. The Company believes
that the licenses controlled by the Company will be renewed in a timely manner.
However, in the event that a license is not renewed, the Company would no longer
have the right to operate in the relevant service area. A non-renewal of
licenses that are currently pending would have a material adverse effect on the
Company's result of operations.
54
<PAGE>
Under FCC rules, each cellular licensee was given the exclusive right to
construct one of two cellular telephone systems within the licensee's MSA or RSA
during the initial five-year period of its authorization. At the end of such
five-year period, other persons are permitted to apply to serve areas within the
licensed market that are not served by the licensee and current FCC Rules
provide that competing applications for these "unserved areas" are to be
resolved through the auction process. The Company has no material unserved areas
in any of its cellular telephone systems that have been licensed for more than
five years.
The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to expand
its service territory and to provide new services. The Communications Act
requires prior FCC approval for acquisitions by the Company of other cellular
telephone systems licensed by the FCC and transfers by the Company of a
controlling interest in any of its licenses or construction permits, or any
rights thereunder. Although there can be no assurance that any future requests
for approval or applications filed by the Company will be approved or acted upon
in a timely manner by the FCC, based upon its experience to date, the Company
has no reason to believe such requests or applications would not be approved or
granted in due course.
The Communications Act prohibits the holding of a common carrier license
(such as the Company's cellular licenses) by a corporation of which more than
20% of the capital stock is owned directly or beneficially by aliens. Where a
corporation such as the Company controls another entity that holds an FCC
license, such corporation may not have more than 25% of its capital stock owned
directly or beneficially by aliens, in each case, if the FCC finds that the
public interest would be served by such prohibitions. Failure to comply with
these requirements may result in the FCC issuing an order to the Company
requiring divestiture of alien ownership to bring the Company into compliance
with the Communications Act. In addition, fines or a denial of renewal, or
revocation of the license are possible.
From time to time, legislation which could potentially affect the Company,
either beneficially or adversely, may be proposed by federal and state
legislators. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecom Act") was signed into law, revising the Communications Act to eliminate
unnecessary regulation and to increase competition among providers of
communications services. The Company cannot predict the future impact of this or
other legislation on its operations.
The major provisions of the Telecom Act potentially affecting the Company
are as follows:
INTERCONNECTION. The Telecom Act requires state public utilities
commissions and/or the FCC to implement policies that mandate cost-based
reciprocal compensation between cellular carriers and LECs for interconnection
services.
On August 8, 1996, the FCC released its First Report and Order in the matter
of Implementation of the Local Competition Provisions in the Telecommunications
Act of 1996 ("FCC Order") establishing the rules for the costing and
provisioning of interconnection services and the offering of unbundled network
elements by incumbent local exchange carriers. The FCC Order established
procedures for the Company's renegotiation of interconnection agreements with
the incumbent local exchange carrier in each of the Company's markets. LECs and
state regulators filed appeals of the FCC Order, which were consolidated in the
U.S. Court of Appeals for the Eighth Circuit (the "Eighth Circuit"). The Eighth
Circuit in 1996 and 1997 vacated and stayed the effective date of pricing and
other portions of the rules established in the FCC Order. In 1998, the United
States Supreme Court agreed to hear an appeal of the Eighth Circuit's decisions
and a decision of the Court is expected later this year.
The Company has renegotiated certain interconnection agreements with LECs in
most of the Company's markets. These negotiations have resulted in a substantial
decrease in interconnection expenses incurred by the Company.
FACILITIES SITING FOR PERSONAL WIRELESS SERVICES. The siting and
construction of cellular transmitter towers, antennas and equipment shelters are
often subject to state or local zoning, land use and other regulation. Such
regulation may require zoning, environmental and building permit approvals or
other state or local certification.
55
<PAGE>
The Telecom Act provides that state and local authority over the placement,
construction and modification of personal wireless services (including cellular
and other commercial mobile radio services and unlicensed wireless services)
shall not prohibit or have the effect of prohibiting personal wireless services
or unreasonably discriminate among providers of functionally equivalent
services. In addition, local authorities must act on requests made for siting in
a reasonable period of time and any decision to deny must be in writing and
supported by substantial evidence. Appeals of zoning decisions that fail to
comply with the provisions of the Telecom Act can be made on an expedited basis
to a court of competent jurisdiction, which can be either federal district or
state court. The Company anticipates that, as a result of the Telecom Act, it
will more readily receive local zoning approval for proposed cellular base
stations. In addition, the Telecom Act codified the Presidential memorandum on
the use of federal lands for siting wireless facilities by requiring the
President or his designee to establish procedures whereby federal agencies will
make available their properties, rights of ways and other easements at a fair
and reasonable price for service dependent upon federal spectrum.
ENVIRONMENTAL EFFECT OF RADIO FREQUENCY EMISSIONS. The Telecom Act provides
that state and local authorities cannot regulate personal wireless facilities
based on the environmental effects of radio frequency emissions if those
facilities comply with the federal standard.
UNIVERSAL SERVICE. The Telecom Act also provides that all communications
carriers providing interstate communications services, including cellular
carriers, must contribute to the federal universal service support mechanisms
being established by the FCC. Carrier payments to the universal service fund are
based on end-user interstate telecommunications revenues multiplied by a
universal service contribution percentage proposed by the fund administrator and
adopted by the FCC. Certain of the universal service costs may be passed through
to customers. The FCC first implemented this provision of the Telecom Act in a
"Report and Order" released May 8, 1997 in the matter of "Federal-State Joint
Board on Universal Service," which also provides that any cellular carrier is
potentially eligible to receive universal service support.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of cellular service.
EMPLOYEES
At September 30, 1998, the Company had 550 full-time employees, none of whom
is represented by a labor organization. Management considers its relations with
employees to be good.
PROPERTIES
For each market served by the Company's operations, the Company maintains at
least one sales or administrative office and operates a number of cell
transmitter and antenna sites. As of June 30, 1998, the Company had
approximately 34 leases for retail stores used in conjunction with its
operations and 3 leases for administrative offices and owned one retail store.
The Company also had approximately 143 leases to accommodate cell transmitters
and antennas as of September 30, 1998.
LEGAL PROCEEDINGS
The Company is not currently involved in any pending legal proceedings
likely to have a material adverse impact on the Company.
In May 1998, a complaint in respect of a class action lawsuit was filed in
Lee County, Florida against the Company and Cellular One, Inc. alleging certain
causes of action in connection with the Company's practice of "rounding up" its
billing to the nearest minute. The Company believes that such practice is
customary among cellular service providers. Although the Company believes that
its position will prevail, it does not believe that such lawsuit, if determined
adversely to the Company, would have a material adverse effect on its business,
financial condition or results of operations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
director and executive officers of PCW and of PCC.
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert Price......................................... 65 Director, President, Chief Executive Officer and
Treasurer of PCC, Director of PCW
Kim I. Pressman...................................... 41 Executive Vice President, Secretary and Chief
Financial Officer of PCC
Brian Edwards (1).................................... 36 President and Chief Executive Officer
Jeffrey L. Green..................................... 36 Vice President--Finance and Chief Financial Officer
Victor M. Landau..................................... 58 Vice President--Technical Operations (1)
</TABLE>
- ------------------------
(1) The position of Mr. Landau was effective April 1, 1998. Prior to his
promotion. Mr. Landau served as Director of Property Management/Site
Acquisitions of PCW. The position of Brian Edwards was effective August 8,
1998. Prior to his promotion, Mr. Edwards served as Executive Vice
President, Sales and Marketing.
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of the executive
officers and directors of PCC, and the executive officers of PCW named above
(each of whom served as an executive officer and director of Palmer prior to its
acquisition by PCW).
ROBERT PRICE has served concurrently as a Director and the Chief Executive
Officer, President and Treasurer of PCC since 1979, and has been a Director of
Holdings and PCW since 1997. Mr. Price has been a Director of PriCellular since
1990. Mr. Price was the President and Assistant Treasurer of PriCellular from
1990 until May 1997 and has served as Chairman of PriCellular since May 1997.
Mr. Price, an attorney, is a former General Partner of Lazard Freres & Co. He
has served as an Assistant United States Attorney, practiced law in New York and
served as Deputy Mayor of New York City. In the early sixties, Mr. Price served
as President and Director of Atlantic States Industries, a corporation owning
weekly newspapers and four radio stations. After leaving public office, Mr.
Price became Executive Vice President of The Dreyfus Corporation and an
Investment Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co.
Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant,
Inc., and is currently a member of The Council on Foreign Relations. Mr. Price
serves as the Representative of the Majority Leader and President Pro Tem of the
New York Senate and as a member of the Board of Directors of the Municipal
Assistance Corporation for the City of New York and as a Member of the Board of
Trustees of the City University of New York. Mr. Price is also a Director and
President of TLM Corporation.
KIM I. PRESSMAN, a certified public accountant, is a graduate of Indiana
University and holds an M.B.A. from New York University. Before assuming her
present office as Executive Vice President and Secretary of PCC in October 1994
(in which she served until August 1997 and again from December 1997 to the
present), and as Chief Financial Officer of PCC in May 1998, Ms. Pressman was
Vice President and Treasurer of PCC from November 1987 to December 1989, and
Senior Vice President of PCC from January 1990 to September 1994. She was also
Secretary of PCC from July 1989 to February 1990. Ms. Pressman was Vice
President--Broadcasting and Vice President, Controller, and Assistant Treasurer
of PCC from 1984 to October 1987. Prior to joining PCC in 1984, Ms. Pressman was
employed for three
57
<PAGE>
years by Peat, Marwick, Mitchell & Co., a national certified public accounting
firm, and for more than three years thereafter was Supervisor, Accounting
Policies for International Paper Company and then Manager, Accounting Operations
for Corinthian Broadcasting of Dun & Bradstreet Company, a large group owner of
broadcasting stations. Ms. Pressman is a Director, Executive Vice President and
Secretary of PriCellular Corporation. Ms. Pressman has served as Executive Vice
President, Secretary and Chief Financial Officer of Holdings since May 4, 1998.
BRIAN EDWARDS has been employed by the Company and its predecessor, Palmer,
since 1988. Before his appointment as President and Chief Executive Officer in
August 1998, Mr. Edwards served as Executive Vice President, Sales and
Marketing. In that capacity, he was responsible for all the Company's sales
efforts as well as advertising and marketing. Prior to joining the Company, Mr.
Edwards was southeastern Regional Manager for SAV-A-STOP Inc., a former division
of Hanes. A graduate of Georgia College, Mr. Edwards has been acknowledged as an
innovator in the cellular industry, serving on the Board of the National
Cellular One Group and guest speaking at the Paul Kagan Conference and CTIA
Annual Conventions.
JEFFREY L. GREEN has been with PCW and its predecessor, Palmer since 1995.
Before assuming his current office as Vice President--Finance, and Chief
Financial Officer in March 1998, Mr. Green served as the Director of Corporate
Planning. While at the Company he has been extensively involved in strategic
planning, investor relations and company acquisitions. Prior to joining PCW, Mr.
Green spent five years with Forsch/Evanite Fiber Corporation, a leveraged buyout
firm, and six years at Arthur Andersen & Company, a national public accounting
firm. Mr. Green is a Certified Public Accountant and is a graduate of Miami
University.
VICTOR M. LANDAU has been with PCW and its predecessor, Palmer since 1984.
Before assuming his current role as Vice President--Technical Operations in
April 1998, Mr. Landau was the Director of Property Management/Site Acquisitions
from 1993 to 1998. From 1987 to 1993, Mr. Landau worked as the Technical
Operations Broadcast Division. Prior to joining the Company, Mr. Landau worked
as the Chief Engineer for the Collins Radio division of Rockwell International
from 1973-1975, and as a radio engineering consultant for E.H. Munn from
1977-1984. Mr. Landau attended Jacksonville University and the Milwaukee School
of Engineering.
DIRECTOR COMPENSATION
Directors of PCW are not paid fees.
58
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the executive officers of PCW for the three years ended
December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
----------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTION (3) COMPENSATION($)
- ---------------------------------------------- --------- ----------- ----------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
William J. Ryan, Chairman of the Board 1997 370,769 212,500 195,313 30,991(4)
(1)(12).....................................
1996 339,731 34,000 0 31,422
1995 331,651 119,880 130,000(9) 55,356
M. Wayne Wisehart, President and Chief
Executive Officer of PCW(2)(12)............. 1997 186,635 57,000 146,406 18,873(5)
1996 152,211 15,250 0 23,559
1995 145,256 34,800 75,000(9) 33,417
Jeffrey L. Green, Vice President--Finance and
Chief Financial Officer..................... 1997 91,692 55,750 39,063 7,490(6)
1996 78,848 11,250 0 8,381
1995 64,327 0 10,000(9) 51,019
Victor M. Landau, Vice President--Technical
Operations.................................. 1997 77,033 41,120 19,531 7,931(7)
1996 73,365 8,400 0 8,220
1995 69,824 11,375 0 7,919
K. Patrick Meehan, Vice President--General
Counsel and Secretary(12)................... 1997 147,115 54,500 58,594 9,237(8)
1996 124,423 12,500 0 19,386
1995 109,936 26,400 65,000(9) 15,108
Jim Fredrickson, Vice
President--Engineering(12).................. 1997 113,462 91,125 97,656 6,092(10)
1996 99,438 10,248 0 7,200
1995 85,115 14,400 50,000(9) 7,173
Steve Carlson, Vice
President--Operations(12)................... 1997 112,788 104,812 78,125 7,966(11)
1996 94,615 18,910 0 7,930
1995 82,105 21,780 40,000(9) 8,038
</TABLE>
- ------------------------
(1) Prior to his promotion to such position effective April 1, 1998 Mr. Ryan
served as President and Chief Executive Officer of PCW.
(2) Prior to his promotion to such position effective April 1, 1998, Mr.
Wisehart served as Executive Vice President, Treasurer and Chief Financial
Officer of PCW.
(3) Gives effect to five-for-four stock splits of the Company's Common Stock in
the form of stock dividends, paid on December 23, 1997, April 1, 1998 and
April 30, 1998.
(4) Includes the following: auto allowance of $6,943 (including insurance and
license), financial services of $3,755, tax services of $1,975 and club dues
of $5,291.
(5) Includes the following: auto allowance of $6,774 (including insurance and
license), financial services of $1,375, club dues of $6,106 and medical
reimbursements of $4,619.
(6) Includes the following: auto allowance of $6,404 (including insurance and
license) and medical re-imbursements of $1,086.
(7) Includes the following: auto allowance of $7,931 (including insurance and
license).
(8) Includes the following: auto allowance of $7,042 (including insurance and
license), tax services of $275, medical re-imbursements of $1,283 and club
dues of $637.
(9) These options were granted by Palmer.
(10) Includes the following: auto allowance of $6,092.
(11) Includes the following: auto allowance of $7,966 (including insurance).
(12) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
STOCK OPTIONS
The following table reflects the number of options for shares of the PCC's
Common Stock subject to options granted under the PCC's 1992 Long Term Incentive
Plan (the "LTIP") during the year ended December 31, 1997 to the named executive
officers of PCW.
59
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATED FOR OPTION
UNDERLYING GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE ------------------------------
NAME GRANTED(1)(2) FISCAL YEAR PRICE(2) EXPIRATION DATE 5% 10%
- --------------------------------- ------------- --------------- ----------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (4)(5)........... 195,313 12.7% $4.67 10/09 $573,622 $1,453,671
M. Wayne Wisehart(5)............. 146,406 9.5% 4.67 10/09 429,985 1,089,667
Jeffrey L. Green................. 39,063 2.5% 4.67 10/09 114,725 290,737
Victor M. Landau................. 19,531 1.3% 5.37 12/09 66,959 167,154
K. Patrick Meehan(5)............. 58,594 3.8% 4.67 10/09 172,087 436,102
Jim Fredrickson(5)............... 97,656 6.4% 4.67 10/09 286,810 726,832
Steve Carlson(5)................. 78,125 5.1% 4.67 10/09 229,448 581,467
</TABLE>
- ------------------------------
(1) Upon the occurrence of a "change in control" of the PCC, as defined in the
LTIP, the PCC's Stock Option and Compensation Committee may, in its
discretion, provide for the purchase of any then outstanding options by the
PCC or a designated subsidiary for an amount of cash equal to the excess of
(i) the product of the "change in control price" (as defined below) and the
number of shares of the PCC's Common Stock subject to the options over (ii)
the aggregate exercise price of such options. The change in control price
means the higher of (i) the higher price per share of the PCC's Common Stock
paid in any transaction related to a change in control of PCC and (ii) the
highest "fair market value" as defined in the LTIP, of the PCC's Common
Stock at any time during the 60-day period preceding the change in control.
(2) Number of options and exercise price give effect to five-for-four stock
splits, in the form of stock dividends, paid on December 23, 1997, April 1,
1998 and April 30, 1998.
(3) In order to realize these potential values, the closing price of the PCC's
Common Stock on October 7, 2009 would have to be $7.61 and $12.11 per share
and on December 4, 2009 would have to be $8.80 and $13.93 per share,
respectively.
(4) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
(5) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
The following table reflects the number of stock options held by the named
executive officers of PCW on December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE- MONEY OPTIONS AT
SHARES END(1) FISCAL YEAR END
ACQUIRED ON VALUE -------------------------- --------------------------
EXERCISE(1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (2)(3)......... -- -- -- 195,313 -- $154,204
M. Wayne Wisehart(3)........... -- -- -- 146,406 -- 118,589
Jeffrey L. Green............... -- -- -- 39,065 -- 31,641
Victor M. Landau............... -- -- -- 19,531 -- 2,148
K. Patrick Meehan(3)........... 58,596 47,461
Jim Fredrickson(3)............. -- -- -- 97,656 -- 79,097
Steve Carlson(3)............... -- -- -- 78,125 -- 63,278
</TABLE>
- ------------------------------
(1) Numbers of shares gives effect to five-for-four stock splits, in the form of
stock dividends, paid on December 23, 1997, April 1, 1998 and April 30,
1998.
(2) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
(3) Mr. Ryan and Mr. Carlson ceased to be employed by PCW in April 1998. Mr.
Fredrickson left the Company in May 1998. Mr. Wisehart left in July 1998 and
Mr. Meehan left in September 1998.
60
<PAGE>
EMPLOYMENT AGREEMENTS
In 1997, PCW entered into an employment agreement with Mr. Ryan (the "Ryan
Agreement") for a term ending on December 31, 1999. The base salary rate per
annum under the Ryan Agreement for 1997 was $500,000, plus an annual bonus based
upon PCW's financial performance commencing in 1998. In connection with Mr.
Ryan's desire to serve as Chairman of the Board of the Company commencing
effective April 1, 1998, Mr. Ryan and PCW agreed that (i) Mr. Ryan will serve as
Chairman of the Board until December 31, 1998; (ii) in lieu of the other
compensation and benefits under the Ryan Agreement, Mr. Ryan received on April
1, 1998 a single lump sum payment of $875,000 and will participate in the
Company's Bonus Plan for 1998; and (iii) all options for the Company's Common
Stock held by Mr. Ryan be terminated.
In 1997, PCW entered into an employment agreement with Mr. Wisehart (the
"Wisehart Agreement") for an initial term ending on December 31, 1999. The
Wisehart Agreement has an automatic one-year renewal on each anniversary date
thereof. The base salary rate per annum under the Wisehart Agreement for 1997
was $300,000, plus an annual bonus based upon PCW's financial performance.
Pursuant to the Wisehart Agreement, when William J. Ryan ceased to be President
of PCW upon his promotion to Chairman of the Board of PCW, Mr. Wisehart assumed
the position of President for an annual base salary of $500,000, plus an annual
bonus based on PCW's financial performance. The Wisehart Agreement specifies
that if Mr. Wisehart is terminated by PCW other than for Cause (as defined
therein), disability or death or if Mr. Wisehart terminates the agreement for
Good Reason (as defined therein), PCW will pay to Mr. Wisehart the full base
salary and benefits which would otherwise have been paid to Mr. Wisehart, as
well as a pro-rated bonus, for two years after the date of termination (to be
paid at the time such payments are due).
In 1997, PCW entered into an employment agreement with Mr. Green (the "Green
Agreement") for an initial term ending on December 31, 1998. The Green Agreement
has an automatic one-year renewal on each anniversary date thereof. The base
salary rate per annum under the Green Agreement for 1997 was $113,000. A
separate agreement also provides for an annual bonus based on PCW's financial
performance. The Green Agreement specifies that if Mr. Green is terminated by
PCW other than for Cause (as defined therein), disability or death or if Mr.
Green terminates the agreement for Good Reason (as defined therein), PCW will
pay to Mr. Green the full base salary and benefits which would otherwise have
been paid to Mr. Green, as well as pro-rated bonus, through the first
anniversary of the date of termination (to be paid at the time such payments are
due).
William Ryan and Jim Fredrickson were terminated as of May 1998 and Steve
Carlson was terminated as of April 1998. Wayne Wisehart was terminated as of
July 1998 and Patrick Meehan was terminated as of September 1998. Pursuant to
their employment agreements, each of the foregoing is entitled to severance
payments, including regular salary for between twelve and twenty-four months
subsequent to their respective terminations.
PRINCIPAL STOCKHOLDER
All of PCW's issued and outstanding capital stock is owned by Holdings.
61
<PAGE>
DESCRIPTION OF THE 11 3/4% PCW NOTES
PCW issued the 11 3/4% PCW Notes on July 10, 1997 pursuant to an indenture
(the "11 3/4% PCW Indenture"). The 11 3/4% PCW Notes are general unsecured
obligations of PCW and subordinated in right of payment to all existing and
future senior Indebtedness of PCW and rank PARI PASSU in right of payment to all
future senior subordinated Indebtedness of PCW and rank senior to all
subordinated indebtedness of PCW.
Commencing on January 15, 1997, cash interest on the 11 3/4% PCW Notes will
be payable, at a rate of 11 3/4% per annum, semi-annually in arrears on each
January 15 and July 15. The 11 3/4% PCW Notes are redeemable at the option of
Holdings, in whole or in part, at any time on or after July 15, 2002 in cash at
the redemption prices set forth below, plus accrued and unpaid interest, if any,
thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
<S> <C>
YEAR PRICE
- ------------------------------------------------------------- -----------
2002......................................................... 105.875%
2003......................................................... 104.406%
2004......................................................... 102.938%
2005......................................................... 101.469%
2006 and thereafter.......................................... 100.000%
</TABLE>
The 11 3/4% PCW Indenture contains covenants which are substantially similar
to those in the Indenture relating to the Notes and which impose certain
limitations on the ability of PCW and its subsidiaries to, among other things,
incur Indebtedness (as defined), make Restricted Payments (as defined), effect
certain Asset Sales (as defined), enter into certain transactions with Related
Persons (as defined), merge or consolidate with any other person or transfer all
or substantially all of their properties and assets.
On November 14, 1997, in order to satisfy certain obligations of the Company
under the Registration Rights Agreement dated July 10, 1997, among the Company
and other signatories thereto, the Company offered to exchange registered $1,000
principal amount of 11 3/4% Series B Senior Subordinated Notes due 2007 (the
"Series B 11 3/4% PCW Notes") for each $1,000 principal amount of the issued and
outstanding 11 3/4% PCW Notes. The terms of the Series B 11 3/4% PCW Notes are
identical in all respect to the original 11 3/4% PCW Notes, except that the
offer of the Series B 11 3/4% PCW Notes were registered under the Securities Act
of 1933, as amended.
62
<PAGE>
DESCRIPTION OF THE HOLDINGS PIK NOTES
In July 1998, Holdings issued $200 million aggregate principal amount of
Senior Exchangeable Payable-in-Kind Notes due 2008 (the "Holdings PIK Notes") in
an offering registered under the Securities Act (the "Holdings Offering"). The
Holdings PIK Notes will initially bear interest at a rate of 11 1/4% per annum.
Such interest rate will be permanently reduced by 0.50% once cash interest
begins to accrue on the Holdings PIK Notes. Cash interest will begin to accrue
on the Holdings PIK Notes on February 15, 2003; provided that at any time prior
to February 15, 2003, Holdings may make an election on any interest payment date
to commence the accrual of cash interest from and after such interest payment
date. The impact of the issuance of the Holdings PIK Notes on PCC's consolidated
financial position is reflected in the pro forma financial statements included
elsewhere in the Prospectus. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements."
The Holdings PIK Notes rank senior to all subordinated indebtedness of
Holdings. In the event that the daily high price of PCC Common Stock equals or
exceeds 115% of the exchange price (initially $40) for ten out of 15 consecutive
trading days, then each outstanding $1,000 aggregate principal amount of
Holdings PIK Notes will be mandatorily exchanged into 25 shares of PCC Common
Stock, subject to adjustment for certain events.
The proceeds of the Holdings Offering was used by Holdings to redeem all of
the outstanding 13 1/2% Senior Secured Discount Notes due 2007 (the "13 1/2%
Holdings Notes") and for general corporate purposes.
63
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued under an Indenture, dated as of June 16, 1998,
(the "Indenture") by and among the Company, each of the Guarantors and Bank of
Montreal Trust Company, as trustee (the "Trustee"). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the TIA. The following summaries of certain provisions of the
Indenture are summaries only, do not purport to be complete and are qualified in
their entirety by reference to all of the provisions of the Indenture.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Indenture. Wherever particular provisions of the
Indenture are referred to in this summary, such provisions are incorporated by
reference as a part of the statements made, and such statements are qualified in
their entirety by such reference. For purposes of this "Description of Notes,"
references to the "Company" are to Price Communications Wireless, Inc. and any
successor corporation thereto and do not include the subsidiaries of Price
Communications Wireless, Inc. or their respective successors.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes and except that, if the Exchange
Offer is not consummated by December 12, 1998, Holders that have complied with
their obligations under the Registration Rights Agreement will be entitled,
subject to certain exceptions, to liquidated damages in an amount equal to $0.05
per week per $1,000 principal amount at maturity of Old Notes held by such
Holder until March 12, 1999 and up to $0.25 per week per $1,000 principal amount
at maturity of Old Notes thereafter until the consummation of the Exchange
Offer.
The aggregate principal amount of Notes issued under the Indenture shall not
exceed $1 billion from time to time outstanding, except as set forth in the
Indenture. An aggregate principal amount of $525 million of Notes will be issued
in the Offering, and the Indenture will provide for (i) the issuance of the $525
million aggregate principal amount of Notes offered hereby, and (ii) subject to
the limitations set forth under "-- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness" below, the issuance from time to time of
one or more additional series of notes (which may, but need not, be identical in
all respects to the Notes originally issued (or in all respects except for the
payment of interest (i) scheduled and paid prior to the date of issuance of the
additional series or (ii) payable on the first interest payment date following
such date of issuance)), in an aggregate principal amount, when aggregated with
the Notes issued on the Issue Date, not to exceed $1 billion from time to time
outstanding. The Notes offered hereby and any such additional Notes shall be
treated as a single class for all purposes under the Indenture. The Notes will
mature on December 15, 2006. The Notes issued on the Issue Date will bear
interest at the rate of 9 1/8% per annum from June 16, 1998 or from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semiannually on December 15 and June 15 of each year, commencing
December 15, 1998, to the Persons in whose names such Notes are registered at
the close of business on the December 1 or June 1 preceding such Interest
Payment Date. The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
Principal of, premium, liquidated damages, if any, and interest on the Notes
will be payable, and, subject to the following provisions, the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in the Borough of Manhattan of The City of New York. At the option of
the Company, payment of interest may be made by check mailed to the Holders of
the Notes at the addresses set forth upon the registry books of the Company. No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. Until otherwise
designated by the Company, the
64
<PAGE>
Company's office or agency will be the corporate trust office of the Trustee
presently located at 77 Water Street, 4th Floor, New York, New York 10005, c/o
Corporate Trust Department.
SECURITY AND RANKING OF THE NOTES
The Notes will be senior obligations of the Company, secured on the Issue
Date by a first priority Lien, subject to certain Permitted Liens, on (i) the
Capital Stock of Restricted Subsidiaries (other than Non-Recourse Restricted
Subsidiaries) owned by the Company or any Guarantor and such other assets of the
Restricted Subsidiaries (other than Non-Recourse Restricted Subsidiaries) as can
be perfected by the filing of a UCC-1 financing statement with the filing office
of any applicable jurisdiction (PROVIDED, HOWEVER, that the assets subject to
such Lien will not include, without limitation, any FCC licenses, real property
or leases of real property relating to transmitting towers that require the
consent of the landlord thereto for the grant of such Lien or any cash or
Eligible Investments not deposited with the Trustee or any collateral agent as
bailee of the Trustee) and (ii) certain cash collateral and Eligible Investments
from time to time pledged by the Company or the Guarantors to the Trustee (the
property described in the foregoing clauses (i) and (ii), (the "Collateral"). To
the extent that any additional Collateral may be pledged by the Company or the
Guarantors, the Lien on such Collateral will be perfected to the same extent,
subject to Permitted Liens, as the Liens securing the Collateral pledged on the
Issue Date. Subject to the terms of the Indenture and the Security Documents,
the Collateral securing the Notes may be released and thereafter secure other
Indebtedness of the Company or its Restricted Subsidiaries. See "-- Releases of
Collateral". The Lien will rank pari passu with the Liens in favor of the
trustees for the benefit of the noteholders under certain Permitted Pari Passu
Secured Indebtedness permitted to be issued on a secured basis under the
Indenture.
The Notes will rank (i) senior in right of payment to all subordinated
indebtedness of the Company and (ii) effectively senior in right of payment to
all future senior unsecured Indebtedness of the Company to the extent of the
value of the Collateral available for the payment of the Notes. The Company
conducts significant operations through its subsidiaries and, therefore, the
Notes will be effectively subordinated to all liabilities (including trade
payables) of the Company's subsidiaries that are not Guarantors.
The Indenture will not contain provisions that would afford Holders of the
Notes protection in the event of a decline in the Company's credit quality
resulting from highly leveraged or other similar transactions involving the
Company.
OPTIONAL REDEMPTION
Except as set forth below, the Company will not have the right to redeem any
Notes prior to June 15, 2002. On or after June 15, 2002, the Company will have
the right to redeem all or any part of the Notes in cash at the redemption
prices (expressed as a percentage of the aggregate principal amount thereof) set
forth below, in each case including accrued and unpaid interest, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date) if redeemed during the 12-month
period beginning June 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------- -----------
<S> <C>
2002....................... 104.56250%
2003....................... 102.28125%
2004 and thereafter 100.00000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis or in such other manner as
it deems appropriate and fair. The Notes may be redeemed in part in multiples of
$1,000 only.
65
<PAGE>
The Notes will not have the benefit of a sinking fund.
Notwithstanding the Optional Redemption provisions described above, prior to
June 15, 2002, in the event that the Company or any Parent consummates one or
more Equity Offerings, other than in any circumstances resulting in, or as part
of a series of transactions that result in, directly or indirectly, a Change of
Control, on or before the third anniversary of the Issue Date, the Company may
at its option, use all or a portion of the cash received by it or contributed to
it from such Equity Offerings to redeem up to 35% of the originally issued
aggregate principal amount of the Notes at a cash redemption price equal to
109.125% of the principal amount of the Notes so redeemed, plus accrued and
unpaid interest thereon, if any, to the Redemption Date; PROVIDED, HOWEVER, that
(x) at least 65% of the original aggregate principal amount of the Notes remains
outstanding thereafter (excluding any Notes owned by the Company or any of its
Affiliates), and (y) any such net cash proceeds of such Equity Offering by any
Parent to be used for such a redemption shall be contributed to the Company in
an amount in cash sufficient to redeem the Notes to be redeemed at the then
current redemption price. Notice of any such redemption must be given within 60
days after the date of the last Equity Offering the proceeds of which are to be
so contributed.
In addition, notwithstanding the optional redemption provisions described
above, at any time on or prior to June 15, 2002, the Notes may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control (but in no event more than 90 days after the occurrence of such Change
of Control) at a redemption price equal to 100% of the principal amount thereof,
plus the Applicable Premium as of, and accrued but unpaid interest, if any, to,
the Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
Subject to the following, notice of any redemption will be sent, by
first-class mail, at least 30 days and not more than 60 days prior to the date
fixed for redemption to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the books of the Registrar. Any notice which
relates to a Note to be redeemed in part only must state the portion of the
principal amount to be redeemed and must state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date fixed for redemption, interest will cease to accrue on the portions of the
Notes called for redemption.
GUARANTEES
The Company's obligations under the Notes will be unconditionally guaranteed
on a joint and several basis (each, a "Guarantee") by the Guarantors. The
Guarantees will rank PARI PASSU in right of payment with all other senior
indebtedness of each Guarantor and senior in right of payment to all
subordinated indebtedness of such Guarantor.
The Indenture will provide by its terms that each Guarantee shall be
automatically and unconditionally released and discharged upon any sale,
exchange or other transfer to any Person that is not an Affiliate of the Company
of all of the outstanding Capital Stock of such Guarantor owned by the Company
or any other Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or of all or substantially all of the assets of, such Guarantor
(which sale, exchange or transfer is not prohibited by the Indenture).
SECURITY
The obligations of the Company with respect to the Notes and the obligations
of the Guarantors under their Guarantees will be secured by a first priority
Lien on the Collateral, subject to certain Permitted Liens applicable to such
Collateral. The Collateral will be pledged by the Company and the Guarantors to
the Trustee, for its benefit and the benefit of the Holders, pursuant to a
security agreement (the "Security Agreement").
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The Lien in favor of the Trustee with respect to substantially all of the
Collateral will be perfected to the extent contemplated by the Security
Agreement on the Issue Date or the date of acquisition thereof by the Company or
the applicable Guarantor.
Unless an Event of Default shall have occurred and be continuing, the
Company and the Guarantors will have the right to remain in possession and
retain use of the Collateral (other than cash collateral and Eligible
Investments), to operate the Collateral and to collect, invest and dispose of
any income thereon (subject to applicable limitations under the Indenture and
the Security Agreement). Furthermore, any transfer of the power to vote the
Capital Stock of a Restricted Subsidiary that, directly or indirectly, possesses
a license from the FCC to operate a Cellular System, including as a result of
foreclosure on the Collateral, will require FCC approval.
The Lien on the Collateral in favor of the Trustee will be PARI PASSU with
the Lien in favor of the Trustee on behalf of the holders of the Permitted Pari
Passu Secured Indebtedness, if any. Each such lienholder shall execute and
deliver the Intercreditor Agreement relating to the Collateral, and the
Indenture and the Security Agreement shall be subject to the terms and
provisions thereof.
To the extent that any of the Collateral is subject to any Permitted Liens,
the exercise of the rights and remedies associated therewith could adversely
affect the value of the Collateral.
No appraisals of the Collateral have been prepared by or on behalf of the
Company. There can be no assurance that the proceeds of any sale of the
Collateral pursuant to the Indenture following an Event of Default would be
sufficient to satisfy payments due on the Notes. See "Risk Factors--Guarantee
and Security for the Notes" above. In addition, the ability of the Holders of
Notes to realize upon the Collateral may be subject to FCC approval as described
above and certain bankruptcy law limitations in the event of a bankruptcy. See
"Risk Factors--Certain Other Bankruptcy Considerations" above.
If an Event of Default occurs under the Indenture, the Trustee, on behalf of
the Holders of the Notes, in addition to any rights or remedies available to it
under the Indenture, may take such action as it deems advisable to protect and
enforce its rights in the Collateral, including the institution of foreclosure
proceedings, subject, however, to the terms of the Intercreditor Agreement. The
proceeds received by the Trustee from any foreclosure will be applied by the
Trustee first to pay the expenses of such foreclosure and fees and other amounts
then payable to the Trustee under the Indenture and, thereafter, to pay the
principal of and interest on and other amounts due with respect to the Notes.
PERMITTED PARI PASSU SECURED INDEBTEDNESS
Subject to the terms of the Indenture, the Company will be permitted to
Incur Indebtedness by the issuance of notes, which may (but need not) be issued
under the Indenture (subject to the limitations therein) as one or more series
of additional Notes (any such notes, the "Permitted Pari Passu Secured
Indebtedness"). The Permitted Pari Passu Secured Indebtedness shall not mature
or have any mandatory redemption or required prepayment dates (other than a
mandatory offer to repurchase upon the occurrence of a change of control or
asset sale) prior to the final stated maturity date of the Notes and may be
fixed rate or floating rate obligations. The Permitted Pari Passu Secured
Indebtedness will constitute senior Indebtedness of the Company PARI PASSU with
the Notes. The Permitted Pari Passu Secured Indebtedness may be secured by a
first priority Lien on the Collateral PARI PASSU with the Lien for the benefit
of the Holders if (i) the Secured Indebtedness as of the date of issuance of
such series of Permitted Pari Passu Secured Indebtedness on a PRO FORMA basis is
less than or equal to the Minimum Collateral Value, (ii) the indenture and the
related documents for each such series of Permitted Pari Passu Secured
Indebtedness contains provisions with respect to releases of Collateral that are
substantially similar to and no more restrictive on the Company than the
provisions of the Indenture and the Security Agreement and (iii) the trustee for
the holders of each series of Permitted Pari Passu Secured Indebtedness executes
and delivers a joinder supplement to the Intercreditor Agreement.
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Except for certain Permitted Liens, the Company and its Restricted
Subsidiaries will not be permitted to issue or Incur any other Indebtedness
secured by all or any portion of the Collateral without the consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding.
INTERCREDITOR AGREEMENT
Prior to the first Incurrence of any Permitted Pari Passu Secured
Indebtedness that is secured by the Collateral, the Trustee will enter into an
intercreditor agreement (the "Intercreditor Agreement") or a joinder supplement
thereto with the Company and the trustee for the holders of such series of
Permitted Pari Passu Secured Indebtedness. The Intercreditor Agreement will
provide, among other things, (i) the relative priorities of the parties thereto
in and to the Collateral, (ii) the conditions under which the parties thereto
will consent to the release of or granting of any Lien in any Collateral and
(iii) the conditions under which the parties thereto will enforce their rights
with respect to the Collateral and the Indebtedness secured thereby.
RELEASES OF COLLATERAL
The collateral release provisions of the Indenture and the Security
Documents will permit the release of items of Collateral that are the subject of
an Asset Sale and in other circumstances upon compliance with certain
conditions. At the request of the Company, the Trustee shall release its Lien
without the consent of the Holders with respect to any Collateral (x) that is
the subject of an Asset Sale that complies with "--Certain Covenants--Limitation
on Asset Sales and Sales of Subsidiary Stock" below and "-- Certain
Covenants--Minimum Coverage Ratio" below or (y) if after giving PRO FORMA effect
thereto, the Company would be in compliance with "--Certain Covenants--Minimum
Coverage Ratio" below so long as in each of case (x) and (y) (i) no Event of
Default shall have occurred and be continuing after giving effect to, on a PRO
FORMA basis, such release, unless, in the case of an Asset Sale, such Asset Sale
is in consideration solely of cash or Cash Equivalents and such consideration is
applied immediately to the permanent reduction of Senior Indebtedness of the
Company or any Restricted Subsidiary and (ii) the other conditions, if any, to
such Asset Sale or release under the Indenture have been satisfied. With respect
to any other partial release of Collateral that would result in the Minimum
Collateral Value being less than the amount of Secured Indebtedness, the consent
of Holders of a majority of the aggregate principal amount of Notes then
outstanding will be required under the Indenture; PROVIDED, HOWEVER, that with
respect to any such release that relates to more than 25% of the fair market
value (as determined in good faith by the Company's Board of Directors) of the
Collateral at the date of release, such proportion of the Notes shall be 66
2/3%. The Company and the Guarantors may not effect a release of all or
substantially all of the Collateral (except as set forth above) or any amendment
of or modification to the Indenture or the Security Documents that has the
substantial effect thereof without the consent of Holders of 75% of the
aggregate principal amount of Notes then outstanding.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL.
The Indenture will provide that in the event that a Change of Control has
occurred, unless the Company has elected to redeem all of the Notes upon the
occurrence of a Change of Control as set forth above under "--Optional
Redemption," each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Company (the "Change
of Control Offer"), to require the Company to repurchase all or any part (equal
to $1,000 principal amount or an integral multiple thereof) of such Holder's
Notes, on a date (the "Change of Control Purchase Date") that is no later than
45 Business Days after the occurrence of such Change of Control at a cash price
(the "Change of Control Purchase Price") equal to 101% of the aggregate
principal amount thereof, together with any accrued and unpaid interest to the
Change of Control Purchase Date. The Change of Control Offer shall be made
within 20 Business Days following a Change of Control and shall remain open for
20 Business
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Days following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, the Company shall purchase all
Notes properly tendered in response to the Change of Control Offer.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent promptly will deliver
to the Holders of Notes so accepted payment in an amount equal to the Change of
Control Purchase Price (together with any accrued and unpaid interest), and the
Trustee will promptly authenticate and mail or deliver to such Holders a new
Note equal in principal amount to any unpurchased portion of the Note
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will announce publicly the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company or its Parent, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the company, its Parent and the Initial Purchasers and is
not the result of any intention on the part of the Company or its Parent or
their management to discourage the acquisition of the Company or its Parent.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws, and the Company may modify a Change of Control Offer to the
extent necessary to effect such compliance.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, issue, create, incur, assume, guarantee or otherwise directly or
indirectly become liable for (including as a result of an acquisition), or
otherwise become responsible for, contingently or otherwise (individually or
collectively, to "Incur" or, as appropriate, an "Incurrence"), any Indebtedness.
Neither the accrual of interest (including the issuance of "pay in kind"
securities or similar instruments in respect of such accrued interest) pursuant
to the terms of Indebtedness Incurred in compliance with this covenant, nor the
accretion of original issue discount, nor the mere extension of the maturity of
any Indebtedness shall be deemed to be an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness, the
Company's Annualized Operating Cash Flow Ratio would have been less than 8 to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of:
(i) Indebtedness by the Company or any of its Restricted Subsidiaries
constituting Existing Indebtedness, reduced by repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement under "--Limitation on Asset Sales and Sales of
Subsidiary Stock" below and by repayments and permanent reductions in
amounts outstanding pursuant to scheduled amortization and mandatory
prepayments in accordance with the terms thereof;
(ii) unsecured Indebtedness Incurred by the Company or any Guarantor in
an aggregate principal amount outstanding at any time not to exceed
$100,000,000 reduced by amounts Incurred
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pursuant to clause (x) below, so long as such amounts Incurred pursuant to
clause (x) remain outstanding;
(iii) Indebtedness Incurred by the Company evidenced by the Notes (but
not any Permitted Pari Passu Secured Indebtedness) and the guarantees
thereof by Restricted Subsidiaries;
(iv) (a) Permitted Acquisition Indebtedness by the Company that
satisfies the provisions of clause (x) of the definition thereof or (b)
Permitted Acquisition Indebtedness by any Restricted Subsidiary that
satisfies the provisions of clause (y) of the definition thereof;
(v) Indebtedness between the Company and any Restricted Subsidiary of
the Company or between Restricted Subsidiaries of the Company; PROVIDED,
HOWEVER, that, in the case of Indebtedness of the Company, such obligations
shall be unsecured and subordinated in all respects to the Holders' rights
pursuant to the Notes, and the date of any event that causes a Restricted
Subsidiary no longer to be a Restricted Subsidiary shall be an Incurrence
Date with respect to such Indebtedness;
(vi) Capitalized Lease Obligations and Purchase Money Indebtedness in an
aggregate amount or aggregate principal amount, as the case may be,
outstanding at any time not to exceed in the aggregate $15,000,000;
PROVIDED, HOWEVER, that in the case of Purchase Money Indebtedness, such
Indebtedness shall not constitute less than 75% nor more than 100% of the
cost (determined in accordance with GAAP) to the Company or such Restricted
Subsidiary of the property purchased or leased with the proceeds thereof;
(vii) Indebtedness of the Company or any Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary of the Company to the extent none of the foregoing results in the
obligation to repay an obligation for money borrowed by any Person and are
limited in aggregate amount to no greater than 10% of the fair market value
of such business, assets or Restricted Subsidiary so disposed of;
(viii) any guarantee by any Restricted Subsidiary of any Indebtedness
Incurred in compliance with "-- Limitation on Subsidiary Guarantees" below;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reimbursement obligations with respect thereto
issued in the ordinary course of business and consistent with industry
practices limited in aggregate amount to $5,000,000 at any one time
outstanding; and
(x) Refinancing Indebtedness Incurred to extend, renew, replace or
refund Indebtedness permitted under clauses (i) (as so reduced in amount),
(ii) (as so reduced in amount), (iii), (iv) and (x) of this paragraph.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
described above or is entitled to be incurred pursuant to the second paragraph
of the covenant described above, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with the covenant
described above and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the second
paragraph above. In addition, the Company may, at any time, change the
classification of an item of Indebtedness (or any portion thereof) to any other
clause or to the second paragraph hereof, provided that the Company would be
permitted to incur such item of Indebtedness (or such portion thereof) pursuant
to such other clause or the second paragraph hereof, as the case may be, at such
time of reclassification.
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Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
LIMITATION ON SUBSIDIARY GUARANTEES.
The Indenture will provide that the Company will not permit any of its
Restricted Subsidiaries that is not a Guarantor to guarantee the payment of any
Indebtedness of the Company unless such Restricted Subsidiary (i) executes and
delivers a supplemental indenture in a form reasonably satisfactory to the
Trustee pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Notes and the Indenture on
the terms set forth in the Indenture and (ii) delivers to the Trustee an opinion
of counsel that such supplemental indenture has been duly authorized, executed
and delivered by such Restricted Subsidiary and constitutes a legal, valid,
binding and enforceable obligation of such Restricted Subsidiary subject to
customary exceptions. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of the Indenture unless and until its Guarantee is
released in accordance with the Indenture.
LIMITATION ON RESTRICTED PAYMENTS.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, if, immediately prior or after giving
effect thereto:
(a) a Default or an Event of Default would exist;
(b) the Company's Annualized Operating Cash Flow Ratio for the Reference
Period would exceed 8.5 to 1; or
(c) the aggregate amount of all Restricted Payments made by the Company
and its Restricted Subsidiaries, including such proposed Restricted Payment
(if not made in cash, then the fair market value of any property used
therefor, as determined in good faith by the Board of Directors of the
Company) from and after the Issue Date and on or prior to the date of such
Restricted Payment, shall exceed the sum of (i) the amount determined by
subtracting (x) 2.0 times the aggregate Consolidated Interest Expense of the
Company for the period (taken as one accounting period) from the Issue Date
to the last day of the last full fiscal quarter prior to the date of the
proposed Restricted Payment (the "Computation Period") from (y) Operating
Cash Flow of the Company for the Computation Period, PLUS (ii) the aggregate
Net Proceeds received by the Company from (x) Equity Offerings (other than
to a Subsidiary of the Company) after the Issue Date and on or prior to the
date of such Restricted Payment or (y) capital contributions to the Company
after the Issue Date, PLUS (iii) to the extent not otherwise included in
clauses (i) or (ii), above, an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from payments of
dividends, repayment of loans or advances, or other transfers of assets, in
each case to the Company or any Wholly Owned Restricted Subsidiary of the
Company from Unrestricted Subsidiaries, or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed, in the case of
any Unrestricted Subsidiary, the amount of Investments previously made by
the Company and any Restricted Subsidiary in such Unrestricted Subsidiary.
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Notwithstanding the foregoing paragraph, the provisions set forth in clauses
(b) and (c) thereof will not prohibit (i) the use of an aggregate of $10,000,000
to be used for Restricted Payments not otherwise permitted by this "Limitation
on Restricted Payments" covenant, (ii) the distribution of amounts to Holdings
sufficient to pay the scheduled interest or dividends, as applicable, owed by
Holdings on the Permitted Parent Securities as such interest or dividends become
due and payable so long as Holdings (or any other direct or indirect Wholly
Owned Subsidiary of PCC) is the direct Parent of the Company owning 100% of the
Capital Stock of the Company and (iii) any dividend, distribution or other
payment by any Restricted Subsidiary on shares of its Capital Stock that is paid
PRO RATA to all holders of such Capital Stock, and notwithstanding the foregoing
paragraph, the provisions set forth in clause (a), (b) and (c) thereof will not
prohibit (x) the payment of any dividend within 60 days after the date of its
declaration if such dividend could have been made on the date of its declaration
in compliance with the foregoing provisions, or (y) the redemption, defeasance,
repurchase or other acquisition or retirement of any Indebtedness or Capital
Stock of the Company or its Restricted Subsidiaries either in exchange for or
out of the Net Proceeds of any substantially concurrent Equity Offering (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Junior Indebtedness or Capital Stock of the Company or its
Restricted Subsidiaries and other than to a Subsidiary of the Company) or sale
of Junior Indebtedness (in the case of any redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness of the Company or its
Restricted Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this description of the
"Limitations on Restricted Payments" covenant, 100% of the amounts expended
under clauses (i) through (iii) and (x) and (y) of the immediately preceding
paragraph shall be included as Restricted Payments from and after the Issue
Date.
LIMITATION ON RESTRICTING SUBSIDIARY DIVIDENDS.
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, with respect to securities issued
directly thereby or with respect to which they are obligors, directly or
indirectly, create, assume or suffer to exist any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to pay
dividends or make other distributions on the Capital Stock of any Restricted
Subsidiary of the Company or pay or satisfy any obligation to the Company or any
of its Restricted Subsidiaries or otherwise transfer assets or make or pay loans
or advances to the Company or any of its Restricted Subsidiaries, except
encumbrances and restrictions existing under
(i) the Indenture, the Notes and any Permitted Pari Passu Secured
Indebtedness;
(ii) any Existing Indebtedness;
(iii) any applicable law or any governmental or administrative regulation
or order;
(iv) Refinancing Indebtedness permitted under the Indenture; PROVIDED,
HOWEVER, that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate than those
contained in the instruments governing the Indebtedness (in the good faith
judgment of the Company's Board of Directors) being refinanced immediately
prior to such refinancing;
(v) restrictions with respect solely to a Restricted Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital Stock
or assets of such Restricted Subsidiary; PROVIDED, HOWEVER, that such
restrictions apply solely to the Capital Stock or assets (in the good faith
judgment of the Company's Board of Directors) being sold of such Restricted
Subsidiary;
(vi) restrictions contained in any agreement relating to the financing
of the acquisition of a Person or property, business or assets, after the
Issue Date which are not applicable to any Person or property, business or
assets, other than the Person or property so acquired and which either (a)
were
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not put in place in anticipation of or in connection with such acquisition
or (b) constituted Permitted Acquisition Indebtedness of a Person satisfying
the provisions of clause (y) of the definition thereof; or
(vii) any agreement (other than those referred to in clause (vi)) of a
Person acquired by the Company or a Restricted Subsidiary of the Company,
which restrictions existed at the time of acquisition and were not put in
place in anticipation of or in connection with such acquisition.
Notwithstanding the foregoing, neither (A) customary provisions restricting
subletting or assignment of any lease entered into the ordinary course of
business, consistent with past practices nor (B) Permitted Liens shall in and of
themselves be considered a restriction on the ability of the applicable
Restricted Subsidiary to transfer such agreement or assets, as the case may be.
LIMITATION ON TRANSACTIONS WITH RELATED PERSONS.
The Indenture will provide that, after the Issue Date, the Company will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
contract, agreement, arrangement or transaction with any Related Person (each a
"Related Person Transaction"), or any series of Related Person Transactions,
except for transactions made in good faith, the terms of which are (i) fair and
reasonable to the Company or such Subsidiary, as the case may be, and (ii) at
least as favorable as the terms that could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or series
of Related Person Transactions with an aggregate value in excess of $1,000,000
must first be approved by a majority of the Board of Directors of the Company
who are disinterested in the subject matter of the transaction pursuant to a
Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute Related
Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or Incurred by such Persons, as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment not prohibited by the "--Limitation on Restricted
Payments" above, (iv) any loan or advance by the Company or a Restricted
Subsidiary to employees of the Company or a Restricted Subsidiary in the
ordinary course of business, in an aggregate amount at any one time outstanding
not to exceed $500,000, and (v) any payment pursuant to a tax-sharing agreement
between the Company and any other Person with which the Company is required or
permitted to file a consolidated tax return or with which the Company is or
could be part of a consolidated group for tax purposes, which payments are not
in excess of the tax liabilities attributable solely to the Company and its
Restricted Subsidiaries (as a consolidated group).
LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY STOCK.
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, in one or a series of
related transactions, convey, sell, transfer, assign or otherwise dispose of,
directly or indirectly, any of its property, businesses or assets, including by
merger or consolidation, and including any sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary of the Company, whether by the
Company or a Restricted Subsidiary (any such transaction an "Asset Sale"),
unless
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(1) (a) within 360 days after the date of such Asset Sale, an amount equal to
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") is applied
to the optional redemption of the Notes in accordance with the terms of the
Indenture and other Senior Indebtedness of the Company (including any
Permitted Pari Passu Secured Indebtedness) from time to time outstanding
with similar provisions requiring the Company to make an offer to purchase
or to redeem such Indebtedness with the proceeds from asset sales, PRO RATA
in proportion to the respective principal amounts (or accreted values in the
case of Indebtedness issued with an original issue discount) of the Notes
and such other Indebtedness then outstanding or to the repurchase of the
Notes and such other Indebtedness pursuant to an irrevocable, unconditional
offer (PRO RATA in proportion to the respective principal amounts (or
accreted values in the case of Indebtedness issued with an original issue
discount) of the Notes and such other Indebtedness then outstanding) (the
"Asset Sale Offer") to repurchase such Indebtedness at a purchase price (the
"Asset Sale Offer Price") of 100% of the principal amount of Notes to be
repurchased or redeemed in the case of the Notes or 100% of the principal
amount of such other Indebtedness to be repurchased or redeemed (or accreted
value in the case of Indebtedness issued with an original issue discount)
plus, in each case, accrued interest to the date of payment, made within 330
days of such Asset Sale, or (b) within 330 days of such Asset Sale, the
Asset Sale Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional 90 days) in
assets and property (other than notes, obligations or securities), which in
the good faith reasonable judgment of the Board of Directors of the Company
are of a type used in a Related Business, or Capital Stock of a Person
(which, if such Person becomes a Subsidiary of the Company by virtue of such
Asset Sale, shall initially be designated a Restricted Subsidiary) all or
substantially all of whose assets and property (in the good faith reasonable
judgment of the Board of Directors of the Company) are of a type used in a
Related Business (PROVIDED, HOWEVER, that, with respect to such Capital
Stock, all of the requirements of the last proviso of clause (v) of the
following paragraph shall have been satisfied), or (ii) used to retire
permanently any Senior Indebtedness of the Company or any Restricted
Subsidiary (other than a Non-Recourse Restricted Subsidiary);
(2) with respect to any transaction or related series of transactions of
securities, property or assets with an aggregate fair market value in excess
of $1,000,000, at least 75% of the value of consideration for the assets
disposed of in such Asset Sale (excluding (a) Indebtedness (other than
Indebtedness which by its terms is subordinated to the Notes) (and any
Refinancing Indebtedness issued to refinance any such Indebtedness) or the
Indebtedness of any Restricted Subsidiary assumed by a transferee which
assumption permanently reduces the amount of Indebtedness outstanding on the
Issue Date and permitted to have been Incurred pursuant to "--Limitation on
Incurrence of Additional Indebtedness" above (including that in the case of
a revolver or similar arrangement that makes credit available, such
commitment is permanently reduced by such amount), (b) Purchase Money
Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are
promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equivalents; PROVIDED, HOWEVER, that any cash or Cash Equivalents received
within 12 months following any such Asset Sale upon conversion of any
property or assets (other than in the form of cash or Cash Equivalents)
received in consideration of such Asset Sale shall be applied promptly in
the manner required of Net Cash Proceeds of any such Asset Sale as set forth
above, and the other conditions to such release of Collateral, if
applicable, are satisfied;
(3) no Default or Event of Default shall occur or be continuing after giving
effect to, on a PRO FORMA basis, such Asset Sale, unless such Asset Sale is
in consideration solely of cash or Cash Equivalents and such consideration
is applied immediately to the permanent reduction of the principal amount of
Indebtedness outstanding pursuant to other Senior Indebtedness of the
Company or any Restricted Subsidiary;
(4) the Board of Directors of the Company determines in good faith that the
Company or such Restricted Subsidiary, as applicable, would receive fair
market value in consideration of such Asset Sale; and
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(5) immediately after giving PRO FORMA effect to such Asset Sale, the Company
would be in compliance with the provisions of "--Minimum Coverage Ratio"
below.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (1) (b) above exceeds $5,000,000 and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement and no longer,
except as otherwise required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, the Company shall apply the
Asset Sale Offer Amount, plus an amount equal to accrued interest, to the
purchase of all Indebtedness properly tendered (on a PRO RATA basis as described
above if the Asset Sale Offer Amount is insufficient to purchase all
Indebtedness so tendered) at the Asset Sale Offer Price (together with accrued
interest).
Notwithstanding the foregoing provisions of the second preceding paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with "--Limitation on Merger, Sale or Consolidation" below;
(iii) the Company and its Restricted Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Restricted Subsidiary, as
applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets (other than FCC
licenses) to the Company or any of its Restricted Subsidiaries other than to
any Non-Recourse Restricted Subsidiary if, with respect to any such
conveyance, sale, lease, transfer, assignment or other disposition to any
Restricted Subsidiary that is not a Guarantor or the stock of which has not
been pledged pursuant to the Security Agreement, immediately after giving
PRO FORMA effect thereto the Company would be in compliance with the
provisions of "--Minimum Coverage Ratio" below; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a financial
point of view to the Company or such Restricted Subsidiary of the proposed
transaction), exchange all or a portion of its property, businesses or
assets for property, businesses or assets which are, or Capital Stock of a
Person all or substantially all of whose assets are, of a type used in a
Related Business (provided that such Person shall initially be designated a
Restricted Subsidiary if such Person becomes a Subsidiary of the Company by
virtue of such Asset Sale), or a combination of any such property,
businesses or assets, or Capital Stock of such a Person and cash or Cash
Equivalents; PROVIDED, HOWEVER, that (a) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default; (b) a majority
of the independent directors of the Board of Directors of the Company shall
have approved a Board Resolution that such exchange is fair to the Company
or such Restricted Subsidiary, as the case may be; (c) any cash or Cash
Equivalents received pursuant to any such exchange shall be applied in the
manner applicable to Net Cash Proceeds from an Asset Sale as set forth
pursuant to the provisions of the immediately preceding paragraph of this
covenant; (d) immediately after giving PRO FORMA effect thereto, the Company
would be in compliance with the provisions of "--Minimum Coverage Ratio"
below; and (e) any Capital Stock of a Person received in an Asset Sale
pursuant to this clause (v) shall be owned directly by the Company or a
Restricted Subsidiary, and, when combined with the Capital Stock of such
Person already owned by the Company and its Restricted
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Subsidiaries, shall constitute a majority of the voting power and Capital
Stock of such Person, unless (A) (I) the Company has received a binding
commitment from such Person (or the direct or indirect parent of such
Person) that such Person (or the direct or indirect parent of such Person)
will distribute to the Company in cash an amount equal to the Company's
Annualized Operating Cash Flow (determined as of the date of such Asset
Sale) attributable to the property, business or assets of the Company and
its Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until the Company shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall have
been satisfied), (II) immediately after such Asset Sale the aggregate number
of Net Pops of the Cellular Systems in which the Company or any of its
Restricted Subsidiaries has ownership interests ("Company Systems") that are
owned directly by a Person or Persons a majority of whose voting power and
Capital Stock is owned directly or indirectly by the Company is no less than
80% of the aggregate number of Net Pops of Company Systems immediately prior
to such Asset Sale and (III) upon consummation of such Asset Sale, on a PRO
FORMA basis, the ratio of such Person's Annualized Operating Cash Flow to
the product of Consolidated Interest Expense for the Reference Period
multiplied by four (but excluding from Consolidated Interest Expense all
amounts that are not required to be paid in cash on a current basis) shall
be at least 1.0 to 1, or (B) in the case of Capital Stock of a Person that
is not a Subsidiary of the Company owned by the Company or a Restricted
Subsidiary that is exchanged (the "Exchanged Capital Stock") for Capital
Stock of another Person all or substantially all of whose assets are of a
type used in a Related Business, either (i) the Exchanged Capital Stock
shall not have been acquired prior to such Asset Sale in reliance upon
clause (A) of this proviso or (ii) the requirements of subclauses (A) (I)
(based on the original guaranteed cash flow) and (A) (III) shall be
satisfied with respect to any Capital Stock acquired in consideration of the
Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of "--Limitation on Restricted Payments" above, without giving effect to
clause (i) of the second paragraph thereof, shall not be deemed to be Asset
Sales.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
MINIMUM COVERAGE RATIO.
So long as any of the Notes remain outstanding, neither the Company nor any
of its Restricted Subsidiaries may make any Asset Sale (other than any Asset
Sale described in clauses (i), (ii) or (iii) of the second paragraph of "--
Limitation on Asset Sales and Sales of Subsidiary Stock" above), or issue any
Permitted Pari Passu Secured Indebtedness that is secured by the Collateral
unless immediately after giving effect to any such Asset Sale or issuance, on a
PRO FORMA basis, the sum of the aggregate principal amount of the Notes plus the
aggregate principal amount (or the aggregate accreted amount in the case of
Permitted Pari Passu Secured Indebtedness, if any, with an original issue
discount) of any Permitted Pari Passu Secured Indebtedness that is secured by
the Collateral then outstanding (such sum, the "Secured Indebtedness") shall be
less than or equal to the sum of (i) the aggregate amount of cash collateral and
Eligible Investments held in the Collateral Account and (ii) the product of (a)
the aggregate number of Net Pops of the MSAs and RSAs in the Collateral Pool and
(b) $175 (the sum of the items described in clauses (i) and (ii), the "Minimum
Collateral Value").
The term "Collateral Pool" shall mean as of any date each MSA or RSA for
which the Company or any Guarantor (other than a Non-Recourse Restricted
Subsidiary) has obtained a license from the FCC to operate a domestic public
cellular mobile radio telecommunications system (each, a "Cellular System");
PROVIDED, HOWEVER, that (a) to the extent that a Lien thereon can be perfected
solely by filing a financing statement in the applicable jurisdictions, the
Company has granted to the Trustee pursuant to the Security
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Agreement as of the Issue Date and not released a perfected Lien (subject to any
Permitted Liens) on all of its property located in such MSA or RSA and (b) in
the event that such license has been granted to a Guarantor (other than a
Non-Recourse Restricted Subsidiary), (1) the Company and such Guarantor, as
applicable, have granted to the Trustee pursuant to the Security Agreement and
not released a perfected Lien (subject to any Permitted Liens) on all of the
issued and outstanding shares of Capital Stock of such Guarantor owned by the
Company or any of the Restricted Subsidiaries, and (2) to the extent that a Lien
thereon can be perfected solely by filing a financing statement in the
applicable jurisdictions, such Guarantor has granted to the Trustee pursuant to
the Security Agreement and not released a perfected Lien (subject to any
Permitted Liens) on all of its property and assets located in such MSA or RSA in
each case to the extent contemplated by the Security Agreement; provided that
there shall be excluded from the Collateral Pool any MSA or RSA for which the
FCC license to operate a Cellular System was acquired by the Company or a
Guarantor after the Issue Date and for which the average annual per capita
income was less than $15,000 at the time of such acquisition (as most recently
reported at the time of acquisition by the applicable source cited in the
definition of "Pops").
LIMITATION ON LIENS.
The Indenture will provide that the Company will not and will not permit any
Restricted Subsidiary, directly or indirectly, to Incur or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Permitted Liens.
LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Indenture will prohibit the Company and its Restricted Subsidiaries from
becoming "investment companies" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Indenture will provide that the Company will not consolidate with or
merge with or into another Person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its and its Restricted Subsidiaries'
assets (computed on a consolidated basis), whether in a single transaction or a
series of related transactions, to another Person or group of affiliated
Persons, unless (i) either (a) the Company is the continuing entity or (b) the
resulting surviving or transferee entity is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Notes, the Indenture and the Security Documents;
PROVIDED, HOWEVER, that in the case of a sale, lease, conveyance, transfer or
other disposition of all or substantially all of the Company's and its
Restricted Subsidiaries' assets, the provisions of this clause (i)(b) need not
be met if all of the consideration in respect of such transaction is received by
the Company and its Restricted Subsidiaries (other than any Non-Recourse
Restricted Subsidiary); (ii) no Default or Event of Default shall exist or shall
occur immediately after giving effect on a PRO FORMA basis to such transaction;
(iii) (a) immediately after giving effect to such transaction on a PRO FORMA
basis, the consolidated resulting surviving or transferee entity (or, in the
case contemplated by the proviso to clause (i)(b), the Company) would
immediately thereafter be permitted to Incur at least $1.00 of additional
Indebtedness pursuant to the Annualized Operating Cash Flow Ratio provision set
forth in the second paragraph of "--Limitation on Incurrence of Additional
Indebtedness" above or (b), if the requirement of clause (a) is not satisfied,
(x) any Indebtedness of the resulting surviving or transferee entity (or, in the
case contemplated by the proviso to clause (i)(b), the Company) in excess of the
amount of the Company's Indebtedness immediately prior to such transaction is
Permitted Acquisition Indebtedness and (y) the requirement of clause (a) is not
satisfied solely due to the Incurrence of such Permitted Acquisition
Indebtedness; (iv) immediately after giving PRO FORMA effect thereto the Secured
Indebtedness of the consolidated resulting surviving or transferee entity (or,
in the case contemplated by the proviso to
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clause (i)(b), of the Company) would either (x) not exceed the Minimum
Collateral Value of the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), of the Company)
or (y) not exceed such Minimum Collateral Value by an amount greater than the
Secured Indebtedness of the Company exceeded the Minimum Collateral Value of the
Company and its Restricted Subsidiaries immediately prior to such transaction;
and (v) the Company shall have delivered to the Trustee an Officers' Certificate
and an opinion of counsel, if applicable, confirming compliance with the
requirements of this covenant.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall (other than as provided in the proviso to
clause (i)(b) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the Notes
and the Indenture.
LIMITATION ON LINES OF BUSINESS.
The Indenture will provide that neither the Company nor any of its
Restricted Subsidiaries shall directly or indirectly engage in any line or lines
of business activity other than that which, in the reasonable, good faith
judgment of the Board of Directors of the Company, is a Related Business.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK.
The Indenture will provide that the Company will not sell, and will not
permit any of its Restricted Subsidiaries to issue or sell, any shares of
Capital Stock of any Restricted Subsidiary of the Company to any Person other
than the Company or a Wholly Owned Restricted Subsidiary of the Company, except
for shares of common stock with no preferences or special rights or privileges
and with no redemption or prepayment provisions ("Special Rights"); PROVIDED,
HOWEVER, that, in the case of a Restricted Subsidiary that is a partnership or
joint venture partnership (a "Restricted Partnership") the Company or any of its
Restricted Subsidiaries may sell or such Restricted Partnership may issue or
sell Capital Stock of such Restricted Partnership with Special Rights no more
favorable than those held by the Company or such Restricted Subsidiary in such
Restricted Partnership.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction; PROVIDED, HOWEVER, that the
Company may enter into a Sale and Leaseback Transaction if (i) the Company could
have (a) Incurred Indebtedness (other than Indebtedness described in the third
paragraph (other than clause (vi) thereof) of "-- Limitation on Incurrence of
Additional Indebtedness" above) in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction in compliance with "--Limitation
on Incurrence of Additional Indebtedness" above and (b) Incurred a Lien to
secure such Indebtedness in compliance with the "--Limitation on Liens" above,
(ii) the gross cash proceeds of such Sale and Leaseback Transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors of the Company and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such Sale and Leaseback
Transaction and (iii) the transfer of assets in such Sale and Leaseback
Transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the provisions of "--Limitation on Asset Sales
and Sales of Subsidiary Stock" above.
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SEPARATE ACCOUNT
The Indenture will provide that on the Issue Date, the Company will deposit
$80,000,000 of cash into a separate account (which may but need not be the
Collateral Account), which amount may only be used by the Company (i) for
acquisitions or (ii) to purchase, redeem or otherwise acquire or retire for
value or make any payment of principal, interest or premium in respect to the
Notes or any Permitted Pari Passu Secured Indebtedness.
REPORTS
The Indenture will provide that whether or not the Company is subject to the
reporting requirements of Section 13 or 15 (d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder, within 15 days after it is or
would have been required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if the Company was
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the Commission, and in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required. In addition, for so long as any Notes remain outstanding,
the Company will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of the Notes, if not obtainable from the Commission,
information of the type that would be filed with the Commission pursuant to the
foregoing provisions, upon the request of any such holder.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when the same
becomes due and payable and the continuance of any such failure for 30 days;
(ii) the failure by the Company to pay all or any part of the principal, or
premium, if any, on the Notes when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, payment of the Change of Control Purchase Price or the Asset Sale
Offer Price; (iii) the failure by the Company or any Guarantor to observe or
perform any other covenant or agreement contained in the Notes or the Indenture
and, subject to certain exceptions, the continuance of such failure for a period
of 30 days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding; (iv) certain events of bankruptcy, insolvency
or reorganization in respect of the Company or any of the Company's Significant
Restricted Subsidiaries; (v) the failure to pay at final stated maturity (giving
effect to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary of the
Company or the acceleration of the final stated maturity of any Indebtedness if
the aggregate principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
final maturity or which has been accelerated, aggregates $15,000,000 or more at
any time, except that such dollar amount shall not apply to any Permitted Pari
Passu Secured Indebtedness that is secured by the Collateral; (vi) final
unsatisfied judgments not covered by insurance aggregating in excess of
$5,000,000, at any one time rendered against the Company or any of the Company's
Restricted Subsidiaries and not stayed, bonded or discharged within 60 days;
(vii) the failure of any Guarantee to be in full force and effect or declaration
of any Guarantee to be null and void and unenforceable or finding of any
Guarantee to be invalid or denial by any Guarantor of its liability under its
Guarantee (other than by reason of release of such Guarantor in accordance with
the terms of the Indenture); and (viii) the failure of any of the Security
Documents to be in full force and effect or to give the Trustee the Liens,
rights, powers and privileges purported to be created thereby. The Indenture
will provide that if a default occurs and is continuing, the
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Trustee must, within 90 days after the occurrence of such default, give to the
Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above relating to the Company or any
Significant Restricted Subsidiary), then in every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of 25% in aggregate principal amount of the Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) may declare all principal and accrued interest thereon to be
due and payable and the same shall become immediately due and payable. If an
Event of Default specified in clause (iv) above, relating to the Company or any
Significant Restricted Subsidiary occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of Notes generally are authorized to
rescind such acceleration if all existing Events of Default, other than the
non-payment of the principal of, premium, if any, and interest on the Notes
which have become due solely by such acceleration, have been cured or waived.
The Indenture will provide that in the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (v) of the first paragraph under "--Events of Default and Remedies," the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of all Indebtedness described in clause (v) (without any payment to any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Notes would not conflict
with any judgment or decree of a court of competent jurisdiction and (ii) all
Events of Default, except nonpayment of principal interest on the Notes that
became due solely because of the acceleration of the Notes, have been cured or
waived.
The Holders of a majority in aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of or interest on any Note not yet cured, or
a default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holders of a greater specified percentage of
the aggregate principal amount of the Notes then outstanding without the consent
of such greater percentage. Subject to the provisions of the Indenture relating
to the duties of the Trustee, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Company may, at its option and at any
time, elect to have its obligations and the obligations of the Guarantors
discharged with respect to the outstanding Notes, Guarantees and Security
Documents ("Legal Defeasance"). Such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented,
and the Indenture, Guarantees and Security Documents shall cease to be of
further effect, except as to (i) rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due from the trust funds; (ii) the Company's obligations with
respect to such Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or
agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and the Company's
obligations in connection therewith; and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with
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respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including nonpayment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"--Events of Default and Remedies " above will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, U.S. Legal Tender, non-callable
government securities or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on such Notes on the stated date for payment thereof or on the applicable
Redemption Date of such principal or installment of principal of, premium,
if any, or interest on such Notes, and the Holders of Notes must have a
valid, perfected, exclusive security interest in such trust;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (a) the Company has received from,
or there has been published by the Internal Revenue Service, a ruling or (b)
since the date of the Indenture, there has been a change in the applicable
Federal income tax law, in each case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of such Notes will
not recognize income, gain or loss for Federal income tax purposes as a
result of such Legal Defeasance, and will be subject to Federal income tax
in the same amount, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit
or such deposit) shall have occurred and be continuing on the date of such
deposit or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of such Notes over any other creditors of
the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance have been complied with.
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AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Company, the Guarantors
and the Trustee to enter into a supplemental indenture for certain limited
purposes without the consent of the Holders. With the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, the Guarantors and the Trustee are permitted to amend
or supplement the Indenture or any supplemental indenture or modify the rights
of the Holders; provided, however, that no such modification may, without the
consent of each Holder affected thereby: (i) change the Stated Maturity of any
Note, or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or reduce the Change of Control Purchase Price or the Asset Sale Offer
Price or alter redemption provisions or the provisions (or the definitions
related thereto) of "--Certain Covenants--Repurchase of Notes at the Option of
the Holder Upon a Change of Control" above in a manner adverse to the Holders,
or (ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) modify any of the
waiver provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Note affected thereby. With the
consent of Holders of two-thirds of the aggregate principal amount of the Notes
at the time outstanding, the Company and the Trustee are permitted to change the
Change of Control Purchase Date or the Asset Sale Offer Period.
In addition, no waiver or amendment may permit (x) a release of Collateral
(not otherwise permitted under the Security Documents) that relates to more than
25% of the fair market value of the Collateral (as determined in good faith by
the Company's Board of Directors) without the consent of the Holders of 66 2/3%
of the aggregate principal amount of Notes then outstanding or (y) the release
(not otherwise permitted under the Security Documents) of all or substantially
all of the Collateral or any amendment of or modification to the Indenture or
the Security Documents that has the substantial effect thereof without the
consent of Holders of 75% of the aggregate principal amount of Notes then
outstanding.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company or any
Guarantor or any successor entity shall have any personal liability in respect
of the obligations of the Company or any Guarantor or any successor entity under
the Indenture, the Notes or any Guarantee by reason of his or its status as such
stockholder, employee, officer or director.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms contained in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"AFFILIATE" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the
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voting common equity of such Person (on a fully diluted basis) or of warrants or
other rights to acquire such equity (whether or not presently exercisable).
"ANNUALIZED OPERATING CASH FLOW" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"ANNUALIZED OPERATING CASH FLOW RATIO" on any date (the "Transaction Date")
means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving PRO FORMA effect to the Incurrence of any Indebtedness on
such Transaction Date) divided by (ii) the aggregate amount of Annualized
Operating Cash Flow of such Person (determined on a PRO FORMA basis after giving
effect to all acquisitions or dispositions of businesses made by such Person and
its Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such acquisition or disposition had occurred at the
beginning of such Reference Period); PROVIDED that for purposes of such
computation, in calculating Annualized Operating Cash Flow and consolidated
Indebtedness, (a) the transaction giving rise to the need to calculate the
Annualized Operating Cash Flow Ratio will be assumed to have occurred (on a PRO
FORMA basis) on the first day of the Reference Period; (b) the Incurrence of any
Indebtedness during the Reference Period or subsequent thereto and on or prior
to the Transaction Date (and the application of the proceeds therefrom to the
extent used to retire Indebtedness or to acquire businesses) will be assumed to
have occurred (on a PRO FORMA basis) on the first day of such Reference Period;
(c) Consolidated Interest Expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the Transaction Date had been the applicable rate
for the entire period; (d) all members of the consolidated group of such Person
on the Transaction Date that were acquired during the Reference Period or
thereafter and on or prior to the Transaction Date shall be deemed to be members
of the consolidated group of such Person for the entire Reference Period; and
(e) consolidated Indebtedness shall include any Indebtedness constituting
Permitted Parent Securities to the extent that the aggregate outstanding amount
thereof exceeds $153.4 million; PROVIDED, HOWEVER, that with respect to any such
Indebtedness, the amount thereof included pursuant to this clause (e) as of any
date shall be limited to the proportion of such Indebtedness, if any, that is
equal to the proportion of the interest on such Indebtedness that as of the most
recent interest payment date in respect thereof was paid with cash distributed
by the Company pursuant to clause (ii) of the second paragraph of "--Certain
Covenants -- Limitation on Restricted Payments" above. When the foregoing
definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at June 15, 2002 (such redemption price being described under "--Optional
Redemption") above, PLUS (2) all remaining required interest payments (excluding
accrued but unpaid interest) due on such Note through June 15, 2002, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)
the then outstanding principal amount of such Note.
"ASSET SALE" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PERIOD" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PRICE" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
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"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction means, as
of the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended).
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL STOCK" means, with respect to any Person, any capital stock of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"CAPITALIZED LEASE OBLIGATIONS" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing within one year after the date of acquisition and
(iii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) and (ii) above.
"CELLULAR SYSTEM" has the meaning set forth in "--Certain Covenants --
Minimum Coverage Ratio" above.
"CHANGE OF CONTROL" means (i) other than any transaction in which the
resulting transferee Person need not assume the Notes as provided in the proviso
to clause (i)(b) of "--Certain Covenants-- Limitation on Merger, Sale or
Consolidation" above, any sale, transfer or other conveyance, whether direct or
indirect, of a majority of the fair market value of the assets of the Company or
Parent, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), other than an Excluded
Person or Excluded Group, is or becomes the "beneficial owner" (as such term is
used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly or
indirectly, of more than 50% of the equity of the transferee, (ii) any person or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than an Excluded Person or
Excluded Group, is or becomes the "beneficial owner" (as such term is used in
Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of
more than 50% of the equity of the Company or Parent then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or Parent was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute at
least a majority of the Board of Directors of the Company or Parent then in
office.
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"CHANGE OF CONTROL OFFER" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change of
Control" above.
"CHANGE OF CONTROL OFFER PERIOD" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change in
Control" above.
"CHANGE OF CONTROL PURCHASE PRICE" has the meaning set forth under
"--Certain Covenants -- Repurchase of Notes at the Option of the Holder upon a
Change in Control" above.
"CHANGE OF CONTROL PUT DATE" means the earlier of (a) the third Business Day
prior to the Change of Control Purchase Date and (b) the third Business Day
following the expiration of the Change of Control Offer.
"COLLATERAL" has the meaning set forth under "--Security and Ranking of the
Notes" above.
"COLLATERAL ACCOUNT" means an account maintained with the Trustee or with
any financial institution into which cash collateral and Eligible Investments
securing the Notes are deposited pursuant to the terms of the Security
Agreement.
"COLLATERAL POOL" has the meaning set forth under "--Certain Covenants --
Minimum Coverage Ratio" above.
"COMPANY SYSTEMS" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"COMPUTATION PERIOD" has the meaning set forth under "--Certain Covenants --
Limitation on Restricted Payments" above.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (i) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to the Capitalized Lease Obligations) of such Person and
its consolidated Subsidiaries during such period, including (a) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (b) the
interest portion of all deferred payment obligations, and (c) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financings and currency and Interest Swap and Hedging
Obligations, in each case to the extent attributable to such period, and (ii)
the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"CONSOLIDATED NET INCOME" of any Person for any period means the net income
(or loss) of such Person and its consolidated Subsidiaries for such period,
determined (on a consolidated basis) in accordance with GAAP, adjusted to
exclude (only to the extent included in computing such net income (or loss) and
without duplication) (i) all extraordinary gains and losses and gains and losses
that are nonrecurring (including as a result of Asset Sales outside the ordinary
course of business), (ii) the net income, if positive, of any Person that is not
a Subsidiary in which such Person or any of its Subsidiaries has an interest,
except to the extent of the amount of dividends or distributions actually paid
to such Person or a Subsidiary of such Person that both (a) are actually paid in
cash to such Person or a Subsidiary of such
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Person during such period and (b) when taken together with all other dividends
and distributions paid during such period in cash to such Person or a Subsidiary
of such Person, are not in excess of such Person's PRO RATA share of such other
Person's aggregate net income earned during such period, (iii), except as
provided in the definition of "Annualized Operating Cash Flow Ratio" above the
net income (or loss) of any Subsidiary acquired in a pooling of interests
transaction for any period prior to the date of such acquisition and (iv) the
net income, if positive, of any Subsidiary of such Person (other than a Non-
Recourse Restricted Subsidiary) to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or any agreement or instrument applicable to such
Subsidiary. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"COVENANT DEFEASANCE" has the meaning set forth under "--Legal Defeasance
and Covenant Defeasance" above.
"DEFAULT" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"DISQUALIFIED CAPITAL STOCK" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity; PROVIDED, HOWEVER, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"DLJ POP BOOK" means The Wireless Communications Industry survey published
by Donaldson, Lufkin & Jenrette Securities Corporation.
"ELIGIBLE INVESTMENTS" means (a) direct obligations of the United States of
America, or of any agency thereof, or obligations guaranteed as to principal and
interest by the United States of America, or by any agency thereof, in either
case maturing not more than one year from the date of acquisition thereof by
such Person; (b) time deposits, certificates of deposit or bankers' acceptances
(including eurodollar deposits) issued by any bank or trust company organized
under the laws of the United States of America or any state thereof and having
capital, surplus and undivided profits of at least $500 million and a deposit
rating of investment grade; (c) commercial paper rated A-1 or better by S&P or
P-1 or better by Moody's, respectively, maturing not more than 180 days from the
date of acquisition thereof by such Person; (d) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (a) above entered into with a bank meeting the qualifications
described in clause (b) above; (e) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or A by
Moody's; or (f) money market mutual funds that invest primarily in the foregoing
items.
"EQUITY OFFERING" means with respect to any Person, the sale or offering of
any Capital Stock of such Person that is not Disqualified Capital Stock.
"EXCHANGE CAPITAL STOCK" has the meaning set forth under "--Certain
Covenants -- Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"EXCLUDED GROUP" means a "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) that includes one or more Excluded Persons; PROVIDED,
HOWEVER, that the voting power of the Capital Stock of the Company or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital
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Stock "beneficially owned" (as such term is used in Rule 13d-3 promulgated under
the Exchange Act) by such group.
"EXCLUDED PERSON" means Robert Price, Parent (so long as not controlled by
anyone other than Robert Price) and any Affiliate of any of the foregoing that
is wholly owned by any of the foregoing.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; PROVIDED, HOWEVER, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"GUARANTEE" has the meaning set forth under "--Guarantees" above.
"GUARANTORS" means each Restricted Subsidiary of the Company (other than a
Non-Recourse Restricted Subsidiary) that has executed and delivered the
Indenture or a supplement thereto to become a Guarantor, and "Guarantor" means
any of them.
"HOLDER" means a Person in whose name a Note is registered. The Holder of a
Note will be treated as the owner of such Note for all purposes.
"HOLDINGS" means Price Communications Cellular Holdings, Inc., a Delaware
corporation, and its successors and assigns.
"INCUR" has the meaning set forth under "--Certain Covenants --Limitation on
Incurrence of Additional Indebtedness" above.
"INDEBTEDNESS" of any Person means, without duplication, (i) all liabilities
and obligations, contingent or otherwise, of such Person, (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (b) evidenced by bonds,
notes, debentures or similar instruments, (c) representing the balance deferred
and unpaid of the purchase price of any property or services, except (other than
accounts payable or other obligations to trade creditors which have remained
unpaid for more than 90 days past their original due date or to financial
institutions, which obligations are not being contested in good faith and for
which appropriate reserves have not been established) those Incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
to trade creditors, (d) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks, (e) for the payment of money relating to a
Capitalized Lease Obligation, or (f) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(ii) all obligations of such Person under Interest Swap and Hedging Obligations;
(iii) all liabilities of others of the kind described in the preceding clauses
(i) or (ii) that such Person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such Person and all
obligations to purchase, redeem or acquire any Capital Stock; (iv) all
Disqualified Capital Stock of such Person and all Preferred Stock of such
Person's Subsidiaries; and (v) any and all deferrals, renewals, extensions,
refinancing and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii), or (iv) or this clause (v), whether or
not between or among the same parties; provided that the outstanding principal
amount at any date of any Indebtedness issued with original issue discount is
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such date.
"INTERCREDITOR AGREEMENT" has the meaning set forth under "--Intercreditor
Agreement" above.
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"INTEREST SWAP AND HEDGING OBLIGATIONS" means any obligations of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of the
Indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such Person.
"INVESTMENT" by any Person in any other Person means (without duplication)
(i) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such other Person or any agreement to make any
such acquisition; (ii) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (iii) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (iv) the
making of any capital contribution by such Person to such other Person; and (v)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of "-- Certain Covenants--Limitation on
Restricted Payments" above, (x) "Investment" shall include and be valued at the
fair market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary and (y) the amount of any Investment shall be the fair
market value of such Investment plus the fair market value of all additional
Investments by the Company or any of its Restricted Subsidiaries at the time any
such Investment is made; PROVIDED, HOWEVER that, for purposes of this sentence,
the fair market value of net assets in excess of $5,000,000 shall be as
determined by an independent appraiser of national reputation.
"ISSUE DATE" means the time and date of the first issuance of the Notes
under the Indenture.
"JUNIOR INDEBTEDNESS" means Indebtedness of the Company that (i) requires no
payment of principal prior to or on the date on which all principal of and
interest on the Notes is paid in full and (ii) is subordinate and junior in
right of payment to the Notes in all respects.
"LEGAL DEFEASANCE" has the meaning set forth under "--Legal Defeasance and
Covenant Defeasance" above.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"LIEN" means any mortgage, lien, pledge, charge, security interest, or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"MATURITY DATE" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer, Proceeds Purchase Offer or Asset
Sale Offer).
"MINIMUM COLLATERAL VALUE" has the meaning set forth under "--Certain
Covenants--Minimum Coverage Ratio" above.
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"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means the aggregate amount of cash and Cash Equivalents
received by the Company and its Restricted Subsidiaries in respect of an Asset
Sale (including upon the conversion to cash and Cash Equivalents of (A) any note
or installment receivable at any time, or (B) any other property as and when any
cash and Cash Equivalents are received in respect of any property received in an
Asset Sale but only to the extent such cash and Cash Equivalents are received
within one year after such Asset Sale), less the sum of (i) all reasonable
out-of-pocket fees, commissions and other expenses Incurred in connection with
such Asset Sale, including the amount (estimated in good faith by the Board of
Directors of the Company) of income, franchise, sales and other applicable taxes
required to be paid by the Company or any Restricted Subsidiary of the Company
in connection with such Asset Sale and (ii) the aggregate amount of cash so
received which is used to retire any existing Senior Indebtedness of the Company
or Indebtedness of its Restricted Subsidiaries, as the case may be, which is
required to be repaid in connection with such Asset Sale or is secured by a Lien
on the property or assets of the Company or any of its Restricted Subsidiaries,
as the case may be; PROVIDED, HOWEVER, that the provisions of this clause (ii)
shall not permit any non-pro rata application of the proceeds of any Asset Sale
to Permitted Pari Passu Secured Indebtedness to the disadvantage of the Notes.
"NET POPS" of any Person with respect to any Cellular System means the Pops
of the MSA or RSA served by such Cellular System multiplied by the direct and/or
indirect percentage interest of such Person in the entity licensed or designated
to receive an authorization by the Federal Communications Commission to
construct or operate a Cellular System in that MSA or RSA.
"NET PROCEEDS" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business, in an amount reasonably determined by the
Board of Directors of the Company for amounts less than or equal to $5,000,000
and by a financial advisor or appraiser of national reputation for greater
amounts) received by a Person from any Equity Offering (other than to a
Subsidiary of such Person) after payment of out-of-pocket expenses, commissions
and discounts Incurred in connection therewith.
"NON-RECOURSE RESTRICTED SUBSIDIARY" has the meaning specified in the
definition of "Permitted Acqusition Indebtedness."
"OBLIGATION" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"OPERATING CASH FLOW" of any Person means (i) with respect to any period,
the Consolidated Net Income of such Person for such period, plus (ii) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (a) the provisions for
income taxes for such period for such Person and its consolidated Subsidiaries,
(b) depreciation, amortization and other non-cash charges of such Person and its
consolidated Subsidiaries and (c) Consolidated Interest Expense of such Person
for such period, determined, in each case, on a consolidated basis for such
Person and its consolidated Subsidiaries in accordance with GAAP, less (iii) the
amount of all cash payments made during such period by such Person and its
Subsidiaries to the extent such payments relate to non-cash charges that were
added back in determining Operating Cash Flow for such period or for any prior
period. When the foregoing definition is used in connection with the Company and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"PARENT" means PCC or any direct or indirect Wholly Owned Subsidiary of PCC
that directly or indirectly wholly owns the Company.
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"PARENT INDENTURE" means the indenture dated as of August 7, 1997, by and
between Holdings and Bank of Montreal Trust Company, as trustee, under which the
Parent Notes were issued.
"PARENT NOTES" means the 13-1/2% Senior Secured Discount Notes due 2007 of
Holdings.
"PCC" means Price Communications Corporation, a New York corporation, and
its successors and assigns.
"PERMITTED ACQUISITION INDEBTEDNESS" means, with respect to any Person,
Indebtedness Incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Related Business; PROVIDED, HOWEVER,
that, in the case of the Company or its Restricted Subsidiaries, as applicable,
(x) (i) the Company's Annualized Operating Cash Flow Ratio, after giving effect
to such acquisition and such Incurrence on a PRO FORMA basis, is no greater than
such ratio prior to giving PRO FORMA effect to such acquisition and such
Incurrence; (ii) the Company's consolidated Indebtedness, divided by the Net
Pops of the Company and its Restricted Subsidiaries, in each case giving PRO
FORMA effect to the acquisition and such Incurrence, does not exceed $175; (iii)
after giving effect to such acquisition and such Incurrence the acquired
property, businesses or assets or such Capital Stock is owned directly by the
Company or a Wholly Owned Restricted Subsidiary of the Company or (y) (i) under
the terms of such Indebtedness and pursuant to applicable law, no recourse could
be had for the payment of principal, interest or premium with respect to such
Indebtedness or for any claim based thereon against the Company or any
Restricted Subsidiary of the Company other than the obligor of such Indebtedness
and its Subsidiaries or any of their property or assets other than the Capital
Stock of such obligor or its Subsidiaries, (ii) the obligor of such Indebtedness
shall have, immediately after giving effect to such acquisition and such
Incurrence on a PRO FORMA basis, a ratio of Annualized Operating Cash Flow as of
the date of such acquisition and Incurrence to the product of Consolidated
Interest Expense for the Reference Period multiplied by four (but excluding from
Consolidated Interest Expense all amounts that are not required to be paid in
cash on a current basis) of at least 1.0 to 1, (iii) since the Issue Date no
Permitted Investment (other than as permitted by clause (viii) of the definition
of "Permitted Investment" below) shall have been made in such obligor or its
Subsidiaries and (iv) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by the Company (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary."
"PERMITTED INVESTMENT" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (a) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (b) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
"--Certain Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock"
above; (vi) any guarantee issued by a Restricted Subsidiary Incurred in
compliance with the Indenture; (vii) advances and prepayments for asset
purchases in the ordinary course of business in a Related Business of the
Company or a Restricted Subsidiary; (viii) Investments in Non-Recourse
Restricted Subsidiaries with the proceeds of contributions irrevocably and
unconditionally received without restriction by the Company from any Parent; and
(ix) customary loans or advances made
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in the ordinary course of business to officers, directors or employees of the
Company or any of its Restricted Subsidiaries for travel, entertainment, and
moving and other relocation expenses.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business;
PROVIDED, HOWEVER, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under the Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not Incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary or is merged with or into the Company or
a Restricted Subsidiary; PROVIDED, HOWEVER, that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
Incurred in anticipation thereof, and do not extend to any other assets; (k)
Liens arising from Purchase Money Indebtedness permitted under the Indenture;
(l) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders than the terms of the Liens securing such refinanced Indebtedness; (m)
Liens in favor of the Company or a Wholly Owned Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary); (n) Liens securing any Permitted
Pari Passu Secured Indebtedness Incurred in accordance with the provisions of
"-- Certain Covenants--Limitation on Incurrence of Additional Indebtedness"
above; PROVIDED, HOWEVER, that (A) the aggregate principal amount of the Secured
Indebtedness as of the date of issuance of such series of Permitted Pari Passu
Secured Indebtedness on a PRO FORMA basis is less than or equal to the Minimum
Collateral Value, (B) the indenture and the related documents for each such
series of Permitted Pari Passu Secured Indebtedness contains provisions with
respect to releases of Collateral that are substantially similar to and no more
restrictive on the Company than the provisions of the Indenture and the Security
Agreement and (C) the trustee for the holders of each series of Permitted Pari
Passu Secured Indebtedness executes and delivers a joinder supplement to the
Intercreditor Agreement; and (o) Liens on assets other than the Collateral
securing Indebtedness (other than Junior Indebtedness) permitted to be incurred
under "--Certain Covenants -- Limitation on Incurrence of Additional
Indebtedness" above.
"PERMITTED PARENT SECURITIES" means (i) the Parent Notes, (ii) any
refinancing of the Parent Notes that has a first scheduled cash interest payment
due and payable no earlier than the due date of the first scheduled cash
interest payment of the Indebtedness being refinanced as of the Issue Date and
(iii) any other Indebtedness of Holdings or Parent Incurred after the Issue
Date; PROVIDED, HOWEVER, that (a) the gross proceeds of such Indebtedness do not
exceed $100 million in the aggregate, (b) such Indebtedness has a first
scheduled cash interest payment due and payable no earlier that the due date of
the first scheduled cash interest payment of the Indebtedness described in
clauses (i) or (ii) above and (c) the net proceeds of such Indebtedness are
contributed to the Company or its Restricted Subsidiaries and applied
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in a manner permitted by the Indenture. For purposes of this definition, the
term "first scheduled cash interest payment" shall not include any payment date
on which the issuer (i) may elect to pay interest in cash or (ii) is required to
pay interest in cash as a result of such election.
"PERMITTED PARI PASSU SECURED INDEBTEDNESS" has the meaning set forth under
"--Permitted Pari Passu Secured Indebtedness" above.
"PERSON" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory entity
country, state or political subdivision thereof, trust, municipal or other
entity.
"POPS" means, as of any date of determination, the greater of the estimate
of the population of a Metropolitan Statistical Area ("MSA") or Rural Service
Area ("RSA") derived from (i) the most recent Donnelly Market Service and (ii)
the most recent DLJ Pop Book; PROVIDED, HOWEVER, that (x) if such statistics are
no longer printed in either the Donnelly Market Service or the DLJ Pop Book, or
either such source is no longer published, the then currently published source
of the two containing such information shall be used; (y) if such statistics are
no longer printed in either such source, or both sources are no longer
published, the statistics in the most recent Rand McNally Commercial Atlas shall
be used; and (z) if such statistics are no longer printed in the Rand McNally
Commercial Atlas or the Rand McNally Commerical Atlas is no longer published,
another nationally recognized source of such information shall be used.
"PREFERRED STOCK" means Capital Stock, other than common stock of an issuer
having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"RECORD DATE" means the Record Date specified on the Notes whether or not
such Record Date is a Business Day.
"REDEMPTION DATE" when used with respect to any Note to be redeemed means
the date fixed for such redemption pursuant to the Indenture and the Note.
"REDEMPTION PRICE" when used with respect to any Note to be redeemed, means
the redemption price for such redemption pursuant to Article 3 of the Indenture
and Paragraph 5 in the form of Note, which shall include, without duplication,
in each case, any accrued and unpaid interest to the Redemption Date.
"REFERENCE PERIOD" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing") any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
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lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably Incurred in connection with such
refinancing; PROVIDED, HOWEVER that (A) Refinancing Indebtedness issued by any
Restricted Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have no installments of principal (or redemption payment)
scheduled to come due earlier than the scheduled maturity of any installment of
principal (or redemption payment) of the Indebtedness or Disqualified Capital
Stock to be so refinanced which was scheduled to come due prior to the Stated
Maturity.
"REGISTRAR" means the office or agency in the Borough of Manhattan, The City
of New York, where the Notes may be presented for registration of transfer or
for exchange.
"RELATED BUSINESS" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"RELATED PERSON" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person describe in clause (i) above has a beneficial interest.
"RELATED PERSON TRANSACTION" has the meaning set forth under "--Certain
Covenants -- Limitation on Transactions with Related Persons" above.
"RESTRICTED PARTNERSHIP" has the meaning set forth under "--Certain
Covenants -- Restriction on Sale and Issuance of Subsidiary Stock" above.
"RESTRICTED PAYMENT" means, with respect to any Person, (i) any dividend or
other distribution on shares of Capital Stock of such Person, its Parent, or any
Subsidiary of such Person, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any shares of
Capital Stock of such Person, its Parent, or any Subsidiary of such Person held
by Persons other than such Person or any of its Restricted Subsidiaries (other
than any Non-Recourse Restricted Subsidiary), (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any Indebtedness
of the Company (other than the scheduled repayment thereof at maturity and any
mandatory redemption or mandatory repurchase thereof pursuant to the terms
thereof) by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks PARI PASSU (other than the Notes) with, the Notes
(other than in exchange for Refinancing Indebtedness permitted to be Incurred
under the Indenture and except for any such defeasance, redemption, repurchase,
other acquisition or payment in respect of Indebtedness held by any Restricted
Subsidiary) and (iv) any Investment (other than a Permitted Investment);
PROVIDED, HOWEVER, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on shares of Capital Stock of the
Company or any Restricted Subsidiary solely in shares of Qualified Capital
Stock, (ii) any dividend, distribution or other payment to the Company, or any
dividend to any of its Restricted Subsidiaries (other than any Non-Recourse
Restricted Subsidiary), by any of its Subsidiaries, and (iii) the purchase,
redemption or other acquisition or retirement for value of shares of
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Capital Stock of any Restricted Subsidiary (other than Non-Recourse Restricted
Subsidiaries) held by Persons other than the Company or any of its Restricted
Subsidiaries.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately before and after giving effect to such
designation, there would exist no Default or Event of Default and the Company
could Incur at least $1.00 of Indebtedness pursuant to the Annualized Operating
Cash Flow Ratio test of "--Certain Covenants-- Limitation on Incurrence of
Additional Indebtedness" above, on a PRO FORMA basis taking into account such
designation.
"S&P" means Standard & Poor's Corporation.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement
with any Person or to which any such person is a party providing for the leasing
to the Company or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later acquired, which
has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such property.
"SECURED INDEBTEDNESS" shall have the meaning set forth under "--Certain
Covenants -- Minimum Coverage Ratio" above.
"SECURITY AGREEMENT" has the meaning set forth under "--Security" above.
"SECURITY DOCUMENTS" means the Security Agreement, the Intercreditor
Agreement and any other document from time to time entered into by the Company
or any Guarantor to pledge Collateral to the Trustee for its benefit and the
benefit of the Holders.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company or any
Restricted Subsidiary, including the Notes, other than Indebtedness of the
Company or any Restricted Subsidiary as to which the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, provides that
such Indebtedness shall be subordinated or junior in right of payment to the
Notes or the Guarantees, as applicable.
"SENIOR SUBORDINATED NOTES" means the Company's 11-3/4% Senior Subordinated
Notes due 2007.
"SENIOR SUBORDINATED NOTES INDENTURE" means the indenture dated as of July
10, 1997, by and between the Company and Bank of Montreal Trust Company, as
trustee, under which the Senior Subordinated Notes were issued.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of the
net book value of the assets of the Company and its Restricted Subsidiaries on a
consolidated basis.
"SPECIAL RIGHTS" has the meaning set forth under "--Certain Covenants --
Restriction on Sale and Issuance of Subsidiary Stock" above.
"STATED MATURITY" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Notes, including the Maturity Date,
upon redemption, acceleration, Asset Sale Offer, Change of Control Offer or
otherwise.
"SUBSIDIARY" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more
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Subsidiaries of such Person, or such Person and one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof has (x) at
least a fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time.
"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from
the Redemption Date to June 15, 2002; PROVIDED, HOWEVER, that if the period from
the Redemption Date to June 15, 2002 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period
from the Redemption Date to June 15, 2002 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"TRUSTEE" means Bank of Montreal Trust Company or any successor appointed
pursuant to the terms of the Indenture.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Company that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary so long as (i) no Default
or Event of Default is existing or will occur as a consequence thereof, (ii)
such Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, (iii) such Subsidiary and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee, or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any property or assets of the Company or any of its Restricted
Subsidiaries (except that such Subsidiary and its Subsidiaries may guarantee the
Notes) and (iv) such Subsidiary is at the time of designation also designated as
an unrestricted subsidiary pursuant to the Senior Subordinated Notes Indenture
and the Parent Indenture; PROVIDED, HOWEVER, that either (A) the Subsidiary to
be so designated has total assets of $1,000 or less or (B) if such Subsidiary
has assets greater than $1,000, that such designation would be permitted under
"--Certain Covenants--Limitation on Restricted Payments" above. Any Subsidiary
of the Company that is designated on the Issue Date as an unrestricted
subsidiary pursuant to the Senior Subordinated Notes Indenture and the Parent
Indenture shall be designated to be an Unrestricted Subsidiary. Each such
designation shall be evidenced by filing with the Trustee a certified copy of
the resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"WEIGHTED AVERAGE LIFE" means, as of the date of determination, with respect
to any debt instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such debt instrument multiplied
by the amount of each such respective principal payment by (ii) the sum of all
such principal payments.
"WHOLLY OWNED" means, with respect to a Subsidiary of the Company, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned
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directly by such Person or through one or more other Wholly Owned Subsidiaries
of such Person, or (ii) any entity other than a corporation in which such
Person, directly or indirectly, owns not less than 99% of the Capital Stock of
such entity.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights pursuant to the Registration Rights Agreement. Pursuant to
the Registration Rights Agreement, the Company has agreed to file with the SEC
and have declared effective on or prior to November 12, 1998 a registration
statement (the "Exchange Offer Registration Statement") under the Securities Act
with respect with the Exchange Offer. The Company also agreed that, after the
effectiveness of the Exchange Offer Registration Statement, it would, subject to
certain conditions, offer to the Holders of Old Notes who are able to make
certain representations the opportunity to exchange their Old Notes for New
Notes. In the event that applicable interpretations of the staff of the SEC do
not permit the Company to effect the Exchange Offer ("SEC Blockage") or do not
permit any Holder of Old Notes, subject to certain limitations, to participate
in such Exchange Offer, the Company has agreed to file with the SEC a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the applicable Old Notes. The Registration Statement of which this Prospectus is
a part constitutes the Exchange Offer Registration Statement.
The Registration Rights Agreement provides that the Company will use its
reasonable best efforts to have the Exchange Offer Registration Statement (and,
if applicable, a Shelf Registration Statement) declared effective by the SEC on
or prior to November 12, 1998. If the Exchange Offer has not been consummated by
December 12, 1998 (unless there exists a SEC Blockage) (such event, a
"Registration Default"), the Company will pay liquidated damages to each Holder
of Old Notes, during the first 90-day period immediately following the
occurrence of such Registration Default in an amount equal to $0.05 per week per
$1,000 principal amount at maturity of Notes constituting Old Notes held by such
Holder. The amount of the liquidated damages will increase by an additional
$0.05 per week per $1,000 of Accreted Value constituting Old Notes for each
subsequent 90-day period until the Exchange Offer is consummated, up to a
maximum amount of liquidated damages of $0.25 per week per $1,000 principal
amount at maturity of Notes constituting Old Notes. All accrued liquidated
damages shall be paid to Holders in the same manner as interest payments on the
Notes and on interest payment dates for the Notes.
The Registration Rights Agreement provides that the Company (i) shall make
available for a period of 90 days after the consummation of the Exchange Offer a
prospectus meeting the requirements of the Securities Act to any broker-dealer
for use in connection with any resale of any such New Notes and (ii) shall pay
all expenses incident to the Exchange Offer (including the expenses of one
counsel to the Holders of the Notes) and will indemnify certain Holders of the
Notes (including any broker-dealer) against certain liabilities, including
liabilities under the Securities Act.
Holders of Old Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
liquidated damages set forth in the preceding sentence. In addition, for so long
as the Notes are outstanding, the Company will continue to provide to Holders of
Notes and to prospective purchasers of the Notes the information required by
Rule 144A(d)(4). The Company will provide a copy of the Registration Rights
Agreement to prospective investors upon request.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to Holders. When a Holder
exchanges an Old Note for a New Note pursuant to the Exchange Offer, the Holder
will have the same adjusted basis and holding period in the New Note as in the
Old Note immediately before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a Prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker-dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal.
The Company has agreed in the Registration Rights Agreement to indemnify
each broker-dealer reselling New Notes pursuant to this Prospectus, and their
officers, directors and controlling persons, against certain liabilities in
connection with the offer and sale of the New Notes, including liabilities under
the Securities Act, or to contribute to payments that such broker-dealers may be
required to make in respect thereof.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Davis Polk & Wardwell, New York, New York.
EXPERTS
The financial statements and schedules included in this prospectus and
elsewhere in this registration statement to the extent and for the periods
indicated in their reports have been audited by Arthur Andersen LLP, independent
public accountants and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing and giving said reports.
97
<PAGE>
The consolidated financial statements of Price Communications Wireless, Inc.
and subsidiaries (formerly Palmer Wireless, Inc.); Palmer Wireless Holdings,
Inc.; Cellular Systems of Southeast Alabama, Inc. and subsidiary; Albany
Cellular Partners and subsidiary (a Georgia Partnership); Cellular Dynamics
Telephone Company of Georgia; Columbus Cellular Telephone Company (a Georgia
Partnership); Dothan Cellular Telephone Company, Inc.; Macon Cellular Telephone
Systems Limited Partnership (A New Hampshire Limited Partnership); Montgomery
Cellular Holding Co. Inc. and subsidiary; Montgomery Cellular Telephone Company,
Inc.; Panama City Cellular Telephone Company, Ltd.; and Panhandle Cellular
Partnership as of December 31, 1996, and for each of the years in the two-year
period ended December 31, 1996, and the consolidated financial statements of
Savannah Cellular Limited Partnership (a Delaware Limited Partnership) as of
December 31, 1996, and for the year then ended, have been audited by KPMG Peat
Marwick LLP, independent auditors, and have been included in this Prospectus and
Registration Statement in reliance upon their reports thereon appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
AVAILABLE INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form S-4
under the Securities Act filed by the Company with the SEC under the Securities
Act. As permitted by the rules and regulations of the SEC, this Prospectus does
not contain all of the information contained in the Registration Statement and
the exhibits and schedules thereto and reference is hereby made to the
Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the Notes offered hereby. Statements
contained herein concerning the provisions of any documents filed as an exhibit
to the Registration Statement or otherwise filed with the SEC are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
CERTAIN TERMS
Interests in cellular markets that are licensed by the FCC are commonly
measured on the basis of the population of the market served, with each person
in the market area referred to as a "Pop." The number of Pops or Net Pops owned
is not necessarily indicative of the number of subscribers or potential
subscribers. As used in this Offering Memorandum, unless otherwise indicated,
the term "Pops" means the estimate of the population of a MSA or RSA as derived
from the most recent DLJ Pop Book or if such statistics are no longer printed in
the DLJ Pop Book or the DLJ Pop Book is no longer published, the most recent
Rand McNally Commercial Atlas or if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, such other nationally recognized source of such information. The term
"Net Pops" means the Pops of the MSA or RSA served by such System multiplied by
the direct and/or indirect percentage interest of such Person in the entity
licensed or designated to receive an authorization by the Federal Communications
Commission to construct or operate a System in that MSA or RSA. MSAs and RSAs
are also referred to as "markets." The term "wireline" license refers to the
license for any market initially awarded to a company or group that was
affiliated with a local landline telephone carrier in the market, and the term
"non-wireline" license refers to the license for any market that was initially
awarded to a company, individual or group not affiliated with any landline
carrier. The term "System" means an FCC-licensed cellular telephone system. The
term "CTIA" means the Cellular Telecommunications Industry Association.
98
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Auditors' Reports................................................................... F-6
Consolidated Balance Sheets at December 31, 1996 and 1997........................... F-8
Consolidated Statements of Operations for Years ended December 31, 1995 and 1996 and
for the nine months ended September 30, 1997 and for the period May 29, 1997
through December 31, 1997......................................................... F-9
Consolidated Statements of Cash Flows for Years ended December 31, 1995 and 1996 and
for the nine months ended September 30, 1997 and for the period May 29, 1997
through December 31, 1997......................................................... F-10
Consolidated Statements of Stockholder's Equity for Years ended December 31, 1995,
1996 and 1997 and for the Nine Months ended September 30, 1997.................... F-12
Notes to Consolidated Financial Statements.......................................... F-13
Condensed Consolidated Balance Sheets at September 30, 1998 and at December 31,
1997.............................................................................. F-29
Condensed Consolidated Statements of Operations--Nine months ended September 30,
1998 and 1997..................................................................... F-30
Condensed Consolidated Statements of Stockholder's Equity at September 30, 1998..... F-31
Condensed Consolidated Statements of Cash Flows for the nine months ended September
30, 1998 and 1997................................................................. F-32
Notes to Condensed Consolidated Financial Statements................................ F-33
PALMER WIRELESS HOLDINGS, INC.
Auditors' Reports................................................................... F-35
Consolidated Balance Sheets at September 30, 1998, and at December 31, 1997 and
1996.............................................................................. F-37
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
for the Nine Months ended September 30, 1998 and 1997 and for the Years ended
December 31, 1997, 1996 and 1995.................................................. F-38
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-39
Notes to Consolidated Financial Statements.......................................... F-40
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
Auditors' Reports................................................................... F-51
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-53
Consolidated Statements of Operations and Retained Earnings for the Nine Months
ended September 30, 1998 and 1997 and for the Years ended December 31, 1997, 1996
and 1995.......................................................................... F-54
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-55
Notes to Consolidated Financial Statements.......................................... F-56
ALBANY CELLULAR PARTNERS
Auditors' Reports................................................................... F-61
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-63
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-64
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997, 1996 and 1995..................... F-64
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-65
Notes to Consolidated Financial Statements.......................................... F-66
</TABLE>
F-1
<PAGE>
<TABLE>
<S> <C>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Auditors' Reports................................................................... F-72
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-74
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
for the Nine Months ended September 30, 1998 and 1997 and for the Years ended
December 31, 1997, 1996 and 1995.................................................. F-75
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-76
Notes to Consolidated Financial Statements.......................................... F-77
COLUMBUS CELLULAR TELEPHONE COMPANY
Auditors' Reports................................................................... F-82
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-84
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-85
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997, 1996 and 1995..................... F-85
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-86
Notes to Consolidated Financial Statements.......................................... F-88
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
Auditors' Reports................................................................... F-93
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-95
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
for the Nine Months ended September 30, 1998 and 1997 and for the Years ended
December 31, 1997, 1996 and 1995.................................................. F-96
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-97
Notes to Consolidated Financial Statements.......................................... F-98
MACON CELLULAR TELEPHONE SYSTEMS, LIMITED PARTNERSHIP
Auditors' Reports................................................................... F-103
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-105
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-106
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997, 1996 and 1995..................... F-106
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-107
Notes to Consolidated Financial Statements.......................................... F-109
MONTGOMERY CELLULAR HOLDING, CO., INC.
Auditors' Reports................................................................... F-114
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-116
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
for the Nine Months ended September 30, 1998 and 1997 and for the Years ended
December 31, 1997, 1996 and 1995.................................................. F-117
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-118
Notes to Consolidated Financial Statements.......................................... F-119
</TABLE>
F-2
<PAGE>
<TABLE>
<S> <C>
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
Auditors' Reports................................................................... F-125
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-127
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
for the Nine Months ended September 30, 1998 and 1997 and for the Years ended
December 31, 1997, 1996 and 1995.................................................. F-128
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-129
Notes to Consolidated Financial Statements.......................................... F-130
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
Auditors' Reports................................................................... F-136
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-138
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-139
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997, 1996 and 1995..................... F-139
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-140
Notes to Consolidated Financial Statements.......................................... F-141
PANHANDLE CELLULAR PARTNERSHIP
Auditors' Reports................................................................... F-146
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-148
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-149
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997, 1996 and 1995..................... F-149
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997, 1996 and 1995................. F-150
Notes to Consolidated Financial Statements.......................................... F-151
SAVANNAH CELLULAR LIMITED PARTNERSHIP
Auditors' Reports................................................................... F-156
Consolidated Balance Sheets at September 30, 1998 and at December 31, 1997 and
1996.............................................................................. F-158
Consolidated Statements of Operations for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997 and 1996....................... F-159
Consolidated Statements of Partners' Equity for the Nine Months ended September 30,
1998 and for the Years ended December 31, 1997 and 1996........................... F-159
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998
and 1997 and for the Years ended December 31, 1997 and 1996....................... F-160
Notes to Consolidated Financial Statements.......................................... F-161
CEI COMMUNICATIONS, INC.
Balance Sheets at September 30, 1998 and at December 31, 1997 and 1996.............. F-166
Statements of Operations for the Nine Months ended September 30, 1998 and 1997 and
for the Years ended December 31, 1997, 1996 and 1995.............................. F-167
Statements of Cash Flows for the Nine Months ended September 30, 1998 and 1997 and
for the Years ended December 31, 1997, 1996 and 1995.............................. F-168
Notes to Financial Statements....................................................... F-169
</TABLE>
F-3
<PAGE>
<TABLE>
<S> <C>
PANAMA CITY COMMUNICATIONS, INC.
Balance Sheets at September 30, 1998 and at December 31, 1997 and 1996.............. F-170
Statements of Operations for the Nine Months ended September 30, 1998 and 1997 and
for the Years ended December 31, 1997, 1996 and 1995.............................. F-171
Statements of Cash Flows for the Nine Months ended September 30, 1998 and 1997 and
for the Years ended December 31, 1997, 1996 and 1995.............................. F-172
Notes to Financial Statements....................................................... F-173
PRICE COMMUNICATIONS WIRELESS II, INC.
Auditor's Report.................................................................... F-174
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-175
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-176
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-177
Notes to Financial Statements....................................................... F-178
PRICE COMMUNICATIONS WIRELESS III, INC.
Auditor's Report.................................................................... F-179
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-180
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-181
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-182
Notes to Financial Statements....................................................... F-183
PRICE COMMUNICATIONS WIRELESS IV, INC.
Auditor's Report.................................................................... F-184
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-185
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-186
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-187
Notes to Financial Statements....................................................... F-188
PRICE COMMUNICATIONS WIRELESS V, INC.
Auditor's Report.................................................................... F-189
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-190
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-191
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-192
Notes to Financial Statements....................................................... F-193
PRICE COMMUNICATIONS WIRELESS VI, INC.
Auditor's Report.................................................................... F-194
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-195
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-196
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-197
Notes to Financial Statements....................................................... F-198
</TABLE>
F-4
<PAGE>
<TABLE>
<S> <C>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Auditor's Report.................................................................... F-199
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-200
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-201
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-202
Notes to Financial Statements....................................................... F-203
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Auditor's Report.................................................................... F-204
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-205
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-206
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-207
Notes to Financial Statements....................................................... F-208
PRICE COMMUNICATIONS WIRELESS IX, INC.
Auditor's Report.................................................................... F-209
Balance Sheets at September 30, 1998 and at December 31, 1997....................... F-210
Statements of Operations for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-211
Statements of Cash Flows for the Nine Months ended September 30, 1998 and for the
period October 7, 1997 through December 31, 1997.................................. F-212
Notes to Financial Statements....................................................... F-213
</TABLE>
F-5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Price Communications Wireless, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Wireless, Inc. (a Delaware corporation, formerly Palmer Wireless,
Inc.) and subsidiaries as of December 31, 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for the period May
29, 1997 through December 31, 1997 (post acquisition basis). We have also
audited the accompanying consolidated statements of operations, stockholder's
equity, and cash flows for the nine month period ended September 30, 1997
(pre-acquisition basis). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless, Inc. and subsidiaries as of December 31, 1997 and the results of their
operations and their cash flows for the periods May 29, 1997 to December 31,
1997 (post-acquisition basis) and January 1, 1997 to September 30, 1997
(pre-acquisition basis) in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
New York, New York
March 17, 1998
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Price Communications Wireless, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Wireless, Inc. and subsidiaries (formerly Palmer Wireless, Inc.)
as of December 31, 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the two-year period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Price
Communications Wireless, Inc. and subsidiaries as of December 31, 1996 and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1996 in conformity with generally accepted
accounting principles.
/S/ KPMG PEAT MARWICK LLP
-------------------------------------------------------------------
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-7
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (NOTE 1)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
DECEMBER 31, DECEMBER 31,
1996 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 1,698 $ 27,926
Trade accounts receivable, net of allowance for doubtful accounts of $1,791 in 1996
and $818 in 1997................................................................. 18,784 15,940
Receivable from other cellular carriers............................................ 1,706 3,902
Prepaid expenses and deposits...................................................... 2,313 902
Inventory.......................................................................... 5,106 1,280
Deferred income taxes.............................................................. 830 5,402
------------- ------------
Total current assets............................................................. 30,437 55,352
Property and equipment:
Land and improvements.............................................................. 5,238 6,438
Buildings and improvements......................................................... 7,685 8,561
Equipment, communication systems, and furnishings.................................. 166,735 140,381
------------- ------------
179,658 155,380
Less accumulated depreciation and amortization..................................... 47,220 4,239
------------- ------------
Net property and equipment....................................................... 132,438 151,141
Licenses and goodwill, net of accumulated amortization of $30,188 in 1996 and $6,016
in 1997............................................................................ 375,808 918,488
Other intangible assets and other assets, at cost less accumulated amortization of
$7,311 in 1996 and $818 in 1997.................................................... 11,259 19,498
------------- ------------
Total assets..................................................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt............................................. $ 5,296 $ 2,812
Notes payable...................................................................... 1,366 --
Payable to Price Communications Corporation........................................ -- 2,328
Accounts payable................................................................... 10,394 13,059
Accrued interest payable........................................................... 2,341 11,361
Accrued salaries and employee benefits............................................. 2,432 2,324
Other accrued liabilities.......................................................... 3,626 16,031
Deferred revenue................................................................... 3,929 3,755
Customer deposits.................................................................. 757 602
------------- ------------
Total current liabilities........................................................ 30,141 52,272
Long-term debt, excluding current installments....................................... 337,000 610,188
Obligation of parent company......................................................... -- 80,112
Accrued income taxes-long term....................................................... -- 50,491
Deferred income taxes................................................................ 11,500 308,901
Minority interests................................................................... 6,371 7,352
Commitments and contingencies........................................................
Stockholders' equity
Preferred stock par value $.01 per share; 10,000,000 shares authorized; none
issued........................................................................... -- --
Class A Common Stock par value $.01 per share; 73,000,000 shares authorized in
1996; 11,119,681 shares issued in 1996 including shares in treasury and Class B
Common Stock par value $.01 per share; 18,000,000 shares authorized in 1996;
17,293,578 shares issued in 1996................................................. 284 --
Class A Common Stock par value $.01 per share; 3,000 shares authorized in 1997;
1,500 shares issued in 1997...................................................... -- --
Additional paid-in capital......................................................... 166,975 44,015
Retained earnings (accumulated deficit)............................................ 6,535 (8,852)
------------- ------------
173,794 35,163
Less Class A Common stock in treasury at cost-600,000 shares in 1996............... 8,864 --
------------- ------------
Total stockholders' equity....................................................... 164,930 35,163
------------- ------------
Total liabilities and stockholders' equity....................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------------- COMPANY
--------------------
FOR THE YEAR ENDED FOR THE PERIOD
DECEMBER 31, FOR THE NINE MAY 29, 1997 THROUGH
--------------------- MONTHS ENDED DECEMBER 31, 1997
1995 1996 SEPTEMBER 30, 1997 (A)
--------- ---------- ------------------ --------------------
<S> <C> <C> <C> <C>
Revenue:
Service....................................... $ 96,686 $ 151,119 $ 134,123 $ 41,365
Equipment sales and installation.............. 8,220 8,624 7,613 2,348
--------- ---------- -------- -------
Total revenue............................... 104,906 159,743 141,736 43,713
--------- ---------- -------- -------
Operating expenses:
Engineering, technical and other direct....... 18,184 28,717 23,301 5,978
Cost of equipment............................. 14,146 17,944 16,112 5,259
Selling, general and administrative........... 30,990 46,892 41,014 12,805
Depreciation and amortization................. 15,004 25,013 25,498 11,055
--------- ---------- -------- -------
Total operating expenses.................... 78,324 118,566 105,925 35,097
Operating income............................ 26,582 41,177 35,811 8,616
--------- ---------- -------- -------
Other income (expense):
Interest income............................... 211 62 30 2,195
Interest expense.............................. (21,424) (31,524) (24,497) (24,393)
--------- ---------- -------- -------
Interest expense, net....................... (21,213) (31,462) (24,467) (22,198)
Other (expense) income, net................... (687) (429) 208 15
--------- ---------- -------- -------
Total other expense......................... (21,900) (31,891) (24,259) (22,183)
--------- ---------- -------- -------
Income (loss) before minority interest share
of income and income taxes................ 4,682 9,286 11,552 (13,567)
Minority interest share of income............. 1,078 1,880 1,310 414
--------- ---------- -------- -------
Income (loss) before income tax expense
(benefit)................................. 3,604 7,406 10,242 (13,981)
Income tax expense (benefit).................... 2,650 2,724 4,153 (5,129)
--------- ---------- -------- -------
Net income (loss)........................... $ 954 $ 4,682 $ 6,089 $ (8,852)
--------- ---------- -------- -------
--------- ---------- -------- -------
</TABLE>
- ------------------------
(a) Includes results of operations only for the period October 1, 1997 through
December 31, 1997 (see Note 1).
See accompanying notes to consolidated financial statements.
F-9
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------ ---------------------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED FOR THE NINE FOR THE PERIOD
DECEMBER 31, MONTHS ENDED MAY 29, 1997 THROUGH
---------------------------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
------------- ------------ ------------- ---------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ 954 $ 4,682 $ 6,089 $ (8,852)
------------- ------------ ------------- ----------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................. 15,004 25,013 25,498 11,055
Minority interest share of income.............. 1,078 1,880 1,310 414
Deferred income taxes.......................... 2,650 1,855 3,939 (2,454)
Interest deferred and added to long-term
debt......................................... 607 355 -- 4,400
Payment of deferred interest................... -- (1,080) (1,514) --
Changes in current assets and liabilities:
(Increase) decrease in trade accounts
receivable................................... (2,741) (1,561) 473 124
Decrease (increase) in inventory............... 4,076 (2,595) 2,800 458
Increase (decrease) in accounts payable........ 2,623 (841) (1,390) 3,598
(Decrease) increase in accrued interest
payable...................................... (14) (167) (374) 9,394
Increase (decrease) in accrued salaries and
employee benefits............................ 241 165 251 (341)
Increase (decrease) in other accrued
liabilities.................................. 583 (507) 2,049 (4,529)
Increase (decrease) in deferred revenue........ 658 912 4 (1,046)
(Decrease) increase in customer deposits....... (53) 134 (94) 15
(Decrease) increase in accrued income tax long
term......................................... -- -- -- (2,675)
Other.......................................... 1,994 1,885 (250) 1,752
------------- ------------ ------------- ----------
Total adjustments............................ 26,706 25,448 32,702 20,165
------------- ------------ ------------- ----------
Net cash provided by operating activities.... 27,660 30,130 38,791 11,313
------------- ------------ ------------- ----------
Cash flows from investing activities:
Capital expenditures........................... (36,564) (41,445) (40,757) (14,499)
Increase in other intangible assets and other
assets....................................... (310) (2,180) (778) --
Proceeds from sales of property and
equipment.................................... 38 5 201 --
Acquisition of Predecessor net assets.......... -- -- -- (497,856)
Purchase of cellular systems................... (158,397) (67,588) (31,469) --
Proceeds from sales of cellular systems........ -- -- -- 193,799
Collection of purchase price adjustment........ -- 2,452 -- --
Purchases of minority interests................ (1,543) (1,854) (956) (794)
Distributions to minority interests............ -- -- -- (1,680)
------------- ------------ ------------- ----------
Net cash used in investing activities.......... (196,776) (110,610) (73,759) (321,030)
Cash flows from financing activities:
Advance from Price Communications
Corporation.................................. -- -- -- 2,328
Payment on advances from Palmer Communications
Incorporated................................. (1,650) -- -- --
Increase (decrease) in short term notes
payable...................................... -- 1,366 (1,366) --
Repayment of long-term debt.................... (65,125) (108,319) (3,782) (385,000)
Proceeds from long-term debt................... 171,000 100,000 41,000 615,712
Payment of debt issuance costs................. (4,803) -- -- (19,412)
Public offering proceeds, net.................. 71,144 95,000 -- --
Funding provided by parent company............. -- -- -- 80,000
Issuance of common stock....................... -- -- -- 44,015
Proceeds from stock options exercised.......... 285 95 999 --
Payment of deferred offering costs............. (1,297) (826) -- --
Purchase of treasury stock..................... -- (8,864) -- --
Proceeds from sales under stock purchase
plans........................................ -- 290 -- --
------------- ------------ ------------- ----------
Net cash provided by financing activities.... 169,554 78,742 36,851 337,643
------------- ------------ ------------- ----------
Net (decrease) increase in cash and cash
equivalents................................ 438 (1,738) 1,883 27,926
Cash and cash equivalents at the beginning of
period........................................... 2,998 3,436 1,698 --
------------- ------------ ------------- ----------
Cash and cash equivalents at the end of period..... $ 3,436 $ 1,698 $ 3,581 $ 27,926
------------- ------------ ------------- ----------
------------- ------------ ------------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-10
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
($ IN THOUSANDS)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During 1995, the Predecessor committed to purchase certain minority
interests in 1996. This commitment totaling $451 was accrued in 1995 and paid in
1996.
During 1996, the Predecessor increased the purchase obligations related to
the final purchase price adjustment for the controlling interest in a
non-wireline cellular telephone system purchased in 1991. This increase amounted
to $899 and resulted in an increase in licenses.
Acquisitions of non-wireline cellular telephone systems in 1995, 1996 and
1997:
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------------
<S> <C> <C> <C>
FOR THE YEAR ENDED FOR THE NINE
DECEMBER 31, MONTHS ENDED
------------------------
<CAPTION>
SEPTEMBER 30,
1996 1995 1997
------------- --------- --------------
<S> <C> <C> <C>
Cash payment........................................................... $ 158,397 $ 67,588 $ 31,469
------------- --------- -------
------------- --------- -------
Allocated to:
Fixed assets......................................................... $ 22,846 $ 5,678 $ 3,197
Licenses and goodwill................................................ 136,940 61,433 27,738
Deferred income taxes................................................ (6,165) -- --
Current assets and liabilities, net.................................. 4,776 477 534
------------- --------- -------
$ 158,397 $ 67,588 $ 31,469
------------- --------- -------
------------- --------- -------
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------ -------------------
<S> <C> <C> <C> <C>
FOR THE PERIOD
FOR THE YEAR ENDED FOR THE NINE MAY 29, 1997
DECEMBER 31, MONTHS ENDED THROUGH
--------------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
------------- ------------ ------------- -------------------
Income taxes paid (received), net............... $ -- $ 1,591 $ (736) $ (40)
------------- ------------ ------------- -------
------------- ------------ ------------- -------
Interest paid................................... $ 18,435 $ 29,733 $ 25,102 $ 9,924
------------- ------------ ------------- -------
------------- ------------ ------------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
F-11
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------------------------------------------------------
COMMON STOCK CLASS A COMMON STOCK CLASS B TREASURY
ADDITIONAL STOCK
---------------------- ---------------------- PAID-IN RETAINED ---------
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES
--------- ----------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994.......... 706,422 $ 7 17,293,578 $ 173 $ 4,902 $ (167) --
Partnership loss before business
combination.......................... -- -- -- -- (1,066) -- --
Public offering, net of issuance costs
of $8,114............................ 5,369,350 54 -- -- 68,345 -- --
Exercise of stock options.............. 20,000 -- -- -- 285 -- --
Net income............................. -- -- -- -- -- 2,020 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at December 31, 1995.......... 6,095,772 61 17,293,578 173 $ 72,466 1,853 --
Public offering, net of issuance costs
of $5,826............................ 5,000,000 50 -- -- 94,124 -- --
Exercise of stock options.............. 6,666 -- -- -- 95 -- --
Employee and non-employee director
stock purchase plans................. 17,243 -- -- -- 290 -- --
Treasury shares purchased.............. -- -- -- -- -- -- 600,000
Net income............................. -- -- -- -- -- 4,682 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at December 31, 1996.......... 11,119,681 111 17,293,578 173 166,975 6,535 600,000
Exercise of stock options.............. 70,000 1 -- -- 998 -- --
Net income............................. -- -- -- -- -- 6,089 --
--------- ----- --------- ----- ----------- ----------- ---------
Balances at September 30, 1997......... 11,189,681 $ 112 17,293,578 $ 173 $ 167,973 $ 12,624 600,000
--------- ----- --------- ----- ----------- ----------- ---------
--------- ----- --------- ----- ----------- ----------- ---------
<CAPTION>
TOTAL
STOCKHOLDER'S
AMOUNT EQUITY
----------- -------------
<S> <C> <C>
Balances at December 31, 1994.......... $ -- $ 4,915
Partnership loss before business
combination.......................... -- (1,066)
Public offering, net of issuance costs
of $8,114............................ -- 68,399
Exercise of stock options.............. -- 285
Net income............................. -- 2,020
----------- -------------
Balances at December 31, 1995.......... -- 74,553
Public offering, net of issuance costs
of $5,826............................ -- 94,174
Exercise of stock options.............. -- 95
Employee and non-employee director
stock purchase plans................. -- 290
Treasury shares purchased.............. (8,864) (8,864)
Net income............................. -- 4,682
----------- -------------
Balances at December 31, 1996.......... (8,864) 164,930
Exercise of stock options.............. -- 999
Net income............................. -- 6,089
----------- -------------
Balances at September 30, 1997......... $ (8,864) $ 172,018
----------- -------------
----------- -------------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
----------------------------------------------------
COMMON STOCK
CLASS A ADDITIONAL
------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Balances at May 29, 1997.................................................. -- $ -- $ -- $ --
Capital contribution...................................................... 1,500 -- 44,015 --
Net loss.................................................................. -- -- -- (8,852)
----- ----- ----------- -------------
Balances at December 31, 1997............................................. 1,500 $ -- $ 44,015 $ (8,852)
----- ----- ----------- -------------
----- ----- ----------- -------------
<CAPTION>
TOTAL
STOCKHOLDER'S
EQUITY
-------------
<S> <C>
Balances at May 29, 1997.................................................. $ --
Capital contribution...................................................... 44,015
Net loss.................................................................. (8,852)
-------------
Balances at December 31, 1997............................................. $ 35,163
-------------
-------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-12
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Wireless, Inc. ("PCW" or the "Company"), a wholly-owned
subsidiary of Price Communications Cellular Holdings, Inc. ("Holdings"), a
wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly-owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and direct stock purchase plans
for an aggregate price of approximately $486,400. In addition, as a result of
the Merger, PCW assumed all outstanding indebtedness of Palmer of approximately
$378,000. Therefore, the aggregate purchase price for Palmer (including
transaction fees and expenses) was approximately $880,000. PCW refinanced all of
the Palmer Existing Indebtedness concurrently with the consummation of the
Merger.
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the Merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the Merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
In order to fund the Merger and pay related fees and expenses, in July,
1997, PCW issued $175,000 aggregate principal amount of 11 3/4% Senior
Subordinated Notes due 2007 and entered into a syndicated senior loan facility
providing for term loan borrowings in the aggregate principal amount of
approximately $325,000 and revolving loan borrowings of $200,000. In October,
1997, PCW borrowed all term loans available thereunder and approximately
$120,000 of revolving loans. DLJ Capital Funding, Inc. provided and syndicated
the Credit Facility. See Notes 5(a) and 5(b).
The remaining acquisition price of Palmer was funded through a $44,015
equity contribution of PCC and $75,712 of borrowings of Holdings (See Note 5
(c)).
BASIS OF PRESENTATION
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as
F-13
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
"push down" accounting. The consolidated financial statements as of December 31,
1997 and for the period May 29, 1997 through December 31, 1997 reflect a
preliminary allocation of the purchase price to the assets acquired and
liabilities assumed. Additional purchase liabilities recorded include
approximately $6,464 for severance and related costs and $4,051 for costs
associated with the shutdown of certain acquired facilities. See Note 3, Other
Accrued Liabilities, for amounts outstanding as of December 31, 1997. The
preliminary allocation of the purchase price resulted in licenses of
approximately $924,504 on the balance sheet, which are being amortized on a
straight-line basis over a period of 40 years.
In August, 1997 Holdings issued 153,400 units, consisting of Notes and
warrants of PCC (the "Warrants"), in exchange for $80,000. Such notes, which are
not guaranteed by the Company or secured by its stock, do not represent
indebtedness of the Company. Holdings' notes have been reflected as an
"Obligation of Parent Company" in the accompanying consolidated financial
statements in accordance with the "push-down" basis of accounting discussed
above. The Notes accrete at a rate of 13.5%, compounded semi-annually, to an
aggregate principal amount of approximately $153,400 by August 1, 2002. Cash
interest will not commence to accrue on the Notes prior to August 2, 2002.
Commencing on February 1, 2003, cash interest on the Notes will be payable at a
rate of 13.5% per annum, payable semi-annually. The Notes will be redeemable at
the option of Holdings, in whole or in part, at any time after August 1, 1998 in
cash at the redemption price as defined, plus accrued and unpaid interest, if
any, thereon to the redemption date; provided that the trading price of the
common stock of PCC shall equal or exceed certain levels. The Notes mature on
August 1, 2007 and contain covenants that restrict payments of dividends,
incurrence of debt and sale of assets. The Warrants have been assigned a value
of $4,288, which amount is accounted for as original issue discount, resulting
in an effective interest rate of approximately 14.13% per annum. The fair value
of the Notes was estimated as $80,112 as of December 31, 1997.
The consolidated financial statements through September 30, 1997 reflect the
historical cost of its assets and liabilities and results of operations and are
referred to as the "Predecessor" consolidated financial statements. Accordingly,
the accompanying financial statements of the Predecessor and the Company are not
comparable in all material respects since those financial statements report
financial position, results of operations, and cash flows of these two separate
entities.
PRO FORMA INFORMATION
The following unaudited pro forma condensed consolidated financial
information was prepared assuming (i) the Predecessor was acquired on January 1,
1996, (ii) the acquisitions of the licenses had occurred on January 1, 1996 (See
Note 4) and (iii) the Ft. Myers Sale and Georgia Sale occurred on January 1,
1996.
F-14
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Proforma information is presented for comparative purposes only and does not
purport to be indicative of the results which would have been achieved had this
acquisition occurred as of January 1, 1996, nor does it purport to be indicative
of results that may be achieved in the future.
<TABLE>
<CAPTION>
UNAUDITED
----------------------
<S> <C> <C>
YEAR ENDED DECEMBER 31
----------------------
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Total Revenue...................................................... $ 145,643 $ 161,468
---------- ----------
---------- ----------
Loss Before Income Taxes........................................... $ (54,529) $ (51,532)
---------- ----------
---------- ----------
Net Loss........................................................... $ (48,895) $ (43,911)
---------- ----------
---------- ----------
</TABLE>
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries after the elimination of significant
intercompany accounts and transactions. The financial statements also include
the debt of Holdings, which funded a portion of the acquisition of Palmer and is
indirectly guaranteed by the assets of the Company.
The Predecessor was a Delaware corporation and was incorporated on December
15, 1993 to effect an initial public offering of its Class A Common Stock. At
December 31, 1996, Palmer Communications Incorporated ("PCI") owned 61 percent
of the Predecessor's outstanding stock and had 75 percent of its voting rights
and therefore the Predecessor was a subsidiary of PCI.
On March 21, 1995 and April 18, 1995, the Predecessor issued 5,000,000 and
369,350 shares respectively, of Class A Common Stock in an initial public
offering (the "Offering") for net proceeds of $68,399. In connection with the
Offering, on March 21, 1995, the Predecessor issued 704,755 shares of Class A
Common Stock and 17,288,578 shares of Class B Common Stock in exchange for 100
percent of the Partnership interests of Palmer Cellular Partnership (the
"Exchange"). The assets and liabilities received in the Exchange were recorded
at their historical cost to Palmer Cellular Partnership and not revalued at fair
value on the date of transfer. Since the Exchange was between related parties it
was accounted for in a manner similar to a pooling of interests.
Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.
OPERATIONS
The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in eight Metropolitan
Statistical Areas ("MSA") in three states: Florida (one), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range from
approximately 78 percent to 100 percent. The Company owns directly and operates
eight non-wireline cellular telephone systems in Rural Service Areas in Georgia
(seven) and Alabama (one).
The Predecessor had majority ownership in corporations and partnerships
which operated the non-wireline cellular telephone systems in nine MSA's in
three states: Florida (two), Georgia (five) and Alabama (two). The Predecessor's
ownership percentages in these entities ranged from approximately 78
F-15
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
percent to 100 percent. The Predecessor owned directly and operated eight
non-wireline cellular telephone systems in RSA's in Georgia (seven) and Alabama
(one).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company and the Predecessor
consider cash and repurchase agreements with a maturity of three months or less
to be cash equivalents.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of additions and
improvements are capitalized while maintenance and repairs are charged to
expense when incurred. Depreciation is provided principally by the straight-line
method over the estimated useful lives, ranging from 5 to 20 years for buildings
and improvements and 5 to 10 years for equipment, communications systems and
furnishings.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period.
Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of licenses may warrant revision or that the
remaining balance of the license rights may not be recoverable. The Company
utilizes projected undiscounted cash flows over the remaining life of the
licenses and sales of comparable businesses to evaluate the recorded value of
licenses. The assessment of the recoverability of the remaining balance of the
license rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangibles consist principally of deferred financing costs and other
items. These costs are being amortized by the interest or straight-line method
over their respective useful lives, which range from 5 to 10 years.
INCOME TAXES
The Company and the Predecessor account for income taxes under the asset and
liability method of accounting for deferred income taxes. Under the asset and
liability method, deferred tax assets and
F-16
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
INTEREST RATE SWAP AGREEMENTS
The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and outcollect roaming
revenue.
Local subscriber revenue is earned by providing access to the cellular
network ("access revenue") or, as applicable, for usage of the cellular network
("airtime revenue"). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Outcollect roaming revenue represents revenue earned for usage of its
cellular network by subscribers of other cellular carriers. Outcollect roaming
revenue is recognized when the services are rendered.
Equipment sales and installation revenues are recognized upon delivery to
the customer or installation of the equipment.
OPERATING EXPENSES-ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical and other direct operating expenses represent certain
costs of providing cellular telephone service to customers. These costs include
incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
STOCK OPTION PLANS
Prior to January 1, 1996, the Predecessor accounted for its stock option
plans in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. On January 1, 1996, the Predecessor adopted Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Predecessor elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
F-17
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods and assumptions used to estimate the fair
value of financial instruments are set forth below:
For cash and cash equivalents, trade accounts receivable, receivable from
other cellular carriers, notes payable, accounts payable and accrued expenses,
the carrying amount approximates the estimated fair value due to the short-term
nature of those instruments.
Rates currently available for long-term debt with similar terms and
remaining maturities are used to discount the future cash flows to estimate the
fair value for long-term debt. Note 5 presents the fair value for long-term debt
and the related interest rate cap and swap agreements.
Fair value estimates are made as of a specific point in time, based upon the
relevant market information about the financial instruments. Because no market
exists for a majority of the financial instruments, fair value estimates are
based on judgments regarding current economic conditions and other factors.
These estimates are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
F-18
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(2) TRADE ACCOUNTS RECEIVABLE
The Company and the Predecessor grant credit to its customers. Substantially
all of the customers are residents of the local areas served. Generally, service
is discontinued to customers whose accounts are 60 days past due.
The activity in the Predecessor's and the Company's allowance for doubtful
accounts for the years ended December 31, 1995, and 1996, the nine months ended
September 30, 1997 and the period from October 1, 1997 through December 31, 1997
consisted of the following:
<TABLE>
<CAPTION>
ALLOWANCE AT
BALANCE AT CHARGED DATES OF DEDUCTIONS,
BEGINNING TO ACQUISITIONS NET OF BALANCE AT
OF PERIOD EXPENSES (DISPOSITIONS) RECOVERIES END OF PERIOD
----------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
PREDECESSOR
Year ended December 31, 1995................. $ 1,567 $ 2,078 $ 432 $ (2,197) $ 1,880
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
PREDECESSOR
Year ended December 31, 1996................. $ 1,880 $ 3,946 $ 1,270 $ (5,305) $ 1,791
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
PREDECESSOR
Nine months ended
September 30, 1997......................... $ 1,791 $ 3,614 $ 147 $ (4,212) $ 1,340
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
COMPANY
Period from May 29, 1997 through through
December 31, 1997.......................... $ 1,340 $ 1,202 $ (206) $ (1,518) $ 818
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
</TABLE>
(3) OTHER ACCRUED LIABILITIES
Other accrued liabilities at December 31, 1996 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Accrued telecommunications expenses...................................... $ 892 $ 2,176
Accrued local taxes...................................................... 913 888
Accrued severance payments............................................... -- 6,155
Accrued shutdown costs of certain facilities............................. -- 3,818
Miscellaneous accruals................................................... 1,821 2,994
--------- ---------
$ 3,626 $ 16,031
--------- ---------
--------- ---------
</TABLE>
(4) ACQUISITIONS AND PURCHASE OF LICENSES
On December 1, 1995, the Predecessor purchased all of the outstanding stock
of Augusta Metronet, Inc. and Georgia Metronet, Inc., which own either directly
(or in the case of Georgia Metronet, Inc., through its 97.9 percent interest in
the Savannah Cellular Limited Partnership) the licenses to operate the
non-wireline cellular telephone systems in the Savannah and Augusta, Georgia
MSAs, respectively, for an aggregate purchase price of $158,397. The acquisition
was accounted for by the purchase method of
F-19
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(4) ACQUISITIONS AND PURCHASE OF LICENSES (CONTINUED)
accounting. In connection with this acquisition, $136,940 of the purchase price
was allocated to licenses and goodwill.
On June 20, 1996, the Predecessor acquired the assets of and the license to
operate the non-wireline cellular telephone system serving the Georgia-1 RSA for
an aggregate purchase price of $31,616. The acquisition was accounted for by the
purchase method of accounting. In connection with the acquisition, $27,942 of
the purchase price was allocated to licenses.
On July 5, 1996, two of the Predecessor's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving the Georgia-6 RSA for an aggregate purchase price of
$35,972. The acquisition was accounted for by the purchase method of accounting.
In connection with the acquisition, $33,491 of the purchase price was allocated
to licenses.
On January 31, 1997, a majority-owned subsidiary of the Predecessor acquired
the assets of and the license to operate the non-wireline cellular telephone
system serving the Georgia-13 RSA for an aggregate purchase price of $31,486.
The acquisition was accounted for by the purchase method of accounting. In
connection with the acquisition, $27,650 of the purchase price was allocated to
licenses.
See Note 1 for presentation of pro forma information.
(5) NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- ----------
<S> <C> <C>
DECEMBER 31
-----------------------
<CAPTION>
1996 1997
----------- ----------
<S> <C> <C>
Credit agreement...................................................................... $ 337,000(c) $ 438,000(a)
11.75% Senior Subordinated Notes...................................................... -- 175,000(b)
Purchase obligations.................................................................. 5,296(d) --
----------- ----------
342,296 613,000
Less current installments............................................................. 5,296 2,812
----------- ----------
Long-term debt, excluding current installments........................................ $ 337,000 $ 610,188
----------- ----------
----------- ----------
</TABLE>
- ------------------------
(a) In October 1997, the Company entered into a credit agreement ("Credit
Agreement") with a syndicate of banks, financial institutions and other
"accredited investors" providing for loans of up to $525,000. The Credit
Agreement includes a $325,000 term loan facility and a $200,000 revolving
credit facility. The term loan facility is comprised of tranche A loans of
up to $100,000, which will mature on September 30, 2005, and tranche B term
loans of up to $225,000, which will mature on September 30, 2006. The
revolving credit facility will terminate on September 30, 2006. The Credit
Agreement bears interest at the alternate base rate, as defined in the
Credit Agreement, as the reserve adjusted Euro-Dollar rate plus, in each
case, applicable margins of (i) in the case of tranche A term loans and
revolving loans (x) 2.5% for Euro-Dollar rate loans and (y) 1.5% for base
rate loans and (ii) in the case of tranche B term loans (x) 2.75 for
Euro-Dollar rate loans and (y) 1.75% for base rate loans. As of December 31,
1997, the Credit Agreement was bearing interest at 8.5% for the tranche A
loan and
F-20
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
revolving credit facility and 8.7% for the tranche B loan. The Credit
Agreement contains restrictions on the subsidiary's ability to engage in
certain activities, including limitations on incurring additional
indebtedness, liens and investments, payment of dividends and the sale of
assets. Holdings is a guarantor of the Credit Agreement. As of December 31,
1997 $87,000 of the revolving credit facility was unused and available for
borrowings.
(b) In July 1997, the Company issued $175,000 of 11.75% Senior Subordinated
Notes ("11.75% Notes") due July 15, 2007 with interest payable semi-annually
commencing January 15, 1998. The 11.75% Notes contain covenants that
restrict the payment of dividends, incurrence of debt and sale of assets.
The carrying value of the 11.75% Notes approximates fair value as of
December 31, 1997.
(c) On December 1, 1995, the Predecessor entered into an amended and restated
credit agreement with 21 banks which provided for a revolving line of credit
of up to $500,000, subject to certain limitations through June 30, 2004.
Interest was payable at variable rates and under various interest rate
options. The interest rate at December 31, 1996 ranged from 7.42 to 8.88
percent before the affect of the interest rate swap and cap agreements
outlined below. The credit agreement also provided for a commitment fee of
.5 percent per year on any unused amounts of the credit agreement. Amounts
outstanding were secured by the assets of the Predecessor.
The credit agreement provided for various compliance covenants and
restrictions, including items related to mergers or acquisition
transactions, the declaration or payment of dividends or other payments to
stockholders, capital expenditures and maintenance of certain financial
ratios. At December 31, 1996, the Predecessor was in compliance with all but
one financial ratio covenant. This covenant was based on operating results
for the year ended December 31, 1996. The Predecessor obtained a waiver of
the noncompliance with this 1996 financial ratio covenant. In connection
with the acquisition of the Predecessor (see Note 1), the Predecessor credit
agreement was refinanced.
(d) In connection with the purchase of controlling interest in a non-wireline
cellular telephone system in 1991, the Predecessor incurred certain purchase
obligations. The obligations were retired in July 1996 and January 1997.
The Company has entered into interest rate swap and cap agreements to reduce
the impact of changes in interest rates on its floating rate debt and thus were
entered into for purposes other than trading. At December 31,1997, the Company
had outstanding seven interest rate swap agreements and one interest rate cap
agreement having a total notional value of $370,000. These interest rate swap
and cap agreements
F-21
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
effectively change the Company's interest rate exposure on a quarterly basis on
$370,000 of outstanding debt. The cap and swap agreements are summarized as
follows:
<TABLE>
<CAPTION>
MAXIMUM NOTIONAL
TYPE OF AGREEMENT MATURITY LIBOR VALUE
- ------------------------------------------------------------------------ --------------- ------------- ----------
<S> <C> <C> <C>
Pay Later Cap (1)....................................................... Jan. 12, 1998 8.5% $ 20,000
Participating Swap (2).................................................. Aug. 10, 1998 5.98% 15,000
Swap.................................................................... Aug. 6, 1999 6.36% 25,000
Swap.................................................................... Oct. 21, 1999 5.92% 185,000
Swap.................................................................... Aug. 7, 2000 6.09% 50,000
Swap.................................................................... Aug. 21, 2000 6.11% 25,000
Swap.................................................................... Oct. 10, 2000 6.10% 25,000
Swap.................................................................... Oct. 11, 2000 5.99% 25,000
----------
$ 370,000
----------
----------
</TABLE>
- ------------------------
(1) When the three-month LIBOR rate is 8.5 percent or higher the Company
receives a quarterly payment of $98.
(2) When the six-month LIBOR is less than 5.98 percent the Company participates
in 45 percent of the difference.
F-22
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
The market value of the swap and cap agreements above, which has not been
reflected in the consolidated financial statements as of December 31, 1997, is a
loss of $1,076.
The Company is exposed to interest rate risk in the event of nonperformance
by the other party to the interest rate swap and cap agreements. However, the
Company does not anticipate nonperformance by any of the banks.
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1998.............................................................................. $ 2,812
1999.............................................................................. 4,750
2000.............................................................................. 12,875
2001.............................................................................. 15,375
2002.............................................................................. 17,875
Thereafter........................................................................ 559,313
----------
$ 613,000
----------
----------
</TABLE>
(6) INCOME TAXES
Components of income tax expense (benefit) consist of the following:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Predecessor:
Year ended December 31, 1995:
Current..................................................... $ -- $ -- $ --
Deferred.................................................... 2,550 100 2,650
--------- --------- ---------
$ 2,550 $ 100 $ 2,650
--------- --------- ---------
--------- --------- ---------
Predecessor:
Year ended December 31, 1996:
Current..................................................... $ -- $ 869 $ 869
Deferred.................................................... 1,795 60 1,855
--------- --------- ---------
$ 1,795 $ 929 $ 2,724
--------- --------- ---------
--------- --------- ---------
Predecessor:
Period ended September 30, 1997
Current..................................................... $ -- $ 214 $ 214
Deferred.................................................... 3,553 386 3,939
--------- --------- ---------
$ 3,553 $ 600 $ 4,153
--------- --------- ---------
--------- --------- ---------
Company:
Period ended December 31, 1997
Current..................................................... $ (2,244) $ (432) $ (2,676)
Deferred.................................................... (2,116) (337) (2,453)
--------- --------- ---------
$ (4,360) $ (769) $ (5,129)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-23
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
The consolidated effective tax rate differs from the statutory United States
federal tax rate for the following reasons and by the following percentages:
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------------
COMPANY
YEAR ENDED NINE MONTHS ---------------
DECEMBER 31, ENDED PERIOD ENDED
-------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
--------- --------- ----------------- ---------------
<S> <C> <C> <C> <C>
Statutory United States federal tax rate.................. 34.0% 34.0% 34.0% (34.0)%
Partnership loss prior to corporate status................ 10.1 -- -- --
License amortization not deductible for tax............... 7.7 32.5 -- --
Net operating loss carryforwards.......................... (59.0) (42.8) -- --
State taxes............................................... -- 8.3 6.0 (3.6)
Recognition of deferred taxes related to the difference
between financial statement and income tax bases of
certain assets and liabilities in connection with the
Exchange................................................ 73.5 -- -- --
Nondeductible interest expense............................ -- -- -- 1.1
Other..................................................... 7.2 4.8 1.0 (0.2)
--------- --------- --- -----
Consolidated effective tax rate........................... 73.5% 36.8% 41.0% (36.7)%
--------- --------- --- -----
--------- --------- --- -----
</TABLE>
In 1997, the Predecessor recorded additional deferred tax liability and a
corresponding increase in licenses for timing differences attributable to
pre-1997 acquisitions. The components of the deferred income tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- -----------
<S> <C> <C>
1996 1997
----------- -----------
Deferred tax assets:
Allowance for doubtful accounts......................................................... $ 609 $ 327
Inventory reserve....................................................................... -- 144
Deferred revenue........................................................................ -- 400
Nondeductible accruals.................................................................. 221 6,495
Net operating loss carryforwards........................................................ 4,100 3,560
Valuation allowance..................................................................... -- (3,560)
----------- -----------
Total deferred tax assets............................................................... 4,930 7,366
----------- -----------
Deferred tax liabilities:
Accumulated depreciation................................................................ (7,415) (8,559)
Licenses................................................................................ (8,185) (302,306)
----------- -----------
Total deferred tax liabilities.......................................................... (15,600) (310,865)
----------- -----------
Deferred tax liability, net............................................................. $ (10,670) $ (303,499)
----------- -----------
----------- -----------
</TABLE>
The net operating loss carryforwards totaled approximately $8,900 at
December 31, 1997 and expire in amounts ranging from approximately $300 to
$1,100 through 2012. For these carryforwards utilization is limited to the
subsidiary that generated the carryforwards, unless the Company utilizes
alternative tax planning strategies.
F-24
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS
During 1994, the Predecessor amended its certificate of incorporation to
increase the number of authorized shares of common stock from 60,000,000 to
91,000,000 and to provide for Class A Common and Class B Common Stock. The Class
A Common Stock has one vote per share. The Class B Common Stock, which may be
owned only by PCI or certain successors of PCI and of which no shares may be
issued subsequent to the Offering, has five votes per share, provided, however,
that, so long as any Class A Common Stock is issued and outstanding, at no time
will the total outstanding Class B Common Stock have the right to cast votes
having more than 75 percent of the total voting power of the common stock in the
aggregate. Shares of Class B Common Stock shall be converted into Class A Common
Stock on a share-for share basis: (i) at any time at the option of the holder;
(ii) immediately upon the transfer of shares of Class B Common Stock to any
holder other than a successor of PCI; (iii) immediately if the shares of Class B
Common Stock held by PCI or its successors constitute 33 percent or less of the
outstanding shares of the Predecessor; (iv) at the end of 20 years from original
issuance of those shares of Class B Common Stock; or (v) if more than 50 percent
of the equity interests in PCI become beneficially owned by persons other than:
(i) beneficial owners of PCI as of December 29, 1994 ("Current PCI Beneficial
Owners"); (ii) affiliates of Current PCI Beneficial Owners; (iii) heirs or
devisees of any individual Current PCI Beneficial Owners, successors of any
corporation or partnership which is a Current PCI Beneficial Owner and
beneficiaries of any trust which is a Current PCI Beneficial Owner; and (iv) any
relative, spouse or relative of a spouse of any Current PCI Beneficial Owner.
The Predecessor adopted a Stock Option Plan in connection with the Offering,
under which options for an aggregate of 1,600,000 shares of Class A Common Stock
are available for grants to key employees. The Predecessor also adopted a
Director's Stock Option Plan in connection with the Offering, under which
options for an aggregate of 300,000 shares of Class A Common Stock are available
for grants to directors who are not officers or employees of the Predecessor.
Stock options under both plans are granted with an exercise price equal to the
stock's fair value at the date of grant. The stock options granted under the
Stock Option Plan have 10-year terms and vest and become exercisable ratably
over three years from the date of grant. The stock options granted under the
Director's Stock Option Plan are vested and become fully exercisable upon the
date of the grant. At December 31, 1996, there were options with respect to
693,334 and 45,000 shares of Class A Common Stock outstanding under the Stock
Option Plan and the Director's Stock Option Plan, respectively. At December 31,
1996, there were 880,000 and 255,000 additional shares available for grant under
the Stock Option Plan and the Director's Stock Option Plan, respectively.
The Predecessor applies APB Opinion No. 25 in accounting for its Stock
Option Plan and Director's Stock Option Plan ("the Plans") and accordingly, no
compensation cost has been recognized for its stock options in the consolidated
financial statements. Had the Predecessor determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Predecessor's net income (loss) and net income would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------- NINE MONTHS ENDED
1995 1996 SEPTEMBER 30, 1997
--------- --------- -------------------
<S> <C> <C> <C>
Net income-as reported...................................................... $ 954 $ 4,682 $ 6,089
Net (loss) income-pro forma................................................. $ (777) $ 2,850 $ 4,753
</TABLE>
F-25
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS (CONTINUED)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the weighted-average assumptions as
follows: dividend yield of 0.0%; expected volatility of 101%; risk-free interest
rate of 5.5%; and expected lives of five years.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
($'S NOT IN
THOUSANDS)
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
----------- ---------------------
<S> <C> <C>
Balance December 31, 1994....................................................... -- --
Granted......................................................................... 692,500 $ 14.25
Exercised....................................................................... (20,000) 14.25
-----------
Balance December 31, 1995....................................................... 672,500 14.25
Granted......................................................................... 72,500 17.25
Exercised....................................................................... (6,666) 14.25
-----------
Balance December 31, 1996....................................................... 738,334 14.54
Exercised....................................................................... (70,000) 14.25
-----------
Balance September 30, 1997...................................................... 668,334 14.60
-----------
-----------
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $14.25-$17.25 ($'s not in
thousands) and 8.3 years, respectively.
At December 31, 1996, the number of options exercisable was 250,000, and the
weighted average exercise price of those options was $14.34 ($'s not in
thousands).
The Predecessor adopted a stock purchase plan for employees (the "Employee
Stock Purchase Plan") and a stock purchase plan for non-employee directors (the
"Non-Employee Director Stock Purchase Plan"). Under the Employee Stock Purchase
Plan, 160,000 shares of Class A Common Stock are available for purchase by
eligible employees of the Predecessor or any of its subsidiaries. Under the
Non-Employee Director Stock Purchase Plan, 25,000 shares of Class A Common Stock
are available for purchase by non-employee directors of the Predecessor. The
purchase price of each share of Class A Common Stock purchased under the
Employee Stock Purchase Plan or the Non-Employee Director Stock Purchase Plan
will be the lesser of 90 percent of the fair market value of the Class A Common
Stock on the first trading day of the plan year or on the last day of such plan
year; provided, however, that in no event shall the purchase price be less than
the par value of the stock. Both plans will terminate in 2005, unless terminated
at an earlier date by the board of directors. During the year ended December 31,
1996, 15,541 shares were issued under the Employee Stock Purchase Plan and 1,702
shares were issued under the Non-Employee Director Stock Purchase Plan at a
purchase price of $16.85 ($'s not in thousands). Compensation cost computed
under the provisions of SFAS No. 123 related to the shares issued under the
Employee Stock Purchase Plan and the Non-Employee Director Stock Purchase Plan
is immaterial to the consolidated financial statements.
In connection with the acquisition of Palmer, the Company retired all of the
options of Palmer that were outstanding.
F-26
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(8) RELATED PARTY TRANSACTIONS
On January 1, 1997, the Predecessor purchased a building and certain towers
from PCI for $6,243. These assets were previously leased from PCI.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into both a transitional management and administrative services
agreement and a computer services agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees from these arrangements amounted to a total of $492, $534 and $88 for
the years ended December 31, 1995 and 1996 and the nine months ended September
30, 1997, respectively, and are included as a reduction of selling, general and
administrative expenses.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into a tax consulting agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees for tax consulting services amounted to a total of $84, $120 and $97
for the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997, respectively, and are included in selling, general and
administrative expenses.
PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Predecessor participated in this plan and was allocated 401(k)
retirement and matching expense of $493, $696, and $544 for the years ended
December 31, 1995, and 1996 and the nine months ended September 30, 1997,
respectively.
(9) COMMITMENTS AND CONTINGENCIES
LEASES
The Company occupies certain buildings and uses certain tower sites, cell
sites and equipment under noncancelable operating leases which expire through
2013.
Future minimum lease payments under noncancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<S> <C>
Year ending December 31:
1998............................................................... $ 2,950
1999............................................................... 2,535
2000............................................................... 1,981
2001............................................................... 1,305
2002............................................................... 843
Later years through 2013........................................... 1,491
---------
Total minimum lease payments....................................... $ 11,105
---------
---------
</TABLE>
Rental expense for the Predecessor was $2,487, $3,551, and $3,123 for the
years ended December 31, 1995, 1996 and the nine months ended September 30,
1997, respectively of which $269 and $278 was paid to related parties for 1995
and 1996, respectively. Rental expense for the Company was $806 for the period
from May 29, 1997 to December 31, 1997.
F-27
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial statements.
(10) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
YEAR ENDED DECEMBER 31, 1996 QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ----------- ----------- --------- ----------
Total Revenue...................................... $ 36,950(a) $ 40,031(a) $ 41,171(a) $ 41,591 $ 159,743
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Operating Income................................... $ 8,514 $ 11,281 $ 11,977 $ 9,405 $ 41,177
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Net Income (Loss).................................. $ 76 $ 1,684 $ 2,976 $ (54) $ 4,682
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
-------------
FOR THE
PERIOD
PREDECESSOR MAY 29, 1997
------------------------------- THROUGH
FIRST SECOND THIRD DECEMBER 31,
YEAR ENDED DECEMBER 31, 1997 QUARTER QUARTER QUARTER 1997 (B)
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
Total Revenue..................................................... $ 44,683 $ 48,545 $ 48,508 $ 43,713
--------- --------- --------- -------------
--------- --------- --------- -------------
Operating Income.................................................. $ 9,805 $ 13,022 $ 12,984 $ 8,616
--------- --------- --------- -------------
--------- --------- --------- -------------
Net Income (Loss)................................................. $ 1,177 $ 2,523 $ 2,389 $ (8,852)
--------- --------- --------- -------------
--------- --------- --------- -------------
</TABLE>
- ------------------------
(a) Certain reclassifications were made to conform to the fourth quarter
presentation.
(b) The decrease in revenue and operating income in the fourth quarter is a
result of customer acquisition costs, including advertising, commissions and
phone discounts, related to Holiday sales (consistent with prior years), the
Fort Myers Sale, and amortization of the additional license recorded in the
merger. The net loss is due to these reasons as well as the interest expense
on debt incurred to fund the Acquisition (see Note 1).
F-28
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 102,361 $ 27,926
Restricted cash................................................................... 87,376 --
Trade accounts receivable, net of allowance for doubtful accounts................. 21,036 15,940
Receivable from other cellular carriers........................................... 2,136 3,902
Deferred income taxes............................................................. 3,257 5,402
Prepaid expenses and deposits..................................................... 9,985 902
Inventory......................................................................... 3,350 1,280
------------- ------------
Total current assets............................................................ 229,501 55,352
Net property and equipment.......................................................... 141,566 151,141
Licenses, net of amortization....................................................... 899,902 918,488
Other intangible assets and other assets, at cost less accumulated amortization..... 23,835 19,498
------------- ------------
$ 1,294,804 $1,144,479
------------- ------------
------------- ------------
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt............................................ $ -- $ 2,812
Payable to Price Communications Corporation....................................... 1,398 2,328
Accounts payable.................................................................. 11,332 13,059
Accrued interest payable.......................................................... 20,293 11,361
Accrued salaries and employee benefits............................................ 2,630 2,324
Other accrued liabilities......................................................... 12,018 16,031
Deferred revenue.................................................................. 4,886 3,755
Customer deposits................................................................. 868 602
------------- ------------
Total current liabilities....................................................... 53,425 52,272
Long-term debt, excluding current installments...................................... 700,000 610,188
Obligation of Parent Company........................................................ 201,911 80,112
Accrued income taxes--long term..................................................... 30,857 50,491
Deferred income taxes............................................................... 303,539 308,901
Minority interests.................................................................. 9,067 7,352
------------- ------------
Total liabilities............................................................... 1,298,799 1,109,316
------------- ------------
Commitments and contingencies....................................................... -- --
Stockholder's equity (deficit)...................................................... (3,995) 35,163
------------- ------------
$ 1,294,804 $1,144,479
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-29
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------- -----------
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------
1998 1997
---------- -----------
<S> <C> <C>
Revenue:
Service................................................................................ $ 134,938 $ 134,123
Equipment sales and installation....................................................... 9,175 7,613
---------- -----------
Total revenue........................................................................ $ 144,113 $ 141,736
---------- -----------
Operating expenses:
Engineering, technical and other direct................................................ 21,980 23,301
Cost of equipment...................................................................... 17,401 16,111
Selling, general and administrative.................................................... 39,988 41,014
Depreciation and amortization.......................................................... 33,721 25,498
---------- -----------
Total operating expenses............................................................. $ 113,090 $ 105,924
---------- -----------
Operating income..................................................................... $ 31,023 $ 35,812
---------- -----------
Other income (expense):
Interest expense, net.................................................................. $ (60,786) $ (24,468)
Other income (expense), net............................................................ 98 208
---------- -----------
Total other expense.................................................................. $ (60,884) $ (24,260)
---------- -----------
Income (loss) before minority interest share of income, income taxes and
extraordinary item................................................................. $ (29,861) $ 11,552
Minority interest share of income........................................................ (1,715) (1,310)
---------- -----------
Income (loss) before income taxes and extraordinary item............................... $ (31,576) $ 10,242
Income (expense) benefit................................................................. 11,566 (4,153)
---------- -----------
Income (loss) before extraordinary item................................................ $ (20,010) $ 6,089
Extraordinary item-write-off of deferred finance costs and premium on early
extinguishment of debt (net of income tax benefit of $7,311 and $11,246
respectively).......................................................................... (19,148) --
---------- -----------
Net income (loss)...................................................................... $ (39,158) $ 6,089
---------- -----------
---------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-30
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
CLASS A ADDITIONAL TOTAL
------------------------ PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS EQUITY
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balances at May 29, 1997................................. -- $ -- $ -- $ -- $ --
Capital contribution..................................... 100 -- 44,015 -- 44,015
Net loss................................................. -- -- -- (8,852) (8,852)
--- ----- ----------- ---------- ------------
Balances at December 31, 1997............................ 100 $ -- $ 44,015 $ (8,852) $ 35,163
Net loss................................................. -- -- -- (39,158) (39,158)
--- ----- ----------- ---------- ------------
Balances at September 30, 1998 (unaudited)............... 100 $ -- $ 44,015 $ (48,010) $ (3,995)
--- ----- ----------- ---------- ------------
--- ----- ----------- ---------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-31
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
--------- -----------
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
----------------------
1998 1997
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................................................... $ (39,158) $ 6,089
--------- -----------
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization......................................................... 33,797 25,498
Minority interest share of income..................................................... 1,715 1,310
Deferred income taxes................................................................. (3,217) 3,943
Loss on disposal of property.......................................................... 151 7
Premium on early extinguishment of debt............................................... 18,194 --
Interest deferred and added to obligation of Parent Company........................... 1,911 --
Payment of deferred interest.......................................................... -- (1,514)
(Increase) decrease in trade accounts receivable...................................... (5,096) 473
(Increase) decrease in inventory...................................................... (2,070) 2,800
(Decrease) increase in accounts payable and accrued expenses.......................... (5,434) 536
Decrease in accrued income taxes--long term........................................... (19,634) --
Increase in accrued interest payable.................................................. 8,932 --
Write-off of deferred finance costs................................................... 12,200 --
Change in other accounts.............................................................. 4,825 (351)
--------- -----------
Total adjustments................................................................... $ 46,274 $ 32,702
--------- -----------
Net cash provided by operating activities......................................... $ 7,116 $ 38,791
--------- -----------
Cash flows from investing activities:
Capital expenditures.................................................................... (5,544) (40,757)
Proceeds from sales of property and equipment........................................... -- 201
Purchase of cellular systems............................................................ -- (31,469)
Purchases of minority interests......................................................... -- (956)
Increase in other intangible assets and other assets.................................... -- (778)
--------- -----------
Net cash used in investing activities............................................. $ (5,544) $ (73,759)
--------- -----------
Cash flows from financing activities:
Decrease in short-term notes payable.................................................... -- (1,366)
Repayment of long-term debt............................................................. (518,112) (3,782)
Repayment of advances from Price Communications Corporation............................. (930) --
Proceeds from long-term debt............................................................ 725,000 41,000
Premium on early extinguishment of debt................................................. (18,194) --
Cash pledged for outstanding interest rate swap contracts............................... (9,302) --
Payment of debt issuance costs.......................................................... (18,223) --
Exercise of stock options............................................................... -- 999
--------- -----------
Net cash provided by financing activities......................................... $ 160,239 $ 36,851
--------- -----------
Net increase in cash and cash equivalents......................................... $ 161,811 $ 1,883
Cash and cash equivalents at the beginning of period...................................... 27,926 1,698
--------- -----------
Cash and cash equivalents at the end of period............................................ $ 189,737 $ 3,581
--------- -----------
--------- -----------
Supplemental disclosure of cash flow information:
Income taxes (received) paid, net....................................................... $ 643 $ (736)
--------- -----------
--------- -----------
Interest paid........................................................................... $ 82,620 $ 27,471
--------- -----------
--------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-32
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Wireless, Inc. ("PCW" or the "Company"), a wholly-owned
subsidiary of Price Communications Cellular Holdings, Inc. ("Holdings"), a
wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The Sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Price
Communications Wireless, Inc. and subsidiaries (the "Company") have been
prepared without audit pursuant to Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financials. In the opinion of management, all adjustments (none of
which were other than normal recurring items) considered necessary for a fair
presentation have been included. The results of operations for the interim
periods reported are not necessarily indicative of results to be expected for
the year.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" accounting.
The Condensed Consolidated Statement of Operations of the Predecessor for
the third quarter of 1997 and for the nine months ended September 30, 1997 and
Statement of Cash Flows for the nine months ended September 30, 1997 reflect its
historical results of operations and cash flows and are referred to as the
"Predecessor" condensed consolidated financial statements. Accordingly, the
accompanying financial
F-33
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
statements of the Predecessor and the Company are not comparable in all material
respects since those financial statements report results of operations and cash
flows of these two separate entities.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 Statements of
Operations and Statements of Cash Flows to conform to the 1998 presentation.
(2) LONG-TERM DEBT
In June 1998, PCW issued $525 million of 9.125% Senior Secured Notes
("9.125% Notes") due June 15, 2002 with interest payable semi-annually
commencing December 15, 1998. The 9.125% Notes contain covenants that restrict
the payment of dividends, incurrence of debt and sale of assets. The net
proceeds from the issuance of the 9.125% Notes were used to retire outstanding
indebtedness under the Credit Facility, including interest.
(3) OBLIGATION OF PARENT COMPANY
In August 1998, the Company redeemed all of Holdings outstanding 13 1/2%
Senior Secured Discount Notes due 2007 ("13 1/2% Notes"). The notes were
redeemed at the redemption price per $1,000 aggregate principal amount of
$711.61. The accreted value of the notes approximated $91.0 million. In
addition, Holdings was required to pay a premium of approximately 20% of the
outstanding balance or approximately $18.2 million. The Company financed the
redemption out of the net proceeds of a new $200,000 Holdings offering of
11 1/4% Senior Exchangeable Payable-in-Kind notes due 2008 ("11 1/4% Notes").
Cash interest will begin to accrue on the notes on February 15, 2003 whereupon
the interest rate will be reduced by 0.5%. Commencing February 15, 1999, the
Company may elect to pay cash interest whereupon all future interest becomes
cash pay and the interest rate would be reduced by 0.5%.
The Company's Condensed Consolidated Balance Sheets include as of September
30, 1998 $87,376 of restricted cash which is restricted for the benefit of the
Parents' bondholders.
The Company's Condensed Consolidated Balance Sheets include $201,911
(including accrued interest) at September 30, 1998 of the 11 1/4% Notes and
$80,112 at December 31, 1997 of the 13 1/2% Notes which are obligations of
Holdings but are included in the Balance Sheets solely pursuant to "push down"
accounting rules.
F-34
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Palmer Wireless Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of Palmer
Wireless Holdings Inc. and Subsidiaries (a Delaware Corporation) and Subsidiary
as of December 31, 1997 and the related consolidated statements of operations
and retained earnings (accumulated deficit) and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Palmer Wireless Holdings
Inc. and Subsidiaries as of December 31, 1997, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Palmer Wireless Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of Palmer Wireless
Holdings, Inc. as of December 31, 1996, and the related consolidated statements
of operations and retained earnings (accumulated deficit), stockholder's equity
and cash flows for each of the years in the two-year period ended December 31,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Palmer Wireless
Holdings, Inc. as of December 31, 1996, and the results of their operations and
their cash flows for each of the years in the two-year period ended December 31,
1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-36
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................................. $ 102,361 $ 27,926 $ 1,698
Restricted cash............................................................ 87,376 -- --
Trade accounts receivable, less allowance for doubtful accounts of $2,196
in 1998, $818 in 1997 and $1,791 in 1996................................. 21,036 15,940 18,784
Receivable from other cellular carriers.................................... 2,136 3,902 1,706
Prepaid expenses and deposits.............................................. 9,985 902 2,313
Inventory.................................................................. 3,350 1,280 5,106
Deferred income taxes...................................................... 3,257 5,402 830
------------- --------- ---------
Total current assets................................................... 229,501 55,352 30,437
------------- --------- ---------
Property and equipment :
Land and improvements...................................................... 6,766 6,438 5,238
Buildings and improvements................................................. 8,647 8,561 7,685
Equipment, communication systems, and furnishings.......................... 145,154 140,381 166,735
------------- --------- ---------
160,567 155,380 179,658
Less accumulated depreciation and amortization............................. 19,001 4,239 47,220
------------- --------- ---------
Net property and equipment............................................. 141,566 151,141 132,438
Licenses and goodwill, net of accumulated amortization of $24,606 in 1998,
$6,016 in 1997 and $30,188 in 1996......................................... 899,902 918,488 375,808
Other intangible assets and other assets, at cost less accumulated
amortization of $1,074 in 1998, $818 in 1997 and $7,311 in 1996............ 23,835 19,498 11,259
------------- --------- ---------
Total Assets $ 1,294,804 $1,144,479 $ 549,942
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Current installment of obligation of Parent................................ $ -- $ 2,812 $ 5,296
Notes payable.............................................................. -- -- 1,366
Payable to Price Communications Corporation................................ 1,398 2,328 --
Accounts payable........................................................... 11,332 13,059 10,394
Accrued interest payable................................................... 20,293 11,361 2,341
Accrued salaries and benefits.............................................. 2,630 2,324 2,432
Other accrued expenses..................................................... 12,018 16,031 3,626
Deferred revenue........................................................... 4,886 3,755 3,929
Customer deposits.......................................................... 868 602 757
------------- --------- ---------
Total current liabilities.............................................. 53,425 52,272 30,141
Obligation of Parent......................................................... 700,000 610,188 337,000
Obligation of Price Communications Cellular Holdings, Inc.................... 201,911 80,112 --
Accrued income taxes--long term.............................................. 30,857 50,491 `--
Deferred income taxes........................................................ 303,539 308,901 11,500
Minority interests........................................................... 9,067 7,352 6,371
------------- --------- ---------
Total liabilities...................................................... 1,298,799 1,109,316 385,012
------------- --------- ---------
Commitments and contingencies
Stockholder's Equity:
Common stock par value $.01; 1,000 shares authorized and issued............ -- -- --
Additional paid-in capital................................................. 44,015 44,015 158,395
Retained earnings (accumulated deficit).................................... (48,010) (8,852) 6,535
------------- --------- ---------
Total stockholder's equity (deficit)..................................... (3,995) 35,163 164,930
------------- --------- ---------
Total liabilities and stockholder's equity................................... $ 1,294,804 $1,144,479 $ 549,942
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-37
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(ACCUMULATED DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
---------------------- ----------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Service............................................ $ 134,938 $ 134,123 $ 175,488 $ 151,119 $ 96,686
Equipment sales and installation................... 9,175 7,613 9,961 8,624 8,220
---------- ---------- ---------- ---------- ----------
Total revenue.................................. 144,113 141,736 185,449 159,743 104,906
---------- ---------- ---------- ---------- ----------
Operating expenses:
Engineering, technical and other direct............ 21,980 23,301 29,279 28,717 18,184
Cost of equipment.................................. 17,401 16,112 21,371 17,944 14,146
Selling general and administrative................. 39,988 41,014 53,819 46,892 30,990
Depreciation and amortization...................... 33,721 25,498 36,553 25,013 15,004
---------- ---------- ---------- ---------- ----------
Total operating expenses......................... 113,090 105,925 141,022 118,566 78,324
---------- ---------- ---------- ---------- ----------
Operating income................................. 31,023 35,811 44,427 41,177 26,582
---------- ---------- ---------- ---------- ----------
Other income (expense):
Interest expense, net.............................. (60,786) (24,467) (46,665) (31,462) (21,213)
Other.............................................. (98) 208 223 (429) (687)
---------- ---------- ---------- ---------- ----------
Total other expense............................ (60,884) (24,259) (46,442) (31,891) (21,900)
Income (loss) before minority interest share of
income, income taxes and extraordinary item.... (29,861) 11,552 (2,015) 9,286 4,682
Minority interest share of income................ 1,715 1,310 1,724 1,880 1,078
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes and
extraordinary item............................. (31,576) 10,242 (3,739) 7,406 3,604
Income tax benefit (expense)......................... 11,566 (4,153) 976 (2,724) (2,650)
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary item.............. (20,010) 6,089 (2,763) 4,682 954
Extraordinary item-write-off of deferred finance
costs and premium on early extinguishment of debt
(net of income tax benefit of $12,254).............. (19,148) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss)................................ (39,158) 6,089 (2,763) 4,682 954
Retained earnings (accumulated deficit) at beginning
of year............................................. (8,852) 6,535 6,535 1,853 899
Adjustment of retained earnings for PCW
acquisition......................................... -- -- (12,624) -- --
---------- ---------- ---------- ---------- ----------
Retained earnings (accumulated deficit) at end of
period.............................................. $ (48,010) $ 12,624 $ (8,852) $ 6,535 $ 1,853
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-38
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss)........................................... $ (39,158) $ 6,089 $ (2,763) $ 4,682 $ 954
--------- --------- --------- --------- ---------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 33,797 25,498 36,553 25,013 15,004
Minority interest share of income......................... 1,715 1,310 1,724 1,880 1,078
Deferred income taxes..................................... (3,217) 3,943 1,485 1,855 2,650
Interest deferred and added to obligation of Parent....... -- 355 607
Interest deferred and added to obligation of Price
Communications Cellular Holdings........................ 1,911 -- 4,400 -- --
Payment of deferred interest.............................. -- (1,514) (1,514) (1,080) --
Write-off of deferred finance costs....................... 12,200 -- -- -- --
Premium on early extinguishment of debt................... 18,194 -- -- -- --
Loss on disposal of property.............................. 151 7 -- -- --
(Increase) decrease in trade accounts receivable.......... (5,096) 473 597 (1,561) (2,741)
(Increase) decrease in inventory.......................... (2,070) 2,800 3,258 (2,595) 4,076
(Decrease) increase in accounts payable and accrued
expenses................................................ (5,434) 536 (362) (1,183) 3,447
Decrease in accrued income taxes--long term............... (19,634) -- (2,675) -- --
Increase (decrease) in accrued interest................... 8,932 -- 9,020 (167) (14)
Other..................................................... 4,825 (351) 381 2,931 2,599
--------- --------- --------- --------- ---------
Total adjustments....................................... 46,274 32,702 52,867 25,448 26,706
--------- --------- --------- --------- ---------
Net cash provided by operating activities............... 7,116 38,791 50,104 30,130 27,660
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment................ -- 201 201 5 38
Purchases of property and equipment......................... (5,544) (40,757) (55,256) (41,445) (36,564)
Purchase of cellular systems................................ -- (31,469) (529,325) (67,588) (158,397)
Proceeds from sale of cellular systems...................... -- -- 193,799 2,452 --
Purchase of minority interests.............................. -- (956) (1,750) (1,854) (1,543)
Distributions to minority interests......................... -- -- (1,680) -- --
Purchase of other intangibles............................... -- (778) (778) (2,180) (310)
--------- --------- --------- --------- ---------
Net cash used in investing activities................... (5,544) (73,759) (394,789) (110,610) (196,776)
--------- --------- --------- --------- ---------
Cash flows from financing activities--
Advances (to) from affiliates, net.......................... (930) -- 2,328 -- (1,650)
(Decrease) increase in short-term notes payable............. -- (1,366) (1,366) 1,366 --
Proceeds from debt issued by Parent......................... 525,000 41,000 656,712 100,000 171,000
Repayment of debt issued by Parent.......................... (430,058) (3,782) (388,782) (108,319) (65,125)
Proceeds from debt issued by Price Communications Cellular
Holdings, Inc............................................. 200,000 -- 80,000 -- --
Repayment of debt issued by Price Communications Cellular
Holdings, Inc............................................. (88,054) --
Premium on early extinguishment of debt..................... (18,194) -- -- -- --
Cash pledged for outstanding interest rate swap contracts... (9,302) -- -- -- --
Payment of debt issuance costs.............................. (18,223) -- (19,412) (4,803)
Cash received from Parent for equity transactions........... -- 999 45,014 85,695 70,132
--------- --------- --------- --------- ---------
Net cash provided by financing activities................... 160,239 36,851 374,494 78,742 169,554
Net increase (decrease) in cash......................... 161,811 1,883 29,809 (1,738) 438
Cash and cash equivalents at begining of year................. 31,507 1,698 1,698 3,436 2,998
Acquisition adjustment........................................ (3,581) -- -- -- --
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of period.................... $ 189,737 $ 3,581 $ 31,507 $ 1,698 $ 3,436
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosure of cash flow information:
Income taxes paid (received)................................ $ 643 $ (736) $ (776) $ 1,591 $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash paid during the period for interest.................... $ 82,620 $ 27,471 $ 35,026 $ 29,733 $ 18,435
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-39
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Palmer Wireless Holdings, Inc. (the "Company") was incorporated in March
1995. It was the wholly-owned subsidiary of Palmer Wireless, Inc.
Price Communications Wireless, Inc. ("PCW"), a wholly-owned subsidiary of
Price Communications Cellular Holdings, Inc. ("Holdings"), a wholly-owned
subsidiary of Price Communications Cellular, Inc., a wholly-owned subsidiary of
Price Communications Corporation ("PCC"), was incorporated on May 29, 1997 in
connection with the purchase of Palmer Wireless, Inc. and subsidiaries
("Palmer").
In May, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and direct stock purchase plans
for an aggregate price of approximately $486,400. In addition, as a result of
the Merger, PCW assumed all outstanding indebtedness of Palmer of approximately
$378,000. Therefore, the aggregate purchase price for Palmer (including
transaction fees and expenses) was approximately $880,000. PCW refinanced all of
the Palmer Existing Indebtedness concurrently with the consummation of the
Merger.
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the Merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the Merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt to
fund the Palmer acquisition. Accordingly, no gain or loss was recognized on the
Georgia Sale.
In order to fund the Merger and pay related fees and expenses, in July,
1997, PCW issued $175,000 aggregate principal amount of 11 3/4% Senior
Subordinated Notes due 2007 and entered into a syndicated senior loan facility
providing for term loan borrowings in the aggregate principal amount of
approximately $325,000 and revolving loan borrowings of $200,000. In October,
1997, PCW borrowed all term loans available thereunder and approximately
$120,000 of revolving loans. DLJ Capital Funding, Inc. provided and syndicated
the Credit Facility. See Notes 5(a) and 5(b).
The remaining acquisition price of Palmer was funded through a $44,015
equity contribution of PCC and $75,712 of borrowings of Holdings (See Note
5(c)).
F-40
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION
For financial reporting purposes, the Company revalued its assets and
liabilities as of October 1, 1997 to reflect the price paid by PCC to acquire
100% of Palmer's Common Stock, a process generally referred to as "push down"
accounting. The consolidated financial statements as of December 31, 1997 and
for the period May 29, 1997 through December 31, 1997 reflect an allocation of
the purchase price to the assets acquired and liabilities assumed. Additional
purchase liabilities recorded include approximately $6,464 for severance and
related costs and $4,051 for costs associated with the shutdown of certain
acquired facilities. See Note 3, Other Accrued Liabilities, for amounts
outstanding as of December 31, 1997. The combined allocation of the purchase
price resulted in licenses of approximately $924,504 on the balance sheet, which
is being amortized on a straight-line basis over a period of 40 years.
In August, 1997 Holdings issued 153,400 units, consisting of Notes and
warrants of PCC (the "Warrants"), in exchange for $80,000. Such notes, which are
not guaranteed by the Company or secured by its stock, do not represent
indebtedness of the Company. Holdings' notes have been reflected as an
"Obligation of Holdings" in the accompanying consolidated financial statements
in accordance with the "push-down" basis of accounting discussed above. The
Notes accrete at a rate of 13.5%, compounded semi-annually, to an aggregate
principal amount of approximately $153,400 by August 1, 2002. The Warrants have
been assigned a value of $4,288, which amount is accounted for as original issue
discount, resulting in an effective interest rate of approximately 14.13% per
annum. The fair value of the Notes was estimated as $80,112 as of December 31,
1997. In August 1998, the Company's Parent redeemed all of those notes, see note
5(f).
PRO FORMA INFORMATION
The following unaudited pro forma condensed consolidated financial
information was prepared assuming (i) the purchase by PCC occurred on January 1,
1996, (ii) the acquisitions of the licenses had occurred on January 1, 1996 (See
Note 4) and (iii) the Ft. Myers Sale and Georgia Sale occurred on January 1,
1996.
Proforma information is presented for comparative purposes only and does not
purport to be indicative of the results which would have been achieved had this
acquisition occurred as of January 1, 1996, nor does it purport to be indicative
of results that may be achieved in the future.
<TABLE>
<CAPTION>
UNAUDITED
----------------------
YEAR ENDED DECEMBER 31
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Total Revenue............................................................................ $ 161,468 $ 145,643
---------- ----------
---------- ----------
Loss Before Income Taxes................................................................. $ (51,532) $ (54,529)
---------- ----------
---------- ----------
Net Loss................................................................................. $ (43,911) $ (48,895)
---------- ----------
---------- ----------
</TABLE>
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries after the elimination of significant
intercompany accounts and transactions. The financial
F-41
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
statements also include the debt of Palmer and Holdings, which funded a portion
of the acquisition of Palmer and is indirectly guaranteed by the assets of the
Company's Parent.
The Company is a Delaware corporation and was incorporated in March, 1995.
At December 31, 1996, Palmer Communications Incorporated ("PCI") owned 61
percent of the Predecessor's outstanding stock and had 75 percent of its voting
rights and therefore the Predecessor was a subsidiary of PCI.
Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.
OPERATIONS
The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in eight Metropolitan
Statistical Areas ("MSA") in three states: Florida (one), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range from
approximately 78 percent to 100 percent. The Company owns directly and operates
eight non-wireline cellular telephone systems in Rural Service Areas in Georgia
(seven) and Alabama (one).
The Company is owned 100% by its Parent, Price Communications Wireless, Inc.
The Company is the direct owner of all of the operating subsidiaries.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company and the Predecessor
consider cash and repurchase agreements with a maturity of three months or less
to be cash equivalents.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of additions and
improvements are capitalized while maintenance and repairs are charged to
expense when incurred. Depreciation is provided principally by the straight-line
method over the estimated useful lives, ranging from 5 to 20 years for buildings
and improvements and 5 to 10 years for equipment, communications systems and
furnishings.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or
F-42
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
management). The excess of the total consideration over the amounts assigned to
identifiable assets is recorded as goodwill. Licenses and goodwill are being
amortized on a straight-line basis over a 40-year period.
Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of licenses may warrant revision or that the
remaining balance of the license rights may not be recoverable. The Company
utilizes projected undiscounted cash flows over the remaining life of the
licenses and sales of comparable businesses to evaluate the recorded value of
licenses. The assessment of the recoverability of the remaining balance of the
license rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangibles consist principally of deferred financing costs and other
items. These costs are being amortized by the interest or straight-line method
over their respective useful lives, which range from 5 to 10 years.
INCOME TAXES
The Company accounts for income taxes under the asset and liability method
of accounting for deferred income taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
INTEREST RATE SWAP AGREEMENTS
The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and outcollect roaming
revenue.
Local subscriber revenue is earned by providing access to the cellular
network ("access revenue") or, as applicable, for usage of the cellular network
("airtime revenue"). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Outcollect roaming revenue represents revenue earned for usage of its
cellular network by subscribers of other cellular carriers. Outcollect roaming
revenue is recognized when the services are rendered.
Equipment sales and installation revenues are recognized upon delivery to
the customer or installation of the equipment.
F-43
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES-ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical and other direct operating expenses represent certain
costs of providing cellular telephone service to customers. These costs include
incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods and assumptions used to estimate the fair
value of financial instruments are set forth below:
For cash and cash equivalents, trade accounts receivable, receivable from
other cellular carriers, notes payable, accounts payable and accrued expenses,
the carrying amount approximates the estimated fair value due to the short-term
nature of those instruments.
Rates currently available for long-term debt with similar terms and
remaining maturities are used to discount the future cash flows to estimate the
fair value for long-term debt. Note 5 presents the fair value for long-term debt
and the related interest rate cap and swap agreements.
Fair value estimates are made as of a specific point in time, based upon the
relevant market information about the financial instruments. Because no market
exists for a majority of the financial instruments, fair value estimates are
based on judgments regarding current economic conditions and other factors.
These estimates are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
(2) TRADE ACCOUNTS RECEIVABLE
The Company grant credit to its customers. Substantially all of the
customers are residents of the local areas served. Generally, service is
discontinued to customers whose accounts are 60 days past due.
The activity in the Company's allowance for doubtful accounts for the years
ended December 31, 1995, 1996 and 1997 consisted of the following:
<TABLE>
<CAPTION>
ALLOWANCE AT
BALANCE AT DATES OF DEDUCTIONS,
BEGINNING CHARGED TO ACQUISITIONS NET OF BALANCE AT
OF PERIOD EXPENSES (DISPOSITIONS) RECOVERIES END OF PERIOD
----------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995................ $ 1,567 $ 2,078 $ 432 $ (2,197) $ 1,880
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
Year ended December 31, 1996................ $ 1,880 $ 3,946 $ 1,270 $ (5,305) $ 1,791
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
Year ended December 31, 1997................ $ 1,791 $ 4,816 $ (59) $ (5,730) $ 818
----------- ----------- ------ ------- ------
----------- ----------- ------ ------- ------
</TABLE>
F-44
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(3) OTHER ACCRUED LIABILITIES
Other accrued liabilities at December 31, 1997 and 1996 consisted of the
following:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Accrued telecommunications expenses...................................... $ 2,176 $ 892
Accrued local taxes...................................................... 888 913
Accrued severance payments............................................... 6,155 --
Accrued shutdown costs of certain facilities............................. 3,818 --
Miscellaneous accruals................................................... 2,994 1,821
--------- ---------
$ 16,031 $ 3,626
--------- ---------
--------- ---------
</TABLE>
(4) ACQUISITIONS AND PURCHASE OF LICENSES
On December 1, 1995, the Company purchased all of the outstanding stock of
Augusta Metronet, Inc. and Georgia Metronet, Inc., which own either directly (or
in the case of Georgia Metronet, Inc., through its 97.9 percent interest in the
Savannah Cellular Limited Partnership) the licenses to operate the non-wireline
cellular telephone systems in the Savannah and Augusta, Georgia MSAs,
respectively, for an aggregate purchase price of $158,397. The acquisition was
accounted for by the purchase method of accounting. In connection with this
acquisition, $136,940 of the purchase price was allocated to licenses and
goodwill.
On June 20, 1996, the Company acquired the assets of and the license to
operate the non-wireline cellular telephone system serving the Georgia-1 RSA for
an aggregate purchase price of $31,616. The acquisition was accounted for by the
purchase method of accounting. In connection with the acquisition, $27,942 of
the purchase price was allocated to licenses.
On July 5, 1996, two of the Company's majority-owned subsidiaries acquired
the assets of the license to operate the non-wireline cellular telephone system
serving the Georgia-6 RSA for an aggregate purchase price of $35,972. The
acquisition was accounted for by the purchase method of accounting. In
connection with the acquisition, $33,491 of the purchase price was allocated to
licenses.
On January 31, 1997, a majority-owned subsidiary of the Company acquired the
assets of and the license to operate the non-wireline cellular telephone system
serving the Georgia-13 RSA for an aggregate purchase price of $31,486. The
acquisition was accounted for by the purchase method of accounting. In
connection with the acquisition, $27,650 of the purchase price was allocated to
licenses.
See Note 1 for presentation of pro forma information.
F-45
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE, OBLIGATION OF PARENT, OBLIGATION OF PRICE COMMUNICATIONS
HOLDINGS, INC.
Obligation of Parent consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Credit agreement.................................................... $ 438,000(b) $ 337,000(c)
11.75% Senior Subordinated Notes.................................... 175,000(b) --
Purchase obligations................................................ -- 5,296(d)
---------- ----------
613,000 342,296
Less current installments........................................... 2,812 5,296
---------- ----------
Obligation of Parent, excluding current installments................ $ 610,188 $ 337,000
---------- ----------
---------- ----------
</TABLE>
- ------------------------
(a) In October 1997, the Company's Parent entered into a credit agreement
("Credit Agreement") with a syndicate of banks, financial institutions and
other "accredited investors" providing for loans of up to $525,000. The
Credit Agreement includes a $325,000 term loan facility and a $200,000
revolving credit facility. The term loan facility is comprised of tranche A
loans of up to $100,000, which will mature on September 30, 2005, and
tranche B term loans of up to $225,000, which will mature on September 30,
2006. The revolving credit facility will terminate on September 30, 2006.
The Credit Agreement bears interest at the alternate base rate, as defined
in the Credit Agreement, as the reserve adjusted Euro-Dollar rate plus, in
each case, applicable margins of (i) in the case of tranche A term loans and
revolving loans (x) 2.5% for Euro-Dollar rate loans and (y) 1.5% for base
rate loans and (ii) in the case of tranche B term loans (x) 2.75% for
Euro-Dollar rate loans and (y) 1.75% for base rate loans. As of December 31,
1997, the Credit Agreement was bearing interest at 8.5% for the tranche A
loan and revolving credit facility and 8.7% for the tranche B loan. The
Credit Agreement contains restrictions on the subsidiary's ability to engage
in certain activities, including limitations on incurring additional
indebtedness, liens and investments, payment of dividends and the sale of
assets. Holdings is a guarantor of the Credit Agreement. As of December 31,
1997 $87,000 of the revolving credit facility was unused and available for
borrowings.
(b) In July 1997, the Company's Parent issued $175,000 of 11.75% Senior
Subordinated Notes ("11.75% Notes") due July 15, 2007 with interest payable
semi-annually commencing January 15, 1998. The 11.75% Notes contain
covenants that restrict the payment of dividends, incurrence of debt and
sale of assets. The carrying value of the 11.75% Notes approximates fair
value as of December 31, 1997.
(c) On December 1, 1995, the Company's Parent entered into an amended and
restated credit agreement with 21 banks which provided for a revolving line
of credit of up to $500,000, subject to certain limitations through June 30,
2004. Interest was payable at variable rates and under various interest rate
options. The interest rate at December 31, 1996 ranged from 7.42 to 8.88
percent before the affect of the interest rate swap and cap agreements
outlined below. The credit agreement also provided for a commitment fee of
.5 percent per year on any unused amounts of the credit agreement. Amounts
outstanding were secured by the assets of the Company's Parent.
The credit agreement provided for various compliance covenants and
restrictions, including items related to mergers or acquisition
transactions, the declaration or payment of dividends or other payments to
stockholders, capital expenditures and maintenance of certain financial
ratios. At
F-46
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE, OBLIGATION OF PARENT, OBLIGATION OF PRICE COMMUNICATIONS
HOLDINGS, INC. (CONTINUED)
December 31, 1996 the Company's Parent was in compliance with all but one
financial ratio covenant. This covenant was based on operating results for
the year ended December 31, 1996. The Company's Parent obtained a waiver of
the noncompliance with this 1996 financial ratio covenant. In connection
with the acquisition of the Company's Parent (see Note 1), the Company's
Parent's credit agreement was refinanced.
(d) In connection with the purchase of controlling interest in a non-wireline
cellular telephone system in 1991, the Company's Parent incurred certain
purchase obligations. The obligations were retired in July 1996 and January
1997.
(e) In June 1998, the Company's Parent issued $525 million of 9.125% Senior
Secured Notes ("9.125% Notes") due June 15, 2002 with interest payable
semi-annually commencing December 15, 1998. The 9.125% Notes contain
covenants that restrict the payment of dividends, incurrence of debt and
sale of assets. The net proceeds from the issuance of the 9.125% Notes were
used to retire outstanding indebtedness under the Credit Facility, including
interest.
(f) In August 1998, the Company's Parent redeemed all of Holdings outstanding
13 1/2% Senior Secured Discount Notes due 2007 ("13 1/2% Notes"). The notes
were redeemed at the redemption price per $1,000 aggregate principal amount
of $711.61. The accreted value of the notes approximated $91.0 million. In
addition, Holdings was required to pay a premium of approximately 20% of the
outstanding balance or approximately $18.2 million. The Company's Parent
financed the redemption out of the net proceeds of a new $200,000 Holdings
offering of 11 1/4% Senior Exchangeable Payable-in-Kind notes due 2008
("11 1/4% Notes"). Cash interest will begin to accrue on the notes on
February 15, 2003 whereupon the interest rate will be reduced by 0.5%.
Commencing February 15, 1999, the Company may elect to pay cash interest
whereupon all future interest becomes cash pay and the interest rate would
be reduced by 0.5%.
The Company's Condensed Consolidated Balance Sheets include $201,911
(including accrued interest) at September 30, 1998 of the 11 1/4% Notes and
$80,112 at December 31, 1997 of the 13 1/2% Notes which are obligations of
Holdings but are included in the Balance Sheets solely pursuant to "push
down" accounting rules.
F-47
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(6) INCOME TAXES
Components of income tax expense (benefit) consist of the following:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Year ended December 31, 1995:
Current........................................................................... $ -- $ -- $ --
Deferred.......................................................................... 2,550 100 2,650
--------- --------- ---------
$ 2,550 $ 100 $ 2,650
--------- --------- ---------
--------- --------- ---------
Year ended December 31, 1996:
Current........................................................................... $ -- $ 869 $ 869
Deferred.......................................................................... 1,795 60 1,855
--------- --------- ---------
$ 1,795 $ 929 $ 2,724
--------- --------- ---------
--------- --------- ---------
Year ended December 31, 1997
Current........................................................................... $ (2,244) $ (218) $ (2,462)
Deferred.......................................................................... 1,437 29 1,486
--------- --------- ---------
$ (807) $ (189) $ (976)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The consolidated effective tax rate differs from the statutory United States
federal tax rate for the following reasons and by the following percentages:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Statutory United States federal tax rate............................................ 34.0% 34.0% 34.0%
Partnership loss prior to corporate status.......................................... -- -- 10.1
License amortization not deductible for tax......................................... -- 32.5 7.7
Net operating loss carryforwards.................................................... -- (42.8) (59.0)
State taxes......................................................................... 2.4 8.3 --
Recognition of deferred taxes related to the difference between financial statement
and income tax basis of certain assets and liabilities in connection with the
Exchange.......................................................................... -- -- 73.5
Non-deductible interest expense..................................................... 1.1 -- --
Other............................................................................... .8 4.8 7.2
--------- --------- ---------
Consolidated effective tax rate..................................................... 38.3% 36.8% 73.5%
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-48
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(6) INCOME TAXES (CONTINUED)
In 1997, the Company recorded an additional deferred tax liability and a
corresponding increase in licenses for timing differences attributable to
pre-1997 acquisitions. The components of the deferred income tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts.......................................................... $ 327 $ 609
Inventory reserve........................................................................ 144 --
Deferred revenue......................................................................... 400 --
Nondeductible accruals................................................................... 6,495 221
Net operating loss carryforwards......................................................... 3,560 4,100
Valuation allowance...................................................................... (3,560) --
----------- ----------
Total deferred tax assets................................................................ 7,366 4,930
Deferred tax liabilities:
Accumulated depreciation................................................................. (8,559) (7,415)
Licenses................................................................................. (302,306) (8,185)
----------- ----------
Total deferred tax liabilities........................................................... (310,865) (15,600)
----------- ----------
Deferred tax liability, net.............................................................. $ (303,499) $ (10,670)
----------- ----------
----------- ----------
</TABLE>
The net operating loss carryforwards totaled approximately $8,900 at
December 31, 1997 and expire in amounts ranging from approximately $300 to
$1,100 through 2012. For these carryforwards utilization is limited to the
subsidiary that generated the carryforwards, unless the Company utilizes
alternative tax planning strategies.
(7) RELATED PARTY TRANSACTION
On January 1, 1997, the Company purchased a building and certain towers from
PCI for $6,243. These assets were previously leased from PCI.
Concurrently with the Offering and Exchange, the Company and PCI entered
into both a transitional management and administrative services agreement and a
computer services agreement that extended each December 31 for additional
one-year periods unless and until either party notified the other. The fees from
these arrangements amounted to a total of $492, $534 and $88 for the years ended
December 31, 1995 and 1996 and the nine months ended September 30, 1997,
respectively, and are included as a reduction of selling, general and
administrative expenses.
Concurrently with the Offering and the Exchange, the Company's Parent and
PCI entered into a tax consulting agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees for tax consulting services amounted to a total $84, $120 and $97 for
the years ended December 31, 1995 and 1996 and the nine months ended September
30, 1997, respectively, and are included in selling, general and administrative
expenses.
PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Company participated in this plan and
F-49
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) RELATED PARTY TRANSACTION (CONTINUED)
was allocated 401(k) retirement and matching expense of $493, $696 and $544 for
the years ended December 31, 1995, and 1996 and the nine months ended September
30, 1997, respectively.
(8) COMMITMENTS AND CONTINGENCIES
CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2,006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial statements.
F-50
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Cellular Systems of Southeast Alabama, Inc.:
We have audited the accompanying consolidated balance sheet of Cellular
Systems of Southeast Alabama, Inc. (a Delaware Corporation) and Subsidiary as of
December 31, 1997, and the related consolidated statements of operations,
retained earnings (accumulated deficit) and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cellular Systems of
Southeast Alabama, Inc. and Subsidiary as of December 31, 1997, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-51
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cellular Systems of Southeast Alabama, Inc.
We have audited the accompanying consolidated balance sheet of Cellular
Systems of Southeast Alabama, Inc. and subsidiary as of December 31, 1996, and
the related consolidated statements of operations and retained earnings
(deficit) and cash flows for each of the years in the two-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cellular
Systems of Southeast Alabama, Inc. and subsidiary as of December 31, 1996, and
the results of their operations and their cash flows for each of the years in
the two-year period ended December 31, 1996 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-52
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash........................................................................ $ 78 $ 88 $ 26
Trade accounts receivable, less allowance for doubtful accounts of $38 in
1998, $28 in 1997 and $22 in 1996......................................... 1,406 1,025 1,168
Inventory................................................................... 135 37 155
Other current assets........................................................ 14 20 10
------------- --------- ---------
Total current assets.................................................... 1,633 1,170 1,359
------------- --------- ---------
Property and equipment :
Land and land improvements.................................................. 356 355 375
Buildings and leasehold improvements........................................ 191 187 511
Equipment and furnishings................................................... 324 324 348
Cellular equipment.......................................................... 4,950 4,451 5,792
------------- --------- ---------
5,821 5,317 7,026
Less accumulated depreciation and amortization.............................. 588 65 2,994
------------- --------- ---------
Net property and equipment.............................................. 5,233 5,252 4,032
Licenses and other intangibles, less accumulated amortization of $1,243 in
1998 and $330 in 1997....................................................... 49,196 50,109 --
------------- --------- ---------
$ 56,062 $ 56,531 $ 5,391
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accrued salaries and benefits............................................... $ 26 $ 66 $ 56
Other accrued expenses...................................................... 149 90 118
Deferred revenue............................................................ 325 176 261
Customer deposits........................................................... 47 23 27
------------- --------- ---------
Total current liabilities............................................... 547 355 462
Deferred income taxes......................................................... 16,624 16,944 --
Advances from affiliates...................................................... 5,153 6,261 6,910
------------- --------- ---------
Total liabilities....................................................... 22,324 23,560 7,372
------------- --------- ---------
Commitments and contingencies.................................................
Stockholder's Equity (Deficit):
Common stock, par value $.01 per share
Class A, authorized and issued 5,001 shares............................... -- -- --
Class B, authorized and issued 4,999 shares............................... -- -- --
Class C, authorized 90,000 shares, none issued............................ -- -- --
Additional paid-in capital.................................................. 32,788 32,788 --
Retained earnings (accumulated deficit)..................................... 950 183 (1,981)
------------- --------- ---------
Total stockholder's equity (deficit)...................................... 33,738 32,971 (1,981)
------------- --------- ---------
$ 56,062 $ 56,531 $ 5,391
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-53
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue............................................. $ 8,940 $ 7,449 $ 10,113 $ 9,337 $ 8,596
Equipment sales and installation............................ 814 406 608 452 539
--------- --------- --------- --------- ---------
Total revenue............................................. 9,754 7,855 10,721 9,789 9,135
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct service............. 3,139 2,190 2,976 2,675 3,062
Cost of equipment........................................... 1,226 687 1,035 774 1,046
Sales and marketing......................................... 630 410 605 444 373
General and administrative.................................. 1,810 1,697 2,245 2,169 2,016
Depreciation and amortization............................... 1,436 471 930 445 360
--------- --------- --------- --------- ---------
Total operating expenses.................................. 8,241 5,455 7,791 6,507 6,857
--------- --------- --------- --------- ---------
Operating income.......................................... 1,513 2,400 2,930 3,282 2,278
Other expense................................................. -- 2 2 -- --
Interest expense.............................................. 344 500 657 787 958
--------- --------- --------- --------- ---------
Net income before taxes................................... 1,169 1,898 2,271 2,495 1,320
Provision for taxes....................................... 402 -- 107 -- --
--------- --------- --------- --------- ---------
Net income................................................ 767 1,898 2,164 2,495 1,320
Retained earnings (deficit) at beginning of year.............. 183 (1,981) (1,981) (4,476) (5,796)
--------- --------- --------- --------- ---------
Retained earnings (deficit) at end of period.................. $ 950 $ (83) $ 183 $ (1,981) $ (4,476)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-54
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................................... $ 767 $ 1,898 $ 2,164 $ 2,495 $ 1,320
--------- --------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 1,436 471 930 445 360
Decrease in deferred taxes................................. (320) -- (107) -- --
(Increase) decrease in trade accounts receivable........... (380) 94 143 (46) (232)
(Increase) decrease in inventory........................... (99) 91 118 34 184
Decrease (increase) in other current assets................ 6 (20) (9) (2) (2)
Increase (decrease) in accrued expenses.................... 19 18 (17) (40) (15)
Decrease in accrued interest due to affiliates............. -- -- -- (1,900) (326)
Increase (decrease) in deferred revenue.................... 149 5 (86) 20 36
Increase (decrease) in customer deposits................... 24 (5) (4) 11 (15)
--------- --------- --------- --------- ---------
Total adjustments........................................ 835 654 968 (1,478) (10)
--------- --------- --------- --------- ---------
Net cash provided by operating activities................ 1,602 2,552 3,132 1,017 1,310
Cash flows from investing activities:
Purchases of intangibles..................................... -- (589) (589) -- --
Purchases of property and equipment.......................... (504) (1,956) (1,832) (1,059) (1,279)
--------- --------- --------- --------- ---------
Net cash used in investing activities.................... (504) (2,545) (2,421) (1,059) (1,279)
Cash flows from financing activities:
Advances (to) from affiliates, net........................... (1,108) 53 (649) -- --
--------- --------- --------- --------- ---------
Net (decrease) increase in cash.......................... (10) 60 62 (42) 31
Cash at beginning of year...................................... 88 26 26 68 37
--------- --------- --------- --------- ---------
Cash at end of period.......................................... $ 78 $ 86 $ 88 $ 26 $ 68
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosure of cash flow information --
Cash paid during the period for interest..................... $ -- $ -- $ -- $ 2,687 $ 1,282
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-55
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
Cellular Systems of Southeast Alabama (the "Company") was formed on October
7, 1987, and its wholly owned subsidiary, Dothan Cellular Telephone Company,
Inc., was formed on June 7, 1988, to operate the non-wireline cellular telephone
system in the Dothan, Alabama, Metropolitan Statistical Area. Palmer
Communications Incorporated (Palmer) acquired an interest in the outstanding
stock of Cellular Systems of Southeast Alabama, Inc. on December 20, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Cellular Systems of Southeast Alabama, Inc. and subsidiary (the Company)
to Palmer Cellular Partnership (PCP). Palmer owned a majority interest in PCP.
When Palmer's interest in the Company was transferred to PCP, it had no effect
on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc.("Holdings"), which was formed in January, 1994. PCW is the 100%
owner of Holdings.
BASIS OF PRESENTATION
PWI owned approximately 92.3% of the Company at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Company were not revalued in connection
with the acquisition by Palmer or the subsequent transfers to PCP or PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $50.4 million, which are being amortized over a period
of 40 years.
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the
F-56
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
licenses, the Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Company utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming
F-57
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
expense is the result of subscribers using cellular networks of other cellular
carriers. Incollect roaming revenue is netted against the incollect roaming
expense to determine net incollect roaming expense.
INCOME TAXES
Since March of 1995 through September 30, 1997 the Company was included in
the consolidated income tax return of PWI, and for the period October 1, 1997
through December 31, 1997 the tax return of PCW. Through the Company's tax
sharing arrangement with its parent, the Company computes its current and
deferred income taxes based on the separate return method for financial
statement purposes. At December 31, 1997, the Company has approximately $1.4
million remaining in net operating loss carryforwards for federal income tax
purposes, which can be utilized in future years to the extent that both PWI and
the Company have taxable income. These net operating loss carryforwards will
expire from 2004 through 2008.
2) RELATED PARTY TRANSACTIONS
The Company has various agreements with its parent whereby the Company is
charged or can charge other related entities various items. Among these are the
following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for a monthly management fee
based upon 5 percent of revenues or a construction fee based upon 10 percent of
the construction costs. The agreement also provides for reimbursement of certain
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Company as
out-of-pocket costs. Property and equipment acquisitions are allocated based on
specific identification. Operating expenses are allocated to the Company based
on the parent's estimate of its time spent managing the Company.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Company enjoys favorable reciprocal
roaming arrangements with its affiliates. The revenue is included in service
revenue in the statements of operations. Cost of incollect roaming related to
these arrangements, is included in engineering, technical and other direct
operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Company's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Company participates in this
plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
F-58
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2) RELATED PARTY TRANSACTIONS (CONTINUED)
The Company's accounts payable and disbursement function are performed by
its parent. Under this centralized system, all payments are made by the parent
and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods (000's omitted):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee....................................................... $ 488 $ 392 $ 536 $ 489 $ 457
Construction Fee..................................................... -- -- -- 96 116
Operating Expenses................................................... 682 687 896 895 543
Switching Service.................................................... 186 150 205 175 238
Billing Service...................................................... 372 301 409 350 294
Roaming Revenue...................................................... 396 269 378 245 341
Roaming Cost......................................................... 1,447 948 1,298 755 1,023
401(k) Match......................................................... 11 6 8 15 15
Interest expense..................................................... 344 500 656 787 956
</TABLE>
3) INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes," under which deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. At December 31,
1996 and 1995, the Company had approximately $.6 million and $1.5 million,
respectively, of deferred tax assets, net, which had been offset by a valuation
allowance. The valuation allowance decreased by approximately $.9 million and
$.6 million in 1996 and 1995, respectively. There were no deferred tax assets as
of September 30, 1998 and December 31, 1997.
Income tax expense for the nine months ended September 30, 1998 and 1997 and
the years ended December 31, 1997, 1996 and 1995 differs from the "expected"
income tax expense computed by applying the United States federal income tax
rate of 34 percent for these respective periods due to the utilization of net
operating loss carryforwards. For the year ended December 31, 1997 the current
provision amounted to $2,253 and the deferred benefit amounted to $(777). The
Company recognizes a deferred tax benefit for the turnaround in the deferred tax
liability attributable to the additional amortization of the licenses.
4) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-59
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's Consolidated Financial Statements.
5) LEASES ($ IN THOUSANDS)
The Company, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expense under these noncancelable
leases amounted to $30 and $31 for the periods ended September 30, 1998 and 1997
and $42, $40 and $40 for the years ended December 31, 1997, 1996 and 1995,
respectively, of which $11 and $15 was paid to a related party in 1996 and 1995,
respectively. At December 31, 1997, the approximate minimum rental commitments
under noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
OTHER
-----------
<S> <C>
Year ending December 31:
1998................................................................................ $ 54
1999................................................................................ 32
2000................................................................................ 25
2001................................................................................ 23
2002................................................................................ 15
Thereafter.......................................................................... 33
-----
$ 182
-----
-----
</TABLE>
F-60
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Albany Cellular Partners:
We have audited the accompanying consolidated balance sheet of Albany
Cellular Partners (a Georgia Partnership) and Subsidiary as of December 31,
1997, and the related consolidated statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Albany Cellular Partners and
Subsidiary as of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-61
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Albany Cellular Partners:
We have audited the accompanying consolidated balance sheet of Albany
Cellular Partners and subsidiary (a Georgia Partnership) as of December 31,
1996, and the related consolidated statements of operations, partners' equity,
and cash flows for each of the years in the two-year period ended December 31,
1996. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Albany
Cellular Partners and subsidiary (a Georgia Partnership) as of December 31,
1996, and the results of their operations and their cash flows for each of the
years in the two-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-62
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash....................................................................... $ 78 $ 111 $ 45
Trade accounts receivable, less allowance for doubtful accounts of $68 in
1998, $70 in 1997 and $22 in 1996........................................ 2,088 1,665 835
Inventory.................................................................. 253 144 221
Other current assets....................................................... 20 17 5
------------- --------- ---------
Total current assets..................................................... 2,439 1,937 1,106
------------- --------- ---------
Property and equipment:
Land and land improvements................................................. 123 97 82
Buildings and leasehold improvements....................................... 277 277 570
Equipment and furnishings.................................................. 772 662 415
Cellular equipment......................................................... 7,660 6,999 5,326
------------- --------- ---------
8,832 8,035 6,393
Less accumulated depreciation and amortization............................. 1,076 290 2,979
------------- --------- ---------
Net property and equipment............................................... 7,756 7,745 3,414
------------- --------- ---------
License and other intangibles, less accumulated amortization of $1,947 in
1998, $474 in 1997 and $586 in 1996........................................ 76,355 77,828 2,314
------------- --------- ---------
$ 86,550 $ 87,510 $ 6,834
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits.............................................. $ 80 $ 141 $ 53
Other accrued expenses..................................................... 274 121 47
Deferred revenue........................................................... 513 329 284
Customer deposits.......................................................... 57 45 28
------------- --------- ---------
Total current liabilities................................................ 924 636 412
Deferred income taxes........................................................ 9,609 10,105 --
Advances from affiliates..................................................... 31,670 32,250 153
------------- --------- ---------
Total liabilities........................................................ 42,203 42,991 565
Commitments and contingencies................................................
Partners' equity............................................................. 44,347 44,519 6,269
------------- --------- ---------
$ 86,550 $ 87,510 $ 6,834
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-63
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue............................................ $ 13,560 $ 10,680 $ 14,737 $ 6,542 $ 5,985
Equipment sales and installation........................... 803 569 794 409 421
--------- --------- --------- --------- ---------
Total revenue............................................ 14,363 11,249 15,531 6,951 6,406
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................... 4,437 3,038 4,204 1,874 1,954
Cost of equipment.......................................... 1,537 1,138 1,597 742 844
Sales and marketing........................................ 1,366 990 1,405 467 432
General and administrative................................. 3,039 2,916 3,959 1,843 1,755
Depreciation and amortization.............................. 2,276 1,130 1,859 445 360
--------- --------- --------- --------- ---------
Total operating expenses................................. 12,655 9,212 13,024 5,371 5,345
--------- --------- --------- --------- ---------
Operating income......................................... 1,708 2,037 2,507 1,580 1,061
Interest expense............................................. 2,376 2,187 3,022 8 89
--------- --------- --------- --------- ---------
Net income (loss) before income taxes.................... (668) (150) (515) 1,572 972
Income tax benefit........................................... 496 -- 165 -- --
--------- --------- --------- --------- ---------
Net income (loss)........................................ $ (172) $ (150) $ (350) $ 1,572 $ 972
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<S> <C>
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
Balance at December 31, 1994....................................................... $ 3,725
Net income......................................................................... 972
---------
Balance at December 31, 1995....................................................... 4,697
Net income......................................................................... 1,572
---------
Balance at December 31, 1996....................................................... 6,269
Net (loss)......................................................................... (350)
"Push-down" of Price Communications Wireless, Inc.'s acquisition price............. 38,600
---------
Balance at December 31, 1997....................................................... 44,519
Net (loss)......................................................................... (172)
---------
Balance at September 30, 1998 (Unaudited).......................................... $ 44,347
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-64
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------- -----------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).............................. $ (172) $ (150) $ (350) $ 1,572 $ 972
------------ ------------ ------------ --------- ----------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization................ 2,276 1,130 1,859 445 360
Loss on sale of property and equipment....... -- -- -- 2 --
(Increase) decrease in trade accounts
receivable................................. (423) 423 121 (4) (42)
(Increase) decrease in inventory............. (109) 248 237 (84) 328
Increase in other current assets............. (3) (27) (9) -- (2)
Increase (decrease) in accrued expenses...... 91 (122) (176) (85) 30
Increase (decrease) in deferred revenue...... 184 13 (170) 35 67
Increase (decrease) in customer deposits..... 13 7 6 9 (13)
Decrease in deferred income taxes (496) -- (165) -- --
Decrease in accrued interest due to
affiliates................................. -- -- -- -- (109)
------------ ------------ ------------ --------- ----------
Total adjustments.......................... 1,533 1,672 1,703 318 619
------------ ------------ ------------ --------- ----------
Net cash provided by operating
activities............................... 1,361 1,522 1,353 1,890 1,591
------------ ------------ ------------ --------- ----------
Cash flows from investing activities:
Purchase of cellular system.................... -- (31,260) (31,260) -- --
Purchases of intangibles....................... -- (121) (138) -- --
Purchases of property and equipment............ (814) (1,564) (1,987) (1,427) (1,243)
------------ ------------ ------------ --------- ----------
Net cash used in investing activities...... (814) (32,945) (33,385) (1,427) (1,243)
------------ ------------ ------------ --------- ----------
Cash flows from financing activities: (Decrease)
increase in advances from affiliates, net...... (580) 31,476 32,098 (451) (332)
------------ ------------ ------------ --------- ----------
Net (decrease) increase in cash............ (33) 53 66 12 16
Cash at beginning of year........................ 111 45 45 33 17
------------ ------------ ------------ --------- ----------
Cash at end of period............................ $ 78 $ 98 $ 111 $ 45 $ 33
------------ ------------ ------------ --------- ----------
------------ ------------ ------------ --------- ----------
Supplemental disclosure of cash flow
information--
Cash paid during the period for interest....... $ 2,376 $ 2,187 $ 3,022 $ 8 $ 198
------------ ------------ ------------ --------- ----------
------------ ------------ ------------ --------- ----------
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
During 1996 and 1995, the Partnership transferred certain property and
equipment with an original cost of $8 and $2, respectively and a depreciated
cost of $4 and $2, respectively, to Palmer Wireless, Inc. and affiliates by
decreasing the advances from Palmer Wireless, Inc. and affiliates. No gains or
losses were recognized on the transfers.
See accompanying notes to consolidated financial statements.
F-65
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
Albany Cellular Partners (the "Partnership") was formed on December 21,
1987, and its wholly owned subsidiary, Cellular Dynamics Telephone Company of
Georgia, was formed on September 17, 1987, to operate the non-wireline cellular
telephone system in the Albany, Georgia, Metropolitan Statistical Area. Palmer
Communications Incorporated ("Palmer") acquired an interest in the outstanding
Partnership interest of the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interest. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI entered
into a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997 the merger was completed and PWI changed its
name to PCW. The direct owner of the Partnership is Palmer Wireless Holdings,
Inc. ("Holdings"), which was formed in January, 1994. PCW is the 100% owner of
Holdings.
The Partnership's subsidiary is the 100% owner of Price Communications
Wireless V, Inc., the license holder for the Albany MSA.
BASIS OF PRESENTATION
PWI owned approximately 82.7% of the Partnership at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Partnership were not revalued in
connection with the acquisition by Palmer or the subsequent transfers to PCP or
PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $78.3 million which are being amortized over a period
of 40 years.
The consolidated financial statements include the accounts of the
Partnership and its subsidiary. All significant intercompany balances and
transactions have been eliminated.
F-66
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The consolidated financial statements of the Partnership do not include the
assets and liabilities of the partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
F-67
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Airtime revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES--ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
The consolidated financial statements prior to the adjustment of the value
of the licenses made no provision for income taxes, as gains and losses of the
Partnership are included in the income tax returns of the individual partners.
At December 31, 1997, the Partnership's subsidiary had approximately $4.1
million in net operating loss carryforwards for federal income tax purposes.
These net operating loss carry-forwards will expire from 2005 through 2008.
The Partnership's subsidiary accounts for income taxes under Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes," under
which deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. At December 31, 1996 and 1995, the Partnership's subsidiary had
approximately $.4 million and $1.0 million, respectively, of deferred tax
assets, net, which have been offset by a valuation allowance. The valuation
allowance decreased by approximately $.6 million and $.3 million in 1996 and
1995, respectively. At September 30, 1998 and December 31 ,1997, the
Consolidated Balance Sheets include a net deferred tax liability principally as
a result of the difference between the tax and book basis of the license as a
result of the valuation on October 7, 1997. This difference is being amortized
over a 40 year period and accordingly the Consolidated Statements of Operations
reflect a tax credit for the appropriate periods.
2) PRO-FORMA INFORMATION ($ IN THOUSANDS)
ACQUISITION OF LICENSE
On February 1, 1997 the Partnership acquired the assets and license to
operate the non-wireline cellular telephone system serving the Georgia Rural
Service Area Market No. 383, otherwise known as GA-13 RSA for a total cash
purchase price of approximately $31.3 million. This acquisition was accounted
for using the purchase method of accounting. In connection with the acquisition,
approximately $27.7 million was allocated to license.
F-68
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2) PRO-FORMA INFORMATION ($ IN THOUSANDS) (CONTINUED)
The following unaudited pro-forma condensed consolidated financial
information was prepared assuming the Partnership acquired the GA-13 RSA as of
January 1, 1996. The pro-forma information is presented for comparative purposes
only and does not purport to be indicative of the results which would have been
achieved had this acquisition occurred as of January 1, 1996, nor does it
purport to be indicative of results that may be achieved in the future:
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------------
YEARS ENDED
NINE MONTHS DECEMBER 31,
ENDED SEPTEMBER 30, --------------------
1997 1997 1996
------------------- --------- ---------
<S> <C> <C> <C>
Total revenue.......................................................... $ 11,988 $ 16,271 $ 15,927
Net income (loss)...................................................... $ 89 $ (497) $ 878
</TABLE>
3) PARTNERS' EQUITY
In accordance with the Partnership agreement, the partners' proportionate
share of cash distributions from current operations and net income or loss is
calculated by dividing the partner's capital contribution by total partners'
capital contributions.
The allocation to the partners of gain or loss arising from the sale of
property will be in the same proportion as they share net income or net loss of
the Partnership.
4) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities for various items.
Among these are the following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Partnership. The agreement provides for a monthly management
fee based upon 5 percent of revenues or a construction fee based upon 10 percent
of the construction costs. The agreement also provides for the reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the partnership
as out-of-pocket costs. Property and equipment acquisitions are allocated based
on specific identification. Operating expenses are allocated to the Partnership
based on parent's estimate of its time spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of incollect roaming
related to these arrangements, is included in engineering, technical and other
direct operating expenses in the statements of operations.
F-69
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) RELATED PARTY TRANSACTIONS (CONTINUED)
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Partnership participates in
this plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee....................................................... $ 708 $ 563 $ 777 $ 348 $ 320
Construction Fee..................................................... -- -- -- 130 113
Operating Expenses................................................... 1,066 1,006 1,327 690 460
Switching Service.................................................... 291 237 326 129 226
Billing Service...................................................... 581 444 620 257 220
Roaming Revenue...................................................... 1,007 517 702 516 688
Roaming Cost......................................................... 1,953 921 1,298 568 822
401(k) Match......................................................... 15 11 16 17 15
Interest expense..................................................... 2,376 2,187 3,022 8 89
</TABLE>
5) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Partnership is involved in
various claims and legal actions arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
6) LEASES ($ IN THOUSANDS)
The Partnership, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expense under these noncancelable
leases was $183 and $160 for the nine month periods ended September 30, 1998 and
1997 and $230, $66 and $35 for the years ended December 31, 1997, 1996 and 1995,
respectively. At
F-70
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
6) LEASES ($ IN THOUSANDS) (CONTINUED)
December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
<TABLE>
<S> <C>
Year ending December 31:
1998............................................................... $ 204
1999............................................................... 183
2000............................................................... 150
2001............................................................... 113
2002............................................................... 6
Thereafter......................................................... 3
---------
$ 659
---------
---------
</TABLE>
F-71
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Cellular Dynamics Telephone Company of Georgia
We have audited the accompanying consolidated balance sheet of Cellular
Dynamics Telephone Company of Georgia (a Georgia Corporation) and Subsidiary as
of December 31, 1997, and the related consolidated statements of operations and
retained earnings (accumulated deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cellular Dynamics Telephone
Company of Georgia and subsidiary (a Georgia Corporation) as of December 31,
1997, and the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-72
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cellular Dynamics Telephone Company of Georgia:
We have audited the accompanying consolidated balance sheet of Cellular
Dynamics Telephone Company of Georgia as of December 31, 1996 and the related
consolidated statements of operations and retained earnings (deficit) and cash
flows for each of the years in the two-year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cellular
Dynamics Telephone Company of Georgia as of December 31, 1996, and the results
of their operations and their cash flows for each of the years in the two-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-73
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
------------- --------------------
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash....................................................................... $ 78 $ 111 $ 45
Trade accounts receivable, less allowance for doubtful accounts of $128 in
1998, $70 in 1997 and $22 in 1996........................................ 2,088 1,665 835
Inventory.................................................................. 253 144 221
Other current assets....................................................... 20 17 5
------------- --------- ---------
Total current assets................................................... 2,439 1,937 1,106
------------- --------- ---------
Property and equipment:
Land and land improvements................................................. 123 97 82
Buildings and leasehold improvements....................................... 277 277 570
Equipment and furnishings.................................................. 772 662 415
Cellular equipment......................................................... 7,660 6,999 5,326
------------- --------- ---------
8,832 8,035 6,393
Less accumulated depreciation and amortization............................. 1,076 290 2,979
------------- --------- ---------
Net property and equipment............................................. 7,756 7,745 3,414
------------- --------- ---------
License and other intangibles, less accumulated amortization of $1,773 in
1998, $1,006 in 1997 and $586 in 1996...................................... 76,355 77,828 2,314
------------- --------- ---------
$ 86,550 $ 87,510 $ 6,834
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accrued salaries and benefits.............................................. $ 80 $ 141 $ 53
Other accrued expenses..................................................... 274 121 47
Deferred revenue........................................................... 513 329 284
Customer deposits.......................................................... 57 45 28
------------- --------- ---------
Total current liabilities.............................................. 924 636 412
Deferred income taxes........................................................ 10,103 10,206 --
Advances from affiliates..................................................... 31,670 32,250 153
------------- --------- ---------
Total liabilities...................................................... 42,607 43,092 565
Commitments and contingencies................................................
Stockholder's equity
Common stock; no par value, 200 shares authorized; 100 shares issued....... 1 1 1
Paid-in capital............................................................ 48,139 48,139 9,539
Retained earnings (accumulated deficit).................................... (4,197) (3,722) (3,271)
------------- --------- ---------
Total stockholder's equity............................................. 43,943 44,418 6,269
------------- --------- ---------
$ 86,550 $ 87,510 $ 6,834
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-74
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue.......................................... $ 13,560 $ 10,680 $ 14,737 $ 6,542 $ 5,985
Equipment sales and installation......................... 803 569 794 409 421
--------- --------- --------- --------- ---------
Total revenue.......................................... 14,363 11,249 15,531 6,951 6,406
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................. 4,437 3,038 4,204 1,874 1,954
Cost of equipment........................................ 1,537 1,138 1,597 742 844
Sales and marketing...................................... 1,366 990 1,405 467 432
General and administrative............................... 3,039 2,916 3,959 1,843 1,755
Depreciation and amortization............................ 2,276 1,130 1,859 445 360
--------- --------- --------- --------- ---------
Total operating expenses............................... 12,655 9,212 13,024 5,371 5,345
--------- --------- --------- --------- ---------
Operating income....................................... 1,708 2,037 2,507 1,580 1,061
Interest expense........................................... 2,376 2,187 3,022 8 89
--------- --------- --------- --------- ---------
Net income (loss) before income taxes.................. (668) (150) (515) 1,572 972
Income tax benefit......................................... 193 -- 64 -- --
--------- --------- --------- --------- ---------
Net income (loss)...................................... (475) (150) (451) 1,572 972
--------- --------- --------- --------- ---------
Retained earnings (deficit) at beginning of year........... (3,722) (3,271) (3,271) (4,843) (5,815)
--------- --------- --------- --------- ---------
Retained earnings (deficit) at end of period............... $ (4,197) $ (3,421) $ (3,722) $ (3,271) $ (4,843)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-75
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------- --------------------------------
1998 1997 1997 1996 1995
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................ $ (475) $ (150) $ (451) $ 1,572 $ 972
--------- ---------- ---------- --------- ---------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 2,276 1,130 1,859 445 360
Loss on sale of property and equipment................. -- -- -- 2 --
(Increase) decrease in trade accounts receivable....... (423) 423 121 (4) (42)
(Increase) decrease in inventory....................... (109) 248 237 (84) 328
Increase in other current assets....................... (3) (27) (9) -- (2)
Increase (decrease) in accrued expenses................ 91 (122) (176) (85) 30
Increase (decrease) in deferred revenue................ 184 13 (170) 35 67
Increase (decrease) in customer deposits............... 13 7 6 9 (13)
Decrease in deferred income taxes...................... (193) -- (64) -- --
Decrease in accrued interest due to afffiliates........ -- -- -- -- (109)
--------- ---------- ---------- --------- ---------
Total adjustments.................................... 1,836 1,672 1,804 318 619
--------- ---------- ---------- --------- ---------
Net cash provided by operating activities............ 1,361 1,522 1,353 1,890 1,591
--------- ---------- ---------- --------- ---------
Cash flows from investing activities:
Purchase of cellular system.............................. -- (31,260) (31,260) -- --
Purchases of intangibles................................. -- (121) (138) -- --
Purchases of property and equipment...................... (814) (1,564) (1,987) (1,427) (1,243)
--------- ---------- ---------- --------- ---------
Net cash used in investing activities................ (814) (32,945) (33,385) (1,427) (1,243)
--------- ---------- ---------- --------- ---------
Cash flows from financing activities:
(Decrease) increase in advances from affiliates, net..... (580) 31,476 32,098 (451) (332)
--------- ---------- ---------- --------- ---------
Net (decrease) increase in cash...................... (33) 53 66 12 16
Cash at beginning of year.................................. 111 45 45 33 17
--------- ---------- ---------- --------- ---------
Cash at end of period...................................... $ 78 $ 98 $ 111 $ 45 $ 33
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
Supplemental disclosure of cash flow information --
Cash paid during the period for interest................. $ 2,377 $ 2,187 $ 3,022 $ 8 $ 198
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
During 1996 and 1995, the Company transferred certain property and equipment
with an original cost of $8 and $2, respectively, and a depreciated cost of $4
and $2, respectively, to Palmer Wireless, Inc. and affiliated by decreasing the
advances from Palmer Wireless, Inc. and affiliates. No gains or losses were
recognized on the transfers.
See accompanying notes to consolidated financial statements.
F-76
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPANY OPERATIONS
Cellular Dynamics Telephone Company of Georgia (the "Company"), was formed
on September 17, 1987 to operate the non-wireline cellular telephone system in
the Albany, Georgia, Metropolitan Statistical Area. Albany Cellular Partners was
formed on December 21, 1987, and is the 100% owner of the Company. The financial
statements of Albany Cellular Partners are included elsewhere in this document.
Palmer Communications Incorporated ("Palmer") acquired an interest in the
outstanding Partnership interest of the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interest. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
BASIS OF PRESENTATION
PWI owned approximately 82.7% of the Company at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Company were not revalued in connection
with the acquisition by Palmer or the subsequent transfers to PCP or PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $78.3 million which are being amortized over a period
of 40 years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-77
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Company utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of the
cellular network by subscribers of other cellular carriers. Airtime revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
F-78
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company is owned by a partnership and accordingly is not included in the
consolidated tax return. At December 31, 1997, the Company had approximately
$4.1 million in net operating loss carryforwards for federal income tax
purposes. These net operating loss carryforwards will expire from 2005 through
2008. The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes," under which deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis. At December 31,
1996 and 1995, the Company had approximately $.4 million and $1.0 million,
respectively, of deferred tax assets, net, which have been offset by a valuation
allowance. The valuation allowance decreased by approximately $.6 million and
$.3 million in 1996 and 1995, respectively. At September 30, 1998 and December
31, 1997, the Company has a net deferred tax liability principally as a result
of the difference between the tax and book basis of the license as a result of
the valuation on October 7, 1997. This difference is being amortized over a 40
year period and accordingly the Consolidated Statements of Operations reflect a
tax credit for the appropriate periods.
2) PRO-FORMA INFORMATION ($ IN THOUSANDS)
ACQUISITION OF LICENSE
On February 1, 1997, the Company acquired the assets and license to operate
the non-wireline cellular telephone system serving the Georgia Rural Service
Area Market No. 383, otherwise known as GA-13 RSA for a total cash purchase
price of approximately $31.3 million. This acquisition was accounted for using
the purchase method of accounting. In connection with the acquisition,
approximately $27.7 million was allocated to license.
The following unaudited pro-forma condensed financial information was
prepared assuming the GA-13 RSA was acquired as of January 1, 1996. Pro-forma
information is presented for comparative purposes only and does not purport to
be indicative of the results which would have been achieved had this acquisition
occurred as of January 1, 1996, nor does it purport to be indicative of results
that may be achieved in the future.
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------
<S> <C> <C> <C>
NINE MONTHS YEARS ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, --------------------
1997 1997 1996
------------- --------- ---------
Total revenue................................................................ $ 11,988 $ 16,271 $ 15,927
Net income (loss)............................................................ $ 89 $ (276) $ 3,533
</TABLE>
3) RELATED PARTY TRANSACTIONS
The Company has various agreements with its parent whereby the Company is
charged or can charge other related entities various items. Among these are the
following arrangements:
F-79
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3) RELATED PARTY TRANSACTIONS (CONTINUED)
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for a monthly management fee
based upon 5 percent of revenues or a construction fee based upon 10 percent of
the construction costs. The agreement also provides for reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Company as
out-of-pocket costs. Property and equipment acquisitions are allocated based on
specific identification. Operating expenses are allocated to the Company based
on parent's estimate of its time spent managing the Company.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Company enjoys favorable reciprocal
roaming arrangements with its affiliates. The revenue is included in service
revenue in the statements of operations. Cost of incollect roaming related to
these arrangements, is included in engineering, technical and other direct
operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Company's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Company participates in this
plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Company's accounts payable and disbursement function are performed by
its parent. Under this centralized system, all payments are made by the parent
and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the statements of
operations for the appropriate accounting periods ($ in thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee....................................................... $ 708 $ 563 $ 777 $ 348 $ 320
Construction Fee..................................................... -- -- -- 130 113
Operating Expenses................................................... 1,066 1,006 1,327 690 460
Switching Service.................................................... 291 237 326 129 226
Billing Service...................................................... 581 444 620 257 220
Roaming Revenue...................................................... 1,007 517 702 516 688
Roaming Cost......................................................... 1,953 921 1,298 568 822
401(k) Match......................................................... 15 11 16 17 15
Interest Expense..................................................... 2,376 2,187 3,022 8 89
</TABLE>
F-80
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors. The Company is involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's Consolidated Financial Statements.
5) LEASES ($ IN THOUSANDS)
The Company, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expense under these noncancelable
leases was $183 and $160 for the nine month periods ended September 30, 1998 and
1997 and $230, $66, and $35 for the years ended December 31, 1997, 1996 and
1995, respectively. At December 31, 1997, the approximate minimum rental
commitments under noncancelable operating leases were as follows:
<TABLE>
<S> <C>
Year ending December 31:
1998............................................................... $ 204
1999............................................................... 183
2000............................................................... 150
2001............................................................... 113
2002............................................................... 6
Later years through 2011........................................... 3
---------
$ 659
---------
---------
</TABLE>
F-81
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Columbus Cellular Telephone Company:
We have audited the accompanying consolidated balance sheet of Columbus
Cellular Telephone Company (a Georgia Partnership) as of December 31, 1997, and
the related consolidated statements of operations, partners' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Columbus Cellular Telephone
Company as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen, LLP
New York, New York
November 25, 1998
F-82
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Columbus Cellular Telephone Company:
We have audited the accompanying consolidated balance sheet of Columbus
Cellular Telephone Company (a Georgia Partnership) as of December 31, 1996, and
the related consolidated statements of operations, and partners' equity, and
cash flows for each of the years in the two-year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Columbus
Cellular Telephone Company (a Georgia Partnership) as of December 31, 1996, and
the results of their operations and their cash flows for each of the years in
the two-year period ended December 31, 1996 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-83
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, ---------------------
1998 1997 1996
------------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash...................................................................... $ 78 $ 66 $ 41
Trade accounts receivable, less allowance for doubtful accounts of $194 in
1998, $87 in 1997 and $72 in 1996....................................... 1,889 1,603 1,794
Inventory................................................................. 338 116 157
Other current assets...................................................... 49 21 22
------------- ---------- ---------
Total current assets.................................................... 2,354 1,806 2,014
------------- ---------- ---------
Property and equipment:
Land and land improvements................................................ 276 218 194
Buildings and leasehold improvements...................................... 275 211 808
Equipment and furnishings................................................. 378 351 322
Cellular equipment........................................................ 9,230 8,563 10,080
------------- ---------- ---------
10,159 9,343 11,404
Less accumulated depreciation and amortization............................ 1,098 292 3,761
------------- ---------- ---------
Net property and equipment.............................................. 9,061 9,051 7,643
------------- ---------- ---------
Licenses and other intangibles, less accumulated amortization of $2,404 in
1998, $626 in 1997 and $2,043 in 1996..................................... 89,101 90,879 18,121
------------- ---------- ---------
$ 100,516 $ 101,736 $ 27,778
------------- ---------- ---------
------------- ---------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits............................................. $ 44 $ 98 $ 148
Other accrued expenses.................................................... 212 83 315
Deferred revenue.......................................................... 450 283 471
Customer deposits......................................................... 132 84 100
------------- ---------- ---------
Total current liabilities............................................... 838 548 1,034
Deferred income taxes....................................................... 30,160 30,740 --
Advances from affiliates.................................................... 717 4,352 7,441
------------- ---------- ---------
Total liabilities....................................................... 31,715 35,640 8,475
Commitments and contingencies...............................................
Partners' equity............................................................ 68,801 66,096 19,303
------------- ---------- ---------
$ 100,516 $ 101,736 $ 27,778
------------- ---------- ---------
------------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-84
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
CONSOILDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Revenue:
Service revenue.......................................... $ 12,799 $ 11,330 $ 15,327 $ 13,031 $ 10,033
Equipment sales and installation......................... 900 695 930 894 920
--------- --------- --------- --------- ---------
Total revenue.......................................... 13,699 12,025 16,257 13,925 10,953
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................. 2,644 2,240 2,934 2,287 1,943
Cost of equipment........................................ 1,557 1,176 1,605 1,344 1,469
Sales and marketing...................................... 1,433 998 1,335 1,369 1,231
General and administrative............................... 3,059 2,912 3,924 3,517 2,822
Depreciation and amortization............................ 2,694 1,209 2,129 1,250 975
--------- --------- --------- --------- ---------
Total operating expenses............................... 11,387 8,535 11,927 9,767 8,440
--------- --------- --------- --------- ---------
Operating income....................................... 2,312 3,490 4,330 4,158 2,513
Interest (expense) income, net............................. (187) (450) (560) (265) 10
--------- --------- --------- --------- ---------
Net income before taxes................................ 2,125 3,040 3,770 3,893 2,523
Tax benefit................................................ 580 -- 193 -- --
--------- --------- --------- --------- ---------
Net income............................................. $ 2,705 $ 3,040 $ 3,963 $ 3,893 $ 2,523
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<S> <C>
Balance at December 31, 1994....................................................... $ 12,887
Net income......................................................................... 2,523
---------
Balance at December 31, 1995....................................................... 15,410
Net income......................................................................... 3,893
---------
Balance at December 31, 1996....................................................... 19,303
Net income......................................................................... 3,963
"Push-down" of Price Communications Wireless, Inc.'s acquisition price............. 42,830
---------
Balance at December 31, 1997....................................................... 66,096
Net income......................................................................... 2,705
---------
Balance at September 30, 1998 (Unaudited).......................................... $ 68,801
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-85
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 2,705 $ 3,040 $ 3,963 $ 3,893 $ 2,523
--------- --------- --------- ---------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,694 1,209 2,129 1,250 975
Loss on sale of property and equipment................. -- -- -- 27 --
(Increase) decrease in trade accounts receivable....... (286) 553 191 (275) (259)
(Increase) decrease in inventory....................... (222) 34 41 64 537
(Increase) decrease in other current assets............ (29) (43) 1 (1) (6)
Increase (decrease) in accrued expenses................ 77 (193) (284) (251) 494
Increase (decrease) in deferred revenue................ 167 (18) (188) 35 77
Increase (decrease) in customer deposits............... 47 (23) (15) 17 23
Decrease in deferred income taxes...................... (580) -- (193) -- --
Decrease in accrued interest due to affiliates......... -- -- -- -- (103)
--------- --------- --------- ---------- ---------
Total adjustments.................................... 1,868 1,519 1,682 866 1,738
--------- --------- --------- ---------- ---------
Net cash provided by operating activities............ 4,573 4,559 5,645 4,759 4,261
--------- --------- --------- ---------- ---------
Cash flows from investing activities:
Purchase of property and equipment....................... (926) (1,798) (2,532) (2,923) (1,926)
Cash payment for purchase of nonwireline cellular
telephone system and license........................... -- -- -- (10,727) --
--------- --------- --------- ---------- ---------
Net cash used in investing activities................ (926) (1,798) (2,532) (13,650) (1,926)
--------- --------- --------- ---------- ---------
Cash flows from financing activities:
(Decrease) increase in advances from affiliates, net... (3,635) (2,767) (3,088) 8,795 (2,254)
--------- --------- --------- ---------- ---------
Net increase (decrease) in cash...................... 12 (6) 25 (96) 81
Cash at beginning of year.................................. 66 41 41 137 56
--------- --------- --------- ---------- ---------
Cash at end of period...................................... $ 78 $ 35 $ 66 $ 41 $ 137
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest................. $ 187 $ 450 $ 560 $ 368 $ 103
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
</TABLE>
F-86
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
($ IN THOUSANDS)
Supplemental disclosures of noncash investing and financing activities:
During 1996, the Partnership transferred certain property and equipment
with depreciated cost totaling $289 to Palmer Wireless, Inc. and affiliates
by decreasing the advances from Palmer Wireless, Inc. and affiliates. No
gain or loss was recognized on the transfer.
During 1995, the Partnership received certain property and equipment
totaling $47 from a related party by decreasing the advances to Palmer
Wireless, Inc. and affiliates.
See accompanying notes to consolidated financial statements.
F-87
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
The formal partnership agreement of Columbus Cellular Telephone Company (the
"Partnership") was entered into by the partners effective March 1, 1988. The
Partnership was inactive for the period March 1, 1988, through June 9, 1988, at
which date Palmer Communications Incorporated ("Palmer") acquired and
transferred the FCC license to operate the non-wireline cellular telephone
system in the Columbus, Georgia, Metropolitan Statistical Area to the
Partnership. The non-wireline cellular telephone system was constructed after
June 9, 1988, and actual operations of the system began on November 24, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
financial statements and notes to financial statements include the activity of
PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless Inc. ("PCW") and PWI entered
into a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW. The direct owner of the Partnership is Palmer Wireless Holdings,
Inc. ("Holdings") which was formed in January, 1994. PCW is the 100% owner of
Holdings.
The Partnership is the 100% owner of Price Communication Wireless VI, Inc.,
the license holder for the Columbus, MSA.
BASIS OF PRESENTATION
PWI owned approximately 84.9% of the Partnership at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Partnership were not revalued in
connection with the acquisition by Palmer or the subsequent transfers to PCP or
PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $91.5 million, which are being amortized over a period
of 40 years.
The financial statements of the Partnership do not include the assets and
liabilities of the partners.
F-88
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
F-89
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES--ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
The Consolidated Financial Statements made no provision for income taxes
prior to the adjustment of the value of the licenses as income and losses of the
Partnership are included in the income tax returns of the individual partners.
Such income and losses are proportionately allocated to the partners based upon
their ownership interests. At September 30, 1998 and December 31, 1997, the
Consolidated Balance Sheets include a net deferred tax liability as a result of
the difference between the tax and book basis of the license as a result of the
valuation on October 7, 1997 recorded by the Company's wholly-owned Subsidiary
Price Communications Wireless Inc., VI. This difference is being amortized over
a 40 year period and accordingly the Consolidated Statements of Operations
reflect a tax benefit for the appropriate periods.
2) ACQUISITION AND PURCHASE OF LICENSE
On July 15, 1996, the Partnership acquired the assets of and the license to
operate the non-wireline cellular system serving the western portion (including
Harris, Talbot, Taylor, and Meriweather Counties) of the Georgia Rural Service
Area Market No. 376, otherwise known as Georgia-6 RSA, for a purchase price of
$10.7 million. The acquisition was accounted for by the purchase method of
accounting and was funded by an increase in advances from Palmer Wireless, Inc.
and affiliates. In connection with the aquisition, $10.0 million of the purchase
price was allocated to licenses and goodwill.
From the date of acquisition to September 30, 1998, the effect of this
purchase on the operations of the Partnership cannot be differentiated from the
operations of the whole due to the interrelated nature of transactions.
3) PARTNERS' EQUITY
In accordance with the Partnership agreement, the partners' proportionate
share in cash distributions from current operations and net income or loss is
calculated by dividing the partners' capital contribution by total partners'
capital contributions.
The allocation of gain or loss to the partners arising from the sale of
property will be in the same proportion as the share of net income or net loss
of the Partnership.
F-90
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities various items. Among
these are the following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Partnership. The agreement provides for a monthly management
fee based upon 5 percent of revenues or a construction fee based upon 10 percent
of the construction costs. The agreement also provides for reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Partnership
as out-of-pocket costs. Property and equipment acquisitions are allocated based
on specific identification. Operating expenses are allocated to the Partnership
based on the parent's estimate of its time spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of incollect roaming
related to these arrangements, is included in engineering, technical and other
direct operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Partnership participates in
this plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
F-91
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A GEORGIA PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) RELATED PARTY TRANSACTIONS (CONTINUED)
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee..................................................... $ 685 $ 601 $ 813 $ 696 $ 548
Construction Fee................................................... -- -- -- 266 175
Operating Expenses................................................. 1,112 1,175 1,502 1,425 804
Switching Service.................................................. 285 254 343 282 244
Billing Service.................................................... 570 508 685 564 412
Roaming Revenue.................................................... 969 638 887 538 630
Roaming Cost....................................................... 959 626 844 513 589
401(k) Match....................................................... 9 10 14 31 29
Interest expense (income).......................................... 187 450 560 265 (10)
</TABLE>
5) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Partnership is involved in
various claims and legal actions arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
6) LEASES ($ IN THOUSANDS)
The Partnership occupies certain office facilities and uses certain cellular
plant facilities and office equipment under noncancelable operating leases,
which expire through 2001. Rent expense under these noncancelable leases
amounted to $171 and $127 for the nine month periods ended September 30, 1998
and 1997 and $178, $156 and $136 for the years ended December 31, 1997, 1996 and
1995, respectively. At December 31, 1997, the approximate minimum rental
commitments under noncancelable operating leases were as follows:
<TABLE>
<S> <C>
Year ending December 31,
1998............................................................... $ 102
1999............................................................... 58
2000............................................................... 53
2001............................................................... 11
2002............................................................... 3
---------
$ 227
---------
---------
</TABLE>
F-92
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Dothan Cellular Telephone Company, Inc.
We have audited the accompanying consolidated balance sheet of Dothan
Cellular Telephone Company, Inc. and Subsidiary (an Alabama Partnership) as of
December 31, 1997 and the related consolidated statements of operations and
retained earnings (accumulated deficit) and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dothan Cellular Telephone
Company, Inc. of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-93
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Dothan Cellular Telephone Company, Inc.:
We have audited the accompanying consolidated balance sheet of Dothan
Cellular Telephone Company, Inc. as of December 31, 1996, and the related
consolidated statements of operations and retained earnings (deficit) and cash
flows for each of the years in the two-year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dothan
Cellular Telephone Company, Inc. as of December 31, 1996, and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-94
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash....................................................................... $ 78 $ 88 $ 26
Trade accounts receivable, less allowance for doubtful accounts of $38 in
1998, $28 in 1997 and $22 in 1996........................................ 1,406 1,025 1,168
Inventory.................................................................. 135 37 155
Other current assets....................................................... 14 20 10
------------- --------- ---------
Total current assets..................................................... 1,633 1,170 1,359
------------- --------- ---------
Property and equipment:
Land and land improvements................................................. 356 355 375
Buildings and leasehold improvements....................................... 191 187 511
Equipment and furnishings.................................................. 324 324 348
Cellular equipment......................................................... 4,950 4,451 5,792
------------- --------- ---------
5,821 5,317 7,026
Less accumulated depreciation and amortization............................. 588 65 2,994
------------- --------- ---------
Net property and equipment............................................... 5,233 5,252 4,032
Licenses and other intangibles, less accumulated amortization of $1,243 in
1998 and $330 in 1997...................................................... 49,196 50,109 --
------------- --------- ---------
$ 56,062 $ 56,531 $ 5,391
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accrued salaries and benefits.............................................. $ 26 $ 66 $ 56
Other accrued expenses..................................................... 149 90 118
Deferred revenue........................................................... 325 176 261
Customer deposits.......................................................... 47 23 27
------------- --------- ---------
Total current liabilities................................................ 547 355 462
Deferred income taxes........................................................ 16,624 16,944 --
Advances from affiliates..................................................... 5,153 6,261 6,910
------------- --------- ---------
Total liabilities........................................................ 22,324 23,560 7,372
------------- --------- ---------
Commitments and contingencies................................................
Stockholder's equity (deficit):
Common stock, par value $.01 per share; authorized 3,000 shares issued and
outstanding 200 shares................................................... -- -- --
Additional paid-in capital................................................. 32,788 32,788 --
Retained earnings (accumulated deficit).................................... 950 183 (1,981)
------------- --------- ---------
Total stockholder's equity (deficit)..................................... 33,738 32,971 (1,981)
------------- --------- ---------
$ 56,062 $ 56,531 $ 5,391
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-95
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Revenue:
Service revenue............................................. $ 8,940 $ 7,449 $ 10,113 $ 9,337 $ 8,596
Equipment sales and installation............................ 814 406 608 452 539
--------- --------- --------- --------- ---------
Total revenue............................................. 9,754 7,855 10,721 9,789 9,135
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct..................... 3,139 2,190 2,976 2,675 3,062
Cost of equipment........................................... 1,226 687 1,035 774 1,046
Sales and marketing......................................... 630 410 605 444 373
General and administrative.................................. 1,810 1,697 2,245 2,169 2,016
Depreciation and amortization............................... 1,436 471 930 445 360
--------- --------- --------- --------- ---------
Total operating expenses.................................. 8,241 5,455 7,791 6,507 6,857
--------- --------- --------- --------- ---------
Operating income.......................................... 1,513 2,400 2,930 3,282 2,278
Other expense................................................. -- 2 2 -- --
Interest expense.............................................. 344 500 657 787 958
--------- --------- --------- --------- ---------
Net income before taxes................................... 1,169 1,898 2,271 2,495 1,320
Provision for taxes....................................... 402 -- 107 -- --
--------- --------- --------- --------- ---------
Net income................................................ 767 1,898 2,164 2,495 1,320
Retained earnings (deficit) at beginning of year.............. 183 (1,981) (1,981) (4,476) (5,796)
--------- --------- --------- --------- ---------
Retained earnings (deficit) at end of period.................. $ 950 $ (83) $ 183 $ (1,981) $ (4,476)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-96
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 767 $ 1,898 $ 2,164 $ 2,495 $ 1,320
--------- --------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 1,436 471 930 445 360
Decrease in deferred taxes.............................. (320) -- (107) -- --
(Increase) decrease in trade accounts receivable........ (380) 94 143 (46) (232)
(Increase) decrease in inventory........................ (99) 91 118 34 184
Decrease (increase) in other current assets............. 6 (20) (9) (2) (2)
Increase (decrease) in accrued expenses................. 19 18 (17) (40) (15)
Decrease in accrued interest due to affiliates.......... -- -- -- (1,900) (326)
Increase (decrease) in deferred revenue................. 149 5 (86) 20 36
Increase (decrease) in customer deposits................ 24 (5) (4) 11 (15)
--------- --------- --------- --------- ---------
Total adjustments..................................... 835 654 968 (1,478) (10)
--------- --------- --------- --------- ---------
Net cash provided by operating activities............. 1,602 2,552 3,132 1,017 1,310
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchases of intangibles.................................. -- (589) (589) -- --
Purchases of property and equipment....................... (504) (1,956) (1,832) (1,059) (1,279)
--------- --------- --------- --------- ---------
Net cash used in investing activities................. (504) (2,545) (2,421) (1,059) (1,279)
Cash flows from financing activities:
(Decrease) increase in advances from affiliates, net...... (1,108) 53 (649) -- --
--------- --------- --------- --------- ---------
Net (decrease) increase in cash....................... (10) 60 62 (42) 31
Cash at beginning of year................................... 88 26 26 68 37
--------- --------- --------- --------- ---------
Cash at end of period....................................... $ 78 $ 86 $ 88 $ 26 $ 68
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosure of cash flow information - Cash paid
during the period for interest............................ $ -- $ -- $ -- $ 2,687 $ 1,282
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-97
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
Dothan Cellular Telephone Company, Inc. (the "Company") was formed on June
7, 1988 to operate the non-wireline cellular telephone system in the Dothan,
Alabama, Metropolitan Statistical Area. Cellular Systems of Southeast Alabama,
the 100% owner of the Company, was formed on October 7, 1987. On December 20,
1988 Palmer Communications Incorporated (Palmer) acquired an interest in the
outstanding stock of Cellular Systems of Southeast Alabama, Inc. whose financial
statements are included elsewhere in this document.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Cellular Systems of Southeast Alabama, Inc. and the Company to Palmer
Cellular Partnership (PCP). Palmer owned a majority interest in PCP. When
Palmer's interest in the Company was transferred to PCP, it had no effect on the
carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
BASIS OF PRESENTATION
PWI owned approximately 92.3% of the Company at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Company were not revalued in connection
with the acquisition by Palmer or the subsequent transfers to PCP or PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $50.4 million, which are being amortized over a period
of 40 years.
The consolidated financial statements include the accounts of the Company
and its subsidiary All significant inter-company balances and transactions have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported
F-98
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
licenses, the Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Company utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
F-99
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
Since March of 1995 through September 30, 1997, the Company was included in
the consolidated income tax return of PWI, and for the period October 1, 1997
through December 31, 1997 the tax return of PCW. Through the Company's tax
sharing arrangement with its parent, the Company computes its current and
deferred income taxes based on the separate return method for financial
statement purposes. At December 31, 1997, the Company has approximately $1.4
million remaining in net operating loss carryforwards for federal income tax
purposes, which can be utilized in future years to the extent that both PWI and
the Company have taxable income. These net operating loss carryforwards will
expire from 2004 through 2008.
2) RELATED PARTY TRANSACTIONS
The Company has various agreements with its parent whereby the Company is
charged or can charge other related entities various items. Among these are the
following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for a monthly management fee
based upon 5 percent of revenues or a construction fee based upon 10 percent of
the construction costs. The agreement also provides for reimbursement of certain
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Company as
out-of-pocket costs. Property and equipment acquisitions are allocated based on
specific identification. Operating expenses are allocated to the Company based
on the parent's estimate of its time spent managing the Company.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Company enjoys favorable reciprocal
roaming arrangements with its affiliates. The revenue is included in service
revenue in the statements of operations. Cost of incollect roaming related to
these arrangements, is included in engineering, technical and other direct
operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Company's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Company participates in this
plan and was allocated 401(k) retirement and matching expense.
F-100
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2) RELATED PARTY TRANSACTIONS (CONTINUED)
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Company's accounts payable and disbursement function are performed by
its parent. Under this centralized system, all payments are made by the parent
and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee....................................................... $ 488 $ 392 $ 536 $ 489 $ 457
Construction Fee..................................................... -- -- -- 96 116
Operating Expenses................................................... 682 687 896 895 543
Switching Service.................................................... 186 150 205 175 238
Billing Service...................................................... 372 301 409 350 294
Roaming Revenue...................................................... 396 269 378 245 341
Roaming Cost......................................................... 1,447 948 1,298 755 1,023
401(k) Match......................................................... 11 6 8 15 15
Interest expense..................................................... 344 500 656 787 956
</TABLE>
3) INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes," under which deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. At December 31,
1996 and 1995, the Company had approximately $.6 million and $1.5 million,
respectively, of deferred tax assets, net, which had been offset by a valuation
allowance. The valuation allowance decreased by approximately $.9 million and
$.6 million in 1996 and 1995, respectively. There were no deferred tax assets as
of September 30, 1998 and December 31, 1997.
Income tax expense for the nine months ended September 30, 1998 and 1997 and
the years ended December 31, 1997 1996 and 1995 differs from the "expected"
income tax expense computed by applying the United States federal income tax
rate of 34 percent for these respective periods due to the utilization of net
operating loss carryforwards. For the year ended December 31, 1997 the current
provision amounted to $2,253 and the deferred benefit amounted to $(777). the
Company recognizes a deferred tax benefit for the turnaround in the deferred tax
liability attributable to the additional amortization of the licenses.
F-101
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors. The Company is involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's Consolidated Financial Statements.
5) LEASES ($ IN THOUSANDS)
The Company, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expense under these noncancelable
leases amounted to $30 and $31 for the periods ended September 30, 1998 and 1997
and $42, $40 and $40 for the years ended December 31, 1997, 1996 and 1995,
respectively, of which $11 and $15 was paid to a related party in 1996 and 1995,
respectively. At December 31, 1997, the approximate minimum rental commitments
under noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
OTHER
-----------
<S> <C>
Year ending December 31:
1998................................................................................ $ 54
1999................................................................................ 32
2000................................................................................ 25
2001................................................................................ 23
2002................................................................................ 15
Thereafter.......................................................................... 33
-----
$ 182
-----
-----
</TABLE>
F-102
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Macon Cellular Telephone Systems Limited Partnership:
We have audited the accompanying consolidated balance sheet of Macon
Cellular Telephone Systems Limited Partnership (a New Hampshire Limited
Partnership) and Subsidiary as of December 31, 1997 and the related consolidated
statements of operations, partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Macon Cellular Telephone
Systems Limited Partnership as of December 31, 1997, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-103
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Macon Cellular Telephone Systems Limited Partnership:
We have audited the accompanying consolidated balance sheet of Macon
Cellular Telephone Systems Limited Partnership (a New Hampshire Limited
Partnership) as of December 31, 1996 and the related consolidated statements of
operations, partners' equity and cash flows for each of the years in the
two-year period ended December 31, 1996. These consolidated financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Macon
Cellular Telephone Systems Limited Partnership (a New Hampshire Limited
Partnership) as of December 31, 1996, and the results of their operations and
their cash flows for each of the years in the two-year period ended December 31,
1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-104
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, ---------------------
1998 1997 1996
------------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash...................................................................... $ 163 $ 50 $ 83
Trade accounts receivable, less allowance for doubtful accounts of $210 in
1998, $89 in 1997 and $420 in 1996...................................... 2,873 2,258 2,638
Inventory................................................................. 473 353 689
Other current assets...................................................... 78 78 92
------------- ---------- ---------
Total current assets.................................................... 3,587 2,739 3,502
------------- ---------- ---------
Property and equipment:
Land and leasehold improvements........................................... 208 126 637
Equipment and furnishings................................................. 803 791 663
Cellular equipment........................................................ 14,849 14,712 15,192
------------- ---------- ---------
15,860 15,629 16,492
Less accumulated depreciation and amortization............................ 1,993 516 4,672
------------- ---------- ---------
Net property and equipment.............................................. 13,867 15,113 11,820
------------- ---------- ---------
Licenses and other intangibles, less accumulated amortization of $3,710 in
1998, $953 in 1997 and $6,262 in 1996................................... 134,945 137,702 50,114
------------- ---------- ---------
$ 152,399 $ 155,554 $ 65,436
------------- ---------- ---------
------------- ---------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits............................................. $ 112 $ 140 $ 203
Other accrued expenses.................................................... 287 148 317
Deferred revenue.......................................................... 627 350 610
Customer deposits......................................................... 146 103 93
------------- ---------- ---------
Total current liabilities............................................... 1,172 741 1,223
Deferred income taxes....................................................... 45,700 46,579 --
Advances from affiliates.................................................... 1,962 11,402 16,709
------------- ---------- ---------
Total liabilities....................................................... 48,834 58,722 17,932
Commitments and contingencies...............................................
Partners' equity............................................................ 103,565 96,822 47,504
------------- ---------- ---------
$ 152,399 $ 155,554 $ 65,436
------------- ---------- ---------
------------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-105
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Revenue:
Service revenue.......................................... $ 22,272 $ 19,421 $ 26,335 $ 21,178 $ 14,562
Equipment sales and installation......................... 1,138 1,119 1,479 1,211 1,440
--------- --------- --------- --------- ---------
Total revenue.......................................... 23,410 20,540 27,814 22,389 16,002
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................. 5,726 5,226 6,743 5,312 3,530
Cost of equipment........................................ 1,995 1,931 2,689 1,956 1,886
Sales and marketing...................................... 1,776 1,493 1,979 1,648 1,128
General and administrative............................... 3,306 3,594 4,809 4,272 2,860
Depreciation and amortization............................ 4,259 2,410 3,879 2,467 1,804
--------- --------- --------- --------- ---------
Total operating expenses............................... 17,062 14,654 20,099 15,655 11,208
--------- --------- --------- --------- ---------
Operating income....................................... 6,348 5,886 7,715 6,734 4,794
Interest (expense) income, net............................. (494) (1,083) (1,406) (486) 283
--------- --------- --------- --------- ---------
Net income before income taxes............................. 5,854 4,803 6,309 6,248 5,077
Tax benefit................................................ 879 -- 293 -- --
--------- --------- --------- --------- ---------
Net income................................................. $ 6,733 $ 4,803 $ 6,602 $ 6,248 $ 5,077
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<S> <C>
Balance at December 31, 1994...................................................... $ 36,179
Net income........................................................................ 5,077
Balance at December 31, 1995...................................................... 41,256
Net income........................................................................ 6,248
---------
Balance at December 31, 1996...................................................... 47,504
Net income........................................................................ 6,602
"Push-down" of Price Communications Wireless, Inc.'s acquisition price............ 42,726
---------
Balance at December 31, 1997...................................................... 96,832
Net income........................................................................ 6,733
---------
Balance at September 30, 1998 (Unaudited)......................................... $ 103,565
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-106
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 6,733 $ 4,803 $ 6,602 $ 6,248 $ 5,077
--------- --------- --------- ---------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 4,260 2,410 3,880 2,467 1,804
(Increase) decrease in trade accounts receivable....... (615) 892 380 (72) (413)
(Increase) decrease in inventory....................... (120) 257 336 (345) 371
Decrease (increase) in other current assets............ -- 3 14 11 (15)
Increase (decrease) in accrued expenses................ 110 (131) (232) 29 (122)
Increase (decrease) in deferred revenue................ 276 1 (259) (84) 108
Decrease in deferred income taxes...................... (879) -- (293) -- --
Increase (decrease) in customer deposits............... 44 5 10 19 (1)
--------- --------- --------- ---------- ---------
Total adjustments.................................... 3,076 3,437 3,836 2,025 1,732
--------- --------- --------- ---------- ---------
Net cash provided by operating activities............ 9,809 8,240 10,438 8,273 6,809
--------- --------- --------- ---------- ---------
Cash flows from investing activities:
Purchases of property and equipment...................... (256) (4,759) (5,165) (4,561) (2,482)
Cash payments for purchase of non-wireline cellular
telephone system and license........................... -- -- -- (25,244) --
--------- --------- --------- ---------- ---------
Net cash used in investing activities................ (256) (4,759) (5,165) (29,805) (2,482)
--------- --------- --------- ---------- ---------
Cash flows from financing activities:
(Decrease) increase in advances from affiliates, net..... (9,440) (3,456) (5,306) 21,485 (4,365)
--------- --------- --------- ---------- ---------
Net increase (decrease) in cash...................... 113 25 (33) (47) (38)
Cash at beginning of year.................................. 50 83 83 130 168
--------- --------- --------- ---------- ---------
Cash at end of period...................................... $ 163 $ 108 $ 50 $ 83 $ 130
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest................. $ 491 $ 1,083 $ 1,404 $ 821 $ 4
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
</TABLE>
F-107
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
($ IN THOUSANDS)
Supplemental disclosure of noncash investing and financing activities:
During 1996, the Partnership transferred certain property and equipment with
depreciated cost of $30 to Palmer Wireless Inc. and affiliates by decreasing the
advances from Palmer Wireless, Inc. and affiliates. No gain or loss was
recognized on the transfer.
The 1996 acquisition of the non-wireline cellular telephone system was
allocated as follows:
<TABLE>
<S> <C>
Property and equipment........................................... $ 1,546
Licenses and other intangibles................................... 23,444
Current assets and liabilities, net.............................. 254
---------
$ 25,244
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-108
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS AND ASSET EXCHANGE AGREEMENT
Macon Cellular Telephone Systems Limited Partnership (the "Partnership") was
formed on November 11, 1986, to construct and operate certain non-wireline
cellular telephone systems. On October 24, 1989, Palmer Cellular Partnership
("PCP"), a subsidiary of Palmer Communications Incorporated ("Palmer"), directly
or indirectly acquired the Partnership's general partner (approximately 1
percent) and approximately 94 percent of the limited partnership units. In
conjunction with this acquisition, the Partnership entered into an Asset
Exchange Agreement with Macon Cellular Telephone Corp. ("Macon"), whereby the
assets consisted primarily of FCC licenses and a nonwireline cellular telephone
system serving the Macon, Georgia, Metropolitan Statistical Area. The
partnership operates the non-wireline cellular telephone system serving the
Georgia-6 RSA which was acquired on July 5, 1996.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owns a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
financial statements and notes to financial statements include the activity of
PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI entered
into a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW. The direct owner of the Partnership is Palmer Wireless Holdings,
Inc. ("Holdings") which was formed in January, 1994. PCW is the 100% owner of
Holdings.
The Partnership is the 100% owner of Price Communications Wireless VII Inc.,
the licenseholder for the Macon MSA.
BASIS OF PRESENTATION
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $138.7 million, which are being amortized over a
period of 40 years. Prior to October 6, 1997, PWI also utilized "push down
accounting", as PWI owned approximately 99.1% of the Partnership.
The accompanying financial statements do not include the assets and
liabilities of the partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the
F-109
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed on month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
F-110
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES--ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
The Consolidated Financial Statements prior to the adjustment of the value
of the licenses made no provision for income taxes, as income and losses of the
Partnership are included in the income tax returns of the individual partners.
Such income and losses are proportionately allocated to the partners based upon
their ownership interests. At September 30, 1998 and December 31, 1997, the
Consolidated Balance Sheets include a net deferred tax liability as a result of
the difference between the tax and book basis of the license as a result of the
valuation on October 7, 1997. This difference is being amortized over a 40 year
period and accordingly the Consolidated Statements of Operations reflect a tax
benefit for the appropriate periods.
2) ACQUISITION AND PURCHASE OF LICENSE
On July 5, 1996, the Partnership acquired the assets of and the license to
operate the non-wireline cellular system serving the eastern portion (including
Crawford, Lamar, Monroe, Spalding, Pike, and Upson Counties) of the Georgia
Rural Service Area Market No. 376, otherwise known as Georgia-6 RSA, for a
purchase price of $25.2 million. The acquisition was accounted for by the
purchase method of accounting and was funded by an increase in the advances from
Palmer Wireless, Inc. and affiliates. In connection with the acquisition, $23.4
million of the purchase price was allocated to the license and goodwill.
From the date of the acquisition to December 31, 1996, the effect of this
purchase on the operations of the Partnership cannot be differentiated from the
operations of the whole due to the interrelated nature of the transactions.
3) PARTNERS' EQUITY
In accordance with the Partnership agreement, the partners' proportionate
share of cash distributions from current operations and net income or loss is
calculated by dividing the partner's capital contribution by total partners'
capital contributions.
The allocation to the partners of gain or loss arising from the sale of
property will be in the same proportion as they share net income or net loss of
the Partnership.
4) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities various items. Among
these are the following arrangements:
F-111
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4) RELATED PARTY TRANSACTIONS (CONTINUED)
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Partnership. The agreement provides for a monthly management
fee of $2,000. The agreement also provides for reimbursement of out-of-pocket
costs. Certain property and equipment acquisitions and expenses related to the
operations of the system have been allocated to the Partnership as out-of-pocket
costs. Property and equipment acquisitions are allocated based on specific
identification. Operating expenses are allocated to the Partnership based on the
parent's estimate of its time spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of incollect roaming
related to these arrangements, is included in engineering, technical and other
direct operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Partnership participates in
this plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee................................................... $ 18 $ 18 $ 24 $ 24 $ 24
Operating Expenses............................................... 1,718 1,843 2,354 2,113 1,005
Switching Service................................................ 436 377 512 379 248
Billing Service.................................................. 871 754 1,022 759 563
Roaming Revenue.................................................. 1,266 864 1,183 770 634
Roaming Cost..................................................... 2,219 1,445 1,981 1,164 1,145
401(k) Match..................................................... 17 21 27 45 38
Interest expense (income)........................................ 491 1,083 1,404 486 (288)
</TABLE>
F-112
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A NEW HAMPSHIRE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Company is involved in various
claims and legal actions arising in the ordinary course of business.
In the opinion of management, the ultimate disposition of these matters will
not have a material adverse effect on the Company's Consolidated Financial
Statements.
6) LEASES ($ IN THOUSANDS)
The Partnership, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expense under these noncancelable
leases was $329 and $286 for the nine month periods ended September 30, 1998 and
1997 and $389, $311 and $241 for the years ended December 31, 1997, 1996 and
1995, respectively. At December 31, 1997, the approximate minimum rental
commitments under noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- -------------------------------------------------------------------------------------
<S> <C>
1998............................................................................... $ 320
1999............................................................................... 306
2000............................................................................... 295
2001............................................................................... 273
2002............................................................................... 257
Thereafter......................................................................... 37
---------
$ 1,488
---------
---------
</TABLE>
F-113
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Montgomery Cellular Holding Co., Inc. and Subsidiary:
We have audited the accompanying consolidated balance sheet of Montgomery
Cellular Holding Co., Inc. (a Delaware Corporation), and Subsidiary as of
December 31, 1997, and the related consolidated statements of operations and
retained earnings and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Montgomery Cellular Holdings
Co., Inc. and Subsidiary as of December 31, 1997, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-114
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Montgomery Cellular Holding Co., Inc.:
We have audited the accompanying consolidated balance sheet of Montgomery
Cellular Holding Co., Inc. and subsidiary as of December 31, 1996 and the
related consolidated statements of operations and retained earnings (accumulated
deficit) and cash flows for each of the years in the two-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Montgomery
Cellular Holding Co., Inc. and subsidiary as of December 31, 1996, and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1996 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-115
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, ---------------------
1998 1997 1996
------------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash...................................................................... $ 106 $ 184 $ 76
Trade accounts receivable, less allowance for doubtful accounts of $124 in
1998, $102 in 1997 and $155 in 1996..................................... 2,398 1,968 2,274
Inventory................................................................. 420 116 538
Other current assets...................................................... 47 19 17
------------- ---------- ---------
Total current assets.................................................... 2,971 2,287 2,905
------------- ---------- ---------
Property and equipment:
Land and leasehold improvements........................................... -- -- 827
Equipment and furnishings................................................. 403 392 389
Cellular equipment........................................................ 11,149 9,892 15,612
------------- ---------- ---------
11,552 10,284 16,828
Less accumulated depreciation and amortization............................ 1,400 224 7,757
------------- ---------- ---------
Net property and equipment.............................................. 10,152 10,060 9,071
------------- ---------- ---------
Licenses and other intangibles, less accumulated amortization of $2,830 in
1998, $698 in 1997 and $142 in 1996....................................... 110,545 112,677 42
------------- ---------- ---------
$ 123,668 $ 125,024 $ 12,018
------------- ---------- ---------
------------- ---------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accrued salaries and benefits............................................. $ 54 $ 111 $ 101
Other accrued expenses.................................................... 127 100 605
Deferred revenue.......................................................... 508 333 400
Customer deposits......................................................... 64 31 70
------------- ---------- ---------
Total current liabilities............................................... 753 575 1,176
Deferred income taxes....................................................... 37,367 38,086 100
Other notes payable......................................................... 16 17 --
Advances from affiliates.................................................... 566 3,894 6,303
------------- ---------- ---------
Total liabilities....................................................... 38,702 42,572 7,579
------------- ---------- ---------
Commitments and contingencies...............................................
Stockholder's equity:
Preferred stock, $.01 par value; authorized 50,000 shares, none issued.... -- -- --
Common stock, $.01 par value; authorized 100,000 shares, issued 10,000
shares.................................................................. -- -- --
Additional paid in capital................................................ 74,043 74,043 --
Retained earnings......................................................... 10,923 8,409 4,439
------------- ---------- ---------
Total stockholder's equity.............................................. 84,966 82,452 4,439
------------- ---------- ---------
$ 123,668 $ 125,024 $ 12,018
------------- ---------- ---------
------------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-116
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS (ACCUMULATED DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue.......................................... $ 16,327 $ 14,496 $ 19,389 $ 19,174 $ 16,599
Equipment sales and installation......................... 1,032 695 903 987 1,249
--------- --------- --------- --------- ---------
Total revenue........................................ 17,359 15,191 20,292 20,161 17,848
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................. 3,131 2,639 3,607 4,175 3,199
Cost of equipment........................................ 1,907 1,404 1,918 1,958 2,210
Sales and marketing...................................... 1,338 895 1,234 1,054 886
General and administrative............................... 3,610 3,446 4,637 4,589 3,905
Depreciation and amortization............................ 3,308 1,079 2,169 1,239 1,029
--------- --------- --------- --------- ---------
Total operating expenses............................. 13,294 9,463 13,565 13,015 11,229
--------- --------- --------- --------- ---------
Operating income..................................... 4,065 5,728 6,727 7,146 6,619
Interest expense........................................... 75 349 425 695 981
--------- --------- --------- --------- ---------
Income before income tax expense..................... 3,990 5,379 6,302 6,451 5,638
Income tax expense......................................... 1,476 1,991 2,332 2,405 1,075
--------- --------- --------- --------- ---------
Net income........................................... 2,514 3,388 3,970 4,046 4,563
Retained earnings (accumulated deficit) at beginning of
year..................................................... 8,409 4,439 4,439 393 (4,170)
--------- --------- --------- --------- ---------
Retained earnings at end of period......................... $ 10,923 $ 7,827 $ 8,409 $ 4,439 $ 393
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-117
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------- --------------------------------------
1998 1997 1997 1996 1995
--------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,514 $ 3,388 $ 3,970 $ 4,046 $ 4,563
--------- ---------- ---------- ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 3,308 1,079 2,169 1,239 1,029
Loss on disposal of property and equipment.... -- -- -- 15 --
(Decrease) increase in deferred income
taxes....................................... (719) (100) (340) 100 --
(Increase) decrease in trade accounts
receivable.................................. (430) 166 306 (295) 42
(Increase) decrease in inventory.............. (303) 396 421 (385) 848
Increase in other current expenses............ (28) (28) (2) (1) (4)
(Decrease) increase in accrued expenses....... (31) (398) (497) 193 240
Decrease in accrued interest due to
affiliates.................................. -- -- -- (768) (2,450)
Increase (decrease) in deferred revenue....... 175 (28) (67) 94 (131)
Increase (decrease) in customer deposits...... 33 (40) (39) 22 (17)
--------- ---------- ---------- ------------ ------------
Total adjustments........................... 2,005 1,047 1,951 214 (443)
--------- ---------- ---------- ------------ ------------
Net cash provided by operating activities... 4,519 4,435 5,921 4,260 4,120
--------- ---------- ---------- ------------ ------------
Cash flows from investing activities:
Purchases of property and equipment............. (1,267) (1,549) (2,413) (2,777) (3,553)
--------- ---------- ---------- ------------ ------------
Cash flows from financing activities:
Long-term borrowings............................ (2) 18 17 -- --
Decrease in advances from affiliates, net....... (3,328) (2,835) (3,417) (2,041) --
--------- ---------- ---------- ------------ ------------
Net cash used in financing activities....... (3,330) (2,817) (3,400) (2,041) --
--------- ---------- ---------- ------------ ------------
Net (decrease) increase in cash............. (78) 69 108 (558) 567
Cash at beginning of year......................... 184 76 76 634 67
--------- ---------- ---------- ------------ ------------
Cash at end of period............................. $ 106 $ 145 $ 184 $ 76 $ 634
--------- ---------- ---------- ------------ ------------
--------- ---------- ---------- ------------ ------------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest........ $ 83 $ 349 $ 425 $ 1,463 $ 3,431
--------- ---------- ---------- ------------ ------------
--------- ---------- ---------- ------------ ------------
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
During 1996, the Company received certain property and equipment totaling
$279 from a related party by increasing the advances from Palmer Wireless, Inc.
and affiliates.
During 1995, the Company transferred certain property and equipment with an
original cost of $21 and a depreciated cost of $14 to a related party by
decreasing the advances from Palmer Wireless, Inc. and affiliates. No gain or
loss was recognized on the transfer.
See accompanying notes to consolidated financial statements.
F-118
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
Montgomery Cellular Holding Co., Inc. and its wholly owned subsidiary,
Montgomery Cellular Telephone Company, Inc., (the "Company") were formed in
February 1988 to operate the non-wireline cellular telephone system in the
Montgomery, Alabama, Metropolitan Statistical Area. Palmer Communications
Incorporated ("Palmer") acquired an interest in the outstanding stock of
Montgomery Cellular Holding Co., Inc. on December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a majority
interest in PCP. When Palmer's interest in the Company was transferred to PCP,
it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owns a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
BASIS OF PRESENTATION
PWI owned approximately 91.9% of the Company at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Company were not revalued in connection
with the acquisition by Palmer or the subsequent transfers to PCP or PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997, to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the Company revalued its assets and
liabilities to reflect this allocation. The allocation of the purchase price
resulted in licenses of approximately $113.4 million which are being amortized
over a period of 40 years.
The Consolidated Financial Statements include the accounts of Montgomery
Cellular Holding Co., Inc. and its Subsidiary. All significant inter-company
balances and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-119
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred.
Property and equipment are stated at cost. Depreciation is provided
principally using the straight-line method over the estimated useful lives
ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Company utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
ORGANIZATION EXPENSES AND START-UP COSTS
Organization expenses and start-up costs are being amortized primarily using
the straight-line method over ten years.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
F-120
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
Since March of 1995 through September 30, 1997 the Company was included in
the consolidated income tax return of PWI and for the period October 1, 1997
through December 31, 1997 the tax return of PCW. Through the Company's tax
sharing arrangement with PWI and PCW, the Company computes its current and
deferred income taxes based on the separate return method for financial
statement purposes. At December 31, 1997, the Company had approximately $.5
million in net operating loss carryforwards for federal income tax purposes,
which can be utilized in future years to the extent that both PCW and the
Company have taxable income. These net operating loss carryforwards will expire
from 2005 through 2007. Based on the tax sharing arrangement, the Company, for
financial statement purposes, has recognized the benefit of these net operating
loss carry-forwards.
2) RELATED PARTY TRANSACTIONS
The Company has various agreements with its parent whereby the Company is
charged or can charge other related entities various items. Among these are the
following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for a monthly management fee
based upon 5 percent of revenues or a construction fee based upon 10 percent of
the construction costs. The agreement provides for reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Company as
out-of-pocket costs. Property and equipment acquisitions are allocated based on
specific identification. Operating expenses are allocated to the Company based
on the parent's estimate of its time spent managing the Company.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Company enjoys favorable reciprocal
roaming arrangements with its affiliates. The revenue is included in service
revenue in the statements of operations. Cost of incollect roaming related to
these arrangements, is included in engineering, technical and other direct
operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Company's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Company participates in this
plan and was allocated 401(k) retirement and matching expense.
F-121
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2) RELATED PARTY TRANSACTIONS (CONTINUED)
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Company's accounts payable and disbursement function are performed by
its parent. Under this centralized system, all payments are made by the parent
and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee................................................... $ 868 $ 759 $ 1,015 $ 1,008 $ 892
Construction Fee................................................. -- -- -- 252 323
Operating Expenses............................................... 1,467 1,430 1,888 1,910 1,001
Switching Service................................................ 374 329 444 392 263
Billing Service.................................................. 747 658 886 784 650
Roaming Revenue.................................................. 606 434 586 476 499
Roaming Cost..................................................... 872 544 761 543 639
401(k) Match..................................................... 16 10 14 32 25
Interest Expense................................................. 75 349 425 693 980
</TABLE>
3) INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes," under which deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax basis. At September 30,
1998 and December 31, 1997 the Company has a net deferred tax liability as a
result of the difference between the tax and book basis of the license as a
result of the valuation on October 7, 1997. This difference is being amortized
over a 40 year period. Deferred taxes of $100,000 at December 31, 1996, relate
primarily to the difference between financial statement and income tax bases of
property and equipment. At December 31, 1995, the Company had approximately $.3
million of deferred tax assets, net, which had been offset by a valuation
allowance. The valuation allowance decreased by approximately $.3 million and
$1.1 million in 1996 and 1995, respectively.
F-122
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3) INCOME TAXES (CONTINUED)
Components of income tax expense consisted of the following for the years
ended December 31 ($ in thousands):
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Year Ended December 31, 1997:
Current...................................................... $ 2,441 $ 150 $ 2,591
Deferred..................................................... (259) -- (259)
--------- --------- ---------
$ 2,182 $ 150 $ 2,332
--------- --------- ---------
--------- --------- ---------
Year Ended December 31, 1996:
Current...................................................... $ 2,105 $ 200 $ 2,305
Deferred..................................................... 90 10 100
--------- --------- ---------
$ 2,195 $ 210 $ 2,405
--------- --------- ---------
--------- --------- ---------
Year Ended December 30, 1995:
Current...................................................... $ 1,015 $ 60 $ 1,075
Deferred..................................................... -- -- --
--------- --------- ---------
$ 1,015 $ 60 $ 1,075
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes differ from the "expected" income taxes computed by applying
the United States federal income tax rate of 34 percent to income before income
tax expense due to the utilization of deferred tax credits for the nine months
ended September 30, 1998 and the year ended December 31, 1997 and state taxes in
1996 and due to the utilization of net operating loss carryforwards and state
taxes in 1995. The Company recognizes a deferred tax benefit for the turnaround
in the deferred tax liability attributable to the additional amortization of the
license.
4) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
5) LEASES ($ IN THOUSANDS)
The Company, as lessee, has various leases for an office building and
certain cellular plant facilities, all of which are classified as operating
leases. One is with a related party. Rent expense under noncancelable leases
amounted to $190 and $185 for the nine months ended September 30, 1998 and 1997
respectively and $252, $191 and $139 for the years ended December 31, 1997, 1996
and 1995 respectively,
F-123
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5) LEASES ($ IN THOUSANDS) (CONTINUED)
of which $30 and $29 in 1996 and 1995 respectively, were paid to a related
party. At December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
RELATED
PARTY OTHER
----------- -----------
<S> <C> <C>
Year ending December 31:
1998....................................................................... $ 29 $ 192
1999....................................................................... 29 183
2000....................................................................... -- 170
2001....................................................................... -- 151
2002....................................................................... -- 85
Thereafter................................................................. -- 79
--- -----
$ 58 $ 860
--- -----
--- -----
</TABLE>
F-124
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Montgomery Cellular Telephone Company, Inc:
We have audited the accompanying consolidated balance sheet of Montgomery
Cellular Telephone Company, Inc. (an Alabama Corporation) and Subsidiary as of
December 31, 1997, and the related consolidated statements of operations,
retained earnings (accumulated deficit) and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Montgomery Cellular
Telephone Company Inc. and Subsidiary as of December 31, 1997, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-125
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Montgomery Cellular Telephone Company, Inc.:
We have audited the accompanying consolidated balance sheet of Montgomery
Cellular Telephone Company, Inc. as of December 31, 1996 and the related
consolidated statements of operations and retained earnings (accumulated
deficit) and cash flows for each of the years in the two-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Montgomery
Cellular Telephone Company, Inc. as of December 31, 1996, and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-126
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, ---------------------
1998 1997 1996
------------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash...................................................................... $ 106 $ 184 $ 76
Trade accounts receivable, less allowance for doubtful accounts of $124 in
1998, $102 in 1997 and $155 in 1996..................................... 2,398 1,968 2,274
Inventory................................................................. 420 116 538
Other current assets...................................................... 47 19 17
------------- ---------- ---------
Total current assets.................................................... 2,971 2,287 2,905
------------- ---------- ---------
Property and equipment:
Land and leasehold improvements........................................... -- -- 827
Equipment and furnishings................................................. 403 392 389
Cellular equipment........................................................ 11,149 9,892 15,612
------------- ---------- ---------
11,552 10,284 16,828
Less accumulated depreciation and amortization............................ 1,400 224 7,757
------------- ---------- ---------
Net property and equipment.............................................. 10,152 10,060 9,071
------------- ---------- ---------
Licenses and other intangibles, less accumulated amortization of $2,830 in
1998, $698 in 1997 and $142 in 1996....................................... 110,545 112,677 42
------------- ---------- ---------
$ 123,668 $ 125,024 $ 12,018
------------- ---------- ---------
------------- ---------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accrued salaries and benefits............................................. $ 54 $ 111 $ 101
Other accrued expenses.................................................... 127 100 605
Deferred revenue.......................................................... 508 333 400
Customer deposits......................................................... 64 31 70
------------- ---------- ---------
Total current liabilities............................................... 753 575 1,176
Deferred income taxes....................................................... 37,367 38,086 100
Other notes payable......................................................... 16 17 --
Advances from affiliates.................................................... 566 3,894 6,303
------------- ---------- ---------
Total liabilities....................................................... 38,702 42,572 7,579
------------- ---------- ---------
Commitments and contingencies...............................................
Stockholder's equity:
Common stock, $1.00 par value; authorized 5,000 shares 100 shares issued
and outstanding......................................................... -- -- --
Additional paid-in capital................................................ 74,043 74,043 --
Retained earnings......................................................... 10,923 8,409 4,439
------------- ---------- ---------
Total stockholder's equity.............................................. 84,966 82,452 4,439
------------- ---------- ---------
$ 123,668 $ 125,024 $ 12,018
------------- ---------- ---------
------------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-127
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS (ACCUMULATED DEFICIT)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue.......................................... $ 16,327 $ 14,496 $ 19,389 $ 19,174 $ 16,599
Equipment sales and installation......................... 1,032 695 903 987 1,249
--------- --------- --------- --------- ---------
Total revenue........................................ 17,359 15,191 20,292 20,161 17,848
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct.................. 3,131 2,639 3,607 4,175 3,199
Cost of equipment........................................ 1,907 1,404 1,918 1,958 2,210
Sales and marketing...................................... 1,338 895 1,234 1,054 886
General and administrative............................... 3,610 3,446 4,637 4,589 3,905
Depreciation and amortization............................ 3,308 1,079 2,169 1,239 1,029
--------- --------- --------- --------- ---------
Total operating expenses............................. 13,294 9,463 13,565 13,015 11,229
--------- --------- --------- --------- ---------
Operating income..................................... 4,065 5,728 6,727 7,146 6,619
Interest expense........................................... 75 349 425 695 981
--------- --------- --------- --------- ---------
Income before income tax expense..................... 3,990 5,379 6,302 6,451 5,638
Income tax expense......................................... 1,476 1,991 2,332 2,405 1,075
--------- --------- --------- --------- ---------
Net income........................................... 2,514 3,388 3,970 4,046 4,563
Retained earnings (accumulated deficit) at beginning of
year..................................................... 8,409 4,439 4,439 393 (4,170)
--------- --------- --------- --------- ---------
Retained earnings at end of period......................... $ 11,527 $ 7,827 $ 8,409 $ 4,439 $ 393
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-128
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------- --------------------------------------
1998 1997 1997 1996 1995
--------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,514 $ 3,388 $ 3,970 $ 4,046 $ 4,563
--------- ---------- ---------- ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 3,308 1,079 2,169 1,239 1,029
Loss on disposal of property and equipment.... -- -- -- 15 --
(Decrease) increase in deferred income
taxes....................................... (719) (100) (340) 100 --
(Increase) decrease in trade accounts
receivable.................................. (430) 166 306 (295) 42
(Increase) decrease in inventory.............. (303) 396 421 (385) 848
Increase in other current expenses............ (28) (28) (2) (1) (4)
(Decrease) increase in accrued expenses....... (31) (398) (497) 193 240
Decrease in accrued interest due to
affiliates.................................. -- -- -- (768) (2,450)
Increase (decrease) in deferred revenue....... 175 (28) (67) 94 (131)
Increase (decrease) in customer deposits...... 33 (40) (39) 22 (17)
--------- ---------- ---------- ------------ ------------
Total adjustments........................... 2,005 1,047 1,951 214 (443)
--------- ---------- ---------- ------------ ------------
Net cash provided by operating activities... 4,519 4,435 5,921 4,260 4,120
--------- ---------- ---------- ------------ ------------
Cash flows from investing activities:
Purchases of property and equipment............. (1,267) (1,549) (2,413) (2,777) (3,553)
--------- ---------- ---------- ------------ ------------
Cash flows from financing activities:
Long-term borrowings............................ (2) 18 17 -- --
Decrease in advances from affiliates, net....... (3,328) (2,835) (3,417) (2,041) --
--------- ---------- ---------- ------------ ------------
Net cash used in financing activities....... (3,330) (2,817) (3,400) (2,041) --
--------- ---------- ---------- ------------ ------------
Net (decrease) increase in cash............. (78) 69 108 (558) 567
Cash at beginning of year......................... 184 76 76 634 67
--------- ---------- ---------- ------------ ------------
Cash at end of period............................. $ 106 $ 145 $ 184 $ 76 $ 634
--------- ---------- ---------- ------------ ------------
--------- ---------- ---------- ------------ ------------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest........ $ 83 $ 349 $ 425 $ 1,463 $ 3,431
--------- ---------- ---------- ------------ ------------
--------- ---------- ---------- ------------ ------------
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
During 1996, the Company received certain property and equipment totaling
$279 from a related party by increasing the advances from Palmer Wireless, Inc.
and affiliates.
During 1995, the Company transferred certain property and equipment with an
original cost of $21 and a depreciated cost of $14 to a related party by
decreasing the advances from Palmer Wireless, Inc. and affiliates. No gain or
loss was recognized on the transfer.
See accompanying notes to consolidated financial statements.
F-129
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
Montgomery Cellular Telephone Company, Inc., (the "Company") and its parent
Montgomery Cellular Holding Co., Inc., whose financial statements are included
elsewhere in this document, were formed in February 1988 to operate the
non-wireline cellular telephone system in the Montgomery, Alabama Metropolitan
Statistical Area. Palmer Communications Incorporated ("Palmer") acquired an
interest in the outstanding stock of Montgomery Cellular Holding Co., Inc. on
December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and advances
to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a majority
interest in PCP. When Palmer's interest in the Company was transferred to PCP,
it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owns a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The Company's direct owner is Montgomery Cellular
Holding Co., Inc. ("Montgomery Holding"). Montgomery Holding in turn is 100 %
owned by Palmer Wireless Holdings, Inc. which was formed in January, 1994. PCW
is the 100% owner of Palmer Wireless Holdings, Inc.
BASIS OF PRESENTATION
PWI owned approximately 91.9% of the Company at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Company were not revalued in connection
with the acquisition by Palmer or the subsequent transfers to PCP or PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $113.4 million which are being amortized over a period
of 40 years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-130
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Company utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
ORGANIZATION EXPENSES AND START-UP COSTS
Organization expenses and start-up costs are being amortized primarily using
the straight-line method over ten years.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
F-131
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
Since March of 1995 through September 30, 1997, the Company was included in
the consolidated income tax return of PWI and for the period October 1, 1997
through December 31, 1997 the tax return of PCW. Through the Company's tax
sharing arrangement with PWI and PCW, the Company computes its current and
deferred income taxes based on the separate return method for financial
statement purposes. At December 31, 1997, the Company had approximately $.5
million in net operating loss carryforwards for federal income tax purposes,
which can be utilized in future years to the extent that both PCW and the
Company have taxable income. These net operating loss carryforwards will expire
from 2005 through 2007. Based on the tax sharing arrangement, the Company, for
financial statement purposes, has recognized the benefit of these net operating
loss carryforwards.
2) RELATED PARTY TRANSACTIONS
The Company has various agreements with its parent whereby the Company is
charged or can charge other related entities various items. Among these are the
following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for a monthly management fee
based upon 5 percent of revenues or a construction fee based upon 10 percent of
the construction costs. The agreement also provides for reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Company as
out-of-pocket costs. Property and equipment acquisitions are allocated based on
specific identification. Operating expenses are allocated to the Company based
on the parent's estimate of its time spent managing the Company.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Company enjoys favorable reciprocal
roaming arrangements with its affiliates. The revenue is included in service
revenue in the statements of operations. Cost of incollect roaming related to
these arrangements, is included in engineering, technical and other direct
operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Company's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Company participates in this
plan and was allocated 401(k) retirement and matching expense.
F-132
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2) RELATED PARTY TRANSACTIONS (CONTINUED)
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Company's accounts payable and disbursement function are performed by
its parent. Under this centralized system, all payments are made by the parent
and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee................................................... $ 868 $ 759 $ 1,015 $ 1,008 $ 892
Construction Fee................................................. -- -- -- 252 323
Operating Expenses............................................... 1,467 1,430 1,888 1,910 1,001
Switching Service................................................ 374 329 444 392 263
Billing Service.................................................. 747 658 886 784 650
Roaming Revenue.................................................. 606 434 586 476 499
Roaming Cost..................................................... 872 544 761 543 639
401(k) Match..................................................... 16 10 14 32 25
Interest Expense................................................. 75 349 425 693 980
</TABLE>
3) INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes," under which deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax basis. At September 30,
1998 and December 31, 1997 the Company has a net deferred tax liability as a
result of the difference between the tax and book basis of the license as a
result of the valuation on October 7, 1997. This difference is being amortized
over a 40 year period. Deferred taxes of $100,000 at December 31, 1996, relate
primarily to the difference between financial statement and income tax bases of
property and equipment. At December 31, 1995, the Company had approximately $.3
million of deferred tax assets, net, which had been offset by a valuation
allowance. The valuation allowance decreased by approximately $.3 million and
$1.1 million in 1996 and 1995, respectively.
F-133
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3) INCOME TAXES (CONTINUED)
Components of income tax expense consisted of the following for the years
ended December 31 ($ in thousands):
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Year Ended December 31, 1997:
Current......................................................... $ 2,441 $ 150 $ 2,591
Deferred........................................................ (259) -- (259)
--------- --------- ---------
$ 2,182 $ 150 $ 2,332
--------- --------- ---------
--------- --------- ---------
Year Ended December 31, 1996:
Current......................................................... $ 2,105 $ 200 $ 2,305
Deferred........................................................ 90 10 100
--------- --------- ---------
$ 2,195 $ 210 $ 2,405
--------- --------- ---------
--------- --------- ---------
Year Ended December 30, 1995:
Current......................................................... $ 1,015 $ 60 $ 1,075
Deferred........................................................ -- -- --
--------- --------- ---------
$ 1,015 $ 60 $ 1,075
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes differ from the "expected" income taxes computed by applying
the United States federal income tax rate of 34 percent to income before income
tax expense due to the utilization of deferred tax credits for the nine months
ended September 30, 1998 and the year ended December 31, 1997 and state taxes in
1996 and due to the utilization of net operating loss carryforwards and state
taxes in 1995. The Company recognizes a deferred tax benefit for the turnaround
in the deferred tax liabiilty attributable to the additional amortization of the
license.
4) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors. The Company is involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's Consolidated Financial Statements.
5) LEASES ($ IN THOUSANDS)
The Company, as lessee, has various leases for an office building and
certain cellular plant facilities, all of which are classified as operating
leases. One is with a related party. Rent expense under noncancelable leases
amounted to $190 and $185 for the nine months ended September 30, 1998 and 1997
respectively and $252, $191 and $139 for the years ended December 31, 1997, 1996
and 1995, respectively,
F-134
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5) LEASES ($ IN THOUSANDS) (CONTINUED)
of which $30 and $29 in 1996 and 1995, respectively, were paid to a related
party. At December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
RELATED
PARTY OTHER
----------- -----------
<S> <C> <C>
Year ending December 31:
1998....................................................................... $ 29 $ 192
1999....................................................................... 29 183
2000....................................................................... 170
2001....................................................................... -- 151
2002....................................................................... -- 85
Thereafter................................................................. -- 79
--- -----
$ 58 $ 860
--- -----
--- -----
</TABLE>
F-135
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Panama City Cellular Telephone Company, Ltd:
We have audited the accompanying consolidated balance sheet of Panama City
Cellular Telephone Company, Ltd. (a Florida Limited Partnership) as of December
31, 1997, and the related statements of operations, partners' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Panama City Cellular
Telephone Company, Ltd. as of December 31, 1997, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-136
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Panama City Cellular Telephone Company, Ltd.:
We have audited the accompanying consolidated balance sheet of Panama City
Cellular Telephone Company, Ltd. (a Florida Limited Partnership) as of December
31, 1996, and the related consolidated statements of operations, partners'
equity, and cash flows for each of the years in the two-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Panama City
Cellular Telephone Company, Ltd. (a Florida Limited Partnership) as of December
31, 1996, and the results of their operations and their cash flows for each of
the years in the two-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-137
<PAGE>
PANAMA CITY CELULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash........................................................................ $ 28 $ 13 $ 17
Trade accounts receivable, less allowance for doubtful accounts of $38 in
1998, $42 in 1997 and $5 in 1996.......................................... 939 842 972
Inventory................................................................... 163 37 143
Other current assets........................................................ 19 18 20
------------- --------- ---------
Total current assets...................................................... 1,149 910 1,152
------------- --------- ---------
Property and equipment:
Land and land improvements.................................................. 295 295 209
Buildings and leasehold improvements........................................ 109 106 431
Equipment and furnishings................................................... 235 252 236
Cellular equipment.......................................................... 5,017 5,008 7,095
------------- --------- ---------
5,656 5,661 7,971
Less accumulated depreciation and amortization................................ 723 184 2,983
------------- --------- ---------
Net property and equipment................................................ 4,933 5,477 4,988
------------- --------- ---------
Licenses and other intangibles, less accumulated amortization of $835 in 1998,
$30, in 1997 and $11 in 1996................................................ 43,407 44,212 5
------------- --------- ---------
$ 49,489 $ 50,599 $ 6,145
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits............................................... $ 23 $ 50 $ 49
Other accrued expenses...................................................... 177 60 206
Deferred revenue............................................................ 199 152 160
Customer deposits........................................................... 52 25 25
------------- --------- ---------
Total current liabilities................................................. 451 287 440
Deferred income taxes......................................................... 14,583 14,863 --
Advances from affiliates...................................................... (5,757) (1,905) 178
------------- --------- ---------
Total liabilities......................................................... 9,277 13,245 618
------------- --------- ---------
Commitments and contingencies.................................................
Partners' equity.............................................................. 40,212 37,354 5,527
------------- --------- ---------
$ 49,489 $ 50,599 $ 6,145
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-138
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue............................................... $ 7,227 $ 5,818 $ 7,650 $ 6,770 $ 5,342
Equipment sales and installation.............................. 585 287 403 441 410
--------- --------- --------- --------- ---------
Total revenue............................................. 7,812 6,105 8,053 7,211 5,752
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct....................... 917 592 807 916 822
Cost of equipment............................................. 1,101 943 1,258 1,392 1,407
Sales and marketing........................................... 613 392 543 425 396
General and administrative.................................... 1,506 1,557 2,100 2,052 1,600
Depreciation and amortization................................. 1,368 509 994 607 453
--------- --------- --------- --------- ---------
Total operating expenses.................................. 5,505 3,993 5,702 5,392 4,678
--------- --------- --------- --------- ---------
Operating income.......................................... 2,307 2,112 2,351 1,819 1,074
--------- --------- --------- --------- ---------
Other income (expense):
Interest income (expense)..................................... 271 50 97 (66) (102)
Loss on sale of property and equipment........................ -- -- -- -- (327)
--------- --------- --------- --------- ---------
Total other income (expense).............................. 271 50 97 (66) (429)
--------- --------- --------- --------- ---------
Net income before taxes................................... 2,578 2,162 2,448 1,753 645
Income tax benefit.............................................. 280 -- 93 -- --
--------- --------- --------- --------- ---------
Net income................................................ $ 2,858 $ 2,162 $ 2,541 $ 1,753 $ 645
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
STATEMENT OF PARTNERS' EQUITY
<TABLE>
<S> <C>
Balance at December 31, 1994....................................... $ 3,129
Net income......................................................... 645
---------
Balance at December 31, 1995....................................... 3,774
Net income......................................................... 1,753
---------
Balance at December 31, 1996....................................... 5,527
Net income......................................................... 2,541
"Push-down" of Price Communication Wireless Inc.'s acquisition
price............................................................ 29,286
---------
Balance at December 31, 1997....................................... 37,354
Net income......................................................... 2,858
---------
Balance at September 30, 1998 (Unaudited).......................... $ 40,212
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-139
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 2,858 $ 2,162 $ 2,541 $ 1,753 $ 645
--------- --------- --------- ---------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 1,368 509 994 607 453
Loss on sale of property and equipment.................... -- -- -- -- 327
(Increase) decrease in trade accounts receivable.......... (98) 96 131 (73) (326)
(Increase) decrease in inventory.......................... (126) 74 106 (11) 119
(Increase) decrease in other current assets............... (2) (13) 2 16 (16)
Increase (decrease) in accrued expenses................... 92 (40) (146) (189) 324
(Decrease) increase in accrued interest due to
affiliates.............................................. -- -- -- (102) 102
Increase (decrease) in deferred revenue................... 46 2 (8) 13 49
Decrease in deferred income taxes......................... (280) -- (93) -- --
Increase (decrease) in customer deposits.................. 27 5 -- 7 (3)
--------- --------- --------- ---------- ---------
Total adjustments....................................... 1,027 633 986 268 1,029
--------- --------- --------- ---------- ---------
Net cash provided by operating activities............... 3,885 2,795 3,527 2,021 1,674
--------- --------- --------- ---------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment................ -- -- -- -- 31
Purchases of property and equipment......................... (15) (986) (1,182) (871) (2,125)
Purchase of other intangibles............................... (3) (17) (266) (3) --
--------- --------- --------- ---------- ---------
Net cash used in investing activities................... (18) (1,003) (1,448) (874) (2,094)
--------- --------- --------- ---------- ---------
Cash flows from financing activities:
(Decrease) increase in advances from affiliates, net........ (3,852) (1,784) (2,083) (1,176) 443
--------- --------- --------- ---------- ---------
Net increase (decrease) in cash......................... 15 8 (4) (29) 23
Cash at beginning of year..................................... 13 17 17 46 23
--------- --------- --------- ---------- ---------
Cash at end of period......................................... $ 28 $ 25 $ 13 $ 17 $ 46
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest.................... $ -- $ 253 $ 254 $ 169 $ --
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
During 1995, the Partnership transferred certain property and equipment with
a depreciated cost of $13 to a related party by decreasing the advances from
Palmer Wireless, Inc. and affiliates. No gain or loss was recognized on the
transfer.
See accompanying notes to consolidated financial statements.
F-140
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
Panama City Cellular Telephone Company Ltd. (the "Partnership") was formed
on April 1, 1988, to construct and operate non-wireline cellular telephone
systems in the Panama City, Florida, Metropolitan Statistical Area. On July 25,
1991, Palmer Cellular Partnership ("PCP"), a subsidiary of Palmer Communications
Incorporated ("Palmer"), acquired 100 percent of the general partners' interest
and a portion of the limited partners' interest.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owns a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
financial statements and notes to financial statements include the activity of
PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The Partnership's direct owner is Panhandle Cellular
Partnership ("Panhandle") whose financial statements are included elsewhere in
this document. Panhandle in turn is owned by Palmer Wireless Holdings, Inc.
("Holdings"). PCW is the 100% owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless IX, Inc.,
the licenseholder for the Panama City MSA.
BASIS OF PRESENTATION
PWI owned approximately 77.9% of the Partnership at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Partnership were not revalued in
connection with the acquisition by PCP or the subsequent transfer to PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $44.2 million, which are being amortized over a period
of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the
F-141
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangible assets consist primarily of subscriber lists, which are
being amortized using the straight-line method over 10 years.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
F-142
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES -- ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
The Consolidated Financial Statements prior to the adjustment of the value
of the licenses made no provision for income taxes, as income or losses of the
Partnership are to be included in the income tax returns of the individual
partners. Such income or losses are proportionately allocated to the partners
based upon their ownership interests. At September 30, 1998 and December 31,
1997, the Consolidated Balance Sheets include a net deferred tax liability as a
result of the difference between the tax and book basis of the license as a
result of the valuation on October 7, 1997. This difference is being amortized
over a 40 year period and accordingly the Consolidated Statements of Operations
reflect a tax credit for the appropriate periods.
2) PARTNERS' EQUITY
In accordance with the Partnership agreement, the partners' proportionate
share in cash distributions from current operations and net income or loss is
calculated by dividing the partners' capital contribution by total partners'
capital contributions.
The allocation of gain or loss to the partners arising from the sale of
property will be in the same proportion as their share of net income or net loss
of the Partnership.
3) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities various items. Among
these are the following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Partnership. The agreement provides for a monthly management
fee based upon 5 percent of revenues. The agreement also provides for
reimbursement of out-of-pocket costs. Certain property and equipment
acquisitions and expenses related to the operations of the system have been
allocated to the Partnership as out-of-pocket costs. Property and equipment
acquisitions are allocated based on specific identification. Operating expenses
are allocated to the Partnership based on the parent's estimate of its time
spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
F-143
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3) RELATED PARTY TRANSACTIONS (CONTINUED)
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of incollect roaming
related to these arrangements, is included in engineering, technical and other
direct operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Partnership participates in
this plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee............................................................ $ 391 $ 305 $ 403 $ 361 $ 288
Operating Expenses........................................................ 559 594 761 853 485
Switching Service......................................................... 123 113 151 133 196
Billing Service........................................................... 246 225 301 265 194
Roaming Revenue........................................................... 283 158 189 125 137
Roaming Cost.............................................................. 97 64 93 41 55
401(k) Match.............................................................. 9 8 11 18 14
Interest expense (income)................................................. (269) (50) (96) 67 102
</TABLE>
4) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Partnership is involved in
various claims and legal actions arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
F-144
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5) LEASES ($ IN THOUSANDS)
The Partnership, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. One of these leases is with a related party.
Rent expense under these noncancelable leases amounted to $106 and $106 for the
nine month periods ended September 30, 1998 and 1997 and $140, $142 and $126 for
the years ended December 31, 1997, 1996 and 1995, respectively, of which $14 and
$13 in 1996 and 1995, respectively, were paid to a related party.
At December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
RELATED
PARTY OTHER
----------- -----------
<S> <C> <C>
Year ending December 31:
1998....................................................................... $ 15 $ 110
1999....................................................................... -- 62
2000....................................................................... -- 28
2001....................................................................... -- 20
2002....................................................................... -- 13
--- -----
$ 15 $ 233
--- -----
--- -----
</TABLE>
F-145
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Panhandle Cellular Partnership:
We have audited the accompanying consolidated balance sheet of Panhandle
Cellular Partnership as of December 31, 1996, and the related consolidated
statements of operations, partners' equity, and cash flows for each of the years
in the two-year period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Panhandle
Cellular Partnership as of December 31, 1996, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-146
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Panhandle Cellular Partnership:
We have audited the accompanying consolidated balance sheet of Panhandle
Cellular Partnership (a Florida Limited Partnership) as of December 31, 1997,
and the related consolidated statements of operations, partners' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Panhandle Cellular
Partnership as of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-147
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash........................................................................ $ 28 $ 13 $ 17
Trade accounts receivable, less allowance for doubtful accounts of $38 in
1998, $42 in 1997 and $5 in 1996.......................................... 939 842 972
Inventory................................................................... 163 37 143
Other current assets........................................................ 19 18 20
------------- --------- ---------
Total current assets...................................................... 1,149 910 1,152
------------- --------- ---------
Property and equipment:
Land and land improvements.................................................. 295 295 209
Buildings and leasehold improvements........................................ 109 106 431
Equipment and furnishings................................................... 235 252 236
Cellular equipment.......................................................... 5,017 5,008 7,095
------------- --------- ---------
5,656 5,661 7,971
Less accumulated depreciation and amortization.............................. 723 184 2,983
------------- --------- ---------
Net property and equipment................................................ 4,933 5,477 4,988
Licenses and other intangibles, less accumulated amortization of $835 in 1998,
$30, in 1997 and $11 in 1996................................................ 43,407 44,212 5
------------- --------- ---------
$ 49,489 $ 50,599 $ 6,145
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits............................................... $ 23 $ 50 $ 49
Other accrued expenses...................................................... 178 60 206
Deferred revenue............................................................ 199 152 160
Customer deposits........................................................... 52 25 25
------------- --------- ---------
Total current liabilities................................................. 452 287 440
Deferred income taxes......................................................... 14,583 14,863 --
Advances from affiliates...................................................... (5,757) (1,905) 178
Minority interest............................................................. 542 517 55
------------- --------- ---------
Total liabilities......................................................... 9,820 13,762 673
Commitments and contingencies.................................................
Partners' equity.............................................................. 39,669 36,837 5,472
------------- --------- ---------
$ 49,489 $ 50,599 $ 6,145
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-148
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Service revenue............................................... $ 7,227 $ 5,818 $ 7,650 $ 6,770 $ 5,342
Equipment sales and installation.............................. 585 287 403 441 410
--------- --------- --------- --------- ---------
Total revenue............................................. 7,812 6,105 8,053 7,211 5,752
--------- --------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct....................... 1,101 943 1,258 1,392 1,407
Cost of equipment............................................. 917 592 807 916 822
Sales and marketing........................................... 613 392 543 425 396
General and administrative.................................... 1,506 1,557 2,100 2,052 1,600
Depreciation and amortization................................. 1,368 509 994 607 453
--------- --------- --------- --------- ---------
Total operating expenses.................................. 5,505 3,993 5,702 5,392 4,678
--------- --------- --------- --------- ---------
Operating income.......................................... 2,307 2,112 2,351 1,819 1,074
--------- --------- --------- --------- ---------
Other expense:
Interest income (expense)..................................... 271 50 97 (66) (102)
Loss on sale of property and equipment........................ -- -- -- -- (327)
--------- --------- --------- --------- ---------
Total other income (expense).............................. 271 50 97 (66) (429)
--------- --------- --------- --------- ---------
Minority interest............................................... (26) (21) (24) (17) (6)
--------- --------- --------- --------- ---------
Net income before taxes................................... 2,552 2,141 2,424 1,736 639
Tax benefit..................................................... 280 -- 93 -- --
--------- --------- --------- --------- ---------
Net income................................................ $ 2,832 $ 2,141 $ 2,517 $ 1,736 $ 639
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
STATEMENT OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
---------
<S> <C>
Balance at December 31, 1994....................................................... $ 3,097
Net income......................................................................... 639
---------
Balance at December 31, 1995....................................................... 3,736
Net income......................................................................... 1,736
---------
Balance at December 31, 1996....................................................... 5,472
Net income......................................................................... 2,517
'Push-down" of Price Communication Wireless Inc.'s acquisition price............... 28,848
---------
Balance at December 31, 1997....................................................... 36,837
Net income......................................................................... 2,832
---------
Balance at September 30, 1998 (Unaudited).......................................... $ 39,669
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-149
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 2,832 $ 2,141 $ 2,517 $ 1,736 $ 639
--------- --------- --------- ---------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,368 509 994 607 453
Minority interest share of income...................... 26 21 24 17 6
Loss on sale of property and equipment................. -- -- -- -- 327
(Increase) decrease in trade accounts receivable....... (98) 96 131 (73) (326)
(Increase) decrease in inventory....................... (126) 74 106 (11) 119
(Increase) decrease in other current assets............ (2) (13) 2 16 (16)
Increase (decrease) in accrued expenses................ 92 (40) (146) (189) 324
(Decrease) increase in accrued interest due to
affiliates........................................... -- -- -- (102) 102
Increase (decrease) in deferred revenue................ 46 2 (8) 13 49
Decrease in deferred income taxes...................... (280) -- (93) -- --
Increase (decrease) in customer deposits............... 27 5 -- 7 (3)
--------- --------- --------- ---------- ---------
Total adjustments.................................... 1,053 654 1,010 285 1,035
--------- --------- --------- ---------- ---------
Net cash provided by operating activities............ 3,885 2,795 3,527 2,021 1,674
--------- --------- --------- ---------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment........... -- -- -- -- 31
Purchases of property and equipment.................... (15) (986) (1,182) (871) (2,125)
Purchase of other intangibles.......................... (3) (17) (266) (3) --
--------- --------- --------- ---------- ---------
Net cash used in investing activities................ (18) (1,003) (1,448) (874) (2,094)
--------- --------- --------- ---------- ---------
Cash flows from financing activities:
Advances (to) from affiliates, net....................... (3,852) (1,784) (2,083) (1,176) 443
--------- --------- --------- ---------- ---------
Net increase (decrease) in cash...................... 15 8 (4) (29) 23
Cash at beginning of year.................................. 13 17 17 46 23
--------- --------- --------- ---------- ---------
Cash at end of period...................................... $ 28 $ 25 $ 13 $ 17 $ 46
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest................. $ -- $ 253 $ 254 $ 169 $ --
--------- --------- --------- ---------- ---------
--------- --------- --------- ---------- ---------
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
During 1995, the Partnership transferred certain property and equipment with
a depreciated cost of $13 to a related party by decreasing the advances from
Palmer Wireless, Inc. and affiliates. No gain or loss was recognized on the
transfer.
See accompanying notes to consolidated financial statements.
F-150
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
Panhandle Cellular Partnership. (the "Partnership") was formed on January 1,
1987, to construct and operate non-wireline cellular telephone systems in the
Panama City, Florida, Metropolitan Statistical Area. The Partnership is the
99.01% partner of Panama City Cellular Telephone Co., Ltd. which was formed on
April 1, 1988 and whose financial statements are included elsewhere in this
document. On July 25, 1991, Palmer Cellular Partnership ("PCP"), a subsidiary of
Palmer Communications Incorporated ("Palmer"), acquired an interest in the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for 100
percent of the partnership interests of PCP. Palmer owns a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
financial statements and notes to financial statements include the activity of
PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which has a 78.41% ownership interest. Holdings,
which was formed in January, 1994, is 100% owned by PCW.
The Partnership's subsidiary is the 100% owner of Price Communications
Wireless IX, Inc., the license holder for the Panama City MSA.
BASIS OF PRESENTATION
PWI owned approximately 77.7% of the Partnership at December 31, 1996. The
accompanying 1995 and 1996 financial statements have been prepared on the basis
of historical cost. The assets of the Partnership were not revalued in
connection with the acquisition by PCP or the subsequent transfer to PWI.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $44.2 million, which are being amortized over a period
of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the
F-151
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred. Property and equipment are stated
at cost. Depreciation is provided principally using the straight-line method
over the estimated useful lives ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangible assets consist primarily of subscriber lists, which are
being amortized using the straight-line method over 10 years.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
F-152
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPERATING EXPENSES--ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
INCOME TAXES
The Consolidated Financial Statements prior to the adjustment of the value
of the licenses made no provision for income taxes, as income or losses of the
Partnership are to be included in the income tax returns of the individual
partners. Such income or losses are proportionately allocated to the partners
based upon their ownership interests. At September 30, 1998 and December 31,
1997, the Consolidated Balance Sheets include a net deferred tax liability as a
result of the difference between the tax and book basis of the license as a
result of the valuation on October 7, 1997. This difference is being amortized
over a 40 year period and accordingly the Consolidated Statements of Operations
reflect a tax credit for the appropriate periods.
2) PARTNERS' EQUITY
In accordance with the Partnership agreement, the partners' proportionate
share in cash distributions from current operations and net income or loss is
calculated by dividing the partners' capital contribution by total partners'
capital contributions.
The allocation of gain or loss to the partners arising from the sale of
property will be in the same proportion as their share of net income or net loss
of the Partnership.
3) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities various items. Among
these are the following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Partnership. The agreement provides for a monthly management
fee based upon 5 percent of revenues. The agreement also provides for
reimbursement of out-of-pocket costs. Certain property and equipment
acquisitions and expenses related to the operations of the system have been
allocated to the Partnership as out-of-pocket costs. Property and equipment
acquisitions are allocated based on specific identification. Operating expenses
are allocated to the Partnership based on the parent's estimate of its time
spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of
F-153
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3) RELATED PARTY TRANSACTIONS (CONTINUED)
incollect roaming related to these arrangements, is included in engineering,
technical and other direct operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other requirements. The Partnership participates in
this plan and was allocated 401(k) retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Management Fee............................................................ $ 391 $ 305 $ 403 $ 361 $ 288
Operating Expenses........................................................ 559 594 761 853 485
Switching Service......................................................... 123 113 151 133 196
Billing Service........................................................... 246 225 301 265 194
Roaming Revenue........................................................... 283 158 189 125 137
Roaming Cost.............................................................. 97 64 93 41 55
401(k) Match.............................................................. 9 8 11 18 14
Interest expense (income)................................................. (269) (50) (96) 67 102
</TABLE>
4) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Partnership is involved in
various claims and legal actions arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Partnership's Consolidated Financial
Statements.
5) LEASES ($ IN THOUSANDS)
The Partnership, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. One of these leases is with a related party.
Rent expense under these noncancelable leases amounted to $106 for the nine
month periods ended September 30, 1998 and 1997 and $140, $142 and $126 for the
years ended December 31,
F-154
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5) LEASES ($ IN THOUSANDS) (CONTINUED)
1997, 1996 and 1995, respectively, of which $14 and $13 in 1996 and 1995,
respectively, were paid to a related party.
At December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
<TABLE>
<CAPTION>
RELATED
PARTY OTHER
----------- -----------
<S> <C> <C>
Year ending December 31:
1998....................................................................... $ 15 $ 110
1999....................................................................... -- 62
2000....................................................................... -- 28
2001....................................................................... -- 20
2002....................................................................... -- 13
--- -----
$ 15 $ 233
--- -----
--- -----
</TABLE>
F-155
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Savannah Cellular Limited Partnership:
We have audited the accompanying consolidated balance sheet of Savannah
Cellular Limited Partnership (a Delaware Limited Partnership) as of December 31,
1997, and the related consolidated statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Savannah Cellular Limited
Partnership as of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-156
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Savannah Cellular Limited Partnership:
We have audited the accompanying consolidated balance sheet of Savannah
Cellular Limited Partnership (a Delaware Limited Partnership) as of December 31,
1996 and the related consolidated statements of operations, partners' equity and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Savannah
Cellular Limited Partnership (a Delaware Limited Partnership) as of December 31,
1996, and the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-157
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEET
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash....................................................................... $ (17) $ 24 $ 48
Trade accounts receivable, less allowance for doubtful accounts of $223 in
1998, $265 in 1997 and $349 in 1996...................................... 1,853 950 872
Inventory.................................................................. 377 91 252
Other current assets....................................................... 42 35 26
------------- --------- ---------
Total current assets..................................................... 2,255 1,100 1,198
------------- --------- ---------
Property and equipment:
Land and land improvements................................................. 716 704 759
Buildings and leasehold improvements....................................... 975 812 479
Equipment and furnishings.................................................. 278 240 245
Cellular equipment......................................................... 10,376 10,265 11,794
------------- --------- ---------
12,345 12,021 13,277
Less accumulated depreciation and amortization............................. 2,097 1,036 5,119
------------- --------- ---------
Net property and equipment............................................... 10,248 10,985 8,158
------------- --------- ---------
Licenses and other intangibles, less accumulated amortization of $2,043 in
1998, $536 in 1997 and $1,412 in 1996...................................... 76,909 78,416 51,330
------------- --------- ---------
$ 89,412 $ 90,501 $ 60,686
------------- --------- ---------
------------- --------- ---------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accrued salaries and benefits.............................................. $ 63 $ 135 $ 77
Other accrued expenses..................................................... 235 95 298
Deferred revenue........................................................... 373 184 165
Customer deposits.......................................................... 46 59 64
------------- --------- ---------
Total current liabilities................................................ 717 473 604
Deferred income taxes........................................................ 26,023 26,523 --
Advances from affiliates..................................................... 2,252 6,742 8,256
------------- --------- ---------
Total liabilities........................................................ 28,992 33,738 8,860
Commitments and contingencies................................................
Partners' equity............................................................. 60,420 56,763 51,826
------------- --------- ---------
$ 89,412 $ 90,501 $ 60,686
------------- --------- ---------
------------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-158
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHIP
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------
1998 1997 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Service revenue..................................................... $ 13,012 $ 10,637 $ 14,264 $ 13,309
Equipment sales and installation.................................... 874 397 611 501
--------- --------- --------- ---------
Total revenue................................................... 13,886 11,034 14,875 13,810
--------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct............................. 2,550 2,095 2,854 2,909
Cost of equipment................................................... 1,503 1,195 1,623 1,211
Sales and marketing................................................. 1,701 848 1,238 1,118
General and administrative.......................................... 2,069 1,894 2,570 2,421
Depreciation and amortization....................................... 2,568 1,175 2,104 2,439
--------- --------- --------- ---------
Total operating expenses........................................ 10,391 7,207 10,389 10,098
--------- --------- --------- ---------
Operating income................................................ 3,495 3,827 4,486 3,712
Loss on sale of assets................................................ -- 10 10 --
Interest expense...................................................... 338 566 746 1,009
--------- --------- --------- ---------
Net income before taxes......................................... 3,157 3,251 3,730 2,703
Tax benefit........................................................... 500 -- 167 --
--------- --------- --------- ---------
Net income...................................................... $ 3,657 $ 3,251 $ 3,897 $ 2,703
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
STATEMENT OF PARTNERS' EQUITY
<TABLE>
<S> <C>
Balance at December 31, 1995....................................... $ 49,123
Net income......................................................... 2,703
---------
Balance at December 31, 1996....................................... 51,826
Net income......................................................... 3,897
"Push-down" of Price Communications Wireless, Inc.'s acquisition
price............................................................ 1,040
---------
Balance at December 31, 1997....................................... 56,763
Net income......................................................... 3,657
---------
Balance at September 30, 1998...................................... $ 60,420
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-159
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHSIP
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------
1998 1997 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................................... $ 3,657 $ 3,251 $ 3,897 $ 2,703
--------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 2,568 1,175 2,104 2,439
(Increase) decrease in trade accounts receivable....................... (903) (48) (78) 1,429
(Increase) decrease in inventory....................................... (286) 252 161 (156)
Increase in other current assets....................................... (7) (18) (9) (2)
Increase (decrease) in accrued expenses................................ 68 (177) (145) (319)
Increase in deferred revenue........................................... 189 19 19 109
Decrease in deterred income taxes...................................... (500) -- (167) --
Decrease in customer deposits.......................................... (14) (3) (4) (13)
--------- --------- --------- ---------
Total adjustments.................................................... 1,115 1,200 1,881 3,487
--------- --------- --------- ---------
Net cash provided by operating activities............................ 4,772 4,451 5,778 6,190
Cash flows from investing activities:
Purchases of property and equipment...................................... (322) (2,830) (4,288) (2,516)
Cash flows from financing activities:
Advances to affiliates, net.............................................. (4,491) (1,647) (1,514) (3,630)
--------- --------- --------- ---------
Net (decrease) increase in cash...................................... (41) (26) (24) 44
Cash at beginning of year.................................................. 24 48 48 4
--------- --------- --------- ---------
Cash at end of period...................................................... $ (17) $ 22 $ 24 $ 48
--------- --------- --------- ---------
--------- --------- --------- ---------
Supplemental disclosure of cash flow information--
Cash paid during the period for interest................................. $ 338 $ 566 $ 747 $ 1,009
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-160
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
Savannah Cellular Limited Partnership (the "Partnership") was formed on June
21, 1987, to construct and operate certain non-wireline cellular telephone
systems in Bryan, Chatham and Effingham counties, Georgia. On December 1, 1995,
Palmer Wireless Holdings, Inc. ("Holdings"), a subsidiary of Palmer Wireless,
Inc. ("PWI"), acquired Georgia Metronet, Inc., which owned 47.6226 percent of
the Partnership directly through its 100 percent ownership of the Savannah
General Partnership, the general partner of the Partnership. As such, Holdings
purchased 97.8816 percent of the Partnership's general and limited partnership
interests on December 1, 1995.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI entered
into a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW. The direct owner of the Partnership is Holdings which was formed in
January, 1994. PCW is the 100% owner of Holdings.
The partnership is the 100% owner of Price Communications Wireless VIII,
Inc., the license holder for the Savannah MSA.
BASIS OF PRESENTATION
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the partnership revalued its assets and liabilities
to reflect this allocation. The allocation of the purchase price resulted in
licenses of approximately $79.0 million, which are being amortized over a period
of 40 years. Prior to October 6, 1997, Holdings also utilized "push down
accounting".
The accompanying financial statements do not include the assets and
liabilities of the partners.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
F-161
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
The cost of additions and improvements are capitalized while maintenance and
repairs are charged to expense when incurred.
Property and equipment are stated at cost. Depreciation is provided
principally using the straight-line method over the estimated useful lives
ranging from 5 to 20 years.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period. Subsequent to the acquisition of the
license, the Partnership continually evaluates whether later events and
circumstances have occurred that indicate the remaining estimated useful life of
the license or licenses may warrant revision or that the remaining balance of
the license rights may not be recoverable. The Partnership utilizes projected
undiscounted cash flows over the remaining life of the license or licenses and
sales of comparable businesses to evaluate the recorded value of these licenses.
The assessment of the recoverability of the remaining balance of the license
rights will be impacted if projected cash flows are not achieved.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Partnership earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Partnership for usage of the
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES--ENGINEERING, TECHNICAL, AND OTHER DIRECT
Engineering, technical, and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
F-162
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAX
The Consolidated Financial Statements prior to the adjustment of the value
of the licenses made no provision for income taxes, as income and losses of the
Partnership are included in the income tax returns of the individual partners.
At September 30, 1998 and December 31, 1997, the Consolidated Balance Sheets
include a net deferred tax liability as a result of the difference between the
tax and book basis of the license as a result of the valuation on October 7,
1997. This difference is being amortized over a 40 year period and accordingly
the Consolidated Statements of Operations reflect a benefit for the appropriate
periods.
2) PARTNERS' EQUITY
In accordance with the Partnership agreement, for financial and tax
reporting purposes, the income or loss from operations of the Partnership will
be allocated to the partners in accordance with their respective ownership of
outstanding partnership units. However, to the extent any loss allocation
exceeds a partner's financial or tax reporting capital account, the loss will be
allocated among the remaining partners having the economic risk of loss. The
burden of economic risk corresponds to liabilities in which a partner has the
economic risk of loss. Net income will be allocated first to those partners that
were previously allocated losses.
The allocation of gain or loss to the partners arising from the sale of
property will be in the same proportion as they share net income or note loss of
the Partnership.
3) RELATED PARTY TRANSACTIONS
The Partnership has various agreements with its parent whereby the
Partnership is charged or can charge other related entities various items. Among
these are the following arrangements:
CONSULTING AGREEMENT with its parent for the management of the day-to-day
operations of the Company. The agreement provides for reimbursement of
out-of-pocket costs. Certain property and equipment acquisitions and expenses
related to the operations of the system have been allocated to the Partnership
as out-of-pocket costs. Property and equipment acquisitions are allocated based
on specific identification. Operating expenses are allocated to the Partnership
based on the parent's estimate of its time spent managing the Partnership.
REGIONALIZED SWITCHING SERVICE: These monthly charges are based on minutes
of use.
CENTRALIZED BILLING SERVICE: The monthly charges are based on the number of
bills printed.
RECIPROCAL ROAMING REVENUE AND COST: The Partnership enjoys favorable
reciprocal roaming arrangements with its affiliates. The revenue is included in
service revenue in the statements of operations. Cost of incollect roaming
related to these arrangements, is included in engineering, technical and other
direct operating expenses in the statements of operations.
401(K) MATCHING PROVISION: The Partnership's parent has a 401(k) plan with a
noncontributory retirement feature and a matching provision for employees who
meet length of service and other
F-163
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
3) RELATED PARTY TRANSACTIONS (CONTINUED)
requirements. The Partnership participates in this plan and was allocated 401(k)
retirement and matching expense.
INTEREST ON ADVANCES: The balance of the advances from PWI and PCW and
affiliates is a result of the allocation of property and equipment acquisitions,
operating expenses and accrued interest thereon. The advances accrue interest at
2 percent above the prime rate.
The Partnership's accounts payable and disbursement function are performed
by its parent. Under this centralized system, all payments are made by the
parent and all accounts payable are recorded by the parent.
The following table indicates the amounts included in the accompanying
statements of operations for the appropriate accounting periods ($ in
thousands):
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- --------------------
<S> <C> <C> <C> <C>
1998 1997 1997 1996
--------- --------- --------- ---------
Operating Expenses......................................................... $ 1,036 $ 1,049 $ 1,347 $ 1,346
Switching Service.......................................................... 229 182 249 173
Billing Service............................................................ 460 365 497 345
Roaming Revenue............................................................ 806 585 795 567
Roaming Cost............................................................... 854 533 749 339
401(k) Match............................................................... 12 10 14 25
Interest................................................................... 338 566 747 1,009
</TABLE>
4) COMMITMENTS AND CONTINGENCIES
The Partnership is listed as a guarantor for PCW's $525 million 9 1/8%
Series B Senior Secured Notes due 2006. All of PCW's direct or indirect
subsidiaries are also listed as guarantors. The Company is involved in various
claims and legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company's Consolidated Financial Statements.
5) LEASES ($ IN THOUSANDS)
The Partnership, as lessee, has various noncancelable leases for certain
cellular plant facilities, office facilities, and office equipment, all of which
are classified as operating leases. Rent expenses under these noncancelable
leases was $191 and $170 for the nine month periods ended September 30, 1998 and
1997 and $227 and $267 for the years ended December 31, 1997 and 1996. At
December 31, 1997, the approximate minimum rental commitments under
noncancelable operating leases were as follows:
F-164
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
5) LEASES ($ IN THOUSANDS) (CONTINUED)
Year ending December 31:
<TABLE>
<S> <C>
1998................................................................. $ 228
1999................................................................. 203
2000................................................................. 188
2001................................................................. 102
2002................................................................. 43
Thereafter........................................................... 8
---------
$ 772
---------
---------
</TABLE>
F-165
<PAGE>
CEI COMMUNICATIONS, INC.
BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
--------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investment in Macon Cellular Telephone Systems Limited Partnership................. $ 695 $ 573 $ 553
----- --------- ---------
----- --------- ---------
Commitments and contingencies......................................................
EQUITY
Common Stock, $1.00 par value, 150,000 shares authorized, 500 shares issued and
outstanding...................................................................... $ -- $ -- $ --
Retained earnings.................................................................. $ 695 $ 573 $ 553
----- --------- ---------
$ 695 $ 573 $ 553
----- --------- ---------
----- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-166
<PAGE>
CEI COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Partnership income from Macon Cellular Telephone Systems.................. $ 71 $ 51 $ 70 $ 66 $ 54
Limited Partnership...................................................
Retained earning beginning of year........................................ 624 573 503 437 383
--------- --------- --------- --------- ---------
Retained earnings end of period........................................... $ 695 $ 624 $ 573 $ 503 $ 437
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-167
<PAGE>
CEI COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income.................................................................. $ 71 $ 51 $ 70 $ 66 $ 54
Increase in investment account.............................................. (71) (51) (70) (66) (54)
--- --- --- --- ---
Increase in cash............................................................ $ 0 $ 0 $ 0 $ 0 $ 0
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
See accompanying notes to financial statements.
F-168
<PAGE>
CEI COMMUNICATIONS INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION CII Communications, Inc. (the "Company") has a 1.06%
partnership interest in Macon Cellular Telephone Systems Limited Partnership.
The Company is owned 100% by Palmer Wireless Holdings, Inc.
2) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for Price Communications Wireless,
Inc.'s $525 million 9 1/8% Series B Senior Secured Notes due 2006. Price
Communications Wireless Inc. ("PCW") is the parent of Palmer Wireless Holdings,
Inc. All of PCW's direct and indirect subsidiaries are also listed as
guarantors.
F-169
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------
1998 1997 1996
--------------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investment in Panama City Cellular Telephone Co. Inc............................... $ 128 $ 79 $ 54
----- --------- ---------
----- --------- ---------
Commitments and contingencies......................................................
EQUITY
Common stock, no par value: 100 shares authorized, issued and outstanding.......... $ -- $ -- $ --
Retained earnings.................................................................. 128 79 54
----- --------- ---------
$ 128 $ 79 $ 54
----- --------- ---------
----- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-170
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Partnership income from Panama City Cellular
Telephone Co. Ltd....................................................... $ 28 $ 21 $ 25 $ 17 $ 6
Retained earnings beginning of year....................................... 100 79 54 37 31
--------- --------- --------- --------- ---------
Retained earnings end of period........................................... $ 128 $ 100 $ 79 $ 54 $ 37
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-171
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income................................................................ $ 28 $ 21 $ 25 $ 17 $ 6
Increase in investment account............................................ (28) (21) (25) (17) (6)
--------- --------- --------- --------- ---------
Increase in cash.......................................................... $ 0 $ 0 $ 0 $ 0 $ 0
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-172
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION Panama City Communications, Inc. (the "Company") has
a .99% partnership interest in Panama City Cellular Telephone Co., Ltd. The
Company is owned 100% by Palmer Wireless Holdings, Inc.
2) COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for Price Communications Wireless
Inc.'s $525 million 9 1/8% Series B Senior Secured Notes due 2006. Price
Communications Wireless Inc. ("PCW") is the parent of Palmer Wireless Holdings,
Inc. All of PCW's direct and indirect subsidiaries are also listed as
guarantors.
F-173
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless II, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless II, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless II, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-174
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
BALANCE SHEETS
($ IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ ------------
<S> <C> <C>
ASSETS
Cellular license, net of accumulated amortization of $8,241 in 1998 and $2,060
in 1997....................................................................... $ 321,420 $ 327,601
-------- ------------
-------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes.................................................................. $ 108,655 $ 110,745
Commitments and contingencies...................................................
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized, 1,000 shares; issued and
outstanding 100 shares........................................................ -- --
Paid-in capital................................................................. 218,219 218,219
(Accumulated deficit)........................................................... (5,454) (1,363)
-------- ------------
Total stockholder's equity...................................................... 212,765 216,856
-------- ------------
Total liabilities and stockholder's equity...................................... $ 321,420 $ 327,601
-------- ------------
-------- ------------
</TABLE>
See accompanying notes to financial statements.
F-175
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ ---------------
<S> <C> <C>
Amortization of cellular license............................................. $ 6,181 $ 2,060
Tax benefit.................................................................. 2,090 697
------- -------
Net (loss)................................................................... $ (4,091) $ (1,363)
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
F-176
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ ---------------
<S> <C> <C>
Net (loss)................................................................... $ (4,091) $ (1,363)
Amortization of cellular license............................................. 6,181 2,060
Decrease in deferred tax liability........................................... (2,090) (697)
------- -------
Net change in cash........................................................... $ 0 $ 0
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
F-177
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997,
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless II, Inc. ("Wireless II") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Palmer Wireless Holdings Inc. which in turn is 100% owned by
its parent Price Communications Wireless Inc. ("PCW"). The Company owns the
non-wireline licenses of the AL-5 RSA, AL-8 RSA, GA-7 RSA, GA-8 RSA, GA-9 RSA,
GA-10 RSA, GA-12 RSA, Augusta Georgia MSA and the interim operating authority
for SC-7 RSA.
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting." On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
is 100% owned by PCW and accordingly the value of the license allocated to it
was contributed to Wireless II.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company, recognizes a deferred tax
liability as it relates to the difference between financial statement and income
tax basis of the licenses. The Company recognizes a deferred tax benefit for the
turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-178
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless III, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless III (a Delaware corporation) as of December 31, 1997, and the related
statements of operations and cash flows for the period October 7, 1997 to
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless III, Inc. as of December 31, 1997 and the results of its operations and
its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-179
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
BALANCE SHEETS
($ IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cellular license, net of accumulated amortization of $1,261 in 1998 and $315 in
1997.............................................................................. $ 49,178 $ 50,124
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 16,624 $ 16,944
Commitments and contingencies.......................................................
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares............................................................ -- --
Paid-in capital..................................................................... 33,388 33,388
(Accumulated deficit)............................................................... (834) (208)
------------- ------------
Total stockholder's equity.......................................................... 32,554 33,180
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 49,178 $ 50,124
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-180
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 946 $ 315
Tax benefit.................................................................. 320 107
------- -----
Net (loss)................................................................... $ (626) $ (208)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-181
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (626) $ (208)
Amortization of cellular license............................................. 946 315
Decrease in deferred tax liability........................................... (320) (107)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-182
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997,
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless III, Inc. ("Wireless III") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Dothan Cellular Telephone Co. Inc. ("Dothan"). Dothan in
turn is 100% owned by Cellular Systems of Southeast Alabama, Inc. ("Cellular
Systems"). Palmer Wireless Holdings, Inc.("Holdings") has a 94.6% ownership
interest in Cellular Systems. Holdings is 100% owned by Price Communications
Wireless, Inc. ("PCW"). The Company owns the non-wireline license of Dothan
(Dothan MSA), the operating entity.
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless III.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-183
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless IV, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless IV, Inc. (a Delaware corporation) as of December 31, 1997 and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless IV as of December 31, 1997, and the results of its operations and its
cash flows for the period October 7, 1997 to December 31, 1997, in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-184
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
BALANCE SHEETS
($ IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cellular license, net of accumulated amortization of $2,835 in 1998 and $709 in
1997.............................................................................. $ 110,540 $ 112,666
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 37,367 $ 38,086
Commitments and contingencies.......................................................
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares............................................................ -- --
Paid-in capital..................................................................... 75,049 75,049
(Accumulated deficit)............................................................... (1,876) (469)
------------- ------------
Total stockholder's equity.......................................................... 73,173 74,580
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 110,540 $ 112,666
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-185
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 2,126 $ 709
Tax benefit.................................................................. 719 240
------- -----
Net (loss)................................................................... $ (1,407) $ (469)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-186
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (1,407) $ (469)
Amortization of cellular license............................................. 2,126 709
Decrease in deferred tax liability........................................... (719) (240)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-187
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless IV, Inc. ("Wireless IV") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Montgomery Cellular Telephone Co. Inc. ("Montgomery").
Montgomery in turn is 100% owned by its parent, Montgomery Cellular Holding Co.
Inc. ("Montgomery Holdings"), the operating entity. Palmer Wireless Holdings,
Inc. has a 92.8% ownership interest in Montgomery Holdings. Palmer Wireless
Holdings, Inc. is 100% owned by Price Communications Wireless, Inc.,("PCW"). The
Company owns the non-wireline license of Montgomery Holdings (Montgomery MSA).
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless IV.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-188
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications V, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless V, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless V, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-189
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS
Cellular license, net of accumulated amortization of $1,957 in 1998 and $489 in
1997.............................................................................. $ 76,345 $ 77,813
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 25,809 $ 26,305
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares
Paid-in capital..................................................................... 51,832 51,832
(Accumulated deficit)............................................................... (1,296) (324)
------------- ------------
Total stockholder's equity.......................................................... 50,536 51,508
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 76,345 $ 77,813
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-190
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 1,468 $ 489
Tax benefit.................................................................. 496 165
------- -----
Net (loss)................................................................... $ (972) $ (324)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-191
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (972) $ (324)
Amortization of cellular license............................................. 1,468 489
Decrease in deferred tax liability........................................... (496) (165)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-192
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless V, Inc. ("Wireless V") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Cellular Dynamics Telephone Company of Georgia ("Cellular
Dynamics"). Cellular Dynamics in turn is 100% owned by its parent Albany
Cellular Partners ("Albany"), the operating entity. Palmer Wireless Holdings,
Inc.("Holdings"), has an 86.5% ownership interest in Albany. Holdings is 100%
owned by Price Communications Wireless, Inc.("PCW"). The Company owns the
non-wireline license of Albany (Albany MSA and GA-13 RSA).
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless V.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-193
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless VI, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless VI, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless VI Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-194
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cellular license, net of accumulated amortization of $2,288 in 1998 and $572 in
1997.............................................................................. $ 89,217 $ 90,933
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 30,160 $ 30,740
Commitments and contingencies.......................................................
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares
Paid-in capital..................................................................... 60,572 60,572
(Accumulated deficit)............................................................... (1,515) (379)
------------- ------------
Total stockholder's equity.......................................................... 59,057 60,193
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 89,217 $ 90,933
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-195
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 1,716 $ 572
Tax benefit.................................................................. 580 193
------- -----
Net (loss)................................................................... $ (1,136) $ (379)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-196
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (1,136) $ (379)
Amortization of cellular license............................................. 1,716 572
Decrease in deferred tax liability........................................... (580) (193)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-197
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless VI, Inc. ("Wireless VI") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Columbus Cellular Telephone Company ("Columbus Cellular").
Palmer Wireless Holdings, Inc. ("Holdings") has an 85.2% ownership interest in
Columbus Cellular Holdings and is 100% owned by Price Communications Wireless,
Inc. ("PCW"). The Company owns the non-wireline licenses of Columbus Cellular
(Columbus MSA and the GA-6 A2 RSA.
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless VI.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-198
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless VII, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless VII, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless VII, Inc. as of December 31, 1997, and the results of its operations
and its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-199
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS
Cellular license, net of accumulated amortization of $3,467 in 1998 and $867 in
1997.............................................................................. $ 135,188 $ 137,788
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 45,700 $ 46,579
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares
Paid-in capital..................................................................... 91,783 91,783
(Accumulated deficit)............................................................... (2,295) (574)
------------- ------------
Total stockholder's equity.......................................................... 89,488 91,209
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 135,188 $ 137,788
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-200
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 2,600 $ 867
Tax benefit.................................................................. 879 293
------- -----
Net (loss)................................................................... $ (1,721) $ (574)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-201
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (1,721) $ (574)
Amortization of cellular license............................................. 2,600 867
Decrease in deferred tax liability........................................... (879) (293)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-202
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless VII, Inc. ("Wireless VII") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Macon Cellular Telephone Systems Limited Partnership
("Macon"). C.E.I. Communications Inc. ("CEI") is the general partner of Macon
and holds a 1.06% ownership interest in Macon. Palmer Wireless Holdings, Inc.
("Holdings") is the 100% owner of CEI and has a 99.2% ownership interest in
Macon when combined with its ownership of CEI. Holdings is 100% owned by Price
Communications Wireless, Inc. ("PCW"). The Company owns the non-wireline
licenses of Macon (Macon MSA and the GA-6 A1 RSA.
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the licenses allocated to it by PCW to Wireless VII.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-203
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless VIII, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless VIII, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Price Communications
Wireless VIII, Inc. as of December 31, 1997, and the results of its operations
and its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-204
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cellular license, net of accumulated amortization of $1,973 in 1998 and $493 in
1997.............................................................................. $ 76,979 $ 78,459
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 26,023 $ 26,523
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares; issued and
outstanding 100 shares
Paid-in capital..................................................................... 52,262 52,262
(Accumulated deficit)............................................................... (1,306) (326)
------------- ------------
Total stockholder's equity.......................................................... 50,956 51,936
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 76,979 $ 78,459
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-205
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 1,480 $ 493
Tax benefit.................................................................. 500 167
------- -----
Net (loss)................................................................... $ (980) $ (326)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-206
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (980) $ (326)
Amortization of cellular license............................................. 1,480 493
Decrease in deferred tax liability........................................... (500) (167)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-207
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless VIII, Inc. ("Wireless VIII") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Savannah Cellular Limited Partnership ("Savannah").
Palmer Wireless Holdings, Inc. ("Holdings") has a 98.5% ownership interest in
Savannah. Holdings is 100% owned by Price Communications Wireless, Inc. ("PCW").
The Company owns the non-wireline license of Savannah (Savannah MSA).
FINANCIAL STATEMENT BASIS
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless VIII.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-208
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Price Communications Wireless IX, Inc.:
We have audited the accompanying balance sheet of Price Communications
Wireless IX, Inc. (a Delaware corporation) as of December 31, 1997, and the
related statements of operations and cash flows for the period October 7, 1997
to December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly,
in all material respects, the financial position of Price Communications
Wireless IX, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period October 7, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 25, 1998
F-209
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS
Cellular license, net of accumulated amortization of $1,107 in 1998 and $277 in
1997.............................................................................. $ 43,135 $ 43,965
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred taxes...................................................................... $ 14,583 $ 14,863
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized 1,000 shares, issued and
outstanding 100 shares
Paid-in capital..................................................................... 29,286 29,286
(Accumulated deficit)............................................................... (734) (184)
------------- ------------
Total stockholder's equity.......................................................... 28,552 29,102
------------- ------------
Total liabilities and stockholder's equity.......................................... $ 43,135 $ 43,965
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-210
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Amortization of cellular license............................................. $ 830 $ 277
Tax benefit.................................................................. 280 93
------- -----
Net (loss)................................................................... $ (550) $ (184)
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-211
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
(UNAUDITED) OCTOBER 7, 1997
NINE MONTHS THROUGH
ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------ -----------------
<S> <C> <C>
Net (loss)................................................................... $ (550) $ (184)
Amortization of cellular license............................................. 830 277
Decrease in deferred tax liability........................................... (280) (93)
------- -----
Net change in cash........................................................... $ 0 $ 0
------- -----
------- -----
</TABLE>
See accompanying notes to financial statements.
F-212
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998
YEAR ENDED DECEMBER 31, 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATION OPERATIONS
Price Communications Wireless IX, Inc. ("Wireless IX") ("Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Panama Cellular Telephone Company, Ltd. ("Panama City"), the
operating entity. Panama City in turn is owned by Panhandle Cellular Partnership
("PCP"), and by Panama City Communications, Inc. ("PCCI"), which owns .99% of
Panama City and which is 100% owned by Palmer Wireless Holdings,
Inc.("Holdings"). Through its ownership of PCP and PCCI, Palmer Wireless
Holdings, Inc. has a 78.4% ownership interest in Panama City. Holdings is 100%
owned by Price Communications Wireless, Inc. ("PCW"). The Company owns the
non-wireline license of Panama City(Panama City MSA).
FINANCIAL STATEMENT BASIS
On May 23, 1997, Price Communications Wireless, Inc. ("PCW"), the parent of
Palmer Wireless Holdings, Inc. and Palmer Wireless, Inc. ("PWI") entered into a
plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 6, 1997 to reflect the price paid by Price Communications Corporation
to acquire 100% of Palmer's common stock, a process generally referred to as
"push down accounting". On October 6, 1997, PCW allocated the purchase price to
each of the markets purchased and the various operating entities revalued their
assets and liabilities to reflect this allocation. Palmer Wireless Holdings Inc.
contributed the value of the license allocated to it by PCW to Wireless IX.
LICENSES
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
DEFERRED INCOME TAXES
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
COMMITMENTS AND CONTINGENCIES
The Company is listed as a guarantor for PCW's $525 million 9 1/8% Series B
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
F-213
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
OFFERING MEMORANDUM, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. NEITHER THE DELIVERY
OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS OFFERING MEMORANDUM DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH, SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.............................. 1
Risk Factors.................................... 11
The Palmer Acquisition.......................... 18
Use of Proceeds................................. 19
Capitalization..................................
Unaudited Pro Forma Condensed Consolidated
Financial Statements.......................... 20
Selected Consolidated Financial Data............ 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 27
The Exchange Offer.............................. 37
Business of the Company......................... 42
Management...................................... 57
Principal Stockholder........................... 61
Description of the 11 3/4% PCW Notes............ 62
Description of the Holdings PIK Notes........... 63
Description of Notes............................ 64
United States Federal Income Tax Consequences of
the Exchange Offer............................ 97
Plan of Distribution............................ 97
Legal Matters................................... 97
Independent Accountants......................... 97
Available Information........................... 98
Certain Terms................................... 98
Index to Financial Statements................... F-1
</TABLE>
$525,000,000
PRICE COMMUNICATIONS
WIRELESS, INC.
9 1/8% SERIES B SENIOR
SECURED NOTES DUE 2006
--------------
PROSPECTUS
--------------
DECEMBER , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
<TABLE>
<CAPTION>
Securities and Exchange Commission Registration Fee........... $154,875.00*
<S> <C>
Printing and Engraving Expenses............................... $100,000.00
Legal Fees and Expenses....................................... $100,000.00
Accounting Fees and Expenses.................................. $100,000.00
Miscellaneous................................................. $ 125.00
----------
Total......................................................... $455,000.00
----------
----------
</TABLE>
* Previously filed
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for the unlawful payment
of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit.
Section 145 of the DGCL empowers the Company to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought before or threatened by reason of the fact that the person
was a director, officer, employee or agent of such company, or is or was serving
as such with respect to another entity at the request of such company. The DGCL
also provides that the Company may purchase insurance on behalf of any such
director, officer, employee or agent.
The Certificate of Incorporation and By-laws of PCW exonerate directors of
PCW from personal liability to PCW and their respective stockholders, for
monetary damages for breach of the fiduciary duty of care as a director, but it
does not eliminate or limit liability for any breach of the directors' duty of
loyalty for acts or omissions not in good faith or which involve intentional
misconduct or knowing violations of law, for any improper declaration of
dividends or for any transaction from which the directors derived an improper
personal benefit. The Certificate of Incorporation does not eliminate a
stockholder's right to seek nonmonetary, equitable remedies, such as an
injunction or rescission, to redress an action taken by the directors. However,
as a practical matter, equitable remedies may not be available in all
situations, and there may be instances in which no effective remedy is
available.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On June 9, 1998, the Company issued notes consisting of $525 million
principal amount at maturity of 9 1/8% Senior Secured Notes due 2006 in an
unregistered offering in reliance on Section 4(2) of the Securities Act of 1933,
as amended. These notes are the object of this registered exchange offer for
registered, but otherwise identical, notes.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (see index to exhibits at E-1)
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER
AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
/s/ ROBERT PRICE Executive Officer and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Executive Officer)
Chief Financial Officer
* (Principal Financial
- ------------------------------ Officer and Accounting December 22, 1998
Jeffrey L. Green Officer)
</TABLE>
<TABLE>
<S> <C> <C>
By: /s/ ROBERT PRICE Attorney-in-fact
---------------------------------------
Robert Price
</TABLE>
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PANAMA CITY COMMUNICATIONS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PANAMA CITY CELLULAR TELEPHONE COMPANY LTD.
By: Panama City Communications, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PANHANDLE CELLULAR PARTNERSHIP
By: Palmer Wireless Holdlings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
CEI COMMUNICATIONS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
MACON CELLULAR TELEPHONE SYSTEMS, L.P.
By: CEI Communications, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
COLUMBUS CELLULAR TELEPHONE COMPANY
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
ALBANY CELLULAR PARTNERS
By: Palmer Wireless Holdings, Inc.,
its managing partner
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
MONTGOMERY CELLULAR HOLDING CO., INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
/s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PALMER WIRELESS HOLDINGS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS II, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS III, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS IV, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS V, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VI, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VII, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on this Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, New York, on December 22nd, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS WIRELESS IX, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER, ASSISTANT SECRETARY AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Director, President, Chief
Executive Officer,
/s/ ROBERT PRICE Assistant Secretary and
- ------------------------------ Treasurer (Principal December 22, 1998
Robert Price Financial Officer and
Principal Executive
Officer)
/s/ KIM I. PRESSMAN Vice-President, Secretary
- ------------------------------ and Assistant Treasurer December 22, 1998
Kim I. Pressman (Accounting Officer)
</TABLE>
II-25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
1.1 # Purchase Agreement
2.1 The Merger Agreement+
3.1 Certificate of Incorporation, as restated, of PCW (formerly Palmer Wireless, Inc.)
3.2 By-laws of PCW
3.3 Articles of Incorporation, as amended, of Panama City Communications, Inc. (formerly Milky
Way Communications, Inc.)
3.4 Bylaws of Panama City Communications, Inc. (formerly Milky Way Communications, Inc.)
3.5 Certificate of Limited Partnership, as amended, of Panama City Cellular Telephone Company,
Ltd. (formerly Cellular One of Panama City, Florida, Limited)
3.6 Limited Partnership Agreement of Panama City Cellular Telephone Company, Ltd. (formerly
Cellular One of Panama City, Florida, Limited)
3.7 Partnership Agreement of Panhandle Cellular Partnership
3.8 Certificate of Limited Partnership, as amended, of Savannah Cellular Limited Partnership
3.9 Limited Partnership Agreement, as amended, of Savannah Cellular Limited Partnership
3.10 Certificate of Incorporation of CEI Communications, Inc. (formerly Chin Enterprises, Inc.)
3.11 Bylaws of CEI Communications, Inc.
3.12 Agreement and Certificate of Limited Partnership, as amended, of Macon Cellular Telephone
Systems, L.P. (formerly Portsmouth Cellular Limited Partnership)
3.14 Partnership Agreement of Columbus Cellular Telephone Company
3.15 General Partnership Agreement, as amended and restated, of Albany Cellular Partners
3.16 Articles of Incorporation, as amended, of Cellular Dynamics Telephone Company of Georgia
(formerly Cellcom Telephone Company of Georgia)
3.17 Bylaws of Cellular Dynamics Telephone Company of Georgia (formerly Cellcom Telephone Company
of Georgia)
3.18 Certificate of Incorporation of Montgomery Cellular Holding Co., Inc.
3.19 Bylaws of Montgomery Cellular Holding Co., Inc.
3.20 Certificate of Incorporation of Montgomery Cellular Telephone Company, Inc.
3.21 Bylaws of Montgomery Cellular Telephone Company, Inc.
3.22 Certificate of Incorporation of Cellular Systems of Southeast Alabama, Inc.
3.23 Bylaws of Cellular Systems of Southeast Alabama, Inc.
3.24 Articles of Incorporation, as amended, of Dothan Cellular Telephone Company, Inc. (formerly
Cellular One of Southeast Alabama, Inc. and Cosa II, Inc.)
3.25 Bylaws of Dothan Cellular Telephone Company, Inc. (formerly Cellular One of Southeast
Alabama, Inc.)
3.26 Certificate of Incorporation, as restated, of Palmer Wireless Holdings, Inc.
3.27 Bylaws of Palmer Wireless Holdings, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
3.28 Certificate of Incorporation of Price Communications Wireless II, Inc.
3.29 Bylaws of Price Communications Wireless II, Inc.
3.30 Certificate of Incorporation of Price Communications Wireless III, Inc.
3.31 Bylaws of Price Communications Wireless III, Inc.
3.32 Certificate of Incorporation of Price Communications Wireless IV, Inc.
3.33 Bylaws of Price Communications Wireless IV, Inc.
3.34 Certificate of Incorporation of Price Communications Wireless V, Inc.
3.35 Bylaws of Price Communications Wireless V, Inc.
3.36 Certificate of Incorporation of Price Communications Wireless VI, Inc.
3.37 Bylaws of Price Communications Wireless VI, Inc.
3.38 Certificate of Incorporation of Price Communications Wireless VII, Inc.
3.39 Bylaws of Price Communications Wireless VII, Inc.
3.40 Certificate of Incorporation of Price Communications Wireless VIII, Inc.
3.41 Bylaws of Price Communications Wireless VIII, Inc.
3.42 Certificate of Incorporation of Price Communications Wireless IX, Inc.
3.43 Bylaws of Price Communications Wireless IX, Inc.
4.1 Indenture to 9 1/8% Senior Secured Notes due 2006 among PCW, each of the Guarantors and Bank
of Montreal Trust Company, as Trustee (including form of note)
4.2 Indenture to 11 3/4% Senior Subordinated Notes due 2007 between PCW and Bank of Montreal
Trust Company, as Trustee (including form of note)+
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the Notes
5.2 ++ Opinion of Patrick Meehan relating to the validity of Guarantees
10.1 Fort Myers Sale Agreement*
10.2 Georgia Sale Agreement*
10.3 Wisehart Employment Agreement*
10.4 Meehan Employment Agreement*
10.5 Green Employment Agreement+
10.6 Ryan Employment Agreement+
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
21.1 # Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP relating to the financial statements of Palmer
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Davis Polk & Wardwell (see exhibit 5.1)
24.1 # Power of Attorney for the Company
24.2 # Power of Attorney for Panama City Communications, Inc.
24.3 # Power of Attorney for Panama City Cellular Telephone Company, Ltd.
24.4 # Power of Attorney for Panhandle Cellular Partnership
24.5 # Power of Attorney for Savannah Cellular Limited Partnership
24.6 # Power of Attorney for CEI Communications, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
24.7 # Power of Attorney for Macon Cellular Telephone Systems, L.P.
24.8 # Power of Attorney for Columbus Celular Telephone Company
24.9 # Power of Attorney for Albany Cellular Partners
24.10# Power of Attorney for Cellular Dynamics Telephone Company of Georgia
24.11# Power of Attorney for Montgomery Cellular Holding Co., Inc.
24.12# Power of Attorney for Montgomery Cellular Telephone Company, Inc.
24.13# Power of Attorney for Cellular Systems of Southeast Alabama, Inc.
24.14# Power of Attorney for Dothan Cellular Telephone Company, Inc.
24.15# Power of Attorney for Palmer Wireless Holdings, Inc.
24.16# Power of Attorney for Price Communications Wireless II, Inc.
24.17# Power of Attorney for Price Communications Wireless III, Inc.
24.18# Power of Attorney for Price Communications Wireless IV, Inc.
24.19# Power of Attorney for Price Communications Wireless V, Inc.
24.20# Power of Attorney for Price Communications Wireless VI, Inc.
24.21# Power of Attorney for Price Communications Wireless VII, Inc.
24.22# Power of Attorney for Price Communications Wireless VIII, Inc.
24.23# Power of Attorney for Price Communications Wireless IX, Inc.
25.1 Statement of Eligibility of Trustee with respect to the 9 1/8% Senior Secured Notes due 2006
of PCW
99.1 Form of Letter of Transmittal to 9 1/8% Senior Secured Notes due 2006 of the Company
99.2 Form of Notice of Guaranteed Delivery to 9 1/8% Senior Secured Notes due 2006 of the Company
99.3 Form of Instruction to Registered Holder and/or Book-Entry Transfer of Participant from Owner
of the Company
99.4 Form of Letter to Clients
99.5 Form of Letter to Registered Holders and Depository Trust Company
Participants
</TABLE>
- ------------------------
* Incorporated by reference to Registration No. 333-41227 filed by Price
Communications Cellular Holdings Inc. ("Holdings") with the Commission
+ Incorporated by reference to Registration No. 333-57363 filed by Holdings
and Price Communications Corporation with the Commission.
++ To be filed by Amendment.
+ Incorporated by reference to Registration No. 333-36253 filed by the Company
with the Commission.
# Previously filed.
<PAGE>
Exhibit A
RESTATED CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS, INC.
FIRST: The name of the Corporation is Price Communications Wireless,
Inc.
SECOND: The registerd office of the Corporation shall be located at
1013 Centre Road, Wilmington, Delaware 19805 in the County of New Castle. The
registered agent of the Corporation at such address shall be Corporation Service
Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law"). the Corporation shall have all power necessary or helpful to engage in
such acts and activities.
FOURTH: The total number of shares of common stock that the
Corporation shall have the authority to issue is 3,000 shares, of which 1,500
shall be classified as shares of Class A Common Stock, par value $0.01 per share
("Class A Common Stock") and 1,500 shall be classified as shares of Class B
Common Stock, par value $0.01 per share ("Class B Common Stock"). (The Class A
Common Stock and Class B Common Stock are sometimes referred to collectively as
the "Common Stock.")
Except as provided herein, each share of Class A Common Stock and
Class B Common Stock shall have the same relative rights as and be identical in
in all respects as to all matters. Each holder of shares of Class A Common Stock
and Class B Common Stock shall be entitled to attend all special and annual
meetings of the stockholders of the Corporation. On all matters upon which
stockholders are entitled or permitted to vote, every holder of Class A Common
Stock shall be entitled to cast one (1) vote in person or by proxy for each
outstanding share of Class A Common Stock standing in such holders's name on the
transfer books of the Corporation, and every holder of Class B Common Stock
shall be entitled to cast five (5) votes in person or by proxy for each
outstanding share of Class B Common Stock standing in such holder's name on the
transfer books of the Corporation. Except as otherwise provided in this
Certificate of Incorporation or by applicable law, the holders of shares of
Class A Common Stock and Class B Common Stock shall vote together as a single
class.
FIFTH: To the extent permitted by law, the Corporation shall fully
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative)
<PAGE>
SIXTH: That a copy of the Merger Agreement will be furnished by the
surviving corporation, on request and without cost, to any stockholder of the
constituent corporations.
IN WITNESS WHEREOF, Palmer Wireless, Inc. has caused this
Certificate of Merger to be signed by William J. Ryan, its authorized officer,
this 6th day of October 1997.
PALMER WIRELESS, INC.
By: /s/ William J. Ryan
----------------------------------
Name: William J. Ryan
Title: President and Chief Executive Officer
-2-
<PAGE>
RESTATED BYLAWS
OF
PRICE COMMUNICATIONS WIRELESS, INC.
1. OFFICES
1.1. Registered Office.
The initial registered office of the Corporation shall be in Wilmington,
Delaware, and the initial registered agent in charge thereof shall be United
States Corporation Service Company.
1.2. Other Offices.
The corporation may also have offices at such other places, both within
and without the State of Delaware, as the Board of Directors may from time to
time determine or as may be necessary or useful in connection with the business
of the Corporation.
2. MEETINGS OF STOCKHOLDERS.
2.1. Place of Meetings.
All meetings of the stockholders shall be held at such place as may be
fixed from time to time by the Board of Directors, the Chief Executive Officer
or the President.
2.2. Annual Meetings.
The Corporation shall hold annual meetings of stockholders on the first
Tuesday in May at 11 a.m. or at such other date and time as shall be designated
from time to time by the Board of Directors, the Chairman of the Board, or the
Chief Executive Officer, at which stockholders shall elect directors and
transact such other business as may properly be brought before the meeting.
2.3. Special Meetings.
Special Meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute or the Corporation's Certificate of
Incorporation (the "Certificate of Incorporation"), may be called by (a) the
Chairman of the Board, (b) a majority of the directors in office, whether or not
a quorum, or (c) the holders of not less than 35% of the total number of votes
of the then outstanding shares of stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
<PAGE>
2.4. Notice of Meetings.
Notice of any meeting of stockholders, stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be given to each stockholder entitled to vote at such meeting not less than 10
days nor more than 60 days before the date of the meeting (except to the extent
that such notice is waived or is not required as provided in the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law")). Such notice shall be given in accordance with, and shall be deemed
effective as set forth in, Section 222 (or any successor section) of the
Delaware General Corporation Law.
2.5. Waivers of Notice.
Whenever the giving of any notice is required by statute, the Certificate
of Incorporation or these Bylaws, a waiver thereof, in writing and delivered to
the Corporation, signed by the person or persons entitled to said notice,
whether before or after the event as to which such notice except where such
notice is required, shall be deemed equivalent to notice. Attendance of a
stockholder at a meeting shall constitute a waiver of notice (a) of such
meeting, except when the stockholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting, and (b) of
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the stockholder
objects to considering the matter when that matter is first presented for
consideration.
2.6. Business at Annual Meeting.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (c) otherwise properly brought before the
meeting by a stockholder.
For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary. To be timely, a stockholder's notice must be received at the
principal executive office of the Corporation no later than the date designated
for receipt of stockholders' proposals in a prior public disclosure made by the
Corporation. If there has been no such prior public disclosure, then to be
timely, a stockholder's notice must be delivered to or mailed and receive at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the annual meeting; provided, however, that in the event
that less than 70 days' notice of the date of the annual meeting is given to
stockholders or prior public disclosure of the date of the meeting is made,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such
2
<PAGE>
business at the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, (d) any material interest of the stockholder in such business and
(e) the same information required by clauses (b), (c) and (d) above with
respect, to any other stockholder that, to the knowledge of the stockholder
proposing such business, supports such proposal. Notwithstanding any thing in
these Bylaws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 2.6.
The Chairman shall, if the facts warrant, determine and declare to the annual
meeting that a matter of business was not properly brought before the meeting in
accordance with the provisions of this Section 2.6, and if the Chairman should
so determine, the Chairman shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
2.7. List of Stockholders.
After the record date for a meeting of stockholders has been fixed, at
least 10 days before such meeting, the officer who has charge of the stock
ledger of the Corporation shall make a list of all stockholders entitled to vote
at the meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place in the city where the meeting is
to be held, which place is to be specified in the notice of the meeting, or at
the place where the meeting is to be held. Such list also shall, for the
duration of the meeting, be produced and kept open to the examination of any
stockholder who is present at the time and place of the meeting. The stock
ledger of the Corporation shall be the only evidence as to the stockholders
entitled to examine the list required by Section 2.8 hereof or to vote in person
or by proxy at any meeting of stockholders.
2.8. Quorum at Meetings.
Stockholders may take action on a matter at a meeting only if a quorum
exists with respect to that matter. Except as otherwise provided by statute or
by the Certificate of Incorporation, the holders of a majority of the stock
issued and outstanding and entitled to vote at the meeting, and who are present
in person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business. Once a share is represented
for any purpose at a meeting (other than solely to object (a) to holding the
meeting or transacting business at the meeting or (b) to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice), it is deemed present for quorum purposes for
the remainder of the meeting and for any adjournment of that meeting unless a
new record date is or must be set for the adjourned meeting. The holders of a
majority of the voting shares represented at a meeting, whether or not a quorum
is present, may adjourn such meeting from time to time. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than 30 day, or if after the adjournment
a new record date
3
<PAGE>
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder entitled to vote at the meeting.
2.9. Voting and Proxies.
Unless otherwise provided in the Delaware General Corporation Law or in
the Certificate of Incorporation, and subject to the other provisions of these
Bylaws, each holder of Class A Common Stock shall be entitled to one (1) vote,
each holder of Class B Common Stock shall be entitled to five (5) votes, and all
others stockholders shall be entitled to one vote on each matter, in person or
by proxy, for each share of the Corporation's capital stock that has voting
power and that is held by such stockholder, provided, however, that if any Class
A Common Stock is issued, except as otherwise provided by applicable law, the
holders of Class B Common Stock will be entitled to only that number of votes
per share in person or by proxy such that, in the aggregate, the vote of the
holders of Class B Common Stock is no more than 75% of the votes cast on any
matters upon which stockholders are entitled or permitted to vote. No proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A truly executed appointment of proxy shall be
irrevocable if the appointment form states that it is irrevocable and if, and
only as long as, it is coupled with an interest sufficient in law to support an
irrevocable power.
2.10. Required Vote.
If a quorum exists, action on a matter (other than the election of
directors) is approved if the votes cast favoring the action exceed the votes
cast opposing the action, unless the Certificate of Incorporation or the
Delaware General Corporation Law requires a greater number of affirmative votes
(in which case such different requirement shall apply). Directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in the
election (provided a quorum exists), and the election of directors need not be
by written ballot. The Board of Directors, in its discretion, may require that
any votes cast at such meeting shall be cast by written ballot.
2.11. Action Without a Meeting.
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders, and may not be effected by any consent in writing by such
stockholders, unless such written consent is unanimous, and the writing or
writings are delivered to the Corporation for inclusion in the Minute Book of
the Corporation.
2.12. Inspectors of Election.
The director of the person presiding at the meeting shall appoint one or
more inspectors of election and any substitute inspectors to act at the meeting
or any adjournment thereof. Each inspector, before entering upon the discharge
of his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his or her ability. The inspectors shall determine the number of
shares of stock
4
<PAGE>
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum, the validity and effect of proxies and
ballots, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors, certify their determination of the
number of shares represented at the meeting, and their count of all votes and
ballots, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. The inspectors may appoint and retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors. On request of the person presiding at the meeting, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them.
3. DIRECTORS.
3.1. Powers.
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors, which may exercise all such powers of
the Corporation, these Bylaws or agreements among stockholders which are
otherwise lawful.
3.2. Number and Election.
The number of directors which shall constitute the whole board shall be
one. Directors shall be elected only by stockholders at annual meetings of
stockholders, other than the initial board of directors and except as provided
in Section 3.3 hereof in the case of vacancies and newly created directorships.
Each director elected shall hold office for the term for which such director is
elected and until such director's successor is elected and qualified or until
such director's earlier death, resignation or removal.
3.3. Vacancies.
Vacancies resulting from death, resignation or removal and newly created
directorships resulting from any increase in the authorized number of directors
shall be filled, for the unexpired term, by the concurring vote of a majority of
the directors then in office, whether or not a quorum, and any director so
chosen shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such director's successor shall have been elected and qualified or until
such director's earlier death, resignation or removal.
3.4. Terms of Office.
Unless otherwise provided in the Certificate of Incorporation, directors
elected to succeed those whose terms are expiring shall be elected for a term of
office expiring at the annual meeting
5
<PAGE>
of stockholders held in the third year following their election and until their
respective successors are elected or qualified, or until such elector's earlier
death, resignation or removal.
3.5. Nomination of Directors.
Nominations of persons for election to the Board of Directors may be made
by the Board of Directors or by any stockholder of the Corporation entitled to
vote for the election of directors at the annual meeting who complies with the
notice procedures set forth in this Section 3.5. Nominations by stockholders
shall be made pursuant to timely notice in writing to the Secretary. To be
timely, a stockholder's notice shall be received at the principal executive
offices of the Corporation no later than the date designated for receipt of
stockholders' proposals in a prior public disclosure made by the Corporation. If
there has been no such prior public disclosure, then to be timely, a
stockholder's nomination must be delivered to or mailed and received at the
principal executive offices of the Corporation not lees than 60 nor more than 90
days prior to the annual meeting; provided, however, that in the event that lees
than 70 days' notice of the date of the meeting is given to stockholders or
prior public disclosure of the date of the meeting is made, notice by the
stockholder to be timely must be so received not later than the close of
business of the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the Corporation which are beneficially owned by such person, and (iv) any other
information related to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving notice (i) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
nomination, and (ii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder. No person shall be eligible for election
as a director of the Corporation unless nominated in accordance with the
procedures set forth in this Section 3.5. The Chairman shall, if the facts
warrant, determine and declare to the annual meeting that a nomination was not
made in accordance with the provisions of this Section 3.5, and if the Chairman
should so determine, the Chairman shall so declare to the meeting and the
defective nomination shall be disregarded.
3.6. Meetings.
(a) Regular Meetings.
Regular meetings of the Board of Directors may be held without notice at
such time and at such place as shall from time to time be determined by the
Board of Directors.
6
<PAGE>
(b) Special Meetings.
Special meetings of the Board of Directors may be called by the Chairman
of the Board or the Chief Executive Officer on one day's notice to each
director, either personally or by telephone, express delivery service (so that
the scheduled delivery date of the notice is at least one day in advance of the
meeting), telegram or facsimile transmission, and on five days' notice by mail
(effective upon deposit of such notice in the mail). The notice need not
describe the purpose of a special meeting.
(c) Telephone Meetings.
Members of the Board of Directors may participate in a meeting of the
Board of Directors by means of conference telephone or similar communications
equipment by means of which all participating directors can simultaneously hear
each other during the meeting. A director participating in a meeting by this
means is deemed to be present in person at the meeting.
(d) Action Without Meeting.
Any action required or permitted to be taken at any meeting of the Board
of Directors may be taken without a meeting if all members of the Board of
Directors consent thereto in writing, and the writing or writings are delivered
to the Corporation for inclusion in the Minute Book of the Corporation.
(e) Waiver of Notice of Meeting; Presumption of Assent.
A director may waive any notice required by statute, the Certificate of
Incorporation or these Bylaws before or after the date and time stated in the
action. Except as set forth below, the waiver must be in writing, signed by the
director entitled to the notice, and delivered to the Corporation for inclusion
in the Minute Book of the Corporation. Notwithstanding the foregoing, a
director's attendance at or participation in a meeting waives any required
notice to the director of the meeting unless the director at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting. A director who is present at a meeting is presumed to have assented to
any action taken unless such director enters a dissent or abstention in the
minutes of the meeting or files a written dissent to such action no later than
five days after such director receives a copy of the minutes of the meeting,
provided that the right to dissent shall not apply to a director who votes in
favor of such action.
3.7. Compensation of Directors.
The Board of Directors shall have the authority to fix the compensation of
directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
4. COMMITTEES.
7
<PAGE>
4.1. Creation of Committees.
The Board of Directors may by resolution create one or more committees and
appoint members of the board of Directors to serve on them. The Board of
Directors shall create (a) an Audit Committee for the purpose of examining and
considering matters relating to the financial affairs of the Corporation, and
(b) a Compensation Committee for the purpose of establishing and implementing an
executive compensation policy. The Audit and Compensation Committees may each
have one or more members, who serve at the pleasure of the Board of Directors,
provided that each committee shall consist entirely of directors who are not
employees of the Corporation and, in addition, satisfy such other standards of
independence as the Board of Directors deems appropriate. The creation of a
committee and appointment of members to it shall be approved by a majority of
all the directors in office when the action is taken, whether or not a quorum.
The same rules that govern meetings, action without meetings, notice and waiver
of notice, and quorum and voting requirements of the Board of Directors apply to
committees and their members as well.
4.2. Committee Authority.
To the extent specified by the Board of Directors or in the Certificate of
Incorporation, each committee may exercise the authority of the Board of
Directors, except that a committee may not: (i) approve or recommend to
stockholders action that is required by law to be approved by stockholders; (ii)
fill vacancies on the Board of Directors or on any of its committees; (iii)
amend the Certificate of Incorporation; (iv) adopt, amend or repeal these
Bylaws; (v) approve a plan of merger not requiring stockholder approval; (vi)
authorize or approve a distribution, except according to a general formula or
method prescribed by the Board of Directors; or (vii) authorize or approve the
issuance or sale or contract for sale of shares, or determine the designation
and relative rights, preferences and limitations of a class or series of shares,
except that the Board of Directors may authorize a committee, or a senior
executive officer of the Corporation, to do so without limits specifically
prescribed by the Board of Directors.
5. OFFICERS
5.1. Positions.
The officers of the Corporation shall be a Chief Executive Officer, a
President, a Secretary and a Treasurer, and such other officers as the Board of
Directors (or and officer authorized by the Board of Directors) from time to
time may appoint, including a Chairman of the Board, one or more Executive Vice
Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer
shall exercise such powers and perform such duties as shall be set forth below
and such other powers and duties as from time to time may be specified by the
Board of Directors or by any officer(s) authorized by the Board of Directors to
prescribe the duties of such other officers. Any number of offices may be held
by the same person, except that in no event shall the President and the
Secretary be the same person.
8
<PAGE>
5.2. Powers.
(a) Each officer shall have, in addition to the duties and powers set
forth herein, such duties and powers as are commonly incident to such officer's
office and such additional duties and powers as the Board of Directors may from
time to time authorize.
(b) Powers of attorney, proxies, waivers of notice of meetings, consents
and other instruments relating to securities or partnership interests owned by
the Corporation may be executed in the name of and on behalf of the Corporation
by the Chief Executive Officer or the President and any such officer may, in the
name of and on behalf of the corporation, take all such action as any such
officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities,
or at any meeting of any partnership in which the Corporation owns an interest,
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities or partnership interest and
which, as the owners thereof, the Corporation might have possessed and
exercised, if present.
5.3. Chief Executive Officer.
The Chief Executive Officer of the Corporation shall have overall
responsibility and authority for management of the operations of the
Corporation, subject to the authority of the Board of Directors. Unless
otherwise specified by the Board of Directors, the Chief Executive Officer shall
ensure that all orders and resolutions of the Board of Directors and
stockholders are carried into effect. The Chief Executive Officer may execute
bonds, mortgages and other contracts, under the seal of the Corporation, if
required, except where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
Corporation, provided that the Chief Executive Officer may assign or execute any
document or instrument where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
5.4. President.
The President shall have such duties and powers as shall be set forth in
these Bylaws or as shall be designated from time to time by the Board of
Directors or by the Chief Executive Officer. The President may execute bonds,
mortgages and other contracts, under the seal of the Corporation, if required,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation.
5.5. Vice President.
Any Vice President shall have such duties and powers as shall be set forth
in these Bylaws or as shall be designated from time to time by the Board of
Directors, the Chief Executive Officer or the President. In the absence of the
President or in the event of the President's inability or refusal to act, the
Vice President (or in the event there be more than one Vice President, the Vice
9
<PAGE>
Presidents in the order designated, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the President. Any Vice President may execute bonds,
mortgages and other documents under the seal of the Corporation.
5.6. Secretary.
The Secretary shall have responsibility for preparation of minutes of
meetings of the Board of Directors and of the stockholders and for
authenticating records of the Corporation. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors. The Secretary or an Assistant Secretary also may attest all
instruments signed by any other officer of the Corporation.
5.7. Treasurer.
The Treasurer shall have responsibility for the custody of the corporate
funds and securities and shall see to it that full and accurate accountings of
receipts and disbursements are kept in books belonging to the Corporation. The
Treasurer shall render to the Chief Executive Officer, the President, the Vice
President, and the Board of Directors, upon request, an account of all financial
transactions and of the financial condition of the Corporation.
5.8. Term of Office.
The officers of the Corporation shall hold office until their successors
are chosen and qualified or until their death, earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. Any
officer elected or appointed by the Board of Directors may be removed at any
time, with or without cause, by the affirmative vote of a majority of the Board
of Directors.
5.9. Fidelity Bonds.
The Corporation may secure the fidelity of any or all of its officers or
agents by bond or otherwise.
6. CAPITAL STOCK.
6.1. Certificates of Stock; Uncertificated Shares.
The shares of the Corporation shall be represented by certification,
provided that the Board of Directors may provide by resolution that some or all
of any or all classes or series of the Corporation's stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by Board of Directors, every
holder of stock represented by certificates, and upon request every holder of
noncertificated shares, shall be entitled to have a certificate (representing
the number of shares registered in certificate form)
10
<PAGE>
signed in the name of the Corporation by the Chief Executive Officer, the
President or any Vice President, and by the Treasurer, Secretary or any
Assistant Treasurer or Secretary. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
whose signature or facsimile signature appears on a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
6.2. Lost Certificates.
The Board of Directors, Chief Executive Officer, President, or Secretary
may direct a new certificate of stock to be issued in place of any certificate
theretofore issued by the Corporation and alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
that the certificate of stock has been lost, stolen or destroyed. When
authorizing such issuance of a new certificate, the Board of Directors or any
such officer may, as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to advertise the same in such manner as the Board
of Directors or such officer shall require and/or to give the Corporation a
bond, in such sum as the Board of Directors, or such officer may direct, as
indemnity against any claim that may be made against the Corporation on account
of the certificate alleged to have been lost, stolen or destroyed or on account
of the issuance of such new certificate or uncertificated shares.
6.3. Record Date.
(a) Actions by Stockholders.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders (or to take any other
action), the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors and shall not be less than 10 nor more than 60 days
before the meeting or action requiring a determination of stockholders.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and shall
not be more than 10 days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting,
unless the Board of Directors fixes a new record date.
If no record date is fixed by the Board of Directors, the record date
shall be at the close of business on the day next preceding the day on which
notice is given, or if notice is not required or
11
<PAGE>
is waived, at the close of business on the day next preceding the day on which
the meeting is held or such other action is taken, except that (if no record
date is established by the Board of Directors) the record date for determining
stockholders entitled to consent to corporate action without a meeting is the
first date on which a stockholder delivers a signed written consent to the
Corporation for inclusion in the Minute Book of the Corporation.
(b) Payments.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution pertaining thereto.
(c) Stockholders of Record.
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, to
receive notifications, to vote as such owner, and to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise may be provided by the Delaware General Corporation Law.
7. INSURANCE.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
(or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) against liability
asserted against or incurred by such person in such capacity or arising from
such person's status as such (whether or not the Corporation would have the
power to indemnify such person against the same liability).
8. GENERAL PROVISIONS.
8.1. Inspection of Books and Records.
Any stockholder, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the Corporation's
stock ledger, a list of its stockholders, and its other books and records, and
to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a stockholder. In every instance
where
12
<PAGE>
an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing which authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office or at its principal place of business.
8.2. Dividends.
The Board of Directors may declare dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation and
the laws of the State of Delaware.
8.3. Reserves.
The Board of Directors may set apart, out of the funds of the Corporation
available for dividends, a reserve or reserves for any proper purpose and may
abolish any such reserve.
8.4. Execution of Instruments.
All checks, drafts or other orders for the payment of money, and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
8.5. Fiscal Year.
The fiscal year of the Corporation shall begin on January 1 and end on
December 31.
8.6. Seal.
The corporate seal shall be in such form as the Board of Directors shall
approve. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
9. AMENDMENTS TO BYLAWS.
The Board of Directors may from time to time adopt, amend and repeal these
Bylaws. Such action by the Board of Directors shall require the affirmative vote
of at least a majority of the directors then in office. If stockholders are
entitled to vote with respect thereto to amend or repeal Bylaws adopted by the
Board of Directors as may be provided in the Certificate of Incorporation or by
law, then the affirmative vote of 66-2/3% of the total number of votes of the
then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required for the amendment or repeal of Bylaws by the stockholders of the
Corporation.
* * * * *
13
<PAGE>
ARTICLES OF INCORPORATION
OF
MILKY WAY COMMUNICATIONS, INC.
FIRST: The name of this Corporation shall be Milky Way Communications, Inc.
SECOND: The purpose for which this Corporation is formed is to acquire,
construct, own, and manage a cellular telecommunications system for
the Panama City Florida MSA and to engage in the transactions of any
or all lawful business for which corporations may be incorporated
under the Florida General Corporation Act.
THIRD: The maximum number of shares which the Corporation is authorized to
have outstanding is one hundred (100) all of which shall be common
shares without par value.
FOURTH: The name and street address of the initial registered agent is:
Brian O'Neill
261 Hannover Circle
Panama City, Florida 32404
FIFTH: The name and address of the incorporator is:
Thomas Gutierres
Lakes, McGowen, Hace & Gutierres
1819 N. Street, N.W.
Suite 700
Washington D.C. 20006
SIXTH: The holders of shares of the Corporation shall, upon the offering or
sale of shares, have the right, during a reasonable time and on
reasonable terms fixed by the directors, to purchase such shares in
proportion to
<PAGE>
-2-
their respective holdings of such shares, at the price per share
fixed by the board of directors for such offering or sale.
SEVENTH: The amount of capital with which the Corporation will begin business
will not be less than Five Hundred Dollars ($500.00).
EIGHTH: Each director and each officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against
expenses reasonably incurred by him in connection with any claim,
action, suit or proceeding to which he may be made a party by reason
of his being or having been a director or officer of the
Corporation, or of any other corporation of which the Corporation is
a shareholder or creditor and from which he is not entitled to be
indemnified (whether or not he continues to be a director or officer
at the time of incurring such expenses), except in respect to
matters as to which he shall be finally adjudged in such action,
claim, suit or proceeding to be liable for negligence or misconduct
in the performance of his or her duties. In the event of a
settlement of any such claim, action, suit or proceeding,
indemnification shall be provided only in connection with such
matters covered by the settlement as to which the corporation is
advised by counsel that the person to be indemnified did not commit
a breach of duty. The foregoing right of indemnification shall not
be exclusive of other
<PAGE>
-3-
rights to which he may be entitled. The Corporation, its directors,
officers, employees and agents shall be fully protected in taking
any action or making any payment under this Article, or in refusing
to do so in reliance upon the advice of counsel.
NINTH: Each officer, director or member of any committee designated by the
Board of Directors shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or
reports made to the corporation by any of its officials, by an
independent public account, by an appraiser selected with reasonable
care by the Board of Directors or by any such committee or in
relying in good faith upon other records of the Corporation.
TENTH: A director or officer of the Corporation shall not be disqualified
by his office from dealing or contracting with the Corporation as a
vendor, purchaser, employee, agent or otherwise; and any
transaction, contract, or act of the corporation shall not be void
or voidable or be in any way affected or invalidated by reason of
the fact that any director or officer or any firm of which such
director or officer is a member or any corporation of which such
director or officer is a shareholder, director or officer, is in any
way interested in such transaction, contract or act; provided,
however, that the fact that such director, officer, firm or
corporation is so interested shall be [ILLEGIBLE] or
<PAGE>
shall be known to the Board of Directors or such members thereof as
shall be present at any meeting of the Board of Directors at which
action upon any such transaction, contract or act shall be taken;
any such director or officer shall not be held accountable or
responsible to the Corporation, or for any gains or profits realized
by him by reason of the fact that he or any firm of which he is a
member, or any Corporation of which he is a shareholder, officer or
director, is interested in such transaction, contract or act. Any
such director or officer, if such officer is a director, may be
counted in determining the existence of a quorum at any meeting of
the Board of Directors of the Corporation which shall authorize or
take action in respect of any such transaction, contract or act, and
may vote thereof to authorize, ratify or approve any such
transaction, contract or act, with like force and effect as if he or
any firm of which he is a member, or any corporation of which he is
a shareholder, officer or director, were not interested in such
transaction, contract or act.
IN WITNESS WHEREOF, I have hereunto subscribed by name this 1st day of
December, 1987.
/s/ THOMAS [ILLEGIBLE]
--------------------------------
THOMAS [ILLEGIBLE]
INCORPORATOR
<PAGE>
BYLAWS
OF
MILKY WAY COMMUNICATIONS, INC.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
A. Annual Meetings: The annual meeting of the Shareholders shall be held
at the principal office of the Corporation, on such date and at such hour during
the third calendar month following the close of the calendar year of the
Corporation, as shall be set by the officers of the Corporation. At the annual
meeting of the Shareholders, the consideration of an action upon any type of
corporate business shall be proper, even though specific notice thereof may not
have been included in the notice of the meeting.
B. Special Meetings: Special meetings of the Shareholders of this
Corporation shall be called by the Secretary, pursuant to a resolution of the
Board of Directors, or upon the written request of a majority of Directors, or
by Shareholders representing 25 percent of the shares issued and entitled to
vote. Calls for special meetings shall specify the time, place, and object or
objects thereof, and no business other than that specified in the call therefor
shall be considered at any such meetings.
C. Action Without Meeting: Any action which may be taken by the
Shareholders at a meeting may be taken without meeting if evidenced by a writing
signed by all of the holders of shares who would be entitled to notice of a
meeting for the purpose of voting on such action.
D. Notice of Meetings: A written or printed notice of the annual or any
special meeting of the Shareholders, stating the time and place, and in case of
special meetings, the objects thereof, shall be given to each Shareholder
entitled to vote at such meeting appearing on the books of the Corporation, by
mailing same to his address as the same appears on the records of the
Corporation at least seven (7) days, and not more than sixty (60) days, before
any such meeting provided, however, that no failure or irregularity of notice of
any annual meeting shall invalidate the same or any proceeding thereat. Any
notice required hereunder may be waived in writing by Shareholders. The presence
of any Shareholder at any such meeting shall be deemed also to constitute waiver
of notice of the meeting.
All notices with respect to any shares to which persons are jointly
entitled may be given to that one of such persons who is named first upon the
books of the Corporation, and notice so given shall be sufficient notice to all
the holders of such shares.
<PAGE>
- 2 -
E. Quorum: A majority in number of the shares authorized, issued, and
outstanding, represented by the holders of record thereof, in person or by
proxy, shall be requisite to constitute a quorum at any meeting of Shareholders,
but less than such majority may adjourn the meeting of Shareholders from time to
time and at any such adjourned meeting any business may be transacted which
might have been transacted if the meeting had been as originally called.
F. Proxies: Any Shareholder entitled to vote at a meeting of Shareholders
may be represented and vote thereat by proxy appointed by an instrument in
writing, subscribed by such Shareholder, or by his duly authorized attorney, and
submitted to the secretary at or before such meeting.
ARTICLE TWO
CORPORATE SEAL
The Corporation shall not have a seal.
ARTICLE THREE
SHARES
A. Certificates: Certificates evidencing the ownership of shares of the
Corporation shall be issued to those entitled to them by transfer or otherwise.
Each certificate for shares shall bear a distinguishing number, the signature of
the President and of the Secretary and such recitals as may be required by law.
The certificates for shares shall be of such tenor and design as the Board of
Directors from time to time may adopt.
B. Transfers: The shares may be transferred on the proper books of the
Corporation by the registered holders thereof, or by their attorneys legally
constituted or their legal representatives, by surrender of the certificate
therefor for cancellation and a written assignment of the shares evidenced
thereby. The Board of Directors may, from time to time, appoint such transfer
AGents or Registrars of shares as it may deem advisable, and may define their
powers and duties. The Secretary or other agent of the Corporation charged with
the registration of shares shall prescribe such technical requirements of
transfer as will protect the Corporation in the premises.
C. Lost Certificates: No lost certificate for shares shall be placed
except on the registered owner's meeting such conditions as may be prescribed by
the Board of Directors.
<PAGE>
-3-
D. Record Dates: The Board of Directors may establish a date fixed in
advance of any meeting of the Shareholders or dividend payment as a record date
as of which Shareholders (as then appearing upon the transfer books of the
Corporation) shall be entitled to notice or participation. Unless contrary
action be taken, the record date so established shall apply to all proper
adjournments of the meeting called.
ARTICLE FOUR
DIRECTORS
A. Number and Tenure: The number of members of the Board of Directors
shall be determined pursuant to law, by resolution of the Shareholders entitled
to vote, but shall not be less than three (3) members; provided, however, that
where all shares of the Corporation are owned of record by less than three (3)
Shareholder, the number of Directors may be less than three (3), but not less
than the number of Shareholders. The election of Directors shall be held at the
annual meeting of the Shareholders, or at a special meeting called for that
purpose. Directors shall hold office until the expiration of the term for which
they were elected and shall continue in office until their respective successors
shall have been duly elected and qualified. Directors need not be Shareholders.
B. Vacancies in the Board: A resignation from the Board of Directors shall
be deemed to take effect upon its receipt by the Secretary, unless some other
time is specified therein. In case of any vacancy in the Board of Directors,
through death, resignation, disqualification, or other cause deemed sufficient
by the Board, the remaining Directors, though less than a majority of the whole
Board, by affirmative vote of a majority of those present at any duly convened
meeting may, except as hereinafter provided, elect a successor to hold office
for the unexpired portion of the term of the Director whose place shall be
vacant, and until the election and qualification of a successor.
C. Meetings: Unless a policy for the holding of regular meetings be
adopted by the Board of Directors, all of its meetings shall be special meetings
called by the Secretary, at the request of the President, or of any of the
Directors.
D. Notice of Meetings: The Secretary shall give at least three (3) days'
written notice of each meeting of the Board of Directors to each member of said
Board, but the actual presence of a Director at a meeting shall be deemed a
waiver of notice thereof.
<PAGE>
- 4 -
E. Quorum: A majority of the Directors in office at the time shall
constitute a quorum at all meetings thereof.
F. Place of Meetings: The Board of Directors may hold its meetings at such
place or places, within or without the State of Florida as the Board may, from
time to time, determine.
G. Action Without Meeting: Any action which might be taken by the Board of
Directors at a meeting, may be taken without meeting if evidenced by a writing
signed by all members thereof.
H. Compensation: Directors, as such, shall not receive any stated salary
for their services, but, on resolution of the Board, a fixed sum for expenses of
attendance, if any, may be allowed for attendance at each meeting, provided that
nothing herein contained shall be construed to preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE FIVE
TENURE AND DUTIES OF OFFICERS
A. General: All officers shall be elected by and serve at the pleasure of
the Board of Directors and shall act subject to the control thereof. The same
person may hold one or more offices, except the President may not also be Vice
President, the Secretary may not be Assistant Secretary, and the Treasurer may
not be Assistant Treasurer.
B. President: The primary duty of the President shall be to exercise
general supervision over the affairs of the Corporation. He shall preside at all
meetings of the Board of Directors and Shareholders, unless a Chairman of the
Board of Directors has been designated.
C. Secretary: The sole responsibility and authority of the Secretary shall
be to keep the minutes of all proceedings of the Board of Directors, each
committee and the Shareholders; to make, preserve, and attest proper record of
the same; and to act as a second signature for state corporate filings. The
Secretary shall not be empowered to sign checks on debt instruments of the
Corporation and shall not be empowered to participate in the financial affairs
of the Corporation in any way. Without intent to limit the generality of the
foregoing, the Secretary shall have no responsibility for or authority to
<PAGE>
- 5 -
withhold, payover or account for taxes withheld from employee's salaries, no
responsibility for or authority to pay employee wages or salaries and no
responsibility or authority for filing tax returns of any kind.
D. Assistant Secretaries: The Board of Directors shall appoint as many
Assistant Secretaries as it deems necessary. The duties of the Assistant
Secretaries shall be the same as that of the Secretary except where specificaly
limited by resolution of the Board of Directors.
E. Treasurer: The Treasurer shall have custody of the funds and securities
of the Corporation and shall serve as its chief officer, having general
responsibility for the maintenance of full and accurate accounts of the
financial transactions of the Corporation. The Treasurer shall also perform all
other duties to which he be assigned by the Board of Directors or the Executive
Committee.
ARTICLE SIX
ORDER OF BUSINESS
A. Call meeting to order.
B. Selection of Chairman and Secretary.
C. Proof of notice of meeting.
D. Roll call, including filing of proxies with Secretary.
E. Appointment of tellers.
F. Reading and disposal of previously unapproved minutes.
G. If annual meeting, or meeting called for that purpose, election of
Directors.
H. Unfinished business.
I. New business.
J. Adjournment.
This order may be changed by the affirmative vote of a majority in
interest of the Shareholders present.
<PAGE>
- 6 -
ARTICLE SEVEN
AMENDMENTS
These Bylaws may be adopted, amended, or repealed by the affirmative vote
of a majority of the shares empowered to vote thereon at any meeting called and
held for that purpose, notice of which meeting has been given pursuant to law,
or without a meeting, by the assent of the owners of two-thirds (2/3) of the
shares of the Corporation entitled to vote thereon.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of Milky Way Communications, Inc. of Florida, Inc., a Florida
corporation, as in effect on the date hereof.
WITNESS my hand this 31 day of December, 1987.
/s/ [ILLEGIBLE]
-------------------------------------------
President
Milky Way Communications, Inc.
<PAGE>
CERTIFICATE OF AMENDMENT TO CERTIFICATE
OF LIMITED PARTNERSHIP, AS AMENDED TO DATE, OF
CELLULAR ONE OF PANAMA CITY, FLORIDA, LIMITED,
a Florida Limited Partnership
THE UNDERSIGNED, desiring to amend the Certificate of Limited Partnership
of CELLULAR ONE OF PANAMA CITY, FLORIDA, LIMITED, a Florida limited partnership
(the "Limited Partnership"), pursuant to Section 620.109 of the Florida Revised
Uniform Limited Partnership Act (1986), hereby states the following:
(1) The name of the Limited Partnership is Cellular One of Panama City,
Florida, Limited.
(2) The date of filing of the Certificate of Limited Partnership was
April 1, 1988. The Certificate of Limited Partnership was amended on
June 17, 1988.
(3) Upon the filing of this Certificate of Amendment, the name of the
Limited Partnership shall be changed to "PANAMA CITY CELLULAR
TELEPHONE COMPANY, LTD."
(4) The new mailing address for the Limited Partnership is 505 West 15th
Street, Panama City, Florida 32402.
The execution of this Certificate of Amendment by the undersigned
constitutes an affirmation under the penalties of perjury that the facts stated
herein are true.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by the
undersigned this 9th day of February, 1990.
CELLULAR ONE OF PANAMA CITY, FLORIDA,
LIMITED
By: Milky Way Communications, Inc.,
its General Partner
By: /s/ Brian L. O'Neill
--------------------------------------
Brian L. O'Neill, President
STATE OF FLORIDA )
) SS:
COUNTY OF HILLSBOROUGH )
BEFORE ME, the undersigned officer, a Notary Public authorized to
administer oaths and to take acknowledgments in and for the
<PAGE>
State and County set forth above, personally appeared BRIAN L. O'NEILL, as
President of MILKY WAY COMMUNICATIONS, INC., known to me and known by me to be
the person who executed the foregoing Certificate of Amendment, and he
acknowledged to me and before me that he executed this Certificate of Amendment
on behalf of MILKY WAY COMMUNICATIONS, INC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the State and County aforesaid, this 9th day of February, 1990.
/s/ [ILLEGIBLE]
-------------------------------------------
Notary Public
NOTARY PUBLIC,
State of Florida
My Commission Expires
My Commission Expires: June 29, 1991
----------------------
-2-
<PAGE>
AGREEMENT
THIS AGREEMENT made and entered this 6th day of January, 1989, by and
between CELLULAR ONE OF PANAMA CITY, FLORIDA, LIMITED, a Florida limited
partnership, referred to herein as "CELLULAR ONE," and BIDDLE COMMUNICATIONS
INDUSTRIES, INC., hereafter referred to as "BIDDLE."
RECITALS
A. CELLULAR ONE is the licensee of the non-wireline cellular
telecommunication system in the Panama City Metropolitan Statistical Area (MSA),
which is MSA No. 283 (hereafter LICENSE AREA) that consists of Bay County,
Florida,
B. BIDDLE has been in the communications business in the LICENSE AREA for
more than 20 years, and has acquired considerable business experience, name
familiarity and a business knowledge in the telecommunications business in the
LICENSE AREA,
C. BIDDLE is President of the Florida Radio Telephone Association, and has
business contacts in the telecommunications industry in the LICENSE AREA.
D. BIDDLE has control of communications assets which will be leased to
CELLULAR ONE under the terms of this Agreement,
E. CELLULAR ONE wishes to engage BIDDLE, consistent with the rules and
regulations of the Federal Communications Commission (hereafter "FCC"), as an
independent contractor to manage the operation, periodic redesign and
maintenance of a cellular telecommunications system and business for the LICENSE
AREA,
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F. During the one year period lending June 6, 1987, BIDDLE has served as
Manager of CELLULAR ONE and both parties to this Management Agreement are
generally satisfied with the performance of each other pursuant to this contract
and desire to extend the relationship as set forth herein.
G. CELLULAR ONE and BIDDLE desire to enter into this contract for the
purpose of advancing their mutual financial interests by utilizing together the
LICENSE, knowledge and assets of CELLULAR ONE and the knowledge, experience,
business and community contacts, and assets of BIDDLE in order to engage in the
business of providing cellular telecommunications services in the LICENSE AREA;
and
H. BIDDLE and CELLULAR ONE desire that BIDDLE market cellular telephones,
accessories and peripheral equipment in the LICENSE AREA which activity is
expected to benefit CELLULAR ONE.
IN CONSIDERATION of the above recitals and the mutual agreements and
covenants herein contained, CELLULAR ONE and BIDDLE do hereby agree as follows:
1. Terms.
(a) The term of this Management Agreement shall be one (1) year
commencing on the sixth day of January, 1989, and terminating on the sixth day
of January, 1990.
(b) This Management Agreement is subject to renewal, on a one year
basis, provided that both parties agree to renewal in writing by October 31,
1989.
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2. General Duties of BIDDLE.
a. BIDDLE shall perform all services under this Management Agreement
under a fiduciary relationship with CELLULAR ONE in accordance with the highest
standards of honesty, integrity and fair dealing, and in a professional manner
that will best serve the financial and business interests of CELLULAR ONE in the
LICENSE AREA. BIDDLE's performance under this Management Agreement shall comply
in all material respects with good business practice in the industry, and shall
be in compliance with all applicable federal, state, and local laws, rules and
regulations.
b. Subject to CELLULAR ONE's exclusive right of unfettered control
over business assets facilities and operations, BIDDLE shall manage and
implement all business activities for the operation of the said business,
including but not necessarily limited to the following: operation of physical
assets such as antennae, towers, cell sites, switches, transmission lines, spare
parts, terminals and test instruments; billing and collection of payment from
customers; cellular system maintenance and repair; cellular system expansion
activities; negotiation and implementation of cost-effective interconnection
arrangements with local wireline telephone systems, long distance carriers and
other carriers; development and implementation of marketing programs for new
customers and retention of existing customers; provision of such assistance as
CELLULAR ONE may require in preparing reports to the FCC or state and local
regulatory authorities;
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price negotiations with suppliers; generation of purchase orders, approval of
payments to suppliers and verification of receipt of materials; formulation and
implementation of standard operating procedures, including programs and policies
to assure adherence to safety, environmental and other requirements under
applicable federal, state and local laws and regulations; coordination of
engineering approval of selected vendor products; negotiation and acquisition of
appropriate insurance policies; and the performance of all other functions
consistent with the purposes of this Management Agreement.
3. Specific Duties of BIDDLE: For the benefits conferred and the
compensation to be paid to BIDDLE as hereinafter stated, BIDDLE shall at his own
expense, unless otherwise specifically stated, and subject always to CELLULAR
ONE's right of continuing control and approval, diligently perform the following
services for CELLULAR ONE:
a. Facilities Location and Acquisition. BIDDLE shall be responsible
for the location and acquisition of space on towers and other associated
facilities (including microwave facilities) reasonably required to accommodate
equipment for the operation of cellular telecommunications services hereby
defined to include, but not be limited to, local exchange and interexchange
voice and/or data services, voice mail services, monitoring services as well as
other related services which may lawfully be provided
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under CELLULAR ONE's LICENSE as it presently exists or as it and any associated
licenses may be lawfully extended or amended. BIDDLE shall negotiate on behalf
of CELLULAR ONE for additional tower sites and associated facilities, including
all terms and conditions of lease agreements or other agreements, subject always
to CELLULAR ONE's final approval of any and all agreements. At CELLULAR ONE's
cost BIDDLE shall recommend and arrange for purchase and installation of all
reserve, all battery, and such generator equipment as is necessary and
reasonable for all other equipment and facilities.
b. Marketing and Sales Services:
(1) BIDDLE shall use his best efforts to promote, sell and
market the cellular services in the LICENSE AREA for CELLULAR ONE's best
interest. BIDDLE shall organize and put in place a complete marketing, sales and
service organization for the cellular telecommunications business in the LICENSE
AREA. BIDDLE shall prepare and provide to CELLULAR ONE by January 15, 1989 a
comprehensive plan illustrating the activities of such organization for the term
of this Management Agreement. Such efforts shall include, but not limited to,
the appointment of a sales manager, marketing personnel and others necessary to
conduct a first-class sales and marketing program for cellular
telecommunications services.
(2) BIDDLE shall make use of his existing customer list for
CELLULAR ONE's benefit.
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(3) BIDDLE shall maintain quality advertising of the cellular
system in the LICENSE AREA. The marketing and advertising program for the one
year period of this agreement, which provides for, but is not limited to, the
selection of media, the use and employment of advertising assistants or
consultants, the preparation and adoption of an advertising and marketing
budget, and a methodology for review and study of the effectiveness of the
proposed marketing and advertising program for the cellular services in the
LICENSE AREA is provided as Attachment A.
c. Data Processing, Billing and Collection Services:
(1) BIDDLE shall provide data processing services and billing
and collection services which shall itemize and account for all cellular
services rendered to customers in the LICENSE AREA. BIDDLE shall obtain from the
MTSO output as is necessary for the generation of bills to CELLULAR ONE's
customers. The MTSO programming for billing will be provided in an RS-232 serial
format to be captured by BIDDLE's system.
(2) BIDDLE shall maintain software necessary for capturing and
transmitting this information to the billing system. Actual billing tapes for
Southern Bell and Roamer billing will be provided and paid for by CELLULAR ONE.
(3) The form of the billing statements for services to be
mailed by BIDDLE shall be consistent with industry standards. Draft statements
shall be prepared on the 28th day of each
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month for the preceding 30-day period ending on the 25th day of that month.
Statements shall be mailed, under the name of CELLULAR ONE, by the 1st day of
the following month.
(4) BIDDLE shall bill all service charges in advance, and
shall bill overtime and long distance charges for the previous month.
(5) All collections made by BIDDLE for cellular service shall
be deposited daily as received by BIDDLE to Bay Bank & Trust Company in the
account of CELLULAR ONE OF PANAMA CITY, FLORIDA, LIMITED, Account No.
2506905501, or such other account as may be designated in writing by CELLULAR
ONE.
d. Implementation of Business and Financial Plans. BIDDLE shall
implement a comprehensive three-year business and financial plan, including but
not limited to, projected income and expense of the business as set forth in
Attachment B, and shall assist CELLULAR ONE in the generation of required
information and in all other steps for obtaining system financing.
e. Collections Efforts. BIDDLE shall implement a comprehensive
system for the control, prevention and collection of delinquent accounts and
customer fraud. The System shall be patterned after that set forth in Attachment
C. BIDDLE shall implement and maintain such credit practices as are customary in
the cellular industry in order to minimize losses due to lack of credit
worthiness. Credit report forms and appropriate customer contract forms as set
forth in Attachment D shall be authorized,
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and newly created forms shall be presented by BIDDLE to CELLULAR ONE prior to
use. All such forms shall be signed by each customer. Costs of all such systems,
forms preparation, practices and collection services shall be borne by BIDDLE.
f. Sales and Installation Training. BIDDLE shall require all
personnel associated and employed by him in connection with the marketing, sale,
installation and servicing of cellular telephones specified in this contract, as
a condition of employment, to complete training pertinent to cellular systems
and cellular services such that said personnel are fully qualified and
knowledgeable about the products and services they are marketing. Such employees
shall continue said training and updating of their technical qualifications as
required. BIDDLE shall design and/or identify such training programs. The cost
of such training programs shall be borne by BIDDLE. Unless otherwise mutually
agreed to in writing, which agreement shall not be unreasonably withheld, the
initial training shall be patterned after the programs that were successfully
utilized for training during the term of the Agreement expiring January 6, 1989,
and which are identified and summarized on Attachment E.
g. Reporting. On or before the 10th day of each month during the
term of this Agreement, BIDDLE shall prepare in writing and post to an address
designated by CELLULAR ONE detailed informational reports for the preceding
calendar month which shall include:
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(1) an itemization of units put in service for the immediately
preceding month,
(2) an itemization of units disconnected for the immediately
preceding month,
(3) the itemization by category of the services billed during the
preceding month,
(4) an itemization of revenues deposited to CELLULAR ONE's bank
account as required elsewhere in this Management Agreement,
(5) a useful and comprehensive report concerning accounts
receivable with information concerning aging, delinquent
account identification, and corrective and collection efforts
being undertaken, and
(6) other reports customarily generated in the cellular service
industry.
Such informational reports shall be patterned after that report set forth in
Attachment F, and successfully utilized during the term of the Agreement
expiring January 6, 1989.
h. Sale and Installation of Customer Equipment. BIDDLE shall
continue to operate an ongoing and competitive first-class business for the sale
and installation of cellular telephones, accessories and perpherials during the
term of this Management Agreement.
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i. Management of Maintenance Services. BIDDLE shall assist all
management services on behalf of CELLULAR ONE in connection with the negotiation
and implementation of a Maintenance Contract to be executed by CELLULAR ONE for
both routine and emergency maintenance and repair service required for the
operation of the cellular telecommunications system. After execution services
provided by BIDDLE shall include, but not be limited to, the monitoring of the
maintenance performed on CELLULAR ONE's system, analysis and review of costs,
fees and charges, supervision of the actual maintenance work on the cellular
system, on-line monitoring of traffic through the system, routine daily checks
and inspections and comprehensive regular periodic checks on the system
operation, and monitoring the performance by the maintenance contractor as
necessary to maintain first-class cellular system operation and service. At
three month intervals, BIDDLE shall submit to CELLULAR ONE a short statement,
patterned after Attachment G, attesting to the adequacy (or inadequacy) of such
maintenance.
j. Weekly Staff Meetings. BIDDLE and CELLULAR ONE shall participate
in weekly staff meetings addressing all issues having both long-range and
short-term significance to CELLULAR ONE. The meetings, which are expected to
have a duration of one-half business day or less, shall be conducted in
accordance with the following general procedures:
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(i) In order to efficiently utilize time both CELLULAR ONE and
BIDDLE shall, to the extent practical, limit to two the number
of their representatives attending these meetings;
(ii) An agenda will be prepared before each meeting that includes a
listing of all (1) significant activities surfacing during the
preceding week; (2) unresolved matters addressed during
previous weekly meetings; (3) issues of medium range and long
range significance that may reasonably be expected to be of
interst to CELLULAR ONE; and (4) any other items deemed of
sufficient interest to warrant attention on at weekly staff
meetings.
(iii) At each meeting an Action Item Listing will be updated, in
order to provide current information regarding task assigned,
progress made against previously assigned due dates, personnel
responsible for various tasks, and tasks warranting further
effort or direction. This Action Items list shall be formatted
after Attachment H.
k. Transition Services. As required by CELLULAR ONE, BIDDLE shall
provide assistance, counsel, advice and cooperation concerning any transfer or
relocation of equipment and/or operations that may be necessitated by
termination of this Management Agreement.
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l. Complaint Handling. BIDDLE shall maintain in chronological order
and indexed according to subject matter all complaints received by BIDDLE or his
employees which pertain to the operation of the cellular system, cellular
services, or cellular equipment as addressed by this Management Agreement. Such
information shall be continuously made available to CELLULAR ONE. BIDDLE shall
take affirmative constructive responsive action with respect to each complaint
received and shall advise CELLULAR ONE as to all action taken in response to
customer complaints, provided, however, that CELLULAR ONE shall also have the
right to respond personally to any such complaints.
m. Customer Listings and Records. BIDDLE shall have be responsible
for assembling and maintaining a current and complete list of all customers of
the cellular system in a form patterned after Attachment H, which was used
successfully during the term of the Management Agreement expiring on January 6,
1989, or such other form as may be mutually agreed to by CELLULAR ONE and
BIDDLE. Updated copies of each list shall be provided to CELLULAR ONE on a
monthly basis, and CELLULAR ONE shall have access to the customer list at all
times, individually or by designated agents of CELLULAR ONE. Both parties agree
that the customer list shall be the sole property of CELLULAR ONE and upon the
termination of this Management Agreement, it shall have the sole and exclusive
right to possession and control of said customer list, as well as all other
listings and records of the system's
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customers, including any copies in whatever form and wherever the same may be
located.
n. Insurance. BIDDLE shall maintain comprehensive casualty and
liability insurance for all activities and equipment which are the subject of
this Management Agreement. BIDDLE shall be named as an insured and CELLULAR ONE
as an additional insured. CELLULAR ONE shall pay all necessary costs for such
coverage. Insurance policies shall be consistent with those set forth on
Attachment I, or in a form acceptable to CELLULAR ONE. BIDDLE shall assure that
CELLULAR ONE is provided with copies of all current policies within ten (10)
days of their effectiveness. Liability limits shall be not less than $3,000,000
per occurrence. Property shall be insured to full replacement value. CELLULAR
ONE's name shall be placed on policy as a loss payee as its interest may appear.
o. State and Local Approvals. BIDDLE shall timely and in writing
advise CELLULAR ONE of all necessary state and local authority required for
continuing operation or additional construction of the system, and take all
necessary actions to obtain such authority.
p. Interconnection. BIDDLE shall take all actions necessary to
maintain system interconnection with the landline exchange and interexchange
carriers in the most prompt manner possible. As appropriate, BIDDLE shall advise
CELLULAR ONE of desired charges or advances in existing arrangement.
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q. Construction Supervision. BIDDLE shall supervise construction of
the cellular radio and microwave components of the system, and at all times keep
CELLULAR ONE apprized of the status of such activities.
r. Access to Pertinent Business Records. BIDDLE and CELLULAR ONE
recognize that BIDDLE is presently engaged in an ongoing communications business
that is presently not competitive with the cellular service contemplated in this
Management Agreement of CELLULAR ONE. Therefore, the records and information on
BIDDLE's other communications business shall not be available to CELLULAR ONE
unless that information, business records or other data might be both relevant
and reasonably calculated to impact on CELLULAR ONE's business. Should this
situation change, either by effective change in the rules and regulations of the
FCC or otherwise, BIDDLE shall make such information available to CELLULAR ONE
on a continuing basis. BIDDLE recognizes CELLULAR ONE's need to have the right
to conduct full and complete audits without limitation, all at CELLULAR ONE's
expense. Any information acquired during the course of such audits shall be
protected as confidential information under Section 10 of this Management
Agreement.
4. Resources To Be Devoted to the System. In order to fulfill the
obligations set forth in paragraphs 2 and 3 above, BIDDLE shall devote, at a
minimum, the following resources to the system:
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a. BIDDLE shall devote 90 percent of the time of its President,
Byron Biddle, to design and construction of the System until the License is
issued and 90 percent of his time to management of the maintenance and operation
of CELLULAR ONE, which time shall be reasonably split among the duties set forth
on Page 3 and otherwise necessary to accomplish the objectives of this
Management Agreement.
b. BIDDLE, at its own expense, shall employ a sales manager who
shall devote 80 percent of his or her time to the operation of CELLULAR ONE.
c. BIDDLE, at its own expense, shall hire two fulltime salespeople
who shall devote 100 percent of their time to the operation of CELLULAR ONE.
d. BIDDLE shall be solely responsible for all payments to dealers
involved in the dealer (agency) network that BIDDLE shall develop in order to
promote and market cellular services in the LICENSE AREA.
e. BIDDLE shall, at its own expense, provide a telephone line with a
unique telephone number listed in the local telephone listings as the telephone
number of the Cellular Business. (CELLULAR ONE will designate the name of the
Cellular Business which shall appear in the local telephone listing.) Such
telephone line shall ring into BIDDLE's current system at its current business
location. BIDDLE's employees shall insure the
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Cellular Business telephone line "Cellular One," or such other name designated
by CELLULAR ONE.
f. BIDDLE shall, at its own expense, add additional CELLULAR ONE
telephone lines, if BIDDLE's current telephone system is not sufficient to
handle the volume of CELLULAR ONE's telephone calls.
g. BIDDLE shall utilize its current business' customer service
personnel to answer CELLULAR ONE's telephone calls, and to service potential
subscribers' and subscribers' inquiries and complaints.
h. BIDDLE shall implement an advertising campaign, patterned after
that set forth on Attachment J and used successfully throughout the term of the
Management Agreement expiring January 6, 1989, and contribute at least
Twenty-Five Thousand Dollars ($25,000.00) in direct advertising expenses.
CELLULAR ONE shall review and approve the advertising campaign, and all
advertising material to be used in the advertising campaign.
i. BIDDLE shall provide at least 10,000 Cellular Business brochures
and System coverage maps.
5. Responsibilities of CELLULAR ONE. BIDDLE's responsibility for overall
system management shall be only limited by the enumerated responsibilities of
CELLULAR ONE in this Section 5. CELLULAR ONE shall undertake and diligently
perform the following in connection with this contract:
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a. Site Selection and Acquisition. CELLULAR ONE shall assist BIDDLE
in the location and acquisition, including negotiation and contracting, of space
on towers to locate equipment for the rendering of cellular telecommunications
services in the LICENSE AREA, including but not limited to, preparing and
executing all contracts and leases and other related documents, and purchasing
and installing all equipment required for by CELLULAR ONE.
b. Contract Execution. CELLULAR ONE shall execute such contracts as
are recommended by BIDDLE and which are thereafter approved by CELLULAR ONE for
the construction, maintenance and lawful operation of the cellular
telecommunications system in the LICENSE AREA.
c. Payments. CELLULAR ONE shall make lease payments and debt
payments for telecommunications equipment necessary for the providing of
cellular service in the LICENSE AREA except for charges to be paid or costs to
be provided for by BIDDLE pursuant to Sections 2, 3, 4 and 6 hereunder.
d. Maintenance. CELLULAR ONE shall, with assistance from BIDDLE,
negotiate and execute all contracts for maintenance and repairs in connection
with the system. CELLULAR ONE shall pay for all necessary and required
maintenance and repairs on the cellular telecommunications system during the
operation thereof, save and except for the services rendered by BIDDLE in the
super-
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vision of system maintenance and repair as required by other provisions of this
Management Agreement.
e. Technical Training. CELLULAR ONE shall pay all costs of technical
training to be organized, implemented and arranged by BIDDLE pertinent to the
MTSO and associated cellular site equipment; provided, however, that BIDDLE
shall utilize, if feasible, the sales training, personnel and paraphernalia
furnished by cellular system equipment suppliers. All training hereunder shall
be approved in writing by CELLULAR ONE and shall be held in Panama City,
Florida, unless otherwise agreed to by both parties to this Management
Agreement.
f. Access to Cellular System. CELLULAR ONE shall provide BIDDLE ten
(10) numbers for BIDDLE's use in the performance of its obligations under this
Management Agreement in the cellular system. BIDDLE shall pay all costs
associated with such ten (10) numbers except local airtime and local access
charges. BIDDLE shall not sell, lease or otherwise derive any revenue or other
benefit from the use of said ten (10) numbers.
g. System Equipment Acquisition or Lease. CELLULAR ONE shall acquire
by purchase or lease the equipment necessary to implement the non-wireline
cellular telecommunications system in the LICENSE AREA, and such equipment shall
be made available to BIDDLE for his use in the performance of his obligations
under this contract.
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h. Sale or Transfer of System. In the event that CELLULAR ONE
decides to sell, transfer or otherwise dispose of a majority of its interest in
the System, except to a corporation or other business entity owned or controlled
by CELLULAR ONE or Brian L. O'Neill, or a close family member or as part of any
professional estate plan, CELLULAR ONE shall advise BIDDLE of such inclination
to sell and provide BIDDLE an opportunity to purchase CELLULAR ONE's interest in
the LICENSE. If BIDDLE is interested in acquiring CELLULAR ONE's interest, the
parties shall negotiate in good faith for such period of time as CELLULAR ONE
determines in his sole discretion to be warranted. Thereafter, CELLULAR ONE may
market and/or sell any or all interest in the LICENSE without further
restriction.
6. Compensation.
a. As compensation for full and proper compliance with the terms of
this Management Agreement, BIDDLE shall be entitled to the following:
(1) A service fee of One Hundred Fifty Thousand Dollars
($150,000.00), of which Eighty Seven Thousand Five Hundred Dollars
($87,500.00) to be paid upon commencement of the term of this Management
Agreement, and the remainder to be paid via monthly installments of Five
Thousand Two Hundred Eight Dollars and Thirty-Three Cents ($5,208.33),
payable on the 15th day of each month during the term of this Management
Agreement.
(2) Ten percent of gross revenues from the system, after deduction
for all federal, state and local taxes due
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and owing, which sum shall be paid on the 15th day of each month, and
cover the entire prior calendar month.
(3) Subject to the restrictions and limitations of this subparagrah
and subparagraph 2, if CELLULAR ONE sells the System during the term of
this Management Agreement, BIDDLE shall be entitled to a payment equal to
four percent (4%) of the net sales price. Net Sales Price shall mean the
net proceeds received by CELLULAR ONE reduced by the amount of any
brokers' fees or legal fees associated with the sale, the amount of any
transfer fee or tax on the transfer of the System or the Cellular
Business, the amount of any money or capital invested in the Cellular
Business, any money spent on application costs or obtaining the Permit or
License, and reduced by the amount of any debt (including accrued
interest) utilized for construction or maintenance of the System, or
operation of the Cellular Business. Notwithstanding the foregoing,
CELLULAR ONE may convey, transfer, or assign all or any part of its
interest in the System to any corporation or other business entity
controlled by it, by Brian L. O'Neill, or as a part of any professional
estate plan prepared for Brian L. O'Neill by attorneys or other planners,
provided, however, such transfer or conveyance or assignment shall not
materially impair CELLULAR ONE's ability to perform its obligations under
this contract. If BIDDLE is
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the purchaser of the System or the Cellular Business or, if BIDDLE enters
into an agreement with the transferee within one (1) year from the closing
of the sale from CELLULAR ONE to such transferee, under which agreement
BIDDLE renders services similar to those provided herein, the foregoing
sums shall not be due, or if paid, shall be repaid promptly by BIDDLE to
CELLULAR ONE.
(4) BIDDLE shall be entitled to the following compensation based
upon the number of subscribers added to the System on a (calendar) monthly
basis:
Number of Activations Activation Fees
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1-11 Subscribers $150 per Subscriber Activation
12-24 Subscribers $200 per Subscriber Activation
25-36 Subscribers $250 per Subscriber Activation
37-49 Subscribers $300 per Subscriber Activation
50 or more Subscribers $400 per Subscriber Activation
Adjustments required to BIDDLE's compensation shall be deducted from the
monthly amounts owed to BIDDLE pursuant to this Management Agreement. The
amount shall be computed under the above schedule by recalculating the
amount to which BIDDLE would have been entitled under the schedule by
reducing the number of monthly subscribers by the number of subscribers
during that month that failed to remain on the System and pay their bills
for 90 days. Any subscriber for whom BIDDLE receives compensation shall
not be counted for
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compensation purposes again if the subscriber terminates services after 90
days and later resubscribes within a one-year period of the termination
date.
(5) CELLULAR ONE shall pay to BIDDLE additional sums up to the
amount of $5,000.00 for BIDDLE's time required in the generation of Roamer tapes
and Bell South tapes.
b. Each party shall reimburse the other for out-of-pocket expenses
incurred by such party which are the responsibility, under this Management
Agreement, of the other, and which expenses have been incurred at the request of
the other party. Such reimbursement shall occur within ten (10) days after
submission of proof of payment.
7. Competition:
a. In consideration of the expenditure of time, money and effort by
BIDDLE in establishing his business for the sale and installation of cellular
telephones as required in paragraph 3(i) above during the term of this contract,
CELLULAR ONE shall not engage in any business directly or indirectly in
competition with BIDDLE in the sale and installation of cellular telephones,
either as an individual, partner, joint venturer, employee, agent, officer,
director, shareholder or otherwise, in the LICENSE AREA, provided that BIDDLE is
satisfying all of his contractual obligations hereunder.
b. As a condition of their employment, BIDDLE shall require its
employees who work in furtherance of BIDDLE's obliga-
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tions to CELLULAR ONE under this Management Agreement to sign an agreement in a
form consistent with Attachment K and proposed by CELLULAR ONE to the effect
that such employees shall not accept for a period of one (1) year after the
termination of their employment with BIDDLE, or the termination of this
Management Agreement, employment offered by an employer who directly or
indirectly competes with CELLULAR ONE.
c. BIDDLE and CELLULAR ONE recognize that BIDDLE is now operating a
communications business that is not in direct competition with CELLULAR ONE's
business as presently permitted under the applicable rules and statutes of the
FCC and the State of Florida. CELLULAR ONE and BIDDLE recognize that due to a
change in the applicable statutes and rules after the date of this Management
Agreement, there may in the future be a possibility of competition between
BIDDLE's present and future additional expansion business and CELLULAR ONE's
expansion and/or additional business opportunities made available by such
changes or amendments to the present rules and statutes of the FCC and the State
of Florida. In such event and due to the foregoing, the parties hereunder may
come to
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be in competition. Should this transpire, CELLULAR ONE and BIDDLE shall, outside
of this Management Agreement, make every effort to negotiate in good faith and
consummate a separate agreement between them to cover such a competitive
situation. The negotiations of such agreement shall not, directly or indirectly,
interfere with, suspend, or relate in any manner to the duties, responsibilities
or contractual obligations of each party to the other set forth in this
Management Agreement. If CELLULAR ONE elects to subsequently enter into
competition with BIDDLE's present or future business, the parties shall continue
to perform their obligations under this Management Agreement in the same manner
as actually performed prior to said event.
d. During the term of this Management Agreement, BIDDLE shall
refrain from entering into any agreement directly or indirectly through an
entity with which BIDDLE is associated for the provision of cellular, BETRS, or
any other two-way radio telecommunications services, or related service, in the
LICENSE AREA or in any market contiguous to the LICENSE AREA, without obtaining
a prior written consent of CELLULAR ONE.
e. BIDDLE shall not, for a period of one year following the
termination of this Management Agreement, either directly or indirectly, engage
in any business activity which offers or provides to the public in the LICENSE
AREA cellular telephone services, BETRS, or any other two-way radio
telecommunications service, or any related service, including the sale and
installa-
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tion of cellular telephones, unless the sale and installation of such telephones
is done as an authorized agent of CELLULAR ONE. Accordingly, the allegations set
forth in this paragraph shall survive for one one (1) year period the
termination of the Management Agreement regardless of such termination.
f. BIDDLE and CELLULAR ONE understand that BIDDLE has an existing
IMTS system, and BIDDLE has agreed to place all existing two-way customers on
CELLULAR ONE's System, subject to such actions being consistent with the FCC's
rules and regulations.
8. Insurance Benefits. BIDDLE shall use its best efforts to make available
to Brian L. O'Neill and Sylvia Cox, and any other employee of CELLULAR ONE or a
business entity formed and controlled by Brian O'Neill, at CELLULAR ONE's cost,
the right to participate in BIDDLE's life insurance, dental insurance and
medical insurance plans.
9. Confidential Information including this Management Agreement: Both
parties recognize that in performing the Management Agreement that it will be
necessary for each to become conversant with certain information regarding the
business of the other that is not generally available or known to the public, or
to potential or actual competitors, including but not limited to, information
regarding the identity and individual needs of customers and prospective
customers of CELLULAR ONE and BIDDLE, trade secrets, confidential marketing
techniques and certain other confidential information concerning the business
affairs of both
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parties. Each party expressly recognizes and agrees that it would be unfair and
irreparably damaging to the other were it to disclose and/or make use of such
confidential information. Each party covenants and agrees that during the term
of this Management Agreement, and for a period one year thereafter, whether
termination is voluntary or involuntary, that it will refrain from disclosing
and/or making use of any such confidential information, except as may be
necessary in the performance of obligations hereunder or except for disclosures
to counsel. The covenants in this section are in addition to any other
restriction on the dissemination of confidential information, including this
Agreement generally, which may be recognized under any applicable law.
Accordingly, the allegations set forth in this paragraph shall sruvive for one
one (1) year period the termination of the Management Agreement regardless of
the basis for such termination.
10. Law Governing: This Management Agreement shall be interpreted
according to the substantive laws of Washington, D.C. The venue of any
proceeding, arbitration or otherwise shall be the District of Columbia.
11. Termination:
a. This Management Agreement shall terminate upon the earliest of
any of the following:
(1) The date of termination specified in Section 1 of this
Management Agreement;
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(2) A transfer or sale of the subject System, as defined in
Section 5(h) of this Management Agreement;
(3) A material breach of this Management Agreement that is not
cured consistent with subparagraph b of this Section 11; or
(4) Any other change that materially impairs the ability of
either party to comply with the terms of this contract.
b. In the event of a breach of this contract by either party hereto,
the non-breaching party shall serve on the party alleged to be committing, or
alleged to have committed, a breach notice specifying all breaches of the
contract claimed to have occurred up to that time and the date of termination of
the contract which shall be not later than forty (40) days after date of mailing
of said notice to the breaching party. Said notice shall permit the breaching
party twenty (20) days to cure or remedy any breach therein noticed. If the cure
is effected or is in the process of being effected with commercially reasonable
dispatch, this Management Agreement shall not be terminated on account of such
breach. Otherwise the party giving the notice shall have the right to terminate
all of its obligations under this contract (except those provided for in Section
10) pursuant to said notice. In all cases, the non-breaching party shall be
compensated by the other for damages occasioned by any breach.
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c. In the event of an impending sale, transfer, assignment,
assignment for the benefit of creditors, bankruptcy, or any other disposition by
BIDDLE of all or part of his interests under this Management Agreement, BIDDLE
shall notify CELLULAR ONE within five (5) days of intent of such transfer, and,
at CELLULAR ONE's option, this Management Agreement shall automatically
terminate and CELLULAR ONE shall have no further obligation to BIDDLE under this
Management Agreement, except the obligations for unpaid money earned by and due
to BIDDLE pursuant to this Management Agreement up to the date of the
termination, and except those provided for in Section 10. Notwithstanding the
foregoing, BIDDLE may convey, transfer or assign all or any part of his interest
in this Management Agreement to any corporation or other business entity
controlled by him, or as a part of any professional estate plan prepared for
BIDDLE by his attorneys or other planners provided, however, any such transfer
or conveyance or assignment shall not materially impair BIDDLE's ability to
perform its obligations under this contract. In such event, BIDDLE shall give
CELLULAR ONE written notice of the details of the proposed transfer, and the
facts concerning the same.
12. Dispute Resolution: All disputes in connection with this contract
shall be settled by means of mandatory binding arbitration under the laws of the
District of Columbia. Arbitration shall be initiated by a notice demanding
arbitration, specifying the noticing party's appointed arbitrator, designating
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with particularity the facts supporting the demand for arbitration and
constituting the alleged breach, the legal basis therefor and the relief
requested. Such notice shall be personally served on the other party. The other
party, upon receipt of such notice shall, within thirty (30) days after the
mailing of the notice of termination, serve on the initiating party a response
to the notice of arbitration and shall also appoint and designate an arbitrator.
Within thirty (30) days after the designation of the two (2) arbitrators above
stated, the two (2) arbitrators shall meet and agree on a third arbitrator.
Unless otherwise agreed, the three arbitrators by majority vote shall settle the
dispute. In selecting the third arbitrator, the two appointed arbitrators shall
attempt to agree on a third arbitrator who has experience in the
telecommunications industry. All costs of arbitration and reasonable attorney's
fees billed shall be paid by the non-prevailing party.
13. Control and Authority.
a. Nothing contained in this contract shall be deemed to constitute
a surrender or transfer of control of CELLULAR ONE of the right to operate the
Panama City, Florida cellular system or a sale or assignment or option to
purchase any interest in the cellular system in Panama City, Florida, by BIDDLE.
Notwithstanding anything to the contrary in this Management Agreement, CELLULAR
ONE shall have the sole and exclusive right to set rates for the cellular system
and to exercise final authority over all
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decisions concerning the construction, operation and maintenance of the system
in the LICENSE AREA.
b. For the duration of this Management Agreement, CELLULAR ONE
agrees and specifically disclaims any right, title, claim or interest in and to
the business of the sale and installation of cellular telephones, recognizing
that said business shall be the sole property of BIDDLE.
c. No persons working in furtherance of the performance of BIDDLE's
duties hereunder shall be the employees of CELLULAR ONE. All such persons shall
be BIDDLE's employees, representatives, consultants or agents.
d. Notwithstanding anything to the contrary in this Management
Agreement, CELLULAR ONE shall have (i) unfettered use of all cellular business
facilities and equipment; (ii) control over daily operations; (iii) authority to
determine and carry out policy decisions; (iv) responsibility over CELLULAR ONE
employees; (v) responsibility for payment of financing obligations incurred by
CELLULAR ONE; and (vi) entitlement to monies and profits derived from operation
of the cellular facilities, except for fees due and owing to BIDDLE under this
Management Agreement.
14. Specific Performance as an Additional and/or Alternative Remedy: In
addition to any other remedies available in law or equity to the parties in
arbitration, the parties may have the right to enforce the decision of the
arbitration panel or any other decision of competent authority through specific
performance
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as an alternative and/or additional remedy. Both parties recognizing that the
unique services contemplated pursuant to this Management Agreement demand the
availability of such remedy.
15. Notices: All notices, demands, requests, offers or responses permitted
or required hereunder shall be deemed sufficient if mailed by registered or
certified mail or by reputable overnight delivery services, postage prepaid,
addressed as follows:
TO BIDDLE:
Lester B. Biddle, Jr.
1100 Deck Avenue
Panama City, Florida 32401
AND TO:
BIDDLE's designated counsel
Julian Bennett, Esq.
P.0. Box 2422
Panama City, Florida 32402
TO CELLULAR ONE:
Brian L. O'Neill
1100 Beck Avenue
Panama City, Florida 32405
AND TO:
Thomas Gutierrez, Esq.
Lukas, McGowan, Nace and Gutierrez
The Federal Bar Building West
1918 H Street, N.W.
Seventh Floor
Washington, DC 20006
16. Severability: The invalidity or unenforceability of any particular
provision of this Management Agreement shall not
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affect the other provisions hereof and this Management Agreement and shall be
construed in all respects as if such invalid or unenforceable provision were
omitted, provided, however, that both parties shall use their best efforts to
modify the offending provision to conform to the rules and regulations while
preserving the essential benefits of this Management Agreement to each party.
17. No Waiver of Default. No failure by either party to take action on
account of any default by the other party shall constitute a waiver of any
rights set forth in this Management Agreement as they relate to future
performance under the Agreement.
18. Successors. This Management Agreement shall be binding on and shall
operate for the benefit of all parties hereto and their respective heirs,
designees, assigness and successors in interest, including legal
representatives. However, this Management Agreement shall not be assigned
without the written consent of all parties.
19. Headings. Paragraph headings are provided for convenience only and are
not a part of this Management Agreement.
20. Integration. This Agreement contains the entire Agreement between the
Parties and supercedes all other agreements whether written or oral, except for
the lease referenced in Section 3a. This Agreement can be amended only in
writing signed by all parties hereto.
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21. Compliance with FCC Rules. Notwithstanding anything in this Management
Agreement to the contrary, both Parties agree that if any provision shall be
deemed to be inconsistent with or in violation of the FCC's rules, such
provision shall be null and void. In such event, both Parties agree to use best
efforts to modify the offending provision to conform to the FCC rules while
preserving the essential benefits of this Management Agreement to each party.
22. Related Parties. Either party may enter into any reasonable agreement
with a related party or affiliate for the performance of services or the
acquisition of equipment or other property; however, each such agreement shall
be on terms no less favorable to the other party than could readily be obtained
if it was made with a person who is not the related person or affiliate or
partner of the other party.
CELLULAR ONE OF PANAMA CITY, FLORIDA,
LIMITED
By /s/ Brian L. O'Neill
-----------------------------------
Brian L. O'Neill, President
BIDDLE COMMUNICATIONS INDUSTRIES,
INC.
By /s/ Lester B. Biddle
-----------------------------------
Lester B. Biddle, Jr., President
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PANHANDLE CELLULAR PARTNERSHIP AGREEMENT
For Panama City, Florida
MSA 283
This Agreement is by and among the Parties who have timely executed and
delivered a Counterpart Signature Page for this Agreement ("Parties") subject,
however, to the right of Brian L. O'Neill to accept this Agreement depending
upon the number of signatories hereto. The Counterpart Signature Pages, together
with this Agreement, constitutes the entire agreement of the Parties
("Agreement").
WHEREAS, each Party hereto is a beneficiary of the Joint Agreement, dated
November 21, 1986 by and among: Denman Resources, Inc. (14 parties); Mobile
Telephone Corporation (13 parties plus Brian L. O'Neill); Western Cellular
Engineering, Inc. (1 party); and
WHEREAS, One Party, Brian L. O'Neill is the permittee (referred to herein
as the "Permittee" or "Winning Partner") designated by the Federal
Communications Commission ("FCC") for authorization ("Authorization") to build
and operate the non-wireline cellular system ("System") for Panama City, FL MSA
283 ("Market"); and
WHEREAS, in order to clarify each Party's rights and obligations with
respect to the Authorization for the Market, the Parties desire to form this
Panhandle Cellular Partnership ("Partnership") to supersede and replace the
Joint Agreement and all other agreements under which persons may claim an
interest in the System under the terms and conditions set forth herein; and
WHEREAS, the formation of two business entities appears to be a condition
to obtaining acceptable equipment and working capital financing for the System.
The two entities would be arranged in a two tier structure such that all
interest holders would join together in a partnership which would constitute a
holding entity. This holding entity would act as the limited partner in an
operating entity which would operate the System. Through an Executive Committee
the holding entity would pledge its ownership interest in the operating entity
to secure System financing.
NOW, THEREFORE, in consideration of the mutual obligations herein
contained, the receipt and sufficiency of which consideration the Parties hereby
acknowledge, the Parties agree as follows:
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I. Organization
1.1 Governing Agreement. The Partnership shall be governed by the terms
and conditions set forth herein. The Parties hereby intend to form a general
partnership on the terms herein stated.
1.2 Name and Place of Business. The name of the Partnership shall be the
Panhandle Cellular Partnership. The Partnership may also do business under such
other names as are authorized by the Executive Committee from time to time. The
name may be changed from time to time by the Executive Committee of the
Partnership ("Executive Committee"). The principal place of business of the
Partnership shall be Panama City, Florida or any other place authorized by the
Executive Committee. The Partnership shall be a Florida Partnership.
1.3 Purpose. The purpose of this Partnership is to own and manage the
limited partnership or other interest in the entity which will operate the
System for the Market ("Partnership Business"). This Partnership may take any
and all action necessary, incidental or convenient to carry out the Partnership
Business.
1.4 Term. The term of the Partnership shall commence on April 29, 1988
("Effective Date"). The term shall continue until the ninety-ninth anniversary
of the Effective Date, or until earlier terminated as provided herein. This term
may be extended at its expiration date for a similar term only upon approval of
those holding a majority interest in the Partnership.
1.5 Formation. The Partnership shall include each Party who has returned
an executed Counterpart Signature Page on or by the date specified in the letter
circulating this Partnership document and paid the initial $200.00 Capital Call
for each .99% interest. Beneficiaries of the Joint Agreement dated November 21,
1986 who fail to become signatories to this Agreement as a result of not signing
and returning to Winning Party the Counterpart signature page and Qualifications
Questionnaire before April 29, 1988 shall thereby forfeit all rights in this
Partnership, and shall forfeit all contract and all other rights associated with
cellular telephone business in the Market, subject to prior FCC consent, if any
is necessary. All such forfeited interests shall automatically be added to each
Partner's Ownership Interest as specified in Section 2.3 below. Winning Partner
shall have the right to allow additional Parties to join this Partnership at any
time. Such additional Parties may include those who are claiming an interest in
the System in the lawsuit captioned Mitchell, et al v. O'Neill, et al, Bay
County, Florida Cause No. 87-3325. Any person added as an additional party
shall be required to contribute capital in
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such amount as to put such person on a par with other Parties holding like
interests and sign this Agreement. All parties hereto recognize and agree that
the addition of additional Parties to this Partnership will have the effect of
reducing the Partnership Interest of Parties hereto.
1.6 Assignment. Parties hereto shall be permitted to assign all or part of
their interest(s) to another entity or other entities and any such entity or
entities shall succeed to all rights and obligations of the transferor(s).
1.7 Two Tier Structure. This Partnership may become the limited partner in
a limited partnership which may operate the System in the Market. It is
anticipated that this partnership will own 99.01% of such limited partnership. A
.99% interest in a limited partnership operating entity may be granted to the
general partner of the limited partnership which acts as an operating entity.
The general partner in the Operating Entity may be an entity in which Winning
Partner has an interest.
II. Capital Contributions
2.1 Initial Partnership Share. Winning Partner has at least a 50.01%
Ownership Interest in this Partnership. The other Parties to this Agreement
("Minority Parties") have each acquired the right to obtain up to a 0.9900%
interest in this Partnership. All computations under this Agreement shall be to
the nearest ten thousandth of a percent. Any amounts left over shall be added to
increase the interest of the Winning Partner.
2.2 Capital Contributions. Notwithstanding anything to the contrary, each
Party hereto ("Partner") shall contribute to the Partnership in cash its
pro-rata share of the capital of the Partnership in the amounts requested in
writing ("Capital Calls") from time to time by the Executive Committee of the
Partnership. Each Partner's capital contribution shall be made within thirty
(30) days following the date that the Capital Call for the contribution is
delivered to the Partner pursuant to Section 10.10 below. For purposes of this
Agreement, each Partner's pro-rata share shall equal the percentage of its
Ownership Interest in the Partnership at the time of the Capital Call. Capital
Calls except the initial Capital Call of $200.00 for each .9900% interest upon
each Partner shall include an explanation of the reasonably anticipated uses of
the funds.
2.3 Ownership Percentages. Each Partner shall initially have an Ownership
Interest in the Partnership determined in accordance with Sections 1.5 and 2.1
above. After the contributions
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have been made in response to each Capital Call, the interest in the Partnership
("Ownership Interest") held by each Partner shall equal the percentage derived
by multiplying the Partner's total capita contributions by one hundred and then
dividing by the total capital contributions made by all of the Partners.
2.4 Initial Capital Call. The action of the Winning Partner in soliciting
and receiving the initial Capital Call of $200.00 for each .99% interest to be
applied according to this Agreement is hereby ratified, confirmed and approved
by each signatory to this Agreement.
2.5 Failures to Contribute. If any Partner fails to make all or part of a
Capital Call when due pursuant to Section 2.2 above, then the Partner shall be
considered to be in material default with respect to its Ownership Interest in
the Partnership and such Partner's interest shall be reduced by operation of
Section 2.3 above. If a Partner fails to make its initial Capital Call, its
ownership in the Partnership shall be forfeited to the other partners, subject
to the provisions of Section 1.5 above and prior FCC approval, if any is
necessary. No right to cure under this Agreement shall apply to any failure to
make a Capital Call when due, unless approved by unanimous vote of the Executive
Committee. Each deficiency in meeting a Capital Call may be met by a further
pro-rata Capital Call on Partners other than the Partner(s) responsible for the
deficiency. Such further contributions shall be credited to the Capital Accounts
and the Ownership Interest of the Partners making the further contributions and
shall be determined in accordance with the total contributions made by each
Partner subject to the limitations set forth in this Agreement. Whenever a
Partner's interest falls below .2500% and such Partner is in default with
respect to any obligations under this Agreement the Permittee shall have the
right to tender to such defaulting Partner the book value of such defaulting
Partner's interest and such tender shall result in the automatic transfer of the
interest of the defaulting Partner to the Permittee.
2.6 Partnership Financing. Loan agreements for system financing shall be
without recourse to the Partners or shall expressly limit each Partner's joint
and several liability to that particular Partner's Ownership Interest. The
Partnership may participate in the formation and management of a business entity
which will hold the Authorization and enter into financing agreements using the
interests in such business entity as collateral to secure financing. By majority
vote of the Executive Committee, this Partnership shall have the right to pledge
all of its interest in the operating entity as security for financing. Such
pledge shall indirectly include the 50.01% interest of the Winning Partner as
well as the interest of the minority partners.
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2.7 Application Expenses. Permittee shall be entitled to credit toward his
initial and subsequent Capital Call contribution requirements for the expenses
incurred in connection with his application, the dismissal of any petitions to
deny, or other costs incurred in furtherance of the business of this Partnership
or in furtherance of the business of the entity which is owned by this
Partnership and which operates the System ("Operating Entity"). The costs of
prosecuting the winning application which are incurred after the lottery,
defending the winning application's selection and grant and developing the
Partnership Business shall be borne by the Partnership and not individually by
the Winning Partner. This includes all such costs and expenses including but not
limited to attorney's fees, application fees, transportation costs, office
expenses, start-up costs, salaries and any other expenses associated with the
operation of this Partnership or the Operating Entity.
III. Capital Accounts and Allocations
3.1 Title to Property. This Partnership as an entity shall hold sole and
exclusive title to the assets of this Partnership and to all authorizations,
equipment, records, and other property, whether real, personal or intangible,
acquired by this Partnership. No Partner shall have any right, in law or equity,
to request the partition of any asset or property of this Partnership, or to
demand property other than cash upon any distribution by this Partnership.
3.2 Capital Accounts. A separate Capital Account ("Capital Account") shall
be maintained for each Partner on the books of the Partnership in accordance
with generally accepted accounting principles. The Capital Account of each
Partner shall (i) be credited with the Partner's cash capital contributions to
the Partnership and with the net income and gain, if any, of the Partnership
allocated to such Partner and (ii) be charged with the net losses, if any, of
the Partnership allocated to such Partner and with all distributions made by the
Partnership to such Partner. No Partner shall be entitled to interest on its
Capital Account. For purposes of this Agreement, Partnership net income, loss
and gain shall be determined by the Partnership's accountants in accordance with
generally accepted accounting principles.
3.3 Distributions. Distributions of net income and other Partnership
proceeds to the Partners shall be made quarterly in accordance with their
Ownership Interests at the time of distribution. However, the amount available,
if any, for each such distribution shall be determined by the Executive
Committee.
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Distributions of net income shall not exceed such quarter year's net income,
less the amount determined by the Executive Committee to be reasonably required
for non-expensed items in the Partnership budget, such as payment of debt,
principal due or past due, capital investment needs, and working capital. No
Partner shall be required to make a capital contribution to provide the funds
necessary to make a distribution, nor shall the Partnership be required to
borrow money for such purpose.
3.4 Tax Allocations. Taxable income, gain or loss and items of tax credit
of the Partnership for each taxable year shall be determined by the
Partnership's accountants in accordance with applicable income tax laws, rules
and regulations and shall be allocated to the Partners in proportion to their
respective Ownership Interests.
IV. Management
4.1 Partner Voting. Each Partner's voting percentage shall equal the
percentage of its Ownership Interest in the Partnership. The Executive Committee
shall maintain records indicating the Ownership Interest of each partner in the
Partnership. When a Partnership vote is required a vote reflecting more than
fifty percent (50%) in Ownership Interest ("Majority Vote") shall be required.
4.2 Partners' Meeting. A meeting of the Partners shall be held at least
once each year. The first Partners' Meeting shall take place no later than
ninety (90) days after the Effective Date of the Partnership. Partners holding a
total of at least fifty percent (50%) in Ownership Interests shall constitute a
quorum necessary for a Partners' Meeting. Each Partner may designate a proxy to
represent it at Partners' Meetings, by giving written notice thereof to the
Executive Committee. The person so designated will continue to hold said proxy
until the Executive Committee receives written notice of either the revocation
of said proxy or the designation of a successor proxy holder by the Partner.
4.3 Executive Committee. Complete and exclusive power to conduct the
business affairs of this Partnership is hereby delegated to the Executive
Committee of this Partnership ("Executive Committee"), consisting of three
members; provided, however, that prior to the first annual meeting, the Winning
Partner is hereby granted all powers of the Executive Committee. Each member of
the Executive Committee shall be elected at the annual Partners' Meeting;
provided, however, that those persons holding 49.99% of the voting power of this
Partnership (which group may include
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[Illegible] Partner) shall be entitled to elect one of the three members of the
Executive Committee at each annual meeting. Members of the Executive Committee
may be removed at any time by Majority Vote of the Partners. However, the
Executive Committee may fill by appointment any vacancy in its membership which
occurs between annual Partners' Meetings or if the annual Partners' Meeting
fails to elect all required members of the Executive Committee. Meetings of the
Executive Committee shall be held not less than two times per year and such
meetings may be held by conference telephone call. A majority (more than fifty
percent) of the Executive Committee shall constitute a quorum for the
transaction of its business. Each action of the Executive Committee shall
require a vote of a majority of the Executive Committee members casting a vote.
The Executive Committee shall have the authority to pledge the Ownership
Interest of this Partnership in the operating entity as security for System
financing on a non-recourse basis to the individual Partners of the Partnership.
Each Partner hereby grants to and confirms in the Executive Committee power of
attorney and all authority necessary to pledge as security for any such
financing the interest of this Partnership in the Operating Entity and to take
all action deemed by a majority of the Executive Committee to be in the best
interest of this Partnership. Such power of attorney is hereby agreed to be
coupled with an interest. All powers hereby conferred upon the Executive
Committee are hereby agreed to be irrevocable. The Executive Committee is given
the broadest power allowable restricted only by good faith and fair dealing.
4.4 Chairperson and Employees. The Executive Committee shall elect a
Chairperson from among its members. The Chairperson shall preside at all
Executive Committee meetings and all Partners' Meetings. The Executive Committee
may delegate responsibilities and authority to the Chairperson, the System's
general manager, or other Partnership employees to the extent it considers
reasonable. The System's general manager may be delegated the day to day
responsibility for conducting the Partnership Business.
4.5 Meeting Notices. written notice of each Partners' Meeting and each
Executive Committee meeting shall be given by the Chairperson of the Executive
Committee to each Partner and Executive Committee member, respectively. The
notice shall state the place, date, hour and purpose of the meeting. Notice of
any meeting shall be given not less than ten (10) nor more than thirty (30) days
before the date of the meeting, unless otherwise waived in writing. When a
meeting is adjourned to reconvene at another time or place it shall not be
necessary to give notice of the reconvened meeting if the time and place of the
reconvened meeting are announced at the adjourned meeting.
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4.6 Minutes. Minutes reflecting the actions taken at meetings of the
Partnership and Executive Committee shall be kept. Copies of the minutes shall
be maintained at the office of the Partnership and shall be properly transmitted
to a Partner or its representative upon written request.
4.7 Arrangements with Partners. The Partnership may enter onto reasonable
agreements with a Partner or affiliate of a Partner for the performance of
services or the acquisition of System property. However, each such agreement
shall be on terms no less favorable to the Partnership than could readily be
obtained if it was made with a person or entity who is not a Partner or
affiliate of a Partner.
4.8 Indemnification. The Partnership shall indemnify and hold harmless the
Executive Committee from any loss or damage, including attorneys' fees, incurred
by it by reason of any act Performed by it on behalf of the Partnership or in
furtherance of the Partnership's Business; provided, however, that such
indemnification or agreement to hold harmless shall be recoverable only out of
the assets of the Partnership and not from the Partners; provided, further, that
the foregoing indemnity shall extend only to acts or omissions performed or
omitted by the Executive Committee in good faith and in the belief that its acts
or omissions were in the Partnership's interest, and which are not a result of
gross negligence or misconduct on the part of the Executive Committee (unless a
court having jurisdiction determines that the Executive Committee is fairly and
reasonably entitled to such indemnification). Nothing in this Section 4.8 shall
prohibit the Executive Committee from acquiring and entering into contracts of
insurance at the expense of the Partnership that will provide protection to the
Executive Committee from liability for its negligence. Nothing contained in this
Agreement shall allow or be construed to allow an Executive Committee member to
obtain payment or reimbursement for legal fees or other expenses incurred in
connection with any dispute with the Winning Partner.
4.9 No Partner Authority. No Partner shall take any part in the conduct or
control of the Partnership's business nor have any right or authority to act for
or on behalf of the Partnership, except as (a) a member of the Executive
Committee or (b) an agent or employee of the Partnership.
4.10 Operating Entity. The Operating Entity will operate the System in the
Market. The Executive Committee of this Panhandle Cellular Partnership is
empowered to pledge the entire interest of this Partnership in the Operating
Entity as additional security for the obligations of the Operating Entity. It is
anticipated
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that the Operating Entity will acquire equipment and working capital financing
on a secured basis and pledge all of its own assets as security for such
financing.
V. Books and Accounts
5.1 Fiscal Year. The fiscal year of the Partnership shall and on December
31st of each year, or such other date approved by the Executive Committee.
5.2 Books and Records. The Partnership shall maintain proper books and
accounts in accordance with generally accepted accounting principles and the
provisions of this Agreement. Upon the close of each fiscal year, or as
otherwise approved by the Executive Committee, all such books and accounts shall
be audited by the Partnership accountants.
5.3 Reports and Tax Returns. At least fifteen (15) days prior to the
commencement of each fiscal year, the Executive Committee shall mail to each
Partner the annual budget for the Partnership for the fiscal year, together with
the annual budget for the business entity which operates the cellular system.
Within one-hundred and twenty (120) days after the end of each fiscal year,
except in extraordinary situations, the Executive Committee shall mail to each
Partner (i) financial statements for the Partnership, including its balance
sheet as of the end of the year, its statement of income and earnings for the
year, and a statement of changes in its financial position for the year; (ii)
all necessary financial, tax, and other data required for inclusion in or
preparation of tax returns for the Partners; (iii) financial statements for the
business entity which operates the System in Panama City including its balance
sheet as of the end of the year, its statement of income and earnings for the
preceding year and a statement of changes in its financial position for the
year. The Executive Committee may issue other reports from time to time as it
considers appropriate.
5.4 Right of Inspection. Each Partner shall have the right, at its own
expense, to examine and inspect, at reasonable times during business hours, the
books, records, accounts, properties and operations of the Partnership at the
Partnership place of business. Such examination and inspection may be conducted
by the Partner or its authorized agents. However, such examination or inspection
shall not interfere with the operation of the Partnership.
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VI. Transfers of Interest
6.1 Assignment Permitted. Subject to the grant by final order of any
required FCC or other regulatory consent, and subject to the terms of this
Agreement, each Partner may sell, assign, or exchange (collectively "Assign")
all or part of its Ownership Interest to or with any other person or entity
("Assignee"). However, the assigning Partner shall remain fully liable for any
an all of its obligations as a Partner which are incurred prior to the date upon
which the assignment of its Ownership Interest is effective. The Assignee
thereafter shall be subject to all the terms and conditions of the Partnership
Agreement, including all obligations under this Agreement which are attributable
to the assigned Ownership Interest. Partners shall supply adequate proof
satisfactory to the Executive Committee of each Partner's right to participate
in this Partnership, and each person who claims an interest in the Partnership
hereby warrants his or her rights to so participate.
6.2 Notice of Assignment. A Partner who agrees or is required by operation
of law or order of a court of competent jurisdiction, to sell assign or exchange
all or part of its Ownership Interest shall notify the Executive Committee and
counsel to the Partnership at least thirty (30) days in advance of the
consummation of the sale, assignment, or exchange (collectively "Assignment").
The notice shall set forth the name, address, citizenship, and other information
necessary to establish the legal qualifications of the Assignee to hold the
interest to be assigned. This notice is for information purposes only, and shall
not constitute the offering of any right of first refusal to purchase the
interest.
6.3 Approvals and Documentation. If the prior consent of the FCC, any
state regulatory agency, or other governmental authority is required for the
Assignment, such consent shall be obtained prior to consummation of the
Assignment and admittance of the Assignee as a Partner. The Assignee shall
execute and acknowledge all instruments and applications, in form and substance
satisfactory to counsel for the Partnership, which are necessary or desirable to
obtain such consent, to effectuate the Assignment, to admit the assignee as a
Partner, and to bind the assignee under all of the terms and conditions of the
Partnership Agreement. Prior to admission as a Partner, the Assignee shall
reimburse the Partnership for all reasonable expenses, including attorneys'
fees, incurred by the Partnership in connection with the Assignment.
6.4 Preservation of Authorization. No Partner may assign all or part of
its Ownership Interest to any other person or entity unless the Assignment, in
the opinion of the Partnership's
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<PAGE>
counsel, will not disqualify the Partnership from receiving or holding the
Authorization.
6.5 Involuntary Assignment. Upon the death, bankruptcy, insolvency or
incompetency of a Partner, the legal representative, guardian, receiver,
creditor's committee or other successor in interest of the Partner, as the case
may be, shall notify the Executive Committee in writing of such event and,
subject to the restrictions in this Agreement and to Section 6.2 above through
this Section, shall be assigned the Partner's Ownership Interest and admitted as
a Partner.
6.6 Encumbrance of Ownership Interest. No Partner shall pledge,
hypothecate, grant a security interest in or otherwise encumber its Ownership
Interest on the partnership unless: (i) the Partner gives not less than thirty
(30) days prior written notice to the Executive Committee of the creation of the
encumbrance; (ii) the encumbrance attaches solely to the subject Ownership
Interest, and does not attach to any real, personal or intangible property,
equipment, or other asset of the Partnership; (iii) the secured party is
obligated to comply with Sections 6.2, 6.3, 6.4, and 6.5 above in the event it
attempts to enforce the encumbrance; and (iv) any such grant is subject to any
and all prior action with respect thereto by the Executive Committee.
VII. Representation and Warranties
7.1 Representations and Warranties. Each Party or Partner represents and
warrants that: (i) it is duly formed (if not a natural person), validly
existing, and in good standing under the state and local laws to which it is
subject, with full power and authority to enter into and to perform its
obligations under this Agreement; (ii) its execution and performance of this
Agreement will not conflict with, or result in a material breach of or default
under, any agreement, instrument, law, regulation, order, decree or judgment to
which it is subject; (iii) this Agreement is binding and enforceable against it;
(iv) it shall appoint a representative who shall have full power and authority
to vote for it on Partnership matters and such authority shall not be abrogated
until a successor representative is appointed; (v) it has no knowledge of any
fact or circumstance which would disqualify it, the Partnership or the entity
owned by this Partnership from receiving a final grant of the Authorization;
(vi) the statements made or to be made in its application for the Authorization
are true, correct and complete and it has no prohibited cross interest in any
other mutually exclusive application or settlement group; (vii) if the
application is dismissed or returned by the FCC it shall immediately notify the
Executive Committee of such action;
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<PAGE>
(viii) it has not engaged in any improper act, practice or omission which, if
not timely corrected, would result in disqualification of the Operating Entity
to obtain or operate under the Authorization.
VIII. Default
8.1 Material Default. If a Party for any reason breaches any covenant,
representation or warranty of this Agreement as contained in Sections 6.1-6.6
inclusive, 7.1, 10.1, 10.2, and 10.5 hereof, and the breach is not cured within
thirty (30) days after written notice of the breach is provided to the
defaulting Party, then the Party shall be considered to be in material default.
Any Party who commits such a material default shall be liable to the Partnership
for, and shall indemnify the Partnership against, all resulting damages, losses,
and/or expenses suffered and/or incurred by the Partnership including reasonable
attorneys' fees and litigation expenses, suffered or incurred by the
Partnership. The exercise of rights provided in Section 8.2 below shall not
relieve the Party of such liability or indemnification and shall not constitute
a waiver, by any Party of the Partnership of any right or remedy against the
defaulting Party under this Agreement, including the right to offset damages,
losses and expenses against any amount owed to the defaulting Party.
8.2 Sale on Material Default. Each Party who commits a material default
may, at the election of a majority of the Executive Committee, be required to
forfeit its interest in this Agreement, and subject to any required FCC consent,
to transfer to the Winning Partner its Ownership Interest, if any, for an
aggregate amount equal to the lesser of (i) the balance of its capital account;
or (ii) the Partnership book value of its Ownership Interest, as determined in
accordance with generally accepted accounting principles. However, if such
material default occurs before the Party's payment of its share of the Initial
Capital Call, the Party's Ownership Interest shall be forfeited for no
compensation whatsoever and the interest, if any, so forfeited shall
automatically become the property of this Partnership. The provision of this
paragraph may be waived on a case by case basis by vote of the Executive
Committee.
IX. Dissolution and Termination
9.1 Dissolution. Subject to prior FCC and regulatory consent, if any is
required, the Partnership shall dissolve upon the occurrence of any of the
following events: (i) Majority Vote of the Partners to dissolve the Partnership;
(ii) the expiration
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<PAGE>
of the term of this Partnership in which event the interest of all Minority
Parties and all rights associated with the Partnership Business shall
automatically terminate.
9.2 Right to Continue. If the Partnership is dissolved the Winning Partner
or his designee shall have the right to continue the Partnership Business for
the account of Winning Partner or his designee.
9.3 Winding Up. In the event of the dissolution of the Partnership for any
reason, unless the Partnership is continued pursuant to Section 9.2 above, the
Partnership shall be liquidated and its affairs wound up by the Executive
Committee in an orderly yet proper manner. The Partners shall continue to share
all items of income, gain, loss, deduction or credit for tax purposes, and all
profits and losses for accounting purposes, during the period of liquidation in
the same manner as before the dissolution. In order to obtain full market value
from the sale of Partnership assets, the Executive Committee shall have the full
right and discretion to determine the time, manner and terms of each sale of
Partnership property pursuant to the liquidation.
9.4 Distribution Upon Liquidation. After paying or providing for the
payment of all debts and liabilities of the Partnership and all expenses of
liquidation, and after reserving funds reasonably sufficient to cover contingent
or unforeseen liabilities or obligations of the Partnership, the proceeds of the
liquidation and any other assets of the Partnership shall be distributed to the
Partners in accordance with their Ownership Interests at the time of
distribution.
X. Miscellaneous
10.1 Mutual Cooperation. Each Party shall, in good faith, cooperate with
each other Party, the Partnership, and the Executive Committee in promptly
undertaking all actions, executing all documents, and filing all materials with
the FCC, any other governmental body, lenders, vendors, or financial
institutions as may reasonably be necessary or desireable to fulfill each of the
Party's obligations under this Agreement.
10.2 Other Business. Nothing contained in this Agreement shall restrict
any Partner or affiliate of a Partner from engaging in any business outside of
and independent from the Partnership, except that no Partner or affiliate of a
Partner shall be a sales agent or reseller of the wireline cellular system in
the Market.
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<PAGE>
l0.3 Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Parties, their legal
representatives, heirs, administrators, executors, successors and permitted
assigns.
10.4 No Agency. The Parties understand and agree that neither this
Agreement nor the Partnership itself grants or creates in any Party or the
Partnership any power of agency to bind or obligate the Partners, except as
expressly set forth in this Agreement.
10.5 Confidential Information. Under no circumstances shall any Party
utilize or disclose in any manner which is in any way adverse to the interests
of the Partnership or any Party any confidential information, including but not
limited to engineering, technical, financial, managerial and marketing
information, whether or not patentable or copyrightable, disclosed by a Party to
the Partnership or to the other parties in connection with Partnership matters
or created by the Partnership itself or by the Parties in connection with
Partnership matters.
10.6 Specific Performance. Each Party acknowledges that monetary damages
for breach of any of the provisions of this Agreement could be inadequate. Each
Party therefore acknowledges that specific performance, temporary and permanent
injunctive relief, and other appropriate remedies may be granted to enforce any
such provision without proof of actual damage or the inadequacy of the remedy at
law. Notwithstanding the foregoing, damages may also be awarded in addition to
specific performance for breach of this Agreement.
10.7 Severability. If any provision of this Agreement is determined by any
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall continue to be in full force and effect.
10.8 Governing Law. This Agreement and the rights of the Parties hereunder
shall be governed, interpreted, and enforced in accordance with the laws of the
State of Florida.
10.9 Final Order. For purposes of this Agreement, a final order of a
government authority shall mean an order which is effective and is no longer
subject to administrative or court reconsideration, review, appeal or stay.
10.10 Notices. All notices, demands and Capital Calls required or
permitted under this Agreement shall be in writing and shall be conclusively
presumed to have been delivered to the recipient three (3) business days after
posting in the United
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<PAGE>
States mail, first class, postage prepaid, to the recipient's address shown at
the time on the records of the Partnership. Any Party may specify a different
address by notifying the Executive Committee on writing of the change in
address.
10.11 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument. Each signed counterpart shall be dated.
10.12 Headings. All article, section and paragraph titles or captions
contained in this Agreement are for convenience only and shall not be deemed
part of the text of this Agreement.
10.13 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the context may
require.
10.14 Entire Agreement. This Agreement and the Counterpart Signature Pages
specifying the Partnership constitute the entire agreement between the Parties,
superseding all prior agreements or understandings between the Parties. This
Agreement may be modified or amended only by an instrument in writing adopted in
accordance with the provisions of this Agreement.
10.15 Pending Litigation and Claims. There is pending a lawsuit concerning
conflicting claims to interests in this Partnership. Said proceeding is pending
in the circuit court of the Fourteenth Judicial District in the State of Florida
in and for Bay County under Case Number 87-3325. Nothing contained in this
Agreement shall be deemed to constitute a warranty with respect to the true
right to Ownership Interest and/or rights to the Panama City Market. Each
Minority Partner hereto shall be responsible for the preservation of his or her
own interest in this Partnership and/or the Panama City Market. If additional
Partners are admitted as a result of decree or settlement, such event shall not
give rise to a claim for damages and/or equitable relief in favor of any
Minority Party hereto. The Executive Committee shall by majority vote have
absolute and unfettered discretion and authority to settle claims to participate
in this Partnership on whatever terms it deems by majority vote to be in the
best interests of this Partnership even though such settlement may reduce the
interest of each Minority Party in this Partnership, provided such action is
taken in good faith.
10.16 Surrender of Rights. Each signatory to this Agreement surrenders all
rights which each signatory has by virtue of any and all prior settlement
agreements and/or merger agreements
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<PAGE>
and/or other agreements or acts in and to any interests associated with the
operation of a cellular system in Panama City in favor of the terms of this
Agreement. Such surrender of rights shall apply whether or not all twenty eight
(28) minority interest holders to whom this Agreement is presented sign and
return this Agreement and pay the initial Capital Call in a timely fashion. In
the event less than all twenty eight minority interest holders sign this
Agreement the Winning Partner may elect to form another entity to serve as a
holding entity. In such event the rights of the signatories hereto in the System
shall be limited and governed by this agreement rather than by previously
executed settlement agreements (which would include the Denman settlement
agreement, the MTC agreement and the Western Cellular Agreement) or the merger
agreement which was the Joint Agreement of November 21, 1986.
Effective date of the Partnership is April 29, 1988.
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<PAGE>
AMENDED
CERTIFICATE OF LIMITED PARTNERSHIP
OF
SAVANNAH CELLULAR LIMITED PARTNERSHIP
SAVANNAH CELLULAR LIMITED PARTNERSHIP, a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act (the
"Act"), for the purpose of amending its Certificate of Limited Partnership
pursuant to Section 17-202 of the Act, hereby certifies that effective on the
filing date, Paragraph 3 of the Certificate of Limited Partnership is amended to
read in its entirety as follows:
3. The name and business address of the sole general partner of the
Partnership is:
Georgia Metronet, Inc.
245 Perimeter Center Parkway
Atlanta, Georgia 30346
IN WITNESS WHEREOF, the undersigned has executed this Amendment to
the Certificate of Limited Partnership of SAVANNAH CELLULAR LIMITED PARTNERSHIP,
as of May 12, 1993.
GEORGIA METRONET, INC.
its General Partner
By: /s/ Linda T. Muir
----------------------------------
Linda T. Muir, Assistant Secretary
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
SAVANNAH CELLULAR LIMITED PARTNERSHIP
This Certificate of Limited Partnership of Savannah Cellular Limited
Partnership (the "Partnership") has been duly executed and is being filed in
accordance with Section 17-201 of the Delaware Revised Uniform Limited
Partnership Act by Savannah Cellular General Partnership, a California general
partnership, general partner of the Partnership.
1. The name of the Partnership is Savannah Cellular Limited
Partnership.
2. The address of the registered office of the Partnership in the
State of Delaware is at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, and the name and address of the registered agent for
service of process on the Partnership in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
3. The name and business address of the sole general partner of the
Partnership is:
Savannah Cellular General Partnership
137 1/2 South Sycamore Avenue
Los Angeles, California 90036
Attn: Sheila Leibsohn
Managing Partner
Savannah Cellular General Partnership
General Partner
By: /s/ Sheila Leibsohn
-------------------
Sheila Leibsohn
Managing Partner
Date: June 22, 1987
<PAGE>
FIFTH AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT
OF THE PARTNERSHIP OF SAVANNAH CELLULAR LIMITED
PARTNERSHIP
This Fifth Amendment is effective as of March 6,1995, and amends the
Second Amended Limited Partnership Agreement of the Partnership of Savannah
Cellular Limited Partnership (the "Partnership Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Partnership Agreement.
WITNESSETH
WHEREAS: The Partners desire to amend the Partnership Agreement as
provided for herein and in accordance with the requirements for amendments to
the Partnership Agreement set forth therein;
WHEREAS: On March 6,1995, Georgia Metronet, Inc. purchased from GTE
Mobilnet Incorporated, its General Partnership interest in Savannah Cellular
General Partnership, pursuant to the terms of that certain Purchase and Sale;
Assignment and Assumption of Interests Agreement dated June 21, 1995;
WHEREAS: Georgia Metronet, Inc. now owns 100% of the interest in
Savannah Cellular General Partnership, resulting in the dissolution of
Savannah Cellular General Partnership.
NOW THEREFORE: In consideration of the mutual benefits inuring to each of
the parties to this Amendment, intending to be legally bound, the parties hereto
agree that the partnership Agreement shall be amended as follows:
1. The Partnership Agreement is hereby amended by deleting all references
to Savannah Cellular General Partnership as General Partner, and substituting
therefore, Georgia Metronet, Inc. as General Partner.
2. This amendment shall become effective when executed (which execution
may be in counterparts) by the General Partner and Limited Partners whose
Percentage Interests total more than 50% of the Partnership Interests of the
Limited Partners, as provided in Section 12.15 of the Partnership Agreement.
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Fifth Amendment to be
duly executed by its duly authorized representative as of the date first written
above.
GENERAL PARTNER
- ---------------
GEORGIA METRONET, INC., as general partner of Savannah Cellular Limited
Partnership
By: /s/ [ILLEGIBLE]
----------------------
Title:
--------------------
<PAGE>
FOURTH AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT
OF THE PARTNERSHIP OF SAVANNAH CELLULAR LIMITED
PARTNERSHIP
This Fourth Amendment is effective as of December 23, 1994, and amends the
Second Amended Limited Partnership Agreement of the Partnership of Savannah
Cellular Limited Partnership (the "Partnership Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Partnership Agreement.
WITNESSETH
WHEREAS: Article 7 of the Partnership Agreement permits the assignment of
a Limited Partner's Partnership Interest; and
WHEREAS: The Partnership Agreement in Sections 7 and 9 contemplates that
the Partnership Agreement will be amended without the written consent of the
Limited Partners upon the transfer of Partnership Interests by a Limited
Partner; and
WHEREAS: The Kathleen M. Sloan Trust owns a .3067% Limited Partner's
interest in Savannah Cellular Limited Partnership (the "Partnership") and
entered into a definitive Purchase and Sale; Assignment and Assumption of
Interests Agreement (the "Agreement") to sell its entire Limited Partner's
interest to Georgia Metronet, Inc.;
WHEREAS: The Partnership interest in the transaction described herein has
been assigned and transferred in a formal closing on December 23, 1994;
WHEREAS: the General Partner desires, for itself and as attorney-in-fact
for the Limited Partners, to amend the Partnership Agreement and provide for the
continuation of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Partnership Agreement is hereby amended by deleting all references
to the Kathleen M. Sloan Trust as Partner.
2. As a result of this transfer, the respective Partnership Interests of
the Partners as of the date hereof are:
General Partnership Savannah Cellular General 50.2590%
Interest Partnership
<PAGE>
Limited Partnership Georgia Metronet, Inc. 47.6226%
7 Minority Partners 2.1184%
3. This amendment shall become effective when executed (which execution
may be in counterparts) by the General Partner and Limited Partners whose
Percentage Interests total more than 50% of the Partnership Interests of the
Limited Partners, as provided in Section 12.15 of the Partnership Agreement
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
IN WITNESS WHEREOF, the undersigned has caused this Fourth Amendment to be
duly executed by its duly authorized representative as of the date first written
above.
GENERAL PARTNER
- ---------------
For itself and as Attorney-in-fact for the Limited Partners pursuant to
Section 9 of the Partnership Agreement
GEORGIA METRONET, INC.
Managing General Partner
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
LIMITED PARTNER
- ---------------
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
<PAGE>
FOURTH AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT
OF THE PARTNERSHIP OF SAVANNAH CELLULAR LIMITED
PARTNERSHIP
This Fourth Amendment is effective as of December 23, 1994, and amends the
Second Amended Limited Partnership Agreement of the Partnership of Savannah
Cellular Limited Partnership (the "Partnership Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Partnership Agreement.
WITNESSETH
WHEREAS: Article 7 of the Partnership Agreement permits the assignment of
a Limited Partner's Partnership Interest; and
WHEREAS: The Partnership Agreement in Sections 7 and 9 contemplates that
the Partnership Agreement will be amended without the written consent of the
Limited Partners upon the transfer of Partnership Interests by a Limited
Partner; and
WHEREAS: The Kathleen M. Sloan Trust owns a .3067% Limited Partner's
interest in Savannah Cellular Limited Partnership (the "Partnership") and
entered into a definitive Purchase and Sale; Assignment and Assumption of
Interests Agreement (the "Agreement") to sell its entire Limited Partner's
interest to Georgia Metronet, Inc.;
WHEREAS: The Partnership interest in the transaction described herein has
been assigned and transferred in a formal closing on December 23, 1994;
WHIEREAS: the General Partner desires, for itself and as attorney-in-fact
for the Limited Partners, to amend the Partnership Agreement and provide for the
continuation of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Partnership Agreement is hereby amended by deleting all references
to the Kathleen M. Sloan Trust as Partner.
2. As a result of this transfer, the respective Partnership Interests of
the Partners as of the date hereof are:
General Partnership Savannah Cellular General 50.2590%
Interest Partnership
<PAGE>
Limited Partnership Georgia Metronet, Inc. 47.6226%
7 Minority Partners 2.1184%
3. This amendment shall become effective when executed (which execution
may be in counterparts) by the General Partner and Limited Partners whose
Percentage Interests total more than 50% of the Partnership Interests of the
Limited Partners, as provided in Section 12.15 of the Partnership Agreement
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
IN WITNESS WHEREOF, the undersigned has caused this Fourth Amendment to be
duly executed by its duly authorized representative as of the date first written
above.
GENERAL PARTNER
- ---------------
For itself and as Attorney-in-fact for the Limited Partners pursuant to
Section 9 of the Partnership Agreement
GEORGIA METRONET, INC.
Managing General Partner
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
LIMITED PARTNER
- ---------------
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
<PAGE>
THIRD AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT
OF THE PARTNERSHIP OF SAVANNAH CELLULAR LIMITED
PARTNERSHIP
This Third Amendment is effective as of January 13, 1993, and amends the
Second Amended Limited Partnership Agreement of the Partnership of Savannah
Cellular Limited Partnership (the "Partnership Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Partnership Agreement.
WITNESSETH
WHEREAS: Article 7 of the Partnership Agreement permits the assignment of
a Limited Partner's Partnership Interest; and
WHEREAS: The Partnership Agreement in Sections 7 and 9 contemplates that
the Partnership Agreement will be amended without the written consent of the
Limited Partners upon the transfer of Partnership Interests by a Limited
Partner; and
WHEREAS: Donnie K. Mangrum and Elmer Mangrum own a .2972% Limited
Partner's interest in Savannah Cellular Limited Partnership (the "Partnership")
and entered into a definitive Purchase and Sale; Assignment and Assumption of
Interests Agreement (the "Agreement") to sell its entire Limited Partner's
interest to Georgia Metronet, Inc.;
WHEREAS: The Partnership interest in the transaction described herein has
been assigned and transferred in a formal closing on January 13, 1993;
WHEREAS: the General Partner desires, for itself and as attorney-in-fact
for the Limited Partners, to amend the Partnership Agreement and provide for the
continuation of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Partnership Agreement is hereby amended by deleting all references
to Donnie K. Mangrum and Elmer Mangrum as Partners.
<PAGE>
2. This amendment shall become effective when executed (which execution
may be in counterparts) by the General Partner and Limited Partners whose
Percentage Interests total more than 50% of the Partnership Interests of the
Limited Partners, as provided in Section 12.15 of the Partnership Agreement
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
IN WITNESS WHEREOF, the undersigned has caused this Third Amendment to be
duly executed by its duly authorized representative as of the date first written
above.
GENERAL PARTNER
- ---------------
For itself and as Attorney-in-fact for the Limited Partners pursuant to
Section 9 of the Partnership Agreement
GEORGIA METRONET, INC.
Managing General Partner
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
LIMITED PARTNER
- ---------------
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 5/30/95
--------------------
<PAGE>
SECOND AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT OF THE
PARTNERSHIP OF
SAVANNAH CELLULAR LIMITED PARTNERSHIP
This Second Amendment to the Second Amended Limited Partnership Agreement
of the Partnership of Savannah Cellular Limited Partnership is made and entered
into as of July 29, 1994. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in that certain Second
Amended Limited Partnership Agreement of the Partnership of Savannah Cellular
Limited Partnership dated as of June 21, 1987 (the "Partnership Agreement").
WITNESSETH
WHEREAS, the Partners desire to amend the Partnership Agreement as
provided for herein and in accordance with the requirements for amendments to
the Partnership Agreement set forth therein;
NOW, THEREFORE, in consideration of the mutual benefits inuring to each of
the parties to this Amendment, intending to be legally bound, the parties hereto
agree that the Partnership Agreement shall be amended as follows:
1. Section 11.2(b) of the Partnership Agreement shall be amended to delete
the following:
"On or before April 1 of each year,"
and replace it with the following
"By April 30 of the following year,"
2. This amendment shall become effective when executed (which execution
may be in counterparts) by the General Partner and Limited Partners whose
Percentage Interests total more than 50% of the Percentage Interests of the
Limited Partners, as provided in Section 12.15 of the Partnership Agreement.
<PAGE>
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
IN WITNESS WHEREOF, the undersigned hereto have caused this Second
Amendment to be duly executed by their duly authorized representatives as of the
date first written above.
GENERAL PARTNER
- ---------------
SAVANNAH CELLULAR GENERAL PARTNERSHIP
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 7/29/94
--------------------
LIMITED PARTNER
- ---------------
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 7/29/94
--------------------
<PAGE>
FIRST AMENDMENT TO
SECOND AMENDED LIMITED PARTNERSHIP AGREEMENT
OF THE PARTNERSHIP OF SAVANNAH CELLULAR LIMITED
PARTNERSHIP
This First Amendment is effective as of December 3, 1993, and amends the
Second Amended Limited Partnership Agreement of the Partnership of Savannah
Cellular Limited Partnership (the "Partnership Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Partnership Agreement.
WITNESSETH
WHEREAS: Article 7 of the Partnership Agreement permits the assignment of
a Limited Partner's Partnership Interest; and
WHEREAS: the Partnership Agreement in Sections 7 and 9 contemplates that
the Partnership Agreement will be amended without the written consent of the
Limited Partners upon the transfer of Partnership Interests by a Limited
Partner; and
WHEREAS: it is known by all that on June 21, 1987, Georgia Metronet, Inc.,
as a General Partner in the Savannah Cellular General Partnership, entered into
the Partnership Agreement which established Savannah Cellular Limited
Partnership (the "Partnership"). Savannah Cellular General Partnership is the
sole General Partner of the Partnership; and
WHEREAS: on December 28, 1990, GTE Mobile Communications Incorporated
("GTEMC") purchased a 23.7697% limited partnership interest (the "Limited
Partnership Interest") in the Partnership and entered into the Partnership
Agreement; and
WHEREAS: GTEMC is the parent corporation of Georgia Metronet, Inc.; and
WHEREAS: GTEMC is willing to contribute the Limited Partnership Interest
and Georgia Metronet, Inc. is willing to accept the Limited Partnership
Interest; and
WHEREAS: Georgia Metronet, Inc. is willing to assume all of the
obligations of GTEMC relating to the Partnership or arising under the
Partnership Agreement with respect to the Limited Partnership Interest, pursuant
to the terms of the Assignment and Assumption Agreement dated as of December 3,
1993; and
<PAGE>
WHEREAS: the General Partner desires, for itself and as attorney-in-fact
for the Limited Partners, to amend the Partnership Agreement to reflect such
assignment and change in the ownership percentage of the General Partner.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Partnership Agreement is hereby amended by deleting all references
to GTEMC as Partner.
2. As a result of this transfer, the respective Partnership Interests of
the Partners as of the date hereof are:
General Partnership Savannah Cellular General 50.2590%
Interest Partnership
Limited Partnership Georgia Metronet, Inc. 47.3159%
Interest
8 Minority Partners 2.4251%
3. This amendment shall become effective when executed (which execution may be
in counterparts) by the General Partner and Limited Partners whose Percentage
Interests total more than 50% of the Partnership Interests of the Limited
Partners, as provided in Section 12.15 of the Partnership Agreement
ALL OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENT SHALL REMAIN UNCHANGED.
(This space intentionally left blank)
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this First Amendment to be
duly executed by its duly authorized representative as of the date first written
above.
GENERAL PARTNER
- ---------------
For itself and as Attorney-in-fact for the Limited Partners pursuant to
Section 9 of the Partnership Agreement
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 7/29/94
--------------------
LIMITED PARTNER
- ---------------
GEORGIA METRONET, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title: President
-------------------
Date: 7/29/94
--------------------
<PAGE>
Second Amended
Limited Partnership Agreement
of the Partnership of
SAVANNAH CELLULAR LIMITED PARTNERSHIP
THIS AGREEMENT dated as of the 21st day of June, 1987, by and among
Savannah Cellular General Partnership (hereinafter the "Initial General
Partner"), a general partnership organized under the laws of the State of
California, as general partner, and each of those persons who have executed this
Agreement and whose names and addresses are set forth in Schedule A annexed
hereto, as limited partners (hereafter "Limited Partners").
WHEREAS, the FCC has issued to the Managing Partner of the Initial
General Partner a Construction Permit to build and operate a Cellular System in
Savannah, Georgia; and
WHEREAS, the Limited Partners have certain rights to receive
minority equity interests in the entity that will receive that Construction
Permit; and
WHEREAS, the parties hereto have concluded that it will be in their
best interests and the best interests of the public to form a limited
partnership for the purpose of constructing and operating the System; and
WHEREAS, the parties hereto desire to set forth in full the terms
and conditions of their undertaking in this Limited Partnership Agreement (the
"Agreement") and to form this limited partnership under the Delaware Revised
Uniform Limited Partnership Act;
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NOW, THEREFORE, in consideration of the foregoing, the mutual
promises of the parties hereto, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, as hereinafter defined, the
following terms shall have the meanings respectively assigned to them in this
Article I unless the context requires otherwise.
"Affiliate" or "Affiliated Person" means, when used with reference
to a specific Person (or when not referring to a specific Person shall mean
Affiliate of a Partner), any Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with
such specific Person. This term shall also include any Person who, directly or
indirectly, through one or more intermediaries, has the contractual right or
option to acquire or vote more than 50% of the voting interest of a specific
Person.
"Agreed Value" means, with respect to property, the fair market
value of that property on the date it is contributed to the Partnership, as
determined by the Managing General Partner in good faith and by reasonable
methods
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(including the employment of independent professional appraisers). For all
purposes, the Agreed Value of an interest in the Construction Permit (at the
time of its contribution in accordance with section 3.1) shall be based on the
proportion of ownership of the Construction Permit and on a total value for the
Construction Permit of $3,460,920, without increase or diminution for a majority
or minority position.
"Agreement" means this Partnership Agreement and the Schedules
hereto, as the same may be amended from time to time. Words such as "herein,"
"hereinafter," "hereof," "hereto," "hereby," and "hereunder," when used with
reference to this Agreement, refer to this Agreement as a whole, unless the
context otherwise requires.
"Area" means the Savannah, Georgia Metropolitan Statistical Area
("MSA").
"At-Risk Partner" shall mean any Partner that bears the economic
risk of loss with respect to a Partnership liability that is otherwise without
recourse to the Partnership, including Partners that have made non-recourse
loans to the Partnership or have guaranteed such loans made by others.
"Bankruptcy" (including the adjectival form "Bankrupt") means with
respect to any Partner, (i) such Partner making an assignment for the benefit of
creditors or admitting in writing its inability to pay its debts when due; (ii)
the commencement by or against such Partner of any
<PAGE>
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liquidation, dissolution, bankruptcy, reorganization, insolvency or other
proceeding for the relief of financially distressed debtors; or the appointment
for such Partner, or a substantial part of such Partner's assets, of a receiver,
liquidator, custodian or trustee; and, if any of the events referred to in this
clause (ii) occur involuntarily, the failure of same to be dismissed, stayed or
discharged within 90 days; or (iii) the entry of an order for relief against
such Partner under Title 11 of the United States Bankruptcy Code.
"Capital Account" means the capital account to be maintained by the
Partnership for each Partner. A Partner's Capital Account shall be credited with
(i) the amount of any Capital Contribution made by or on behalf of such Partner
in cash, (ii) the Agreed Value (net of liabilities that the Partnership is
considered to assume or take subject to under Code Section 752) of any Capital
Contribution made by or on behalf of such Partner in property other than cash,
and (iii) allocations to such Partner of Partnership Profits, income or gain
pursuant to section 4.1(a), and any other item required to be credited for
proper maintenance of capital accounts by the Treasury regulations under Section
704(b) of the Code. A Partner's Capital Account shall be debited with (i) the
amount of any cash and the fair market value of property distributed to such
Partner (net of liabilities that such Partner is considered to assume or take
subject to under Code
<PAGE>
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Section 752), all as may be determined in accordance with this Agreement, (ii)
allocations of Partnership Losses and deductions (or items thereof, including
Partner Nonrecourse Deductions) pursuant to section 4.1(b), and (iii)
allocations to such Partner of any expenditures of the Partnership described in
Code Section 705(a)(2)(B), including any nondeductible taxes paid by the
Partnership. If any property other than cash is distributed to a Partner, the
Capital Accounts of the Partners shall be adjusted in the manner provided in
section 8.6 as if the property had been sold by the Partnership for a price
equal to its fair market value and the proceeds of such sale distributed. In
addition, each Partner's Capital Account shall be adjusted as of the time of
either the acquisition of any LP or GP Units from the Partnership by any new or
existing Partner in exchange for more than a de minimus Capital Contribution or
the redemption of any LP or GP Units by the Partnership in exchange for more
than a de minimus amount to reflect the amount of unrealized income, gain, loss,
or deduction inherent in all Partnership property (to the extent such amount has
not been reflected in the Capital Accounts previously) that would be allocated
to such Partner under section 4.1 if all Partnership property were sold for its
fair market value at the time of the acquisition or redemption. Any question
concerning a Partner's Capital Account shall be resolved by applying principles
consistent with this Agreement and the regulations
<PAGE>
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promulgated under Section 704 of the Code in order to assure that all
allocations herein will have substantial economic effect or will otherwise be
respected for federal income tax purposes.
"Capital Contribution" means the sum of cash and the Agreed Value of
other property, if any, contributed to the Partnership by each Partner in
accordance with Article III and otherwise. Any reference in this Agreement to
the Capital Contribution of a Partner shall include the contributions to the
capital of the Partnership made by any predecessor in interest of such Partner.
"Cellular System" means the non-wireline Domestic Public Cellular
Radio Telecommunications Services system to be operated in the Area as described
in Part 22 of the FCC's Rules and Regulations as currently in effect or as from
time to time amended or modified.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
"Construction Permit" means the permit granted by the FCC for the
construction of the Cellular System and any successor licenses or permits
allowing construction and operation of the Cellular System.
"Date of Issue" shall mean August 3, 1987, which shall be the record
date for the issue of LP Units (as defined below) and for determining the
respective Percentage
<PAGE>
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Interests (as defined below) of the Limited Partners and the Initial General
Partner.
"General Partner" means a Partner holding GP Units.
"GP Unit" means an ownership interest in the Partnership held by a
General Partner.
"FCC" means the Federal Communications Commission and any successor
federal agency having jurisdiction over the regulation of the Cellular System.
"Indebtedness" means any indebtedness of the Partnership for
borrowed money, or under guarantees (other than endorsements for collection or
deposit in the ordinary course of business) of the obligations of another
Person, or for obligations of the Partnership as an "account party" under a
letter of credit, or for the deferred purchase price of property or services. A
lease, the obligations with respect to which are required to be capitalized on
the Partnership's balance sheet in accordance with generally accepted accounting
principles consistently applied, shall be deemed indebtedness in the amount
required to be capitalized.
"Licenses" means all FCC, state or local licenses, approvals and
authorizations required to construct, own and operate the Cellular System.
"Limited Partner" means a Partner holding LP Units.
"LP Unit" means an ownership interest in the Partnership held by a
Limited Partner.
<PAGE>
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"Majority Vote" means the affirmative vote of a Partner or
combination of Partners holding in excess of 50% of the Percentage Interests
entitled to vote on the matter.
"Managing General Partner" means the Initial General Partner so long
as the Initial General Partner holds more than 50% of the GP Units. If the
Initial General Partner no longer holds more than 50% of the GP Units, the
Managing General Partner shall be that Partner holding more than 50% of the
outstanding GP Units, or, if no Partner holds more than 50% of the GP Units, the
Managing General Partner shall be the Partner holding GP Units that is chosen to
be Managing General Partner by a majority of all General Partners holding GP
Units in accordance with section 6.1(v).
"Option Agreement" means the Option Agreement by and among Sheila
Leibsohn, Georgia Metronet, Inc., a Georgia corporation, Savannah Cellular
Limited Partnership, and Savannah Cellular General Partnership dated as of June
24, 1987, and concerning interests in this Partnership.
"Partner" or "Partners" means the Persons who have executed this
Agreement on or before the Date of Issue (constituting the Initial General
Partner and the Limited Partners as identified in schedule A hereto) and any
Person who becomes a Substitute Partner in respect of any portion of the
Percentage Interest of a Partner as provided in Articles VI and VII.
<PAGE>
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"Partner Nonrecourse Debt" means any nonrecourse debt of the
Partnership for which any Partner bears the economic risk of loss. The
determination of whether a Partnership liability constitutes a Partner
Nonrecourse Debt shall be made in accordance with Temp. Treas. Reg. ss. ss.
1.704-1T (b)(4)(iv)(h), 1.704-1T(b)(4)(iv)(k), and 1.752-1T(d).
"Partner Nonrecourse Deduction" means any item of Partnership loss,
deduction, or Code Section 705(a)(2)(B) expenditure (as defined in Treas. Reg.
ss. 704-1(b)(2)(iv)(i)) entering into the computation of Profits and Losses that
is attributable to a Partner Nonrecourse Debt. The determination of whether an
item constitutes a Partner Nonrecourse Deduction shall be made in accordance
with Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(h).
"Partnership" means the Partnership, formed under and governed by
this Agreement, as such Partnership may from time to time be reconstituted.
"Partnership Business" (including the "Business") shall have the
meaning provided in Section 2.3.
"Percentage Interest" means, with respect to any Partner, a
percentage determined by dividing the sum of that Partner's LP and GP Units by
the total number of LP and GP Units held by all Partners (including Substitute
Partners and Transferees).
<PAGE>
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"Person" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, governmental agency,
cooperative, association, individual or other entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such person as
the context may require.
"Profits" and "Losses" mean, for any fiscal year, the net income or
net loss, respectively, of the Partnership as reported by the Partnership for
federal income tax purposes, except that (i) items of income, gain, loss, and
deduction relating to property contributed to the Partnership shall be computed
as if the basis of the property to the Partnership at the time of contribution
were equal to its Agreed Value on that date (for purposes of this clause (i),
the amount of any depreciation, amortization, or other cost recovery deduction
allowable for any period with respect to Property contributed to the Partnership
shall be an amount that bears the same ratio to the Agreed Value of the Property
on the date of contribution as the federal income tax depreciation,
amortization, or other cost recovery deduction bears to the adjusted tax basis
of the Property on the date of contribution), (ii) any reduction in basis under
Section 48(q) of the Code shall be treated as an expense, (iii) any income of
the Partnership that is exempt from federal income tax and not otherwise taken
into account in compiling Profits or Losses shall be added to such taxable
income or loss, and
<PAGE>
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any related expenses not allowed as a deduction pursuant to Code Section 265
shall be subtracted from such taxable income or loss, and (iv) any expenditures
of the Partnership described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treas. Reg. ss. 1.704-1(b) and not
otherwise taken into account under this section shall be subtracted from such
income or loss. If there has been an adjustment to the Partners' Capital
Accounts pursuant to the next to last sentence under the definition of
"Capital-Accounts" in Article I to reflect the unrealized income, gain, loss, or
deduction inherent in Partnership property at the time of the acquisition or
redemption of LP Units: (I) depreciation, amortization, or other cost recovery
deductions with respect to such property for each fiscal year or other period
shall equal an amount which bears the same ratio to the fair market value of
such property on the date of such adjustment as the federal income tax
depreciation, amortization, or other cost recovery deductions for such year or
other period bears to the adjusted tax basis of such property on such date; and
(II) gain or loss resulting from any disposition of such property with respect
to which gain or loss is recognized for federal income tax purposes shall be
computed under this sentence as if such property had an adjusted basis on the
date of such adjustment equal to its fair market value on such date. Profits and
Losses shall include, where the context requires,
<PAGE>
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related federal income tax items such as capital gain or loss, tax preferences,
investment interest, depreciation, cost recovery, depreciation recapture, and
cost recovery recapture. Except as otherwise provided in the regulations issued
under Code Section 704(b), such amounts shall be computed without regard to any
basis adjustment for federal income tax purposes under Section 743 of the Code
resulting from an election under Section 754 of the Code.
"Pro Rata" means the proportion which the respective Percentage
Interest of any Partner entitled or required to participate in any action bears
to the sum of the Percentage Interests of all Partners entitled or required to
participate in such action.
"Substitute Limited Partner" means any Person who becomes a Partner
by virtue of acquiring the Percentage Interest of a Limited Partner pursuant to
the provisions of Article VI or VII hereof.
"Transfer" (including the verb forms "Transfer" and "Transferred")
means an assignment, sale, exchange, pledge, transfer or other disposition.
"Transferor" means a Partner or Transferee who makes a Transfer and "Transferee"
means a Person who received a Transfer.
"Unanimous Vote" means the affirmative vote of all Partners entitled
to vote on a matter.
"Withdrawal" (including the verb form "Withdraw" and the adjectival
forms "Withdrawing" and "Withdrawn") means
<PAGE>
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as to any Partners, withdrawing from the Partnership either (i) voluntarily in
accordance with section 6.3, or (ii) involuntarily upon the occurrence of such
Partner's Bankruptcy, death or incompetency.
Each definition herein shall be deemed to refer to the singular,
plural, masculine, feminine, or neuter as the context requires.
ARTICLE II
ORGANIZATION
2.1 Formation. The parties hereto form the Savannah Cellular Limited
Partnership as a limited partnership under the laws of the State of Delaware.
2.2 Name. The business of the Partnership shall be conducted under
the name of Personal Telephone Company of Savannah or such other name or names
as may be chosen from time to time by the General Partner.
2.3 Purpose. The principal purpose of the Partnership is to design,
construct, develop, own, operate, and maintain the Cellular System in the Area
(the "Partnership Business" or "Business") and in connection therewith: to enter
into leases for, or purchase properties needed for, any sites necessary to the
operation and maintenance of the Cellular System and the provision of cellular
service and equipment; to construct improvements in, furnish, and equip the
sites; to acquire or lease all equipment, supplies, and
<PAGE>
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services necessary to the construction and operation of the Cellular System; to
engage in the wholesale and retail provision of cellular service and subscriber
equipment; to borrow or raise money necessary to the construction and operation
of the Cellular System; to sell or resell the services provided by the wireline
cellular system in the Area prior to commencement of operations of the
Partnership's Cellular System; to execute any documents required in connection
with the foregoing; and to do any and all acts and things which may be
necessary, incidental, or convenient to carry on the Partnership Business as
contemplated by this Agreement. The Partnership Business shall be conducted by
the Partnership as a partnership organized under the laws of Delaware and
qualified to do business in Georgia. Except as provided in this Agreement, the
Partnership Business may be conducted by the Partnership as a corporation,
business trust, or other business entity, only upon a Majority Vote of all
Partners.
2.4 Term. The term of the Partnership shall commence on the
Effective Date and shall continue until the earlier of (a) the ninety-ninth
anniversary of the Effective Date, unless by Majority Vote the Partners elect to
continue the Partnership or (b) the dissolution and termination of the
Partnership pursuant to Article VIII.
2.5 Principal Place of Business. The principal place of business of
the Partnership shall be the Savannah,
<PAGE>
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Georgia Area, except as otherwise determined by the General Partner.
2.6 Representations and Warranties. Each Partner represents and
warrants to each of the other Partners, which representations and warranties
shall survive the execution of this Agreement and the consummation of the
transactions herein contemplated, that:
(a) Consistent with its apparent identification in Schedule A, (i)
it is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, or (ii) it is a partnership
or joint venture duly organized and validly existing under the laws of the
jurisdiction of its organization, or (iii) it is a natural person;
(b) It has full power and authority to execute and perform this
Agreement;
(c) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of such Partner, and
the Agreement is binding and enforceable against such Partner in accordance with
its terms;
(d) The execution, delivery, and performance of this Agreement will
not conflict with, result in a breach of, or cause a default under, with or
without the giving of notice or the passage of time or both, its articles of
incorporation, bylaws, partnership or joint venture
<PAGE>
-16-
agreements, or any material agreement or instrument to which it is a party or by
which it or any of its property is bound, nor will it conflict with or violate
any statute, law, rule, regulation, order, decree, or judgment of any court or
governmental authority which is binding upon it or its property; and
(e) It has no knowledge of any fact or circumstance that would
disqualify it from holding an interest in the Construction Permit as a Partner.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Contributions. The Initial General Partner shall
contribute to the Partnership all of its right, title and interest in the
Construction Permit issued by the FCC to construct for operation a Cellular
System in the Area, and each Limited Partner shall contribute to the Partnership
all of its right to receive a minority interest in the entity that will
construct and operate the Cellular System. In return, on the Date of Issue each
Limited Partner shall receive one LP Unit or that fraction of or number of LP
Units shown on Schedule A, and the Initial General Partner shall receive one LP
Unit and shall receive a number of GP Units and fractions thereof such that the
Percentage Interest attributable to such GP Units will be fifty and one
one-hundredth percent (50.01%) or such larger Percentage
<PAGE>
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Interest as may be necessary to ensure that the Percentage Interest represented
by one LP Unit does not exceed 0.99%.
3.2 Financing. Consistent with Sections 3.4 and 5.1(b), the
Partnership may, and it is the present intention of the partners to, finance all
or a portion of the cost of construction and operation of the Cellular System by
causing the Partnership to borrow the funds required therefor or otherwise to
finance such construction and operation (on a non-recourse basis, if
non-recourse financing is available on reasonable terms), in such amounts at
such times and on such terms as shall be consistent with sound business and
financial practice.
3.3 Capital Accounts. No interest shall be paid on any Capital
Contribution or Capital Account. No Partner shall have the right to demand a
return of a Capital Contribution. No Partner shall be liable for the return of
the Capital Contribution of any other Partner, or any portion thereof; any such
return shall be made solely from the assets of the Partnership. No Partner shall
be required to pay the Partnership or any Partner any deficit in any other
Partner's Capital Account upon dissolution or otherwise; provided, however, that
if any Partner is required to pay a liability of the Partnership, it shall be
entitled to reimbursement from Partnership assets. Upon the transfer of all or a
part of an interest in the Partnership, the Capital Account of the
<PAGE>
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transferor that is attributable to the transferred interest shall carry over to
the transferee.
3.4 Limited Liability of Limited Partners. No Limited Partner shall
be liable under this Agreement for any of the losses, debts, or obligations of
the Partnership or be required to contribute any capital beyond its initial
contribution and any other capital contributions made in accordance with this
Article.
3.5 No Right to Withdraw Capital. Prior to the dissolution and
liquidation of the Partnership, no Partner shall have the right to withdraw from
the Partnership any part of its capital contributed to the Partnership or have
any right to receive any funds or property of the Partnership except as
specifically provided in this Agreement.
3.6 Priority Among Limited Partners. Except as otherwise provided in
this Agreement, no Limited Partner has any priority over any other Limited
Partner as to the return of its Capital Contribution or as to its allocation of
profits and losses or distribution of cash.
<PAGE>
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ARTICLE IV
PROFITS, LOSSES, TAX ALLOCATIONS, AND DISTRIBUTIONS
4.1 Profits, Losses, and Tax Allocations.
(a) Allocation of Profits. Except as otherwise provided in the
Agreement, items of income and of gain and Profits of the Partnership for each
fiscal year shall be determined as of the end of such fiscal year and allocated
to the Partners as follows:
(i) First, if there is a net decrease in Partnership "minimum
gain" (as defined in Treas. Reg. ss. 1.704-1(b)(4)(iv)(c)) during a
fiscal year, all Partners with a deficit Capital Account balance at the
end of such fiscal year (excluding from each Partner's deficit Capital
Account balance any amount that such Partner is obligated to restore under
section 8.4 of this Agreement and under Treas. Reg. ss.
1.704-1(b)(2)(ii)(c) as well as any addition thereto pursuant to the next
to last sentences of Treas. Reg. ss. l.704-l(b)(4)(iv)(f) and Temp.
Treas. Reg. ss. l.704-1T(b)(4)(iv)(h)(5) after taking into account
thereunder any changes during such fiscal year in partnership minimum gain
and minimum gain attributable to Partnership Nonrecourse Debt, and after
reducing such balance by any adjustments, allocations, and distributions
specified in Treas. Reg. ss. 1.704-1(b)(2)(ii)(d)(4), (5), and (6) as
are
<PAGE>
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reasonably expected to be made to such Partner) shall be allocated items
of Partnership income and gain entering into the computation of Profits
and Losses for such fiscal year (and, if necessary subsequent fiscal
years) in the amount and in the proportions needed to eliminate such
deficits as quickly as possible. The allocation under this section
4.l(a)(i) is intended to comply with the minimum gain chargeback
requirements of Treas. Reg. ss. 1.704-1(b)(4)(iv)(e) and shall be
interpreted consistently therewith. However, if it is determined that the
Partnership is subject to the minimum gain chargeback provisions of
paragraph (b)(4)(iv)(e) of Temp. Treas. Reg. ss. 1.704-1T, then the
allocations required under such paragraph shall apply in lieu of the
allocations described in the first sentence of this section 4.l(a)(i).
(ii) Second, if there is a net decrease during a Partnership
fiscal year in the minimum gain attributable to a Partner Nonrecourse Debt
then any Partner with a share of the minimum gain attributable to such
debt at the beginning of such fiscal year shall be allocated items of
Partnership income and gain entering into the computation of Profits and
Losses for such fiscal year (and, if necessary, for subsequent years) (a
"Partner Nonrecourse Debt Minimum Gain Chargeback") in
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proportion to, and to the extent of, an amount equal to the greater of --
(A) The portion of such Partner's share of the net
decrease in the minimum gain attributable to such Partner Nonrecourse Debt
that is allocable to the disposition of Property subject to such debt; or
(B) The deficit balance in such Partner's Capital
Account at the end of such year (determined before any allocation of
Partnership income, gain, loss, deduction, or section 705(a)(2)(B)
expenditure for such year and excluding from such deficit capital account
balance any amount that such Partner is obligated to restore under Treas.
Reg. ss. 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant
to the next to last sentences of Treas. Reg. ss. 1.704-1(b)(4)(iv)(f) and
Temp. Treas. Reg. ss. 1.704-1T(b)(4)(iv)(h)(5) after taking into account
thereunder any changes during such year in Partnership minimum gain and in
the minimum gain attributable to any Partner Nonrecourse Debt).
(iii) Third, if any Limited Partner unexpectedly receives an
adjustment, allocation, or distribution of the type contemplated by Treas.
Reg. ss. l.704-l(b)(2)(ii)(d)(4), (5), or (6) that causes or increases a
deficit in such Limited Partner's Capital Account balance (in excess of
any amount that such Partner is obligated to restore under Section 8.4 of
this Agreement
<PAGE>
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and under Treas. Reg. ss. l.704-l(b)(2)(ii)(c) as well as any addition
thereto pursuant to the next to last sentences of Treas. Reg. ss.
1.704-l(b)(4)(iv)(f) and Temp. Treas. Reg. ss. l.704-l(b)(4)(iv)(h)(5),
and after reducing such balance by any adjustments, allocations, and
distributions specified in Treas. Reg. ss. l.704-l(b)(2)(ii)(d)(4), (5),
and (6) as are reasonably expected to be made to such Partner), items of
Partnership income and gain entering into the computation of Profits and
Losses shall be allocated to all such Limited Partners in proportion to
such deficits being offset to eliminate such deficits as quickly as
possible. It is the intent of the Partners that this section 4.l(b)(iii)
be construed as a qualified income offset provision under Treas. Reg. ss.
l.704-l(b)(2)(ii)(d).
(iv) Fourth, Profits less any amounts allocated pursuant to
section 4.l(a)(i) through (iii) shall be allocated to the General Partners
to the extent necessary to offset any allocations of Loss to such General
Partners pursuant to the last sentence of section 4.l(b)(ii). This
allocation shall be made in reverse order of the allocations to be offset.
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(v) Fifth, the remaining Profits less any amounts allocated
pursuant to section 4.l(a)(i) through (iv), if any, shall be allocated to
the Partners in proportion to their respective Percentage Interests.
(b) Allocation of Losses. Except as otherwise provided in this
Agreement, items of expense, deduction and loss and the Losses of the
Partnership for each fiscal year shall be determined as of the end of such
fiscal year, and shall be allocated to the Partners as follows:
(i) First, Partner Nonrecourse Deductions attributable to a
Partner Nonrecourse Debt shall be allocated to the Partner that bears the
economic risk of loss for such Partner Nonrecourse Debt in accordance with
Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(h).
(ii) Second, Losses less any amounts allocated pursuant to
section 4.l(b)(i) shall be allocated to each Partner in proportion to such
Partner's Percentage Interest, provided, however, Losses shall not be
allocated to any Limited Partner to the extent such Losses would cause or
increase a deficit in such Limited Partner's Capital Account balance (in
excess of any amount that such Partner is obligated to restore under
section 8.4 of this Agreement and under Treas. Reg. ss.
1.7O4-1(b)(2)(ii)(c) as well as any addition thereto pursuant to the next
to last sentences of Treas. Reg. ss. l.704-1(b)(4)(iv)(f) and Temp. Treas.
Reg.
<PAGE>
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ss. 1.704-1(b)(4)(iv)(h)(5)) and after reducing such balance by any
adjustments, allocations, and distributions specified in Treas. Reg. ss.
1.704-1(b)(2)(ii)(d)(4), (5), and (6) as are reasonably expected to be
made to such Partner). Any Losses (less any amounts allocated pursuant to
section 4.l(b)(i)) that cannot be allocated to a Limited Partner under the
preceding sentence (due to the deficit Capital Account balance
restrictions) shall be allocated to the General Partners in proportion to
their respective Percentage Interests.
(c) Tax Allocations. All items of income, gain, loss, and deduction,
and all tax preferences, depreciation, accelerated cost recovery system
deductions and investment interest and other tax items of the Partnership for
each fiscal year (collectively referred to as "Partnership Tax Items") shall be
allocated for tax purposes to the Partners in accordance with this section
4.1(c).
(i) Except as provided in sections 4.l(c)(ii) and 4.l(c)(iii),
Partnership Tax Items shall be allocated for tax purposes in accordance
with the allocations of items of income, gain, and Partner Nonrecourse
Deductions under sections 4.1(a)(i), 4.l(a)(ii), 4.l(a)(iii), and
4.l(b)(i) and the allocation of Profits and Losses under sections
4.l(a)(iv), 4.l(a)(v), and 4.l(b)(ii). For purposes of
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the preceding sentence, an allocation to a Partner of a share of Profits
or Losses shall be treated as an allocation to such Partner of the same
share of each Partnership Tax Item that is taken into account in computing
such Profits or Losses.
(ii) Except as provided in section 4.l(c)(iii), if there has
been an adjustment to the Partners' Capital Accounts pursuant to the next
to last sentence under the definition of "Capital Accounts" in Article I
to reflect the unrealized income, gain, loss, or deduction inherent in
Partnership property at the time of the acquisition or redemption of LP
Units Partnership Tax Items with respect to such property shall be
allocated to the Partners for tax purposes so as to take into account the
difference between the adjusted tax basis of such property and the value
at which it is reflected in the Partners' Capital Accounts in the same
manner as variations between the adjusted tax basis and fair market value
of property contributed to the Partnership are taken into account in
determining the Partners' allocations of Partnership Tax Items under
section 4.l(c)(iii). For purposes of the preceding sentence, the value at
which property is reflected in the Capital Accounts shall equal the fair
market value of such property on the date it was contributed to or
acquired by the Partnership as adjusted by the aggregate
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adjustments made to all Partners' Capital Accounts with respect to such
property under the next to last sentence under the definition of "Capital
Accounts" and clauses (I) and (II) under the definition of "Profits" and
"Losses" in Article I. The allocations under this section 4.l(c)(ii) are
intended to comply with paragraphs (b)(2)(iv)(f)(4) and (b)(4)(i) of
Treas. Reg. ss. 1.704-1 and shall be interpreted consistently therewith.
(iii) Gain or loss upon sale or other disposition of any
property contributed to the Partnership or any depreciation, amortization,
or other cost recovery deduction allowable with respect to the basis of
property contributed to the Partnership shall be allocated for tax
purposes among the contributing and non-contributing Partners so as to
take into account the difference between the adjusted tax basis and the
Agreed Value of the property on the date of its contribution to the extent
permitted by Treas. Reg. ss. 1.704.1(c)(2) or such superseding regulations
as may be promulgated in accordance with Section 704(c) of the Code. In
making allocations pursuant to the preceding sentence, the Managing
General Partner is authorized to apply any method or convention required
or permitted by Section 704(c) of the Code; provided, however, that the
Managing General Partner shall select such method or convention
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as, in its opinion, will take such variation fully into account.
(d) To the extent consistent with the economic arrangement between
the partners as set forth in this Agreement, accounting matters relating to
allocations of Profits and Losses, Capital Accounts, and allocations of items
for federal income tax purposes shall be handled in such a way that the
allocations of such items will have substantial economic effect or will
otherwise be respected for federal income tax purposes.
(e) Special allocations in the case of a termination. If the
Partnership terminates for tax purposes under Code Section 708(b)(l)(B) either
as a result of the sale by Sheila Harris of her interest in the Savannah
Cellular General Partnership or as a result of the sale by the Providence
Journal Company of the stock of Georgia Metronet and a related election under
Code section 338 ("Technical Termination"), then, to the extent permissible
under applicable regulations, any Partnership nonrecourse deductions (as defined
in Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(b)) attributable to property owned
by the Partnership both before and after the Technical Termination and
attributable to any Partnership Nonrecourse debt outstanding at the time of the
Technical Termination will be allocated in such a way that a Limited Partner
(other than Georgia Metronet) holding his interest before the Technical
Termination will not have the
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amount of such deductions allocated to him reduced for any year as a result of
decreased depreciation or other cost recovery deductions entering into the
computation of Profits and Losses with respect to property placed in service on
or before the date of the Technical Termination where such reduction arises
solely because of such Technical Termination. This provision will be
accomplished by reallocating such deductions from the General Partner to such
Limited Partner. Offsetting allocations from such Limited Partner to the General
Partner will be made in subsequent years to the extent that the amount of
Partnership nonrecourse deductions allocated to the Limited Partner are
increased for any year as a result of increased depreciation or other cost
recovery deductions for such year entering into the computation of Profits and
Losses with respect to property placed in service on or before the date of the
Technical Termination where such increase arises solely because of such
Technical Termination; provided that the aggregate amount of offsetting
allocations made to the General Partner from a Limited Partner under this
sentence does not exceed the aggregate amount of allocations made to that
Limited Partner from the General Partner pursuant to the previous two sentences.
No Limited Partner shall be entitled to the benefits of this subsection 4.1(e)
if the depreciation or other cost recovery deductions allowable to such Limited
Partner are greater for such year and preceding
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years, in the aggregate, than would have been the case had the Technical
Termination not occurred.
4.2 Other Items. All other items that must be allocated to the
Partners shall be allocated to the Partners in accordance with the allocation of
Profits and Losses as provided in section 4.1 of this Agreement.
4.3 Distributions. Distributions in cash or in kind may be made in
the discretion of the Managing General Partner. All such distributions shall be
made in proportion to Partners' positive Capital Account balances or, if no
Partner has a positive Capital Account balance, in proportion to Percentage
Interests. Distributions in kind shall be treated as provided in section 8.6.
ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE PARTNERS
5.1 Management of Partnership Business. Subject only to the
limitations contained in this Agreement, the Managing General Partner shall have
exclusive and complete authority in the management and control of the business
of the Partnership for the purposes herein stated, shall make all decisions
affecting the business of the Partnership, and shall have all of the rights and
powers of a general partner as provided in the Delaware Revised Uniform Limited
Partnership Act and as otherwise provided by law. Any action taken by the
Managing General Partner shall constitute the act of and serve
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to bind the Partnership. The Managing General Partner shall manage and control
the affairs of the Partnership to the best of its ability and shall use its best
efforts to carry out the business of the Partnership set forth in Article II,
and in connection therewith, the powers of the Managing General Partner to act
on behalf of the Partnership, which it may exercise at the cost, expense and
risk of the Partnership but subject to the provisions of Section 5.2 hereof,
include (but are not limited to) the following powers:
(a) To construct and operate the Cellular System and to enter into
agreements with others with respect to these activities, which agreements may
contain such terms, provisions and conditions as the General Partner, in its
sole and absolute discretion, shall approve;
(b) To borrow money from any source, for any Partnership purpose,
and in connection therewith to issue notes, debentures and other debt securities
and to hypothecate the assets of the Partnership to secure repayment of the
borrowed sums; so long as this financing is without recourse to any Partner
(other than to any At-Risk Partner). If such financing is not reasonably
available, the Managing General Partner may cause the Partnership to borrow
money with recourse to the Managing General Partner or with recourse to one or
more other General Partners, but only if such General Partners agree in writing
thereto. In any case, however, no borrowing may be undertaken that is with
recourse to the
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Limited Partners (other than At-Risk Partners). No lender to which application
is made for a loan by the General Partner shall be required to inquire as to the
purposes for which such loan is sought. As between this Partnership and such
lender, it shall be conclusively presumed that the proceeds of such loan are to
be and will be used for the purposes authorized under this Agreement;
(c) To invest Partnership assets in bank savings accounts, savings
and loan associations, commercial paper, government securities, certificates of
deposit, bankers' acceptances and other short-term interest-bearing
obligations;
(d) To obtain replacements of any loans or mortgages related in any
way to the Cellular System and prepay in whole or in part, refinance, recast,
modify, consolidate or extend any loans or mortgages affecting any property of
the Partnership;
(e) to investigate, select and determine the relations with
attorneys, accountants, consultants, borrowers, lenders and persons acting in
any other capacity, in connection with the business of the Partnership;
(f) To expend the capital and revenues of the Partnership in
furtherance of the Partnership's business;
(g) To enter into agreements and contracts with Persons to sell,
lease, dispose of, trade, exchange, convey, quitclaim, surrender, release or
abandon all or any part of the real, personal or mixed property of the
Partnership, or
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any interest therein, upon such terms and conditions as the General Partner may
deem advisable, appropriate or convenient;
(h) To perform any and all other acts or activities customary or
incident to the acquisition, ownership, operation, management, and improvement
of the Cellular System and to the conduct of other related activities;
(i) To enter into agreements and contracts with parties and give
receipts, releases and discharges regarding all of the foregoing and any matters
incident thereto as the General Partner may deem advisable or appropriate;
(j) To make such elections under the tax laws of the United States,
the States of Delaware and Georgia and other relevant jurisdictions as to the
treatment of items of Partnership income, gain, loss, deduction and credit, and
as to all other relevant matters (including without limitation elections under
sections 751 through 755 of the Code), as it believes necessary or desirable;
provided, however, that the Managing General Partner shall be required to make
an election under Section 754 of the Code only if the Partners receiving the
benefits of such election shall agree to pay all of the costs to the Partnership
associated with making such election (including recurrent costs) in proportion
to their Percentage Interests affected by the election;
(k) To delegate all or any of its duties hereunder and in
furtherance of any such delegation to appoint, employ, or make a contract with
any Person (including without
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limitation Affiliates of the Managing General Partner) as the Managing General
Partner may in its sole discretion deem necessary or desirable for the
transaction of the business of the Partnership. Such a Person may, under the
supervision of the Managing General Partner, perform any of the following or
other acts or services for the Partnership as the Managing General Partner may
approve, provided, however, that the Managing General Partner shall continue to
be primarily responsible to the Partnership for the performance of all such
obligations: administer the day-to-day operations of the Partnership; serve as
the Partnership's advisor and consultant in connection with policy decisions
made by the Managing General Partner; act as consultants, accountants,
correspondents, attorneys, brokers, escrow agents, or in any other capacity
deemed by the Managing General Partner necessary or desirable; investigate,
select and, on behalf of the Partnership, conduct relations with persons acting
in such capacities with, or employ, or retain services performed or to be
performed by, any of them in connection with the Cellular System; and perform or
assist in the performance of administrative or managerial functions necessary in
the management of the Partnership and the Cellular System; and
(l) Perform or engage in any other acts or activities, and execute
or deliver all other instruments or other writings of any kind or character, as
the Managing General Partner, in its sole discretion, may determine to be
necessary
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or appropriate to carry out the purposes, powers, and business of the
Partnership in Article II, subject only to the limitations set forth in this
Agreement.
5.2 Restrictions on the Managing General Partner's Authority.
(a) Notwithstanding anything in this Agreement to the contrary, the
Managing General Partner may not (except with the written consent or
ratification of the specific act given in accordance with this Agreement by all
the Limited Partners or by other written instrument executed and delivered by
all the Limited Partners subsequent to the date of this Agreement) do any of the
following:
(i) perform any act in contravention of this Agreement;
(ii) perform any act which would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise provided
in this Agreement;
(iii) possess or assign any rights in specific Partnership
property, other than for a Partnership purpose;
(iv) admit a person as a Partner, except as otherwise provided
in this Agreement; or
(v) amend this Agreement in a manner which affects the rights
of the Limited Partners, except as otherwise provided in Articles IX and
XII.
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5.3 Sale of Additional LP Units.
(a) If, in the judgment of the Managing General Partner, the
Partnership is unable to obtain adequate funds on reasonable terms for the
construction and operation of the Cellular System through the borrowing of funds
in accordance with section 5.1(b), the Managing General Partner may cause the
Partnership to sell additional LP Units in the Partnership, of the same class as
the LP Units initially issued or of a separate class that may be subject to
additional capital calls, on such terms and conditions as it may deem to be
appropriate in order to raise capital; provided, however, that any Partner
(including all General Partners) holding LP Units or GP Units at the time of any
such sale shall be offered the opportunity to purchase such portion of the
additional LP Units being offered for sale as is equal to such Partner's
Percentage Interest in the Partnership.
(b) Any sale of additional LP Units pursuant to this Section
shall be conducted in a manner consistent with the federal securities laws and
the blue sky or other securities laws of any state in which an offer to sell
such additional LP Units may be deemed to be made and shall be conducted in such
a manner that it does not result in the termination of the Partnership for tax
purposes under Section 708(b) of the Code. The transfer of any additional LP
Units sold pursuant to this Section shall be restated in accordance with Article
VII of this Agreement.
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5.4 Tax Matters Partner. The Managing General Partner is hereby
designated as the "Tax Matters Partner" in accordance with Section 6231(a)(7) of
the Code and, in connection therewith and in addition to all other powers given
thereunder, shall have all other powers needed to perform fully hereunder,
including, without limitation, the power to retain all attorneys and accountants
of its choice and the right to settle any audits without the consent of the
Limited Partners. The Managing General Partner shall be entitled to
reimbursement from the Partnership for all necessary and reasonable
out-of-pocket expenses incurred in performing its duties as Tax Matters Partner.
5.5 Management Fees; Reimbursement of Expenses. The Partnership
shall reimburse the Managing General Partner for reasonable and necessary
out-of-pocket expenses incurred by the Managing General Partner (or any
partner therein) in performing the Managing General Partner's duties hereunder,
and shall pay to the Managing General Partner the sum of $25,000 per annum as
compensation for its performance of such duties. General partners in the Initial
General Partner, including the Managing Partner, may enter into consulting or
other agreements with the Partnership and may be paid reasonable compensation
for services actually rendered to the Partnership pursuant to any such
agreements. Except for the reimbursement and compensation expressly provided for
in this Section 5.5, neither the Managing General Partner nor any
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partners therein shall receive any compensation or reimbursement of expenses for
services performed for or on behalf of the Partnership.
5.6 Limitations on Limited Partners. The Limited Partners shall not
participate in the management or control of the Partnership's business, nor
shall they transact any business for the Partnership, nor shall they have the
power to sign for or bind the Partnership, said powers being vested solely and
exclusively in the Managing General Partner. Each Limited Partner hereby
consents to the exercise by the Managing General Partner of the power conferred
on the Managing General Partner by this Agreement.
5.7 Other Interests of Partners. Any of the Partners may engage or
invest in any other business venture or activity of any nature and description,
or possess any interest therein, independently or with others, including, but
not limited to, the operation of cellular systems in other areas. Neither the
Partnership nor the Managing General Partner nor any Limited Partner nor any
Affiliate of the Managing General Partner or of a Limited Partner shall have any
duty or obligation to disclose or offer to the Partnership or the Partners, or
to obtain for the benefit of the Partnership or the Partners, any other venture
or activity or interest therein; and the Partnership, the Partners, the
creditors of the Partnership and any other person having an interest in the
Partnership shall not merely by virtue of the
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Partnership, have any rights in and to such other ventures of a Partner or the
income or profits derived therefrom.
ARTICLE VI
TRANSFER OF GENERAL PARTNERSHIP INTEREST
6.1 Transfer of GP Units. A Partner may not make a Transfer of all
or any portion of its GP Units unless the Transfer satisfies the following
conditions:
(i) the Transfer is in accordance with and does not violate
the Option Agreement;
(ii) in the opinion of reputable legal counsel chosen by the
Managing General Partner, the Transfer of such Units does not violate
federal securities laws, does not result in the termination of the
Partnership within the meaning of Section 708(b) of the Code (a "Tax
Termination") (provided, however, that Transfers of GP Units to GMI made
on or within 180 days after the fifth anniversary of the date on which an
FCC Form 489 in respect of the Cellular System is filed pursuant to the
Option Agreement, may be made regardless of whether or not they will
result in a Tax Termination), and does not jeopardize the status of the
Partnership for income tax purposes;
(iii) the Transfer of such GP Units is not to a minor or
incompetent, except that this limitation shall
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not apply to a transfer in trust for the benefit of a minor or an
individual in custodianship under the Uniform Gifts to Minors Act or
similar legislation;
(iv) any and all FCC and/or state or local regulatory consents
or approvals necessary to permit consummation of the transfer have been
obtained, and any and all necessary filings with the FCC and/or any other
regulatory or governmental agency in respect of such transfer have been
made; and
(v) if (following the Transfer) the Initial General Partner
no longer holds more than 50% of the outstanding GP Units and no General
Partner holds more than 50% of the outstanding GP Units, the holders of
50% or more of the outstanding GP Units (determined after the Transfer)
agree in writing on a General Partner who accepts responsibility for the
management and control of the Partnership as a substitute Managing General
Partner.
6.2 Conversion of GP Units into LP Units. After a transfer of GP
Units in accordance with section 6.1 and receipt by the Managing General Partner
of the Transferee's agreement in writing to be bound by the terms of the Option
Agreement and upon the approval of the Managing General Partner, any Transferee
other than the Managing General Partner may convert the GP Units transferred
into LP Units by giving written notice to the Managing General Partner, provided
that, in the opinion of reputable legal counsel
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chosen by the Managing General Partner, the conversion will not (i) jeopardize
the limited liability of the Limited Partners, (ii) result in the termination of
the Partnership under Code section 708(b), nor (iii) constitute a violation of
any applicable federal or state securities laws. Upon the conversion of GP Units
into LP Units, the holder of those units shall henceforth have, with respect to
the units, only the rights and responsibilities of a holder of LP Units, but the
LP Units shall carry with them the right to receive the distributions and
allocations to which the former GP Unit holder was entitled under Articles IV
and VIII.
6.3 Withdrawal of General Partners. The Managing General Partner may
not transfer all of its GP Units or otherwise voluntarily Withdraw from the
Partnership (other than by operation of law) unless (i) a new Managing General
Partner has been selected in accordance with section 6.l(v) and (ii) that new
Managing General Partner has agreed in writing to serve as such. No General
Partner may withdraw from the Partnership other than (i) by transfer of its GP
Units, in accordance with this Article, (ii) upon dissolution of the Partnership
in accordance with Article VIII, or (iii) by operation of law. Each of the
Limited Partners hereby specifically consents to Georgia Metronet, Inc.,
becoming the Managing General Partner of the Partnership upon its purchase of
more than 50% of the Initial General Partner's GP Units pursuant to the terms of
the Option Agreement.
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6.4 Liability of a Retired General Partner. If the business of the
Partnership is continued after the Initial General Partner (or other former
Managing General Partner) is no longer a holder of GP Units, the Initial General
Partner (or such other former Managing General Partner) shall not incur any
obligation or liability on account of the business of the Partnership or the
activities of the Managing General Partner occurring after the Initial General
Partner (or such other former Managing General Partner) is no longer a Partner.
ARTICLE VII
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
7.1 Transfer of LP Units.
(a) Right to Transfer. Except as provided in Section 8.4, a Limited
Partner shall not have the right to make a Transfer of all or any part of its LP
Units unless the Transfer satisfies the following conditions:
(i) the Transfer is in writing;
(ii) there is filed with the Partnership a duly executed and
acknowledged counterpart of the instrument making the Transfer, and such
instrument evidences the written acceptance of the Transferee to all the
terms and provisions of this Agreement, and the representation that the LP
Unit(s) are being taken for the purposes of investment and not with a view
to resale or distribution;
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(iii) the Transfer of such LP Units is not to a minor or
incompetent, except that this limitation shall not apply to a transfer in
trust for the benefit of a minor or an individual in custodianship under
the Uniform Gifts to Minors Act or similar legislation;
(iv) the Limited Partner desiring to Transfer his Partnership
Interest secures, at his own expense, an opinion of counsel to the
Partnership acceptable to the General Partner, or a "no-action letter"
from the staff of the Securities and Exchange Commission acceptable to the
General Partner, to the effect that the proposed transaction will not
violate the federal securities laws; and
(v) the Limited Partner desiring to Transfer his Partnership
Interest secures, at his own expense, an opinion of counsel to the
Partnership acceptable to the General Partner to the effect that the
proposed transaction would not result in the close of the Partnership's
taxable year with respect to all Partners, would not result in the
termination of the Partnership within the meaning of Section 708(b) of the
Code (provided, however, that transfers to GMI pursuant to Option
Agreements that take place on or within 180 days after the fifth
anniversary of the date on which an FCC Form 489 in respect of the
Cellular System is filed shall be permitted whether or not such transfers
would result in
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a Tax Termination), and would not jeopardize the status of the Partnership
and Partners for federal income tax purposes.
(b) Rights of Transferee. The Transferee of an LP Unit Transferred
in accordance with the provisions of this Article VII shall become a Substitute
Limited Partner only upon the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's sole
discretion. Failure or refusal of the Managing General Partner to admit a
Transferee of any LP Units Transferred in accordance with the provisions of this
Article VIII as a Substitute Limited Partner shall in no way affect the right of
such Transferee to receive the share of the capital and Profits and Losses to
which his predecessor in interest was entitled. A transferee of any LP Units who
does not become a Substitute Limited Partner in accordance with this Section 7.2
and who desires to make a further assignment of its LP Units shall be subject to
all the provisions of this Section 7.2 to the same extent and in the same manner
as any Limited Partner desiring to make a Transfer of his LP Units.
(c) Rights of Transfer. Any Limited Partner who shall Transfer his
LP Units shall cease to be a Limited Partner of the Partnership and shall no
longer have any of the rights or privileges of a Limited Partner.
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7.2 Death of a Limited Partner. The death, bankruptcy or insolvency
of a Limited Partner will not terminate the Partnership. In the event of the
death of a Limited Partner, except as hereinafter provided in this Section 7.2,
his executor or administrator shall succeed to his interests and shall be
responsible for all the liabilities and obligations of the deceased Limited
Partner under this Agreement, but shall have the right to become a Substitute
Limited Partner only in accordance with the provisions of Section 7.1. For the
purpose of settling the estate of the deceased Limited Partner, the executor or
administrator shall have only such rights of a Limited Partner as are necessary.
7.3 Effectiveness of Transfer. (a) The Transfer by a Limited Partner
(or by a Transferor of a Limited Partner) pursuant to Section 7.1 hereof of all
or part of its LP Units shall become effective on the first day of the month
following receipt by the General Partner of evidence of such assignment in form
and substance reasonably satisfactory to the General Partner and a fee
sufficient to cover all reasonable expenses of the Partnership connected with
such Transfer, provided that the General Partner may, in its sole discretion,
establish an earlier effective date for the assignment if requested to do so.
(b) No Transfer of an LP Unit or any part thereof an violation of
this Article shall be valid or effective, and
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the Partnership shall not recognize the same for the purposes of making payment
or distributions of Profits, Income, return of Capital Contributions or other
distribution with respect to such Partnership Interests, or part thereof. The
Partnership may enforce the provisions of this Article either directly or
indirectly or through its agents by entering an appropriate stop-transfer order
on its books or otherwise refusing to register or transfer or permit the
registration or transfer on its books of any proposed Transfers not in
accordance with this Article VII.
(c) The Partnership shall, from such time as Partnership Interests
are registered in the name of the Transferee on the Partnership's books in
accordance with the above provisions, pay to the Transferee all further
distributions or Profits or other compensation by way of income or return of
capital, on account of the Partnership Interest Transferred. Until the
registration of Transfer on the Partnership's books, the Managing General
Partner may proceed as if no Transfer has occurred.
7.4 Determination of Order of Transfer by Partners.
(a) If, at any time in the opinion of reputable legal counsel chosen
by the Managing General Partner, Partners desire to Transfer a number of LP
Units and GP Units that, were all such Units to be Transferred, would cause the
Partnership to terminate for tax purposes pursuant to Section
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708(b) of the Code, the Managing General Partner shall allow such Transfers to
be consummated only at such times as will not result in the termination of the
Partnership for tax purposes. The Managing General Partner shall have the right
to require the consummation of some or all proposed Transfers of GP or LP Units
to be deferred until such time or times as such consummation will not result in
termination of the Partnership for tax purposes.
(b) The General Partnership shall choose the Partners that will be
required to defer their proposed Transfers of GP or LP Units pursuant to section
(a) hereof in the following manner:
(i) As between requests to Transfer that were received by the
Managing General Partner at different times, the later received requested
Transfer shall be deferred. For this purpose, receipt shall occur upon
actual written notification, received by any agent of the Managing General
Partner acting in such capacity, setting forth the Transferor, the
Transferee, and the number of LP Units or GP Units to be transferred. A
request to Transfer by the Managing General Partner shall be considered to
be received on the date it is actually committed to writing and executed.
(ii) Among requests to Transfer that were received
simultaneously, the Managing General Partner may, in its sole discretion,
either (a) allow each
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Partner requesting approval to transfer immediately that Pro Rata portion
of the LP or GP Units it wishes to Transfer that, taken together with all
other such immediate Transfers, will not result in the termination of the
Partnership for tax purposes, and require each Partner to defer
consummation of the Transfer of the remainder of its LP or GP Units, or
(b) designate by lot an order in which Partners will be permitted to
Transfer their LP or GP Units. Each Partner whose name is chosen shall be
permitted in turn to consummate its proposed Transfer in full on the first
date on which such a Transfer would not, in the judgment of the Managing
General Partner, result in the termination of the Partnership for tax
purposes.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Events Causing Termination. The Partnership shall be dissolved
and its affairs wound up upon:
(a) the Withdrawal of the Managing General Partner if no Managing
General Partner remains and the Limited Partners do not elect pursuant to
Section 8.2 to reconstitute the Partnership;
(b) the sale or other disposition of all or substantially all of the
Partnership's real, personal and
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intangible property or of the interests in the Cellular System owned by the
Partnership;
(c) the expiration of the term of the Partnership;
(d) the Unanimous Vote of all the Partners to terminate the
Partnership; or
(e) otherwise by operation of law.
8.2 Successor Partnership. If the Partnership is dissolved or to be
dissolved by reason of the Withdrawal of the Managing General Partner without
replacement pursuant to Section 8.1(a), Limited Partners whose aggregate
Partnership Percentage exceeds twenty-five percent (25%) may call a meeting of
the Limited Partners by delivering to each of the other Limited Partners, within
thirty (30) days of such Withdrawal, a written notice demanding that a meeting
of Limited Partners be held at the principal place of business of the
Partnership or at another location at the time set forth in such notice (which
shall be not less than fifteen nor more than thirty days after the date of such
notice). Limited Partners having all (100%) of the Limited Partnership Interests
may, by affirmative vote at such meeting, continue the business of the
Partnership and reconstitute the Partnership as a successor limited partnership
with a new General Partner if, in the opinion of reputable legal counsel
approved by the holders of over 50% of the outstanding LP Units, the proposed
reconstitution of the Partnership does not result in the termination of the
Partnership within the
<PAGE>
-49-
meaning of Section 708(b) of the Code and does not jeopardize the status of the
Partnership for federal income tax purposes. If the Limited Partners exercise
this right to continue the business of the Partnership, the Person appointed by
them as the new Managing General Partner, the former Managing General Partner,
and each of the Limited Partners shall execute, acknowledge and file with the
Secretary of State of the State of Delaware a Certificate and Agreement of
Limited Partnership that shall contain substantially the same provisions as
those contained herein and in the Certificate of Limited Partnership of the
Partnership, except that the new Managing General Partner shall be allocated
such share of the profits, losses and distributions of the Partnership, or shall
be paid such fees, as is determined by Partners whose aggregate Percentage
exceeds seventy-five percent (75%). Under this new Certificate and Agreement of
Limited Partnership, the former Managing General Partner shall not be then
entitled to payment of the unreturned balance in its Capital Account, but
instead shall thereafter have the status of an assignee of the GP Units of the
former Managing General Partner and shall receive distributions and allocations
to which it is entitled under Article IV and this Article VIII. The new General
Partner shall indicate its acceptance of the appointment by the execution of
such Certificate and Agreement of Limited Partnership.
<PAGE>
-50-
8.3 Final Accounting. Upon the dissolution of the Partnership a
proper accounting shall be made from the date of the most recent prior
accounting to the date of dissolution.
8.4 Negative Capital Account. Upon the dissolution of the
Partnership, any General Partner who has a negative balance in his Capital
Account, as determined after taking into account all Capital Account adjustments
for the fiscal year during which such dissolution occurs, shall be obligated to
contribute to the Partnership by the end of such fiscal year (or, if later,
within 90 days after the date of such dissolution) an amount such that the
balance in his Capital Account is zero, such amount to be applied and
distributed as provided in Section 8.5. No Limited Partner shall have any
obligation to pay any amount to the Partnership on account of a negative Capital
Account Balance.
8.5 Procedure on Liquidation. Unless the business of the Partnership
is continued pursuant to Section 8.2, upon the dissolution of the Partnership,
the Managing General Partner or the Persons required by law to wind up the
Partnership's affairs shall liquidate the assets of the Partnership and apply
and distribute the proceeds of such liquidation as follows:
(a) First, to payment of debts and liabilities of the Partnership;
<PAGE>
-51-
(b) Second, to the setting up of reasonable reserves for any
contingent liabilities or obligations of the Partnership, provided that any such
reserves shall be held for such period as the General Partner or other Persons
so distributing shall deem advisable for the purpose of disbursing such reserves
in payment of such liabilities or obligations and, at the expiration of such
period, the balance of such reserves, if any, shall be distributed as
hereinafter provided;
(c) Third, to the Partners in accordance with their Capital Accounts
as adjusted pursuant to Article IV for all Partnership operations up to and
including such liquidation.
8.6 Distribution in Kind. If the Managing General Partner or the
Persons required by law to wind up the Partnership's affairs shall determine
that a portion of the Partnership's assets should be distributed to the
Partners, the Managing General Partner or such Persons, as the case may be,
shall obtain an Appraisal as of a date reasonably close to the date of
liquidation. Any unrealized appreciation (or loss) with respect to such assets
shall be allocated among the Partners (in accordance with Section 4.1, assuming
that the property were sold for the appraised value) and distribution of any
such assets (or portions thereof as tenants in common) in kind to a Partner
shall be considered a
<PAGE>
-52-
distribution of an amount equal to the assets' appraised fair market value (or
portions thereof) for purposes of Section 8.5.
8.7 Certificate of Cancellation. Upon the completion of the
distribution of Partnership assets as provided in Sections 8.5 and 8.6, the
Partnership shall be terminated and the Managing General Partner or Persons
required by law to wind up the Partnership's affairs shall cause a certificate
of cancellation to be filed in the office of the Secretary of State of the State
of Delaware and shall take such other actions as may be necessary or appropriate
to terminate the Partnership.
8.8 No Recourse Against the General Partners. A Limited Partner
shall look solely to the assets of the Partnership for the return to its
investment, and if the property of the Partnership remaining after the payment
or discharge of the debts and liabilities of the Partnership is insufficient to
return such investment, it shall have no recourse against the Managing General
Partner, any General Partner or other holders of GP Units or any of their
Affiliates or against any other Limited Partner. Distributions in accordance
with the provisions of this Article VIII upon termination and dissolution of the
Partnership will constitute a complete return to the Partners of their interests
in the profits of the Partnership and their Capital Contributions, a final and
complete distribution to the Partners of
<PAGE>
-53-
all their interests in the Partnership properties and its other assets, and a
final termination and settlement of any and all of the Partners' other interests
in the Partnership.
ARTICLE IX
POWER OF ATTORNEY
Section 9.1. Appointment.
(a) Each Limited Partner hereby irrevocably constitutes and appoints
the Managing General Partner his true and lawful attorney-in-fact, and
empowers and authorizes such attorney, in his name, place and stead to make,
execute, deliver, acknowledge, swear to, file and record in all necessary or
appropriate places such documents as may be necessary or appropriate to carry
out this Agreement, including but not limited to:
(1) any application, certificate, certification, report or
similar instrument or document required to be submitted by or on behalf of
the Partnership to any governmental or administrative agency, officer or
body, or to any self-regulatory organization or trade association in
furtherance of the Partnership business;
(2) all certificates and other instruments (including
counterparts of this Agreement), and any amendment thereof, which the
Managing General Partner deems appropriate to form, qualify or continue
the Partnership as a limited partnership in the
<PAGE>
-54-
jurisdictions in which the Partnership may conduct business or in which
such formation, qualification or continuation is, in the opinion of the
Managing General Partner, necessary or desirable to protect the limited
liability of the Limited Partners;
(3) all amendments to this Agreement adopted in accordance
with the terms hereof and all amendments to this Agreement as may be
necessary or appropriate to reflect or effect:
(i) a change of the name or the location of the
principal place of business of the Partnership,
(ii) the Transfer or acquisition of any Partnership
Interests by a Limited Partner or a General Partner in any manner
permitted by this Agreement,
(iii) a Person becoming a Substitute Limited Partner in
the Partnership or a substitute Partner in the Partnership as
permitted by this Agreement,
(iv) a change in any provision of this Agreement
effected by the exercise by any Person of any right or rights
hereunder, and
(v) the dissolution of the Partnership pursuant to this
Agreement;
<PAGE>
-55-
(4) such certificates, instruments and documents as may be
required by, or may be appropriate under, the laws of Delaware in
connection with the use of the name of the Partnership by the Partnership;
(5) such certificates, instruments and documents as such
Limited Partner may be required, or as may be appropriate for such Limited
Partner to make, under the laws of Delaware or Georgia, to reflect
(i) a change of name or address of such Limited Partner,
(ii) any changes in or amendments of this Agreement, or
pertaining to the Partnership, of any kind referred to in this
Section 9.1, and
(iii) any other changes in or amendments of this
Agreement but only if and when the consent thereto has been obtained
from the Managing General Partner and Limited Partners having all
(100%) of the Limited Partnership Interests; and
(6) all conveyances and other instruments which the Managing
General Partner deems appropriate to reflect the dissolution and
termination of the Partnership.
(b) Each of the agreements, certificates, instruments and documents
made pursuant to Section 9.1(a) shall be in such form as the Managing General
Partner and counsel for the Partnership shall deem appropriate. The powers
conferred
<PAGE>
-56-
by Section 9.1(a) to make agreements, certificates, instruments and documents
shall be deemed to include, without limitation, the powers to sign, execute,
acknowledge, swear to, verify, deliver, file, record or publish the same.
(c) Each Limited Partner authorizes the Managing General Partner as
such attorney-in-fact to take any further action which such Managing General
Partner shall consider necessary or advisable in connection with any action
taken pursuant to this Section 9.1, hereby giving such Managing General Partner
as such attorney-in-fact full power and authority to do and perform each and
every act or thing whatsoever requisite or advisable to be done in and about any
action taken pursuant to this Section 9.1 as fully as such Limited Partner might
or could do if personally present and hereby ratifying and confirming all that
such Managing General Partner as such attorney-in-fact shall lawfully do or
cause to be done by virtue of this Section 9.1.
9.2. Irrevocability; Manner of Exercise. The power of attorney
granted hereunder:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by the Managing General Partner as such
attorney-in-fact, by listing all of the Limited Partners executing any
agreement, certificate, instrument or document with the single signature of such
General Partner; and
<PAGE>
-57-
(c) shall survive the Transfer by a Limited Partner of the whole or
a portion of its interest, except that where the purchaser, Transferee or
assignee thereof with the consent of the Managing General Partner is admitted as
a Substitute Limited Partner, the power of attorney shall survive the Transfer
for the sole purpose of enabling such attorney-in-fact to execute, acknowledge
and file any agreement, certificate, instrument or document necessary to effect
such substitution.
9.3 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all other acts and things, as
may be required by law or as, in the opinion of the Managing General Partner,
may be necessary or advisable to carry out the intent and purposes of this
Agreement.
ARTICLE K
LIABILITY AND INDEMNIFICATION OF THE MANAGING GENERAL PARTNER
10.1 Return of Capital Contribution. Anything in this Agreement to
the contrary notwithstanding, the Managing General Partner shall not be liable
for the return of the Capital Contributions of the Limited Partners, or any
portion thereof, it being expressly understood that any such return shall be
made solely from the Partnership assets.
<PAGE>
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10.2 Liability for Actions or Omissions. The performance of any act
or the omission of any act by the Managing General Partner, in the good faith
belief that he was acting within the scope of his authority under this Agreement
on behalf of the Partnership or in furtherance of the Partnership's interests,
shall not subject the Managing General Partner to any liability to the
Partnership or to the Partners; provided, however, that the foregoing shall not
relieve the Managing General Partner of liability for: (i) fraud, gross
negligence, or willful misfeasance of the General Partner, (ii) violations of
his fiduciary duties, or (iii) acts or omissions of the Managing General Partner
which are in breach of his obligations hereunder.
10.3 Indemnification by Partnership. The Partnership shall indemnify
and save harmless the Managing General Partner from and against any claim, loss,
expense, liability, action or demand incurred by the Managing General Partner in
respect of any omission to act or of any act performed by the Managing General
Partner in the good faith belief that he was acting or refraining from acting
within the scope of his authority under this Agreement on behalf of the
Partnership or in furtherance of the Partnership's interests, provided, however,
that the Managing General Partner shall not be entitled to any indemnity for any
loss sustained or fees or expenses incurred by the Managing General Partner by
reason of: (i) fraud, gross negligence or willful misfeasance of
<PAGE>
-59-
the Managing General Partner, (ii) violations of his fiduciary duties, (iii)
acts or omissions of the Managing General Partner which are in breach of his
obligations hereunder, and (iv) his Pro Rata share of any loss sustained or fees
or expenses incurred by the Partnership. This indemnification shall be binding
upon and inure to the benefit of the Managing General Partner, its heirs,
successors and assigns.
ARTICLE XI
FISCAL MATTERS
11.1 Title to Property and Bank Accounts. The property of the
Partnership shall be held in the name of the Partnership. The Managing General
Partner may not commingle property of the Partnership with any other property of
the Managing General Partner or property of an Affiliate of the General Partner.
All deposits (including security deposits) and other funds not needed in the
operation of the business may, to the extent permitted by applicable
governmental requirements, be deposited in any bank or trust company, or
invested in (i) commercial paper having the highest rating by either Standard
and Poor's Corporation or Moody's Investors Services, Inc., (ii) United States
Government securities, (iii) securities of governmental agencies, (iv) insured
money market funds, and (v) bankers' acceptances and certificates of deposit of
banks having individual capital and surplus of not less than one hundred million
dollars ($l00,000,000).
<PAGE>
-60-
The Managing General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in its possession or control, and shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive benefit of the
Partnership. The Managing General Partner may not contract away its fiduciary
duties.
11.2 Books and Reports.
(a) Maintenance of Books. The Managing General Partner shall keep or
cause to be kept complete and accurate books with respect to the Partnership's
business. Each of the Partners and their duly authorized representatives shall
have the right to examine the books of the Partnership and all other records and
information concerning the Partnership at reasonable times.
(b) Annual Reports. On or before April 1 of each year, the Managing
General Partner shall cause to be prepared and sent to the Limited Partners a
statement setting forth the Limited Partner's share of Profits and Losses,
including those for income tax purposes for the preceding calendar year,
together with an annual financial statement of the Partnership in accordance
with generally accepted accounting principles.
(c) Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
<PAGE>
-61-
11.3 Tax Elections. Notwithstanding the provisions of Section 5.1
herein, if a Partner transfers all or part of its interest in the Partnership at
a profit, any basis adjustment allocable to such profit, whether made under
Section 754 of the Code or otherwise, shall be allocated solely to the
transferee.
ARTICLE XII
GENERAL PROVISIONS
12.1 Obligations and Rights of Transferees.
(a) Assumption of Obligations. Any Person who acquires in any manner
whatsoever any interest in the Partnership, regardless of whether such Person
has accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefit of the acquisition thereof to
have agreed to be subject to and bound by the same obligations under this
Agreement that the predecessor in interest of such Person was subject to or
bound by.
(b) Limitation on Rights of Transferees. A person acquiring an
interest in the Partnership, including the personal representative and heirs of
a deceased Partner, shall have only such rights, and shall be subject to all the
obligations, as are set forth in this Agreement; and, without limiting the
generality of the foregoing, such Persons shall not have any right to have the
value of its interest ascertained or to receive the value of such interest or,
in lieu
<PAGE>
-62-
thereof, to receive profits attributable to any right in the Partnership, except
as herein set forth.
12.2 Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been given when the same are (i)
deposited in the United States mail and sent by certified or registered mail,
postage prepaid, or (ii) delivered, in each case, to the parties at the
addresses set forth in Schedule A annexed hereto or at such other addresses as
such parties may designate by notice to the Managing General Partner.
12.3 Waiver of Action for Partition. Each of the Partners
irrevocably waives during the term of the Partnership and during the period of
its liquidation following any dissolution any right that such Partner may have
to maintain any action for Partition with respect to any of the assets of the
Partnership.
12.4 No Warranties or Representations Other Than As Expressed.
Except as set forth in this Agreement, neither the Managing General Partner nor
the Partnership makes any warranty or representation of any kind to any Partner,
and no Partner makes such warranty to the Partnership or any other Partner
relating directly or indirectly to the Partnership or the Partnership Interests,
or the operations, income, losses or profitability thereof, or the tax
consequences of investing in the Partnership. Each Partner understands that no
one is authorized to make any such warranty or representation on
<PAGE>
-63-
behalf of the Partnership or any Partner except as herein stated.
12.5 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements herein shall survive until the
dissolution and final liquidation of the Partnership, except to the extent that
a representation, warranty or agreement expressly provides otherwise.
12.6 Agreement in Counterparts. This Agreement may be executed in
counterparts and all counterparts so executed shall constitute one agreement
binding on all the parties hereto as long as each counterpart is signed by the
General Partner and as long as each Limited Partner shall sign at least one
counterpart.
12.7 Variance of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Person or Entity may require.
12.8 Captions. Captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend, or describe
the scope of this Agreement or the intent of any provisions hereof.
12.9 Construction. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any third party, including, without
limitation, any creditor of the Partnership. Except as otherwise expressly
provided
<PAGE>
-64-
herein, all provisions of this Agreement shall be binding on, inure to the
benefit of, and be enforceable by or against, the heirs, successors, legal
representatives and assigns of the parties hereto.
12.10 Severability. In case one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained here and any other application thereof shall not
in any way be affected or impaired thereby, unless a manifest injustice or
inequity would result from the applicability and enforcement of such remaining
provisions.
12.11 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware applicable to contracts
made and to be performed wholly within such jurisdiction.
12.12 Consent of the Partners. Wherever the consent of Partners is
permitted or required under this Agreement, such consent may be given in writing
or at a meeting of the Partnership held at the principal place of business of
the Partnership pursuant to notice stating the nature of the business to be
transacted and delivered to all Partners in the manner described in Section 12.2
not less than 15 nor more than 50 days prior to such meeting.
12.13 Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the
<PAGE>
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parties hereto with respect to the subject matter hereof, expressly superseding
and replacing any and all Alliance Agreements with respect to the Cellular
System pursuant to which the Partners have rights to receive interests in the
Cellular System, and there are no agreements, restrictions, representations, or
warranties concerning the parties other than those set forth herein.
12.14 Effective Date. This Agreement shall become effective
immediately upon its execution by the General Partner and Limited Partners.
12.15 Amendment. This Agreement may be amended upon the prior
written consent of the General Partner and Limited Partners whose aggregate
Partnership Percentage exceeds fifty percent of the outstanding Partnership
Percentage held by Limited Partners; provided, however, that no amendment shall,
without the prior written consent of all Partners: (i) modify the purposes of
the Partnership or the character of its business; (ii) impose or create any new
or additional liability on any Partner or enlarge the obligations of any Partner
to make contributions to the capital of the Partnership as provided in this
Agreement; or (iii) alter the Partnership Percentages or allocations of
distributions and profits and losses set forth in this Agreement.
* * *
<PAGE>
FILED
OCT 20 1998
9 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
CHIN ENTERPRISES. INC.
FIRST. The name of this corporation shall be:
CHIN ENTERPRISES, INC.
SECOND. Its registered office in the State of Delaware is to be
located at 4305 Lancaster Pike, in the City of Wilmington County of New Castle
19805, and its registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation
is authorized to issue is:
One Hundred Fifty Thousand (150,000) shares of the par value of One
Dollar ($1.00) each, amounting to One Hundred Fifty Thousand Dollars
($150,000.00).
FIFTH. The name and mailing address of the incorporator is as
follows:
JANE S. KRAYER
Corporation Service Company
4305 Lancaster Pike
Wilmington, Delaware 19805
SIXTH. The Board of Directors shall have the power to adopt, amend
or repeal the by-laws.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this twentieth day of October, A.D. 1986.
/s/ Jane S. Krayer
---------------------------------
<PAGE>
Certificate of Amendment of Certificate of Incorporation
of
Chin Enterprises, Inc.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"corporation") is
Chin Enterprises, Inc.
2. The certificate of incorporation of the corporation is hereby
amended by striking out Article FIRST thereof and by substituting in lieu of
said Article the following new Article:
"First: The name of the corporation (hereinafter the 'corporation') is CEI
Communications, Inc."
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware."
Signed and attested to on December 8, 1987
/s/ Paul J. Tobin
--------------------------------
Paul J. Tobin, President
Attest:
/s/ George Michaels
- ---------------------------------
George Michaels, Secretary
<PAGE>
BY-LAWS
OF
CEI COMMUNICATIONS, INC.
(formerly CHIN ENTERPRISES, INC.)
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of stockholders
shall be held for the election of directors at such date, time and place either
within or without the State of Delaware as may be designated by the Board of
Directors from time to time. Any other proper business may be transacted at the
annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may
be called at any time by the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
<PAGE>
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
his absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. Voting at meetings of
-2-
<PAGE>
stockholders need not be by written ballot and need not be conducted by
inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy at such
meeting shall so determine. At all meetings of stockholders for the election of
directors, a plurality of the votes cast shall be sufficient to elect. All other
elections and questions shall, unless otherwise provided by law or by the
certificate of incorporation or these by-laws, be decided by the vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote thereon present in person or by proxy at the meeting, provided that
(except as otherwise required by law or by the certificate of incorporation) the
Board of Directors may require a larger vote upon any election or question.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
-3-
<PAGE>
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors, except as
may be otherwise provided by law or in the certificate of incorporation. The
Board shall consist of one or more members, the number thereof to be determined
from time to time by the Board. Directors need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until the annual meeting of
stockholders next succeeding his election and until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Unless otherwise provided
in the certificate of incorporation or these
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by-laws, vacancies and newly created directorships resulting from any increase
in the authorized number of directors or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so
determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the certificate of incorporation or these by-laws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other participation in a
meeting pursuant to this by-law shall, and constitute presence in person at such
meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of
the Board of Directors one-third of the entire Board shall constitute a quorum
for the transaction of business. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board unless
the certificate of incorporation or these by-laws shall require a vote of a
greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
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Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have power or authority
in reference to amending the certificate of incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
by-laws; and, unless the resolutinn expressly so provided, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business, In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of
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business, the vote of a majority of the members present at a meeting at the time
of such vote if a quorum is then present shall be the act of such committee, and
in other respects each committee shall conduct its business in the same manner
as the Board conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
Officers
Section 4.1. Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and may
give any of them such further designations or alternate titles as it considers
desirable. Each such officer shall hold office until the first meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. The Board may remove any officer with or without cause at any time.
Any such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election or appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be held by the same person. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers
of the Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board. The Board may require any officer, agent or employee
to give security for the faithful performance of his duties.
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ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
certifying the number of shares owned by him in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance
of New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
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thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 6.4. Indemnification of Directors, Officers and Employees.
The Corporation shall have power to indemnify to the full extent authorized by
law any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or intestate is or was a director, officer or
employee of the Corporation or any predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee at the request of
the Corporation or any predecessor of the Corporation.
Section 6.5. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
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Section 6.6. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be altered or
repealed, and new by-laws made, by the Board of Directors, but the stockholders
may make additional by-laws and may alter or repeal any by-law whether or not
adopted by them.
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PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
This Agreement and Certificate of Limited Partnership entered into
this 11th day of November, 1986, by and among Chin Enterprises, Inc. (CEI) a
Delaware corporation, as the General Partner, and William H. Chin ("Chin") as
the initial Limited Partner.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to form a limited partnership
under the Laws of the State of New Hampshire, for the purposes and upon the
terms stated herein; and
WHEREAS, Chin has been awarded a final construction permit (the
"Permit") from the Federal Communications Commission ("FCC") to construct a
domestic public cellular radio telecommunications system to serve the
Portsmouth-Dover-Rochester, New Hampshire-Maine NECMA; and
WHEREAS, Chin entered into a "Cellular Settlement Agreement"
("Settlement Agreement") with Mobile Communications Enterprises, Inc. (MCE) on
May 20, 1986, concerning the partial settlement of mutually exclusive
applications for the Permit; and
WHEREAS, MCE subsequently entered into a "Joint Agreement" ("Joint
Agreement") with various other entities which had structured other partial
settlements of mutually exclusive applications for the Permit; and
WHEREAS, pursuant to the Settlement Agreement and the Joint
Agreement, Chin intends to assign the Permit to the limited partnership, in
which he shall retain a 50.01% interest and shall afford those applicants
subject to the Joint Agreement the opportunity to acquire a limited partnership
interest in accordance with the provisions of the Joint Agreement;
NOW, THEREFORE, pursuant to the terms, covenants and conditions set
forth herein and the mutual promises contained herein, the parties hereto agree
as follows:
ARTICLE ONE
DEFINED TERMS
The defined terms used in this Agreement shall have the meanings
specified below:
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"Agreement" means this Agreement and Certificate of Limited
Partnership as amended from time to time.
"Capital Contribution" means the total amount of cash contributed to
the Partnership by each Partner pursuant to the terms of this Agreement.
"Certificate of Limited Partnership" means this Agreement, as
amended from time to time, if it is filed as Certificate of Limited Partnership
or such other document filed as a Certificate of Limited Partnership under the
State Uniform Limited Partnership Law.
"Code" means the Internal Revenue Code of 1954, as amended.
"General Partner" means Chin Enterprises, Inc., a Delaware
corporation wholly owned by William H. Chin, or any other Person who becomes its
successor as provided herein, in the capacity as the General Partner of the
Partnership.
"Initial Limited Partner" means William H. Chin individually.
"Limited Partners" means the Initial Limited Partner and any Person
who has agreed in writing to accept his offered limited partnership interest,
pursuant to the terms of this Agreement, and any Substituted Limited Partner, in
such Person's capacity as a Limited Partner of the Partnership.
"Notice" means a writing, containing the information required by
this Agreement to be communicated to a party, sent by registered or certified
mail, postage prepaid, to such party at the last known address of such party as
shown on the records of the Partnership, the date of registry thereof or the
date of the certification receipt therefor being deemed the date of receipt
thereof.
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed by this Agreement
by the parties hereto, as said limited partnership may from time to time be
constituted.
"Person" means any individual, partnership, corporation, trust or
other entity.
"Remaining Limited Partners" means those Limited Partners who join
the Partnership after its formation.
"State Uniform Limited Partnership Law" means the Uniform Limited
Partnership Law of the State of New Hampshire.
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"Substituted Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 7.2
hereof.
"Withdrawal" means, as to the General Partner, the occurrence of
death, adjudication of insanity or incompetence, bankruptcy, dissolution, or
voluntary withdrawal from the Partnership for any reason.
ARTICLE TWO
FORMATION, NAME AND OFFICE, PURPOSES, TERM AND DISSOLUTION
2.1 Formation
The parties hereto hereby form a limited partnership pursuant to the
provisions of the State Uniform Limited Partnership Law.
2.2 Name, Place of Business and Office
The Partnership shall be conducted under the name of "Portsmouth
Cellular Limited Partnership." The initial principal office and place of
business shall be 50 Pleasant St., P.O. Box 2290, Concord, New Hampshire 03010.
The General Partner may at any time change the location of such principal
office. Notice of any such change shall be given to the Limited Partners in
writing.
2.3 Purposes
The Partnership shall engage in the development of a domestic public
cellular radio telecommunications system to serve the
Portsmouth-Dover-Rochester, New Hampshire/Maine NEGMA. The Partnership shall
engage in any other activities related or incidental thereto, which in the sole
judgment of the General Partner, is necessary or appropriate to facilitate its
business purpose, including the dissolution of the Partnership. The Partnership
shall not engage in any other business or activity.
2.4 Term and Dissolution
A. The Partnership shall continue in full force and effect until
December 31, 2086 or until dissolution prior thereto upon the happening of any
of the following events:
(i) The decision of the General Partner to convey
substantially all of the Partnership's assets or to terminate the
business of the Partnership;
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(ii) The Withdrawal of the General Partner if no Successor
General partner is elected.
B. Upon dissolution of the Partnership, the General Partner shall
cause the cancellation of the Partnership's Certificate of Limited Partnership,
liquidate the Partnership's assets and apply and distribute the proceeds thereof
in accordance with Section 8.3 hereof.
ARTICLE THREE
PARTNERS AND CAPITAL
3.1 Partnership Equity.
A. The entire equity of the Partnership shall be held by the Limited
Partners.
B. In consideration for the assignment of the Permit to the
Partnership, the Initial Limited Partner shall have at all times, no less than
50.01% of the Partnership equity.
C. The Remaining Limited Partners shall have the opportunity to
acquire their respective interests in the Partnership pursuant to the terms of
the Joint Agreement.
3.2 Capital Contributions.
A. The Limited Partners are not required to contribute any capital
to acquire their respective interests hereunder. The limited partnership
interests acquired hereunder are not being sold or offered for sale within the
meaning of N.H. R.S.A. 421-B.
B. The Limited Partners may be required to contribute capital in
proportion to their respective interests pursuant to capital calls subsequently
issued by the General Partner.
C. Failure of a Limited Partner to contribute capital pursuant to a
capital call shall subject that Limited Partner's interest to the adjustment
provisions of this Section.
D. Except as otherwise determined by the General Partner, no Partner
shall be paid interest on any Capital Contribution to the Partnership.
E. Prior to dissolution of the Partnership, no Partner shall have
the right to demand the return of any Capital Contribution. Upon dissolution no
Limited Partner shall have the right to demand or receive property or any
interest of any kind whatsoever other than cash in return for his equity
interest or any Capital Contribution.
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3.3 Capital Calls.
A. The General Partner may in its sole discretion, from time to
time, issue capital calls upon the Limited Partners to provide working funds for
Partnership purposes. Such capital calls shall be pro rata to each Limited
Partner's respective equity interest.
B. Such capital calls shall be made in writing, pursuant to the
Notice provision of Article One, and each Limited Partner shall provide such
funds within thirty days thereafter or be subject to the adjustment provisions
of this Section.
3.4 Capital Accounts. Separate capital accounts shall be maintained for
each Partner and shall consist of the sum of such Partner's contributions to the
capital of the Limited Partnership, plus the assigned value of any property or
assets contributed by such Partner to the Partnership, plus the share of Net
Profits and gains of the Limited Partnership allocated to such Partner for
accounting purposes, less the sum of all distributions of cash and the fair
market value of all distributions of Property made to such Partner by the
Partnership.
3.5 Adjustment of Partnership Interests. Partnership equity interests
shall be adjusted after, and for, each contribution to capital made to the
Limited Partnership pursuant to this Section. Such adjustment shall be made so
that each Partner's Partnership Interest shall equal a fraction, the numerator
of which is such Partner's aggregate capital or other valuable contributions to
Partnership and the denominator of which is the aggregate of all Partners'
contributions to the Partnership.
3.6 Liability of Limited Partners
A. Subject to the provisions of Section 8.3, no Limited Partner
shall be liable for any obligations of the Partnership; provided, however, any
Limited Partner receiving the return in whole or in part of his Capital
Contributions shall be liable to the Partnership for any sum, not in excess of
such returned Capital Contribution, necessary to discharge the Partnership's
liabilities to all creditors who extended credit, or whose claims arose, before
such Capital Contribution was returned. No General partner shall have any
personal liability for the repayment of the Capital Contribution of any Limited
Partner.
3.7 Participation in Partnership Business by Limited Partner
No Limited Partner (except one who may also be a General Partner,
and then only in his capacity as General
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Partner) shall participate in or have any control over the Partnership business
or shall have any authority or right to act for or bind the Partnership. The
Limited Partners hereby consent to the exercise by the General Partner of the
powers conferred by this Agreement, including but not limited to, the express
powers authorized by Section 5.1.
3.8 Priority Among Limited Partners
No Limited Partner shall have priority over any other Limited
Partner as to Capital Contributions, distributions or any other rights under
this Agreement.
ARTICLE FOUR
APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
the laws of the State of New Hampshire.
ARTICLE FIVE
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
5.1 Authorized Acts; Management and Control
A. The General Partner shall have the exclusive right to manage the
business of the Partnership and is hereby authorized to take any action
(including, but not limited to the acts authorized by this Section 5.1) of any
kind and to do anything and everything in accordance with the provisions of this
Agreement.
B. In the name and on behalf of the Partnership, the General Partner
is hereby authorized:
(i) To sign on behalf of the Partnership the Agreement and
Certificate of Limited Partnership (or any amendments thereto or
restatements thereof).
(ii) To acquire by purchase, lease or otherwise, any real or
personal property which may be necessary, convenient or incidental
to the accomplishment of the purposes of the Partnership.
(iii) To execute, sign, seal and deliver in the name and on
behalf of the Partnership any deed, lease, mortgage, mortgage note,
bill of sale, contract or other instrument purporting to convey,
lease or encumber the real or personal property of the Partnership.
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(iv) To execute, sign, seal and deliver in the name and on
behalf of the Partnership any and all agreements, contracts, leases,
documents, certifications and instruments whatsoever involving the
purchase, construction, development, management, maintenance,
operation and sale of the assets of the Partnership.
(v) To construct, operate, maintain, finance, improve, own,
sell, dispose of, convey, assign, mortgage or lease any real estate
and any personal property necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership.
(vi) To borrow money and issue evidences of indebtedness in
furtherance of any or all of the purposes of the Partnership, and to
secure the same by mortgage, pledge or other lien on the assets of
the Partnership.
(vii) To prepay in whole or in part, refinance, recast,
increase, modify or extend any mortgages affecting the assets of the
Partnership and in connection therewith to execute any extensions,
renewals, or mortgages on the assets of the Partnership.
(viii) To invest in short-term debt obligations (including
obligations of Federal and state governments and their agencies,
commercial paper, and certificates of deposit of commercial banks,
savings banks or savings and loan associations) such funds as are
temporarily not required for the purpose of the Partnership.
(ix) To engage in any kind of activity and to perform and
carry out contracts of any kind necessary to, or in connection with,
or incidental to the accomplishment of the purposes of the
Partnership.
(x) To sell or otherwise dispose of, at one time, all or
substantially all of the assets of the Partnership.
(xi) To employ, when and if in its sole discretion the same is
deemed necessary or advisable, brokers, consultants, agents,
accountants or attorneys.
5.2 Restrictions on Authority
A. Without the consent of the Limited Partners, the General Partner
shall not have the authority to:
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(i) Do any act in contravention of this Agreement.
(ii) Do any act which would make it impossible to carry on the
ordinary business of the Partnership.
(iii) Confess a judgment against the Partnership.
(iv) Possess Partnership property, or assign their rights in
specific Partnership property, for other than a Partnership purpose.
(v) Admit a Person as a General Partner.
(vi) Admit a Person as a Limited Partner, except as provided
in this Agreement.
B. The General Partner shall not cause or permit the Partnership to
grant to any creditor who makes a nonrecourse loan to the Partnership any right
to have or to acquire, at any time, as a result of making the loan, any direct
or indirect interest in the profits, capital, or property of the Partnership
other than as a secured creditor.
5.3 Salary; Time and Effort; Independent Activities
The General Partner shall not, in its capacity as General Partner,
receive any salary. The General Partner shall not be required to devote full
time to the business of the Partnership but shall devote whatever time, effort
and skill may be necessary to the conduct of the Partnership's business. Any
Partner may engage independently with others in other business ventures of every
nature and description, including, without limitation, the ownership, operation,
management, syndication and development of business ventures, related to or
competitive with the business of the Partnership; neither the Partnership nor
any other Partner shall have any rights in and to such independent ventures of
the income or profits derived therefrom.
5.4 Duties and Obligations
A. The General Partner shall prepare and file such amendments to
this Agreement or any Certificate of Limited Partnership as required by law or
as it deems necessary to cause this Agreement or any Certificate of Limited
Partnership to reflect accurately the agreement of the Partners, the identity of
the Limited Partners or the General Partner and the amounts of their respective
Capital Contributions.
B. The General Partner shall prepare (or cause to be prepared) and
file such tax returns and other documents, as required by law or as it deems
necessary, for the operation of the Partnership.
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5.5 Liability for Acts and Omissions; Indemnification; Provision of
Insurance
The General Partner shall not be liable, responsible or accountable
in damages or otherwise to any of the Partners for, and the Partnership shall
indemnify and save harmless the General Partner from any loss or damage incurred
by reason of, any act or omission performed or omitted by it in good faith on
behalf of the Partnership and in a manner reasonably believed by it to be within
the scope of the authority granted to it by this Agreement and in the best
interests of the Partnership; provided that the General Partner shall not have
been guilty of gross negligence or gross misconduct with respect to such acts or
omissions and, further provided that the satisfaction of any indemnification and
any saving harmless shall be paid out of and limited to Partnership assets and
no Limited Partner shall have any personal liability on account thereof. The
Partnership shall provide and pay for insurance for the General Partner covering
all risks which the Partnership may indemnify the General Partner as provided
herein.
ARTICLE SIX
WITHDRAWAL OF A GENERAL PARTNER; SUCCESSOR GENERAL PARTNERS
6.1 Voluntary Withdrawal
The General Partner shall have the right to retire or voluntarily
withdraw from the Partnership.
6.2 Designation of Successor to Withdrawing General Partner
Upon the Withdrawal of the General Partner the Limited Partners
shall appoint a Successor General Partner by a simple majority vote.
6.3 New General Partner's Agreement
Any successor General Partner shall agree to be bound by the
provisions of this Agreement to the same extent and on the same terms as any
other General Partner.
6.4 Amendment of Agreement
This Agreement shall be amended to reflect the admission of the
successor General Partner, and the requirements of filing an amendment to the
Certificate of Limited Partnership under the State Uniform Limited Partnership
Law shall be complied with.
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ARTICLE SEVEN
TRANSFERABILITY OF LIMITED PARTNER INTEREST
7.1 Restrictions on Transfer
A. The Limited Partners agree that they will not sell, assign,
transfer, mortgage, pledge, exchange, convey, hypothecate or otherwise dispose
of (collectively a "transfer") all or any part of its record, financial or
beneficial interest in the Partnership (a "Limited Partner Partnership
Interest") to any person whether such transfer is pursuant to any Article of
this Agreement, by by operation of law or otherwise, without the prior written
consent of the General Partner.
B. Any transfer of a Limited Partner Partnership Interest in
contravention of the provisions of this Article Seven shall be void and
ineffectual and shall not bind or be recognized by the Partnership.
7.2 Substituted Limited Partners
A. A Limited Partner shall not have the right to substitute a Person
as a Limited Partner in his place. Subject to the provisions of Section 7.1
hereof, the General Partner shall, however, have the right, in its sole
discretion, to permit a Person to become a Substituted Limited Partner, and any
such permission by the General Partner shall be binding and conclusive without
the consent or approval of any Limited Partner. Any Substituted Limited Partner
shall, as a condition of receiving any interest in the Partnership, agree to be
bound by the provisions of this Agreement. Each such Substituted Limited Partner
shall be obligated to pay the Partnership's reasonable legal and accounting fees
and filing and recording costs in connection with its substitution as a Limited
Partner.
7.3 Assignees.
A. Subject to the provisions of Section 7.1 hereof, an assignee of a
Limited Partner who does not become a Substituted Limited Partner as provided
aforesaid shall only have the right to receive the distributions of the
Partnership to which the assigning Limited Partner would have been entitled if
no such assignment had been made by such Limited Partner. In particular an
assignee who does not become a Substituted Limited Partner, shall have no right
(i) to require any information from the Partnership or (ii) to require any
accounting of Partnership transactions or (iii) to inspect the Partnership books
or (iv) to exercise any privilege or right of a Limited Partner which is not
specifically granted to an assignee of a limited partner interest under the
State Uniform Limited Partnership Law.
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<PAGE>
B. Subject to the provisions of Section 7.1 hereof, any Limited
Partner who shall assign all its interest in the Partnership shall cease to be a
Limited Partner of the Partnership and shall not longer have any rights or
privileges of a Limited Partner, except that unless and until a Substituted
Limited Partner is admitted in its stead, such assigning Limited Partner shall
retain the statutory rights of an assignor of a limited partner interest
specifically granted to an assignor under the State Uniform Limited Partnership
Law.
C. Subject to the provisions of Section 7.1 hereof, if a Limited
Partner dies, his executor, administrator or trustee, or, if he is adjudicated
incompetent, his guardian, shall have all the rights of a Limited Partner for
the purpose of settling or managing his estate and such power as the decedent or
incompetent possessed to assign all or any part of his interest in the
Partnership and to join with such assignee in satisfying conditions precedent to
such assignee becoming a Substituted Limited Partner. The death of a Limited
Partner shall not dissolve the Partnership.
ARTICLE EIGHT
PROFITS AND LOSSES; DISTRIBUTIONS;
AND EXPENSES OF GENERAL PARTNERS
8.1 Allocation of Profits and Losses
A. Except as otherwise provided herein, all profits and losses of
the Partnership shall be allocated to the Partners, with each Partner sharing in
such profits and losses in proportion to his equity interest.
8.2 Cash Distributions Prior to Dissolution
All Net Cash Income of the Partnership for each fiscal year shall be
distributed to the Partners, with each Partner sharing in such Net Cash Income
in proportion to his equity interest.
8.3 Cash Distributions Upon Dissolution
A. Upon the dissolution of the Partnership as a result of the
occurrence of any of the events set forth in Section 2.4, the General Partner
shall proceed to liquidate the Partnership, and the proceeds of liquidation (the
"Proceeds of Liquidation") shall be applied and distributed in the following
order of priority:
(i) First, to the payment of debts and liabilities of the
Partnership (other than any loans or advances that may have been
made by any of the Partners to the Partnership) and the expenses of
liquidation.
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<PAGE>
(ii) Second, to the establishment of any reserve which the
General Partner may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership. Such
reserve may be paid over by the General Partner to any attorney at
law, or other acceptable party, as escrow agent to be held for
disbursement in payment of any of the aforementioned liabilities
and, at the expiration of such period as shall be deemed advisable
by the General Partner, for distribution of the balance, in the
manner hereinafter provided in this Section.
(iii) Third, to the repayment of any loans or advances that
may have been made by the Limited Partners to the Partnership.
(iv) Finally, the balance of any funds then remaining shall be
distributed to the Partners in the following order of priority:
(1) To the Limited Partners in an amount equal to any
previously undistributed share of the Net Cash Income of the
Partnership due the Limited Partner.
(2) To the Limited Partners in proportion to their
respective Capital Contributions.
(3) To the General Partner in an amount equal to any
loans or advances that have been made by the General Partner
to the Partnership.
(4) The balance to the Partners, with each Partner
sharing in proportion to his equity interest.
8.4 Expenses of Partnership and of the General Partners
All expenses incurred by the General Partner in connection with the
Partnerships business shall be paid by the Partnership or reimbursed to the
General Partner by the Partnership.
ARTICLE NINE
BOOKS, RECORDS AND REPORTS, ACCOUNTING, ETC.
9.1 Books, Records and Reports
A. Proper and complete records and books of account shall be kept by
the General Partner, in which shall be entered all transactions and other
matters relative to the
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<PAGE>
Partnership's business. The Partnership books and records shall be prepared in
accordance with generally accepted accounting principles, consistently applied.
The books and records shall be maintained at the principal office of the
Partnership or such other location specified by the General Partner and shall be
open for examination and inspection by the Partners or by their duly authorized
representative during reasonable business hours.
B. The General Partner shall have prepared, at least annually, at
the Partnership's expense, financial statements prepared in accordance with
generally accepted accounting principles. Copies of such statements shall be
distributed to the Limited Partners within 120 days after the close of each
taxable year of the Partnership.
C. The General Partner shall have prepared, at least annually, at
the Partnership's expense, a report containing Partnership information necessary
in the preparation of the Limited Partners' Federal income tax returns. Copies
of such report shall be distributed to the Limited Partners within 75 days after
the close of each taxable year of the Partnership.
9.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in such
banking institutions as the General Partner shall determine, and withdrawals
shall be made only in the regular course of Partnership business on such
signature or signatures as the General Partner may determine.
9.3 Accountants
The accountants, if any, for the Partnership shall be chosen by the
General Partners.
9.4 Accrual Basis and Fiscal Year
The books of the Partnership shall be kept on the accrual basis. The
fiscal year of the Partnership shall be the calendar year.
ARTICLE TEN
GENERAL PROVISIONS
10.1 Appointment of the General Partner as Attorneys-in-Fact
A. Each Limited Partner, by the execution hereof, hereby irrevocably
constitutes and appoints the General Partner under this Agreement, his true and
lawful attorney-in-fact, with full power and authority in his name, place and
stead, to
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<PAGE>
execute and acknowledge under oath, swear to, deliver, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
carry out the provisions of this Agreement including:
(i) All certificates and other instruments (including this
Agreement or any Certificate of Limited Partnership and any
amendment thereof) which the General Partner deems appropriate to
qualify or continue the Partnership as a limited partnership under
the State Uniform Limited Partnership Law or under the laws of any
other jurisdiction in which the Partnership may conduct business;
(ii) All amendments to this Agreement or any Certificate of
Limited Partnership which are required to be filed or which the
General Partner deems to be advisable to file;
(iii) All instruments which the General Partner deems
appropriate to reflect a change of modification of the Partnership
in accordance with the terms of this Agreement;
(iv) All conveyances and other instruments which the General
Partner deems appropriate to reflect the dissolution and termination
of the Partnership; and
(v) All other instruments, documents or contracts requisite to
carrying out the intent and purpose of this Agreement and the
business of the Partnership.
B. The appointment by the Limited Partners of the General Partner as
attorney-in-fact shall be deemed to be a power coupled with an interest in
recognition of the fact that each of the Partners under this Agreement will be
relying upon the power of the General Partner to act as contemplated by this
Agreement in any filing and other action by it on behalf of the Partnership. The
foregoing power of attorney shall survive the death, incompetency or dissolution
of any Limited Partner or the assignment by a Limited Partner of the whole or
any part of his interest hereunder.
10.2 Word Meanings
The words such as "herein", "hereinafter", "hereof", and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires. The singular
shall include the plural and the masculine gender shall include the feminine and
neuter, and vice versa, unless the context otherwise requires.
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<PAGE>
10.3 Binding Provisions
The covenants and agreements contained herein shall be binding upon,
and inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
10.4 Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart,
except that no counterpart shall be binding unless signed by the General
Partner.
10.5. Entire Agreement
This Agreement contains the entire agreement between the parties and
supersedes all prior writings or representations.
10.6 Separability of Provisions
Each provision of this Agreement shall be considered separable and
if for any reason any provision or provisions herein are determined to be
invalid or unenforceable such invalidity or unenforceability shall not impair
the operation of or effect any other portion of this Agreement and this
Agreement shall be construed in all respect as if such invalid or unenforceable
provision was omitted.
10.7 Representation
Each person who becomes a Limited Partner hereunder does hereby
represent and warrant by the signing of a counterpart of this Agreement that the
Limited Partner Interest acquired by him was acquired for his own account, for
investment only, and not for the interest of any other persons, and not for
resale to any other persons or future distribution, and that he has relied
solely on the advice of his personal tax, investment or other advisor(s) in
making his investment decision. The General Partner has not made and hereby
makes no warranties or representations other than those set forth in this
Agreement. Furthermore, each Limited Partner acknowledges that (a) an investment
in the Partnership is very speculative and may result in a loss of the Limited
Partner's entire investment; (b) the Partnership interests have not been
registered under the Securities Acts of 1933 or 1934, as amended, or under any
applicable state blue sky laws, and are not transferable except in compliance
with the restrictions on transferability contained in the Agreement and imposed
by applicable federal and state securities laws, and accordingly,
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<PAGE>
an investment in the Partnership lacks liquidity; (c) the tax consequences of an
investment in the Partnership may depend upon the Limited Partner's
circumstances; (d) there are no assurances that the Internal Revenue Code or the
Regulations thereunder or interpretations thereof will not be amended in such
manner so as to deprive the Partnership and the Partners of some or all of the
tax benefits they might now receive; (e) the Partnership has only recently been
formed; and (f) no federal or state agency has made any finding or determination
as to the fairness of the offering, or any recommendation or endorsement of the
Partnership interests.
10.8 Section Titles
Section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
10.9 Amendments
A. In addition to the amendments otherwise authorized herein, this
Agreement may be amended, from time to time, by the General Partner and the
Limited Partners; provided, however, that without the prior written consent of
all the Partners, this Agreement may not be amended so as to (i) convert the
interest of a Limited Partner into the interest of a General Partner; (ii)
modify the limited liability of a Limited Partner; (iii) alter the interest of a
Partner with respect to profits and losses, Net Cash Income or other
distributions of the Partnership; or (iv) extend the term of the Partnership as
set forth in Section 2.4 hereof. If this Agreement shall be amended as a result
of substituting a Limited Partner, the amendment to this Agreement shall be
signed by the General Partner and by the person to be substituted and, if a
Limited Partner is to be substituted, by the assigning Limited Partner. If this
Agreement shall be amended to reflect the Withdrawal of a General Partner and
the business of the Partnership is continued, such amendment shall be signed by
the remaining or successor General Partner(s).
B. In addition to any amendments otherwise authorized herein,
amendments may be made to this Agreement from time to time by the General
Partner, without the consent of the Limited Partners, (i) to cure any ambiguity
or to correct or supplement any provision herein which may be inconsistent with
any other provision herein or (ii) to delete or add any provision of this
Agreement required to be so deleted or added by the Securities and Exchange
Commission, the Internal Revenue Service, or other Federal agency or by a state
"blue sky" commissioner or other similar official, which addition or deletion is
deemed by such Commission, Service, agency or official to be for the benefit or
protection of the Limited Partners; provided, however, that no amendment shall
be
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<PAGE>
adopted pursuant to this Section unless the adoption thereof (i) is for the
benefit of or not adverse to the interests of the Limited Partners; (ii) does
not convert the interests of a Limited Partner into the interest of a General
Partner; (iii) does not modify the limited liability of the Limited Partners;
(iv) does not reduce the interest of a Partner with respect to profits and
losses, Net Cash Income or other distributions of the Partnership; (v) does not
extend the term of the Partnership as set forth in Section 2.4 herein; or (vi)
does not affect the status of the Partnership as a partnership for Federal
income tax purposes.
10.10 Partition
The Partners agree that the Partnership's assets are not and will
not be suitable for partition. Accordingly, each of the Partners hereby
irrevocably waives any and all right he may have to maintain any action for
partition of any of the Partnership's assets.
ARTICLE ELEVEN
ADMISSION OF LIMITED PARTNERS; LIMITATIONS
11.1 Admission of Limited Partners. A person shall become a Limited
Partner when he has completed all of the following:
(a) Executed a counterpart of this Agreement or a Limited Partner
Subscription Agreement in the form approved by the General Partner;
(b) Executed any other document, certificate or instrument, and
taken such other action as the General Partner may reasonably request to
evidence and perfect such person's admission as a Limited Partner.
11.2 Expiration and Limitations.
A. Only those duly-qualified applicants for a construction permit to
serve the Portsmouth-Dover-Rochester, New Hampshire-Maine NECMA subject to the
partial settlements encompassed by the Joint Agreement shall be invited to
become Limited Partners.
B. Any such applicant desiring to become a Limited Partner hereunder
must elect to do so, in writing, by execution of a Counterpart of this
Agreement, and transmitting said executed Counterpart postage pre-paid,
first-class U.S. mail, postmarked no later than December 15, 1986, to: Chin
Enterprises, Inc., 3324 Octavia St., Oakland, CA. 94619.
C. An applicants failure to comply with all of the terms of this
Section shall operate to waive forever any rights
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<PAGE>
it may have under the Joint Agreement or any other partial settlement agreement
to obtain any interest in the Partnership.
WITNESS the execution hereof as of the day and year first above
written by the General Partner and the Initial Limited Partner, whose respective
residence addresses are set forth opposite their respective signatures.
GENERAL PARTNER
Address: 3324 Octavia St. CHIN ENTERPRISES, INC.
Oakland, CA 94619
/s/ William H. Chin
--------------------------
William H. Chin, President
INITIAL LIMITED PARTNER
William H. Chin
Address: 3324 Octavia St. By /s/ William H. Chin
Oakland, CA 94619 --------------------------
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<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
AMENDMENT TO CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986 is hereby amended as follows:
I. Article Two, Section 2.2: The zip code of the principal office
and place of business is corrected to read "03310".
II. Article Seven, Section 7.1: The present Section 7.1 is to be
deleted and the following is to be substituted therefor;
7.1 Restrictions on Transfer
A. The Limited Partners agree that they will not sell, assign,
transfer, mortgage, pledge, exchange, convey, hypothecate or
otherwise dispose of (collectively a "transfer") all or any part of
their record, financial or beneficial interest in the Partnership (a
"Limited Partnership Interest") to any person, other than an
existing Partner, whether such transfer is pursuant to any Article
of this Agreement, by operation of law or otherwise, without the
prior written consent of the General Partner, such consent not to be
unreasonably withheld. The General Partner may withhold consent if,
in the opinion of counsel to the Partnership, the transfer would:
(i) result in the termination of the Partnership or jeopardize
the status of the Partnership as a Partnership for Federal income
tax purposes; or
(ii) violate the provisions of any applicable Federal law or
regulation or violate the terms upon which the Partnership's license
to operate the subject cellular system was granted.
B. A Limited Partnership Interest may be transferred to an
existing Partner upon notice to the General Partner. Any transfer of
a Limited Partner Partnership Interest in contravention of the
provisions of this Article Seven shall be void and ineffectual and
shall not bind or be recognized by the Partnership.
III. Article Eight, Section 8.2: Insert the word "annually" after
the word "distributed".
FILED
DEC 15 1986
NEW HAMPSHIRE
SECRETARY OF STATE
<PAGE>
Witness the execution hereof as of the day and year written below by
the General Partner and the Initial Limited Partner, whose respective residence
addresses are set forth opposite their respective signatures.
GENERAL PARTNER
CHIN ENTERPRISES, INC.
3324 Octavia St.
Oakland, CA 94619
Date: Dec. 11, 1986 /s/ William H. Chin
--------------------------
William H. Chin, President
INITIAL LIMITED PARTNER
William H. Chin
3324 Octavia St.
Oakland, CA 94619
Date: Dec. 11, 1986 /s/ William H. Chin
--------------------------
William H. Chin
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<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
AMENDMENT TO CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986 is hereby amended as follows:
I. Article Three, Section 3.1: The present Section 3.1 is to be
deleted and the following is to be substituted therefor:
3.1 Partnership Equity.
A. The entire equity of the Partnership shall be held by the
Partners.
B. The General Partner shall at all times maintain a net worth
and hold an equity interest in the Partnership sufficient to satisfy all
applicable regulations under the Code.
C. The combined equity interest of the Initial Limited Partner
and the General Partner shall be no less than 50.01% of the total Partnership
equity, to be allocated between them at their discretion, provided that the
requirements of subparagraph B. above are met. The Remaining Limited Partners
shall have the opportunity to acquire their respective interests in the
Partnership pursuant to the terms of the Joint Agreement.
Witness the execution hereof as of the day and year written below by
the General Partner and the Initial Limited Partner, whose respective residence
addresses are set forth opposite their respective signatures.
GENERAL PARTNER
Chin Enterprises, Inc.
3324 Octavia St.
Oakland, CA 94619
Date: February 20, 1987 /s/ William H. Chin
--------------------------
William H. Chin, President
INITIAL LIMITED PARTNER
William H. Chin
3324 Octavia St.
Oakland, California
Date: February 20, 1987 /s/ William H. Chin
--------------------------
William H. Chin
<PAGE>
FILED
OCT 14 1987
NEW HAMPSHIRE
SECRETARY OF STATE
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
THIRD AMENDMENT TO AGREEMENT AND CERTIFICIATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986 and
February 20, 1987 (the "Agreement"), is hereby amended pursuant to New Hampshire
Revised Statutes Section 305:26 and Article 10.1 of the Agreement as follows:
I. Subject to II, below, Article 11 of the Agreement is hereby
amended to add the following Article 11.1(c):
(c) The following persons are hereby admitted as Limited
Partners:
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Eugene C. Adams .3332%
RR 1 Oakwood Manor
Spicer, MN 56288
AC Associates .3332%
69 Main St.
Petersborough, NH 03453
Aero-Tel, Inc. .3244%
15030 Marble Road
Sherman Oaks, CA 91403-4521
R.C. Allen .3332%
202 Green Glade
Memphis, TN 38119
American General Cellular Corp. .3244%
270 N. Canon Dr., #1130
Beverly Hills, CA 90210
Gary L. Anderson .3332%
RR #1
Carthage, SD 57323
Roland Andrews .3244%
P.O. Box 1289
Citrus Heights, CA 95611
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
David S. Arslanian .3244%
1818 E. 5775 S., #200
Ogden, UT 84403
Callman Y. M. Au .3332%
95-244 Kupuku Circle
Mililani Town, HI 96789
C-TAC VI .3332%
c/o Harold G. Barbour
212 12th Ave. N.E.
Hickory, NC 28601
C-TAC VII .3332%
c/o Harold G. Barbour
212 12th Ave. N.E.
Hickory, NC 28601
C-TAC VIII .3332%
c/o Harold G. Barbour
212 12th Ave. N.E.
Hickory, NC 28601
J.B. Partnership .3244%
c/o Jack Barnes
3757 Main Street
Middleburg, FL 32068
Raymond Beauchemin .3332%
95-563 Kanamee St.
Mililani, HI 96789
Regg-Bell, Inc. .3244%
c/o Regina M. Billings
8620 Hollywood Boulevard
Los Angeles, CA 90069
Robert S. Block .3332%
13044 Mindanao Way #5
Marina Del Ray, CA 90292
The Dennis M. Bond .3244%
Organization, Inc.
c/o Dennis M. Bond
4570 Encino Ave.
Encino, CA 91316
Milton E. Borden Jr. .3332%
215 RR 1 Jug City Rd.
Epsom, NH 03234
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Madison Cellular Corporation .3244%
c/o Gavin Brackenridge
122 E. 82nd Street
New York, NY 10028
Quentin L. Breen .3332%
559 Pacific Avenue
Suite 32
San Francisco, CA 94133
Royce E. Bridwell .3332%
5900 Chapman, Suite 63
Garden Grove, CA 92645
Olen Frazier/Prospect .3332%
Cellular Investments, Inc.
c/o Charles M. Bruce
P.O. Box 3214
1317 N. 8th Street
Suite 319
Abilene, TX 79604
Patricia G. Burkhardt .3332%
1436 Harvard St., N.W.
Washington, DC 20009
Phillip E. Burkhardt .3332%
7 Roundtree Dr.
Melville, NY 11747
Samuel H. Cade .3332%
2 Nonesuch Rd.
Dallas, TX 75214
Card General Partnership .3332%
Box 153 Rt. 1
Utica, NY 13502
Douglas R. Casey .3244%
555 Diehl Drive
Helena, MT 59601
Franciscan Design Software, Inc. .3332%
c/o Joseph J. Celio
734 Graham Court
Danville, CA 94526
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Cellular Ventures, Inc. .3244%
4929 Valjean
Ensino, CA 91436
Tracy Communications, Inc. .3244%
c/o Hawley T. Chester
908 Brandywine Circle
Dunwoody, GA 30338
June D. Chew .3332%
11380 Glen Manor Place
Oakland, CA 94605
Cinkutis, Inc. .3244%
c/o Robert J. Cinkutis
1220 Florida Ave.
Cornwells Hts. PA 19020
Becky Jo Clark .3332%
114 East Brookwood Drive
Clemson, SC 29631
Condie Cellular Partnership .3332%
c/o Marion A. Condie
255 Black Pine Court
Reno, NV 89511
Marvin Douglas Cook .3332%
341 Cedarcrest Lane
Double Oak, TX 75067
LS Associates .3332%
c/o David L. Coppin
568 Republic Rd.
Batavia, IL 68510
Joan B. Cortright .3244%
711 Woodside Parkway
Silver Spring, MD 20910
Howard Courney .3244%
2000 Embarcadero, Suite 101
Oakland, CA 94606
CPS Telecom, Inc. .3332%
10404 Tullis
Kansas City, MO 64134
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Alpha Cellular II .3332%
c/o Leane C. Crowther
11725 Coldbrook Street, #E
Downey, CA 90241
Andrew Cumming .3332%
2650 California St. #68
Mountain View, CA 94040
Cyrus K. Dam .3332%
45 Buena Vista Ave.
Corte Madera, CA 94925
Lloyd E. Dawson .3332%
42395 Greenbrier Park Drive
Fremont, CA 94538
Dawursk Partnership .3244%
1111 Wejegi Drive
Hubertus, WI 53033
Delchi Corportion .3332%
c/o Javed Ellahie
P. 0. Box 1638
San Jose, CA 95109-1638
Melissa A. Denman .8404%
Route 6, P.O. Box 7036
Austin, TX 78737
Deveny General Partnership .3332%
c/o James E. Deveny
1726 Hudson St.
Englewood, FL 33533
North American Cellular .3332%
Telephone, Inc.
c/o John N. Dick, M.D.
11160 Warner Avenue
Suite 213
Fountain Valley, CA 92708
Arthur R. Dittman .3244%
1104 Irene St.
Green Bay, WI 34302
Malcolm C. Dolan .3332%
P.O. Box 2019
Lancaster, CA 93539
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Randy Douglas .3332%
296 Shoreline Hwy.
Mill Valley, CA 94941
R. Scott Douglass .3244%
300 E. 34th St. #34L
New York, NY 10016-4976
Koire Drysdale .3332%
P.O. Box 3224
Palm Beach, FL 33480
Anthony T. Easton .3332%
559 Pacific Avenue
Suite 32
San Francisco, CA 94133
Susan Easton .3332%
559 Pacific Avenue
Suite 32
San Francisco, CA 94133
Karl M. Eckel .3244%
513 Second Lock Rd.
Lancaster, PA 17603
Elleron Chemicals Corporation .3244%
1911 Bering Drive #9
Houston, TX 77056
Jay L. Ewald .3244%
P. 0. Box 155
Waldorf, MN 56091-0155
Lemon Tree Enterprises, Inc. .3244%
c/o Yvonne Finley
1375 Century Park East
Los Angeles, CA 90067
Don Ford .3332%
16731 Trudy Lane
Huntington Beach, CA 92647
Richard E. Garrett .3332%
6213 Gainsborough Rd.
Amarillo, TX 79106
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Pacific Technocracy R & D, Inc. .3244%
c/o Timothy A. Gibbons
6509 Waring Ave.
Hollywood, CA 90038
Sandra M. Gilbert .3244%
1308 Maryland Ave.
Cape May, NJ 08204
Allan B. Goldin .3332%
900 North Lake Shore #2310
Chicago, IL 60611
George R. Gordon .3244%
146-03 Union Turnpike
Flushing, NY 11367
Germantown Cellular Associates .3244%
c/o Eileen E. Gowan
12011 Birdseye Terrace
Germantown, MD 20874
Three Ring Cellular .3244%
c/o Lawrence B. Gowen
13112 Foxhall Drive
Silver Spring, MD 20906
David W. Guidry .3244%
128 Pigeon Loop
Lafayette, LA 70508
Handler General Partnership .3244%
c/o Dennis Handler
18745 Hatteras St.
Tarzana, CA 91356
Joan Hunter .3332%
14724 Ventura Blvd. Suite 807
Sherman Oaks, CA 91403
Herbert L. Hutner .3332%
115 N. Carolwood Drive
Los Angeles, CA 90077
American Lo-Power
Television Network, Inc. .3332%
103 Main Street
P.O. Box 352
Westford, MA 01886
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<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Lynn J. Juanes .3244%
550 Battery St., Ste 1716
San Francisco, CA 94111
Cellulinear, Inc. .3244%
c/o Stephen P. Kahn
1260 North Hayworth Drive
Los Angeles, CA 90046
K.C. Cellular Corp., Inc. .3244%
c/o Fran Kaufman
55 Smith Hill Road
Monsey, NY 10952
Westmore Cellular Corp. .3244%
c/o Carl. L. Keller
73 N. Water Street
Greenwich, CT 06830
Robert L. Kile .3244%
179 River Run
Middletown, RI 02840
TLC Enterprises .3332%
c/o J. Roy King
1227 Squire Drive
Charlotte, NC 28211
PKO Television, Ltd. .3244%
c/o Paul Klein
322 E. 38th St.
New York, NY 10016
John A. Kramer .3332%
10300 N. 1000 W.
Demotte, IN 46310
Donald J. Kunkle .3332%
2565 Colt Rd.
Rancho Palos Verdes, CA 90274
Raymond John Landau .3332%
35231 Parkdale
Livonia, MI 48150
Henry Langhorst .3332%
618 Broadway
Dunedin, FL 33528
-8-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Paul Lapa .3332%
95-555 Leleiona St.
Mililani, HI 96789
John LaPorte .3332%
275 Van Linda Vista
Manitou Springs, CO 80829
Sheila Leibsohn .3332%
137 1/2 So. Sycamore Ave.
Los Angeles, CA 90036
Arnold C. Leong .3332%
4524 MacDonald Avenue
Richmond, CA 94805
Charles J. Lintini .3332%
52 Caroline Way
Daly City, CA 94014
Michael D. Longshore .3332%
47 Main St.
Canton, NY 13617
Dean C. Lovett .3244%
4508 Everett Street
Kensington, MD 20895
R.G. Partnership .3244%
c/o Robert Lovett
396 Myrtle St.
Laguna Beach, CA 92651
Patcom .3332%
c/o Edward P. Lynch, Jr.
P.0. Box 2544
Woodburn, MA, 01885
Maple Street Partnership Ltd. .3244%
40 Maple Street
Trumbull, CT 06611
American Cellular Corporation .3244%
c/o Michael E. Marcovsky
7115 Macapa Drive
Los Angeles, CA 90068
-9-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
McDonnell & Co., Inc. .3244%
c/o Charles E. McDonnell
P. 0. Box HM1727
Hamilton 5
Bermuda
McElroy Electronics Corp. .3332%
c/o John C. McElroy, Jr.
Fredonia St.
Shirley, MA 01464
Frederick G. Michaud Jr. .3332%
P.O. Box 1404
Alexandria, VA 22313
G. P. Partnership .3244%
c/o George E. Millard
5110 Parklawn Terrace, #102
Rockville, MD 20852
Edward E. Miller .3332%
106 Berkeley Drive
Terre Haute, IN 47803
Robert D. Miller .3332%
12395 Melody Lane
Los Altos Hills, CA 94022
Mincom, Inc. .3244%
c/o Charles D. Minter, Jr.
35100 Anthony Rd
Agua Dulce, CA 91350
Kenneth H. Moore .3244%
647 Pomona St.
Bloomington, CA 92316
Roy J. Murphy .3332%
P. 0. Box 832
Islamorada, FL 33036
Wladimir & Nancy Naleszkiewicz .3332%
8306 Bound Brook Lane
Alexandria, VA 22309
Dennis O'Neill .3332%
3484 NW Sunde Road
Silverdale, WA 98383
-10-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Nils Ridings Olmstead .3244%
1719 W. Coolidge
Phoenix, AZ 85015
Onyx Cellular Corporation .3332%
10104 Tullis
Kansas City, MO 64134
Trygve Opsahl .3332%
4748 Engle Rd., #201
Carmichael, CA 95608
John N. Papajohn .3244%
1807 Windmill Lane
Alexandria, VA 22307
Natubhai Patel .3332%
1819 Montecito Way
Burlingame, CA 94010
Peck General Partnership .3244%
c/o Jeffrey Peck
1545 10th Ave.
San Francisco, CA 94122
Alvin R. Perry .3332%
21616 Cezanne Place
Woodland Hills, CA 91364
Paul A. Phaneuf .3332%
655 Great Road
N. Smithfield, RI 02895
Walter J. Ponne .3332%
14817 Minerva
Dolton, IL 60419
Pliny A. Price, M.D. .3332%
1430 S. High St.
Columbus OH 43207
Nirmal C. Pujari .3332%
34 Northgate Rd.
Mendham, NJ 07945
Richard R. Rawson .3332%
3501 E. 24th St.
Casper, WY 82609
-11-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Daryl D. Reavis .3332%
4355 Morris St.
Salt Lake City, UT 84119
Executive Telecom Limited .3244%
c/o Robert J. Ringer
11030 Santa Monica Blvd.
Suite 108
Los Angeles, CA 90025
Jerry Rochman .3332%
32 Cricket Club Dr.
North Hills, NY 11576
Keynote Communications, Inc. .3332%
c/o Marge D. Roten
6512 Firmament
Van Nuys, CA 91406
Global Cellular Partners .3332%
c/o Arvind Roy
6016 Crossview Circle
San Jose, CA 95120
Belle Schlesinger .3332%
13044 Mindanau Way #5
Marina Del Ray, CA 90292
Michael A. Schwalb .3244%
5225 Pooks Hill Rd., Apt. 428
Bethesda, MD 20814
Seidman & Tribull .3332%
7601 Ventural Lane
Parkland, FL 33067
Jean Lafaye Siegel .3244%
7701 Hemlock Street
Bethesda, MD 20817
Kathleen M. Sloan .3332%
540 Elmwood
Bay Village, OH 44140
Debra L. Slotnick .3332%
7235 N. Wayside Dr.
Milwaukee, WI 53209
Harvey G. Smuckler .3332%
14724 Ventura Blvd. Suite 807
Sherman Oaks, CA 91403
-12-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Taylor Interactive .3244%
Components, Inc.
c/o Scott Steinberg
15030 Marble Dr.
Sherman Oaks, CA 91403
Jonathan Stewart .3244%
550 Battery St., Ste 1716
San Francisco, CA 94111
Edy Tan .3332%
137 Ocean Ave.
San Francisco, CA 94112
Waterside Cellular .3244%
c/o James N. Thaden
6202 Ruatan St.
College Park, MD 20740
Martha K. Thompson .3244%
15221 Manor Lake Dr.
Rockville, MD 20853
Edison Communications .3244%
c/o Miguel Triay
P.O. Box HM 720
Hamilton Bel, PR
Senyu Ueunten .3332%
2026 Ualakaa St.
Honolulu, HI 96822
Stuart S. Verch, II .3244%
P.O. Box 10173
Greensboro, NC 27404
Thomas N. Vertin .3244%
303 North 5th St.
Breckenridge, MN 56520
Eastern Cellular Communications .3244%
c/o Edward Wagner
Woodland Ridge Office Park,
P.O. Box 470
Windham, NH 03087
Donald A. Walsh .3244%
P.O. Box 195
Potosi, WI 53820
-13-
<PAGE>
Limited Partner Limited Partnership Interest
--------------- ----------------------------
Sedgwick Andrews Ward .3332%
82 Prospect Hill Ave.
Summit, NJ 07901
Cellular Systems of America, Inc. .3244%
c/o Jane Blackburn West
"West Alice"
49 Harrington Sound Road
Smith's Parish, FL 08
Bermuda
Joan S. Weyrich .3332%
13715 Harcum Rd.
Phoenix, MD 21131
Ronald Zajac .3332%
15565 Stonehouse
Livonia, MI 48154
Joseph A. Zavaletta .3332%
45 Calle Cenizo
Brownsville, TX 78520
II. Pursuant to Article 7 of the Agreement, certain Limited Partners
assigned their limited partnership interests. Accordingly, Article 11.1(c) is
further amended to include as Substituted Limited Partners the following
persons, owning the Limited Partnership Interests so designated for the former
Limited Partners so indicated:
A. Cellular Holdings, Inc. 2.3324%
559 Pacific Avenue
San Francisco, CA 94133
is the Substituted Limited Partner for the following:
Robert S. Block
Quentin L. Breen
Randy Douglas
Anthony Easton
Susan Easton
Debra L. Slotnick
Belle Schlesinger
B. R Cellular .6664%
14724 Ventura Boulevard
Suite 807
Sherman Oaks, CA 91403-3566
is the Substituted Limited Partner for the following:
Joan Hunter
Harvey G. Smuckler
-14-
<PAGE>
III. Signed counterparts reflecting each Limited Partner's agreement
to the terms of the Agreement are attached hereto and incorporated as part of
this amendment.
IV. Signed assignment forms reflecting each transfer of limited
partnership interests stated in Section II above are attached hereto and
incorporated as part of this amendment.
Witness the execution hereof as of the day and year written below by
the General Partner and the Initial Limited Partner, whose respective residence
addresses are set forth opposite their respective signatures.
GENERAL PARTNER
Chin Enterprises, Inc.
3324 Octavia St.
Oakland, CA 94619
Date: October 5, 1987 /s/ William H. Chin
--------------------------
William H. Chin, President
INITIAL LIMITED PARTNER
William H. Chin
3324 Octavia St.
Oakland, CA 94619
Date: October 5, 1987 /s/ William H. Chin
--------------------------
William H. Chin
-15-
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
FOURTH AMENDMENT TO AGREEMENT AND CERTIFICIATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986,
February 20, 1987, and October 5, 1987 (the "Agreement"), is hereby amended
pursuant to New Hampshire Revised Statutes Section 305:26 and Article 10.1 of
the Agreement as follows:
I. Section 3(C) of the Agreement is deleted and the following is to
be substituted therefor:
(c) The General Partner's equity interest is 1% of the total
Partnership equity. The Initial Limited Partner's equity interest in the
Partnership is 10% of the total partnership equity. The Initial Limited Partner
has transferred 39.0232% of the total partnership equity to BCG of Portsmouth,
Inc., which is hereby admitted as a Substituted Limited Partner for that
interest.
II. Section 11.1 of the Agreement is hereby amended to insert the
words "Subject to Article 7 hereof" at the beginning of the first sentence
thereof.
Witness the execution hereof as of the day and year written below by
the General Partner, the Initial Limited Partner, and BCG of Portsmouth Inc.,
whose respective residence addresses are set forth opposite their respective
signatures.
GENERAL PARTNER
CHIN ENTERPRISES, INC.
Date: Oct 23, 1987 By /s/ William H. Chin
-----------------------
President
<PAGE>
INITIAL LIMITED PARTNER
William H. Chin
3324 Octavia St.
Oakland, CA 94619
Date: October 23, 1987 /s/ William H. Chin
--------------------------
William H. Chin
BCG of Portsmouth, Inc.
1000 Main Street
Dover , N.H.
Date: October 23, 1987 By /s/ Paul J. Tobin
-----------------------
President
-2-
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
AMENDMENT TO AGREEMENT
OF LIMITED PARTNERSHIP
The Agreement of Limited Partnership of Portsmouth Cellular Limited
Partnership as filed with the State of New Hampshire on November 24, 1986, and
as amended by amendments dated December 11, 1986, February 20, 1987, and October
5, 1987 (the "Agreement"), is hereby amended, effective on the date hereof,
pursuant to Sections 10.1 and 10.9B of the Agreement as follows:
Section 5.5 of the Agreement is amended by adding at the end of the
first sentence thereof:
"; and provided further that no indemnification shall be made with
respect to federal or state securities law violations to the extent
proscribed by any applicable federal or state law or regulations,
including without limitation Regulation 13.305(a)(2)(E)(iv)(a)
promulgated under the Massachusetts Uniform Securities Act, which is
incorporated herein by reference.
Witness the execution hereof on October 22, 1987, by the General
Partner pursuant to Sections 10.1 and l0.9B of the Agreement.
GENERAL PARTNER
Chin Enterprises, Inc.
By /s/ William H. Chin
-----------------------
President
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
FIFTH AMENDMENT TO AGREEMENT AND CERTIFICATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986,
February 20, 1987, October 5, 1987 and October 23, 1987 (the "Agreement"), is
hereby amended pursuant to New Hampshire Revised Statutes Section 305:26 and
Article 10.1 of the Agreement as follows:
I. Pursuant to Article 7 of the Agreement, certain Limited Partners
holding in the aggregate limited partnership interests totalling 15.3876%
assigned their limited partnership interests to BCG of Portsmouth, Inc.
Accordingly, Article 11.1(c) is amended to include BCG of Portsmouth, Inc. as a
Substituted Limited Partner for the following former Limited Partners:
Eugene C. Adams
Milton E. Borden, Jr.
Douglas R. Casey
Andrew Cumming
Koire Drysdale
Karl M. Eckel
Don Ford
Richard E. Garrett
Sandra M. Gilbert
Handler General Partnership
Herbert L. Hutner
Dean C. Lovett
Frederick G. Michaud, Jr.
Kenneth H. Moore
Roy J. Murphy
Natubhai Patel
Peck General Partnership
Pliny A. Price, M.D.
Darryl D. Reavis
Jean Lafaye Siegel
Donald A. Walsh
Aero-Tel, Inc.
American Cellular Corporation
American General Cellular Corp.
Cellular Ventures, Inc.
Cellulinear, Inc.
<PAGE>
CPS Telecom, Inc.
The Dennis M. Bond Organization, Inc.
Edison Communications
Global Cellular Partners
G.P. Partnership
J.B. Partnership
K.C. Cellular Corp., Inc.
Keynote Communications, Inc.
Lemon Tree Enterprises, Inc.
Madison Cellular Corporation
Maple Street Partnership, Ltd.
McDonnell & Co., Inc.
McElroy Electronics Corp.
Mincom, Inc.
Pacific Technocracy R&D, Inc.
PKO Television, Ltd.
R.G. Partnership
Regg-Bell, Inc.
Taylor Interactive Components, Inc.
Tracy Communications, Inc.
Westmore Cellular Corp.
II. Signed assignment forms reflecting each transfer of limited
partnership interests stated in Section I above are attached hereto and
incorporated as part of this amendment.
Witness the execution hereof as of the day and year written below by the
General Partner and the Substituted Limited Partner, whose respective addresses
are set forth opposite their respective signatures.
GENERAL PARTNER
100 Main Street
Dover, N.H. 03820 CHIN ENTERPRISES, INC.
Date: 10/27/87 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
SUBSTITUTED LIMITED PARTNER
281 Winter Street
Waltham, MA 02154 BCG of Portsmouth, Inc.
Date: 10/27/87 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
-2-
<PAGE>
LETTER AGREEMENT
BCG OF PORTSMOUTH, INC.
c/o Edwards & Angell
265 Franklin Street
Boston, MA 02110
Re: Sale of Interest in Portsmouth Cellular
Limited Partnership
Gentlemen:
I am a limited partner of Portsmouth Cellular Limited Partnership, a New
Hampshire limited partnership ("Portsmouth Cellular") which holds a construction
permit to build the nonwireline cellular system serving the Portsmouth, New
Hampshire area.
I acquired my limited partnership interest in Portsmouth Cellular as a
result of certain rights under a Cellular Settlement Agreement dated May 20,
1986 and a Joint Agreement dated May 28, 1986 (collectively referred to as the
"Settlement Agreements" and all parties having rights thereunder as the
"Settlement Group").
I understand that you have entered into an Acquisition Agreement (the
"Acquisition Agreement") with William H. Chin ("Chin"), Chin Enterprises, Inc.,
The Boston Communications Group, Inc. The Charter Group, and Portsmouth
Cellular. The Acquisition Agreement provides that Chin will sell to you all of
his interest in Portsmouth Cellular ("Chin's Interest"), including his interest
as a limited partner and his ownership of the stock of Chin Enterprises, Inc.,
the general partner of Portsmouth Cellular provided however that Chin may elect
to retain up to a ten percent (10%) interest in Portsmouth Cellular so long as
you obtain fifty one percent (51%) or more of Portsmouth Cellular and the
interests of the Settlement Group. Thus, following the purchase of Chin's
Interest, you will own a controlling interest in Portsmouth Cellular. I also
<PAGE>
understand that BCG Management, Inc., a company which is affiliated with you,
has entered into a Management Agreement pursuant to which it will construct and
operate the Portsmouth Cellular system on behalf of Portsmouth Cellular. A copy
of the Acquisition Agreement and the Management Agreement has been provided to
me as well as a memorandum dated May 26, 1987.
I HEREBY AGREE TO SELL YOU ALL OF MY RIGHT, TITLE AND INTEREST AS A
LIMITED PARTNER OF PORTSMOUTH CELLULAR AND UNDER THE SETTLEMENT AGREEMENTS (MY
"INTEREST") UPON THE TERMS SET FORTH IN THIS LETTER. THOSE TERMS ARE AS FOLLOWS:
1. Purchase Price. The price for my Interest is proportionately the same
price being paid to Chin for Chin's Interest. The purchase price for my Interest
shall be computed based upon a total value of $2,250,740 for 100% of all
partnership interests in Portsmouth Cellular and interests of the Settlement
Group, less the amount of purchase price adjustments as provided in the
Acquisition Agreement and a five percent (5%) brokerage fee to the Charter
Group.
2. Purchase Date; Termination. The purchase of my Interest by you shall
occur simultaneously with the purchase of Chin's Interest under the Acquisition
Agreement; subject to your right to effect such purchase at such earlier time as
you may elect (the "Purchase Date"). Under the Acquisition Agreement, the
scheduled date for the purchase of Chin's Interest is presently the tenth
business day after all FCC approvals have become final and all conditions set
forth in such approvals have been satisfied. I understand that one such
condition likely to be imposed by the FCC is the completion of construction of
the Portsmouth Cellular system. Thus, the Purchase Date will probably occur
following the completion of construction, which is currently anticipated
sometime during the coming fall or winter.
In the event of termination of the Acquisition Agreement, you shall have
the right to terminate this Letter Agreement.
3. Method of Payment. The purchase price for my Interest will be in cash
or by wire transfer of funds or certified or bank cashier's check. At your
election, such amount will be paid either directly to me or to The Charter Group
in Washington, D.C., who have agreed with Chin Enterprises, Inc. to act as
paying agent for Chin and all other selling limited partners and who have agreed
to promptly forward the purchase price to me at the address listed below.
-2-
<PAGE>
4. Transfer of My Interest. By signing this letter, I irrevocably grant to
you a power of attorney to execute and deliver to you such documents on my
behalf as you may reasonably require in order to effect the sale of my Interest
to you in accordance with the provisions of this letter.
5. My Representations and Warranties. By signing this letter, I make the
following representations, warranties and agreements, each of which is true and
correct on this date and will remain true and correct through the Purchase Date:
a. I am the legal and beneficial owner of my Interest, and I have
full power, authority and right to enter into this letter agreement and sell my
Interest to you.
b. My Interest is owned by me free and clear of all liens, security
interests, encumbrances and restrictions.
c. I will not take any action to interfere with the consummation of
the transactions contemplated in the Acquisition Agreement.
d. If requested, I will cooperate with you in obtaining any
necessary governmental approvals and signing any documents that may be necessary
to accomplish the sale of my Interest to you.
e. I am not aware of any facts which might interfere with the sale
of my Interest to you pursuant to this letter.
6. Miscellaneous. This letter is binding upon and benefits you and me and
our heirs, administrators, successors and assigns. This letter will be governed
by Massachusetts law. I consent to the jurisdiction of all state and federal
courts sitting in Massachusetts for purposes of resolving any dispute under this
letter and I waive any objections to Massachusetts being an appropriate location
for litigating any such dispute. If you prevail in any dispute under this
letter, I agree to reimburse you for all of your reasonable costs, expenses and
legal fees and to indemnify you for any harm you suffer as a result.
-3-
<PAGE>
SIGN HERE ONLY IF LIMITED PARTNER IS A NATURAL PERSON
/s/ E. C. Adams
------------------------
Sign on this line
Date: 6/26, 1987 E. C. ADAMS
------------------------
Print Name on this line
Address: RRI
Oakwood Manor
Box 364
Spizer, MN 56288
- --------------------------------------------------------------------------------
SIGN HERE ONLY IF LIMITED PARTNER IS CORPORATION, PARTNERSHIP, ETC.
-----------------------------
Print Name of Corporation,
Partnership, Etc.
Date: _________, 1987 By
---------------------------
Sign on this line
-----------------------------
Print Name and Title
Address:
--------------------
--------------------
--------------------
- --------------------------------------------------------------------------------
FOR BCG'S USE ONLY
Accepted and Agreed to:
BCG OF PORTSMOUTH, INC.
Date: _________, 1987 By
---------------------------
Title:
-4-
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
SIXTH AMENDMENT TO AGREEMENT AND CERTIFICATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986,
February 20, 1987, October 5, 1987, October 23, 1987, and October 27, 1987 (the
"Agreement"), is hereby amended pursuant to New Hampshire Revised Statutes
Section 305:26 and Article 10.1 of the Agreement as follows:
I. Pursuant to Article 7 of the Agreement, certain Limited Partners
holding in the aggregate limited partnership interests totalling 1.9992%
assigned their limited partnership interests to BCG of Portsmouth, Inc.
Accordingly, Article 11.1(c) is amended to include BCG of Portsmouth, Inc. as a
Substituted Limited Partner for the following former Limited Partners:
Malcolm G. Dolan
Sheila Leibsohn
Charles J. Lintini
Wladimir and Nancy Naleszkiewicz
Trygve Opsahl
Alvin R. Perry
II. R Cellular has assigned one-half of its interest (or .3332% of the
total limited partnership interests) to BCG of Portsmouth, Inc. Accordingly, the
interest of R Cellular is now .3332%.
III. Signed assignment forms reflecting each transfer of limited
partnership interests stated in Sections I and II above are attached hereto and
incorporated as part of this amendment.
WITNESS the execution hereof as of the day and year written below by the
General Partner and the Substituted Limited
<PAGE>
Partner, whose respective addresses are set forth opposite their respective
signatures.
GENERAL PARTNER
100 Main Street
Dover, N.H. 03820 CHIN ENTERPRISES, INC.
Date: 12/7/87 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
SUBSTITUTED LIMITED PARTNER
281 Winter Street
Waltham, MA 02154 BCG of Portsmouth, Inc.
Date: 12/7/87 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
-2-
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
SEVENTH AMENDMENT TO AGREEMENT AND CERTIFICATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986,
February 20, 1987, October 5, 1987, October 23, 1987, October 27, 1987 and
December 7, 1987 (the "Agreement"), is hereby amended pursuant to New Hampshire
Revised Statutes Section 305:26 and Article 10.1 of the Agreement as follows:
I. Pursuant to Article 7 of the Agreement, certain Limited Partners
assigned their limited partnership interests to BCG of Portsmouth, Inc.
Accordingly, Article 11.1(c) is amended to include BCG of Portsmouth, Inc. as a
Substituted Limited Partner for the following former Limited Partners:
David S. Arslanian
Germantown Cellular Associates
Three Ring Cellular
Waterside Cellular
AC Associates
Marvin Douglas Cook
David W. Guidry
LS Associates
Walter J. Ponne
Lynn J. Juanes
Allan B. Goldin
C-TAC VI
C-TAC VII
C-TAC VIII
Gary L. Anderson
Arthur R. Dittman
John A. Kramer
Thomas M. Vertin
<PAGE>
II. Pursuant to Article 7 of the Agreement, Patricia G. Burkhardt assigned
her limited partnership interest to Elsie R. Burkhardt. Accordingly, Article
11.1(c) is amended to substitute for Patricia R. Burkhardt the following Limited
Partner:
Elsie R. Burkhardt
7 Roundtree Drive
Melville, NY 11747
III. Signed assignment forms reflecting each transfer of limited
partnership interest stated in Sections I and II above are attached hereto and
incorporated as part of this amendment.
IV. Article 11.1(c) is further amended to include the following person as
a limited partner with a limited partnership interest of .3497%:
Brian L. O'Neill
1723 Chapin Street
Alameda, CA 94501
A signed counterpart reflecting the limited partner's agreement to the
terms of the Agreement is attached hereto and incorporated as part of this
amendment.
WITNESS the execution hereof as of the day and year written below by the
General Partner and the Substituted Limited Partner, whose respective addresses
are set forth opposite their respective signatures.
SIGNED AND SWORN TO
GENERAL PARTNER
100 Main Street
Dover, N.H. 03820 CEI Communications, Inc.
Date: May 9, 1988 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
SUBSTITUTED LIMITED PARTNER
281 Winter Street
Waltham, MA 02154 BCG of Portsmouth, Inc.
Date: May 9, 1988 /s/ Paul J. Tobin
--------------------------
Paul J. Tobin, President
-2-
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
EIGHTH AMENDMENT TO AGREEMENT AND CERTIFICATE
OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership as filed with the State of New Hampshire on
November 24, 1986, and as amended by amendments dated December 11, 1986,
February 20, 1987, October 5, 1987, October 23, 1987, October 27, 1987, December
7, 1987 and May 9, 1988 (the "Agreement"), is hereby amended pursuant to New
Hampshire Revised Statutes Section 305:26 and Article 10.1 of the Agreement as
follows:
I. Pursuant to Article 7 of the Agreement, certain Limited Partners
assigned their limited partnership interests to BCG of Portsmouth, Inc.
Accordingly, Article 11.1(c) is amended to include BCG of Portsmouth, Inc. as a
Substituted Limited Partner for the following former Limited Partners:
Dawursk Partnership
Patcom
David Coltrin
Sedgwick Andrews Ward
Jerry Rochman
II. Signed assignment forms reflecting each transfer of limited
partnership interest stated in Section I above are attached hereto and
incorporated as part of this amendment.
WITNESS the execution hereof as of the day and year written below by the
General Partner and the Substituted Limited Partner, whose respective addresses
are set forth opposite their respective signatures.
GENERAL PARTNER
100 Main Street
Dover, N.H. 03820 CEI Communications, Inc.
Date: August 22, 1989 /s/ Paul J. Tobin
--------------------------
President
SUBSTITUTED LIMITED PARTNER
281 Winter Street
Waltham, MA 02154 BCG of Portsmouth, Inc.
Date: August 22, 1989 /s/ Paul J. Tobin
--------------------------
President
<PAGE>
PORTSMOUTH CELLULAR LIMITED PARTNERSHIP
(a New Hampshire Limited Partnership)
TENTH AMENDMENT TO AGREEMENT
AND CERTIFICATE OF LIMITED PARTNERSHIP
The Agreement and Certificate of Limited Partnership of Portsmouth
Cellular Limited Partnership, as filed with the State of New Hampshire on
November 24, 1986 and as amended by amendments dated December 15, 1986, March
10, 1987, October 14, 1987, October 28, 1987 (two amendments), December 15, 1987
May 13, 1988, August 23, 1989, and October 24, 1989 (the "Agreement"), is hereby
amended pursuant to New Hampshire Revised Statute Section 305:26 and Articles
10.9(A)(i), and 2.3 of the Agreement as follows:
1. Article 2, Section 2.2 is deleted, and the following is to be
substituted therefore:
2.2 Name, Place of Business and Office
The Partnership shall be conducted under the name "Macon
Cellular Telephone Systems Limited Partnership." The principal
office and place of business shall be 12800 University Drive,
Suite 500, Ft. Myers, Florida 33907. The General Partner may
at any time change the location of such principal office.
Notice of any such change shall be given to the Limited
Partners in writing.
GENERAL PARTNER
CEI Communications, Inc.
By: /s/ Robert G. Engelhardt Date: 2-6-91
-------------------------------
Robert G. Engelhardt, President
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire limited partnership)
TWELFTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
The Agreement of Limited Partnership of Macon Cellular Telephone Systems
Limited Partnership, a New Hampshire limited partnership (formerly Portsmouth
Cellular Limited Partnership), as amended by the following amendments:
a. the First Amendment, filed December 15, 1986;
b. the Second Amendment, filed February 23, 1987;
c. the Third Amendment, filed October 14, 1987;
d. the Fourth Amendment, filed October 28, 1987;
e. the Fifth Amendment, filed October 28, 1987;
f. the Sixth Amendment, filed December 16, 1987;
g. the Seventh Amendment, filed May 13, 1988;
h. the Eighth Amendment, filed October 23, 1989;
i. the Ninth Amendment, dated October 24, 1989, but not filed;
j. the Tenth Amendment, filed February 19, 1991;
k. the Eleventh Amendment, dated March 20, 1995.
(collectively, the "Partnership Agreement") is hereby amended further as
follows:
1. The existing Schedule A shall be deleted and Schedule A attached hereto shall
be attached to the Partnership Agreement.
2. In all other respects, the Partnership Agreement shall remain in full force
and effect.
WITNESS the execution hereof as of the 17th day of June, 1996 by the
General Partner and the substituted limited partners.
CEI Communications, Inc.
By: /s/ [illegible]
----------------------
Its: Vice President
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Substituted limited partners:
By: CEI Communications, Inc. their
duly appointed attorney-in-fact
pursuant to Section 10.1 of the
Partnership Agreement
By: /s/ [illegible]
---------------------------
Its: Vice President
Assigning limited partners:
By: CEI Communications, Inc., their
duly appointed attorney-in-fact
pursuant to Section 10.1 of the
Partnership Agreement
By: /s/ [illegible]
---------------------------
Its: Vice President
Page 2 of 2
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COLUMBUS CELLULAR TELEPHONE COMPANY
PARTNERSHIP AGREEMENT
THIS AGREEMENT, dated as of March 1, 1989, is by and among Palmer
Communications Incorporated, a Delaware corporation ("PCI") and the parties who
have timely executed and delivered a counterpart signature page for this
Agreement (each a "Party", and collectively, the "Parties"). The counterpart
signature pages, together with the Agreement, constitute the entire agreement of
the Parties ("Agreement").
Each Party, as an original party to or as the assignee of an original
party to one of several settlement agreements among applicants for the
Authorization, is a third-party beneficiary of the Joint Agreement, dated May
28, 1986 ("Joint Agreement") by and among Cellular Equity Settlement Group; CPS
Telecom, Inc.; Cellular Management Services, Inc.; Denman Resources, Inc.; The
Genesis Enterprises, Inc.; Mobile Communications Enterprises, Inc.; Mobile
Telephone Corporation; Settlecom, Inc.; and Western Cellular Alliance, pursuant
to which the Parties agreed to allocate their respective rights in applications
before the FCC for Authorization to build and operate the System.
Dr. Trygve Opsahl ("Opsahl") was the selectee originally designated by the
FCC to receive the Authorization to build and operate the System.
Pursuant to a Purchase Agreement, dated as of April 8, 1988, PCI has
become the successor-in-interest to Opsahl with respect to the Authorization and
the other assets and interests set forth in such Purchase Agreement.
In order to clarify each Party's rights and obligations with respect to
the Authorization and to allow for the management of the System by PCI, the
Parties desire to enter into this Agreement in order to supersede and replace
the Joint Agreement with the terms and conditions set forth herein;
In consideration of the mutual obligations herein contained and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each of the Parties, the Parties agree as follows:
1. Definitions
As used in this Agreement, the following terms have the following
meanings:
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"Agreement" has the meaning ascribed to such term in the first
paragraph of this Agreement.
"Assign" has the meaning ascribed to such term in Section 7.1 of
this Agreement.
"Assignee" has the meaning ascribed to such term in Section 7.1 of
this Agreement.
"Authorization" means action by the FCC granting its consent to the
building and operation of the System.
"Capital Accounts" shall mean the capital accounts maintained by the
Partnership with respect to each Party hereto, pursuant to Section 4.2 of this
Agreement.
"Capital Call" has the meaning ascribed to such term in Section 3.2
of this Agreement.
"Executive Committee" shall mean the committee, composed of three
members, with responsibility for conducting the business affairs of the
partnership pursuant to Section 5.3 of this Agreement.
"FCC" means the Federal Communications Commission.
"Joint Agreement" has the meaning ascribed to such term in the
second paragraph of this Agreement.
"Majority Vote" shall mean a vote of the Parties representing more
than fifty percent (50%) of the aggregate Ownership Interests in the
Partnership.
"Market" means the geographic area in and around Columbus, Georgia,
which is served by the System pursuant to authorizations issued by the FCC.
"Opsahl" has the meaning ascribed to such term in the third
paragraph of this Agreement.
"Ownership Interest" means, with respect to each Party, the
percentage interest in the partnership held by such Party.
"PCI" has the meaning ascribed to such term in the first paragraph
of this Agreement.
"Partnership" has the meaning ascribed to such term in Section 2.1
of this Agreement.
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"Partnership Business" has the meaning ascribed to such term in
Section 2.3 of this Agreement.
"Party" or "Parties" has the meaning ascribed to such term in the
first paragraph of this Agreement.
"Supermajority Vote" shall mean a vote of the Parties representing
sixty percent (60%) of the aggregate Ownership Interests in the Partnership.
"System" means the cellular radio telephone system for the Columbus,
Georgia metropolitan area.
2. Organization
2.1. Governing Agreement. The partnership formed by the parties (the
"Partnership") shall be governed by the terms and conditions set forth herein.
2.2. Name and Place of Business. The name of the Partnership shall be the
Columbus Cellular Telephone Company. The name may be changed from time to time
by the Executive Committee. The principal place of business of the Partnership
shall be Columbus, Georgia or any other place authorized by the Executive
Committee. The Partnership shall be a Georgia Partnership.
2.3. Purpose. The purpose and scope of the Partnership is to construct and
to operate the System for the Market and the surrounding areas ("Partnership
Business"). The Partnership may take any and all action necessary, incidental or
convenient to carry out the partnership Business, including, but not limited to:
leasing, purchasing and improving property and equipment for the System;
borrowing and raising money; executing documents; operating the System;
contracting with PCI and other parties for the provision of management services;
selling the services of the System to wholesale and retail customers; selling,
leasing, installing and maintaining customer units used on the System, and
reselling or contracting to resell competing wireline cellular services in the
Market and in any available surrounding markets.
2.4. Term. The term of the partnership commenced on March 28, 1986. The
term shall continue until March 28, 2085, or until earlier terminated as
provided herein.
2.5. Formation. The partnership shall consist of each Party who has
returned an executed counterpart signature page on or by the date specified
thereon.
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3. Capital Contributions
3.1. Initial Ownership Interest and Capital Contribution. The parties
acknowledge and agree that the value of the Authorization, for purposes, inter
alia, of determining the amounts of the respective capital Accounts of the
Parties is $8,839,309. Each Party has contributed to the partnership its
interest in the Authorization pursuant to the Joint Agreement, and each Party's
contribution shall be valued at the percentage of $8,839,309 equal to its
percentage interest in the Authorization pursuant to the Joint Agreement. Each
Party shall have an initial Ownership Interest in the Partnership equal to its
percentage interest in the Authorization pursuant to the Joint Agreement.
3.2. Capital Contributions. Each Party shall from time to time contribute
to the partnership in cash its pro rata share of the amounts requested in
writing ("Capital Call") by the Executive Committee. Each Party's additional
capital contribution(s) shall be made within a period specified in the Capital
Call which shall be not less than thirty days following the date that the
Capital Call for the contribution is delivered to such Party pursuant to Section
11.10 below. For purposes of this Agreement, each Party's pro rata share shall
equal the result by dividing its ownership Interest by the ownership Interest of
all Parties at the time of the Capital Call. Capital Calls made to the Parties
shall include an explanation of the anticipated uses of the funds requested
thereby.
3.3. Ownership Percentages. Each Party shall initially have an ownership
interest in the partnership as set forth in Schedule A. After contributions have
been made in response to each Capital Call, the Ownership Interest held by each
Party shall equal the percentage derived by dividing such Party's total capital
contributions by the total capital contributions made by all of the Parties.
3.4. Failures to Contribute. If any Party fails to make all or part of any
Capital Call when due pursuant to Section 3.2 above, then such Party shall be
considered to be in default of its obligations hereunder, and the provisions of
Section 9.2 hereof shall apply. No right to cure under this Agreement shall
apply to any failure to make a Capital Call when due, unless approved by
unanimous vote of the Executive Committee. Each deficiency in meeting a Capital
Call may be met by a further pro rata Capital Call on Parties other than the
Party or Parties responsible for the deficiency. Such further contributions
shall be credited to
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the Capital Accounts and the ownership Interests of the Parties making such
further contributions.
3.5. Application Expenses. No Party shall be entitled to any reimbursement
of, or to be credited as having made a capital contribution as a result of,
expenses incurred in connection with its own application or with the dismissal
or contribution thereof on behalf of the partnership; provided, however, that
the Capital Account of each Party shall be deemed to include each such Party's
share of the value of the Authorization as set forth in Section 3.1 hereof. The
costs of prosecuting the application to construct and build the System which are
incurred after the lottery, defending the grant of such application, and other
costs associated with or incidental to the development of the partnership
Business shall be borne by the Partnership, and not individually by any Party.
This includes all such costs incurred subsequent to the applicable lottery and
prior to the formation of the partnership.
3.6. Loans. Any funds heretofore or hereafter provided to the partnership
by a Partner other than the Partner's capital contributions pursuant to Sections
3.1 and 3.2 shall be treated as a loan. A loan by a Partner to the partnership
shall not enlarge the lending Partner's Ownership Interest but shall constitute
a debt due from the partnership to the lending Partner. Partners' loans shall be
on terms (including terms relating to the accrual and payment of interest,
security, and events of default) that the Executive Committee determines in its
sole discretion to be in the best interests of the Partnership.
4. Capital Accounts and Allocations
4.1. Title to Property. The Partnership shall hold sole and exclusive
title to the capital of the Partnership and to all applications, authorizations,
equipment and other property, whether real, personal or intangible, acquired by
the Partnership. No Party shall have any right, in law or equity, to request the
partition of any asset or property of the Partnership, or to demand property
other than cash upon any distribution by the Partnership.
4.2. Capital Accounts. A separate Capital Account shall be maintained for
each Party on the books of the Partnership, in accordance with generally
accepted accounting principles. The Capital Account of each Party shall consist
of (i) such Party's share of the value attributed to the Authorization pursuant
to Section 3.1 hereof, (ii) capital contributions already made by such Party as
of the date
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hereof, and (iii) additional capital contributions made pursuant to Capital
Calls. In addition, the Capital Account of each Party shall be credited with the
net income and gain, if any, of the Partnership allocated to such Party and be
charged with the net losses, if any, of the Partnership allocated to such Party,
together with all distributions made by the Partnership to such Party. The
Partnership shall keep separate account of each Party's capital contributions
pursuant to Capital Calls. No Party shall be entitled to interest on its Capital
Account. For purposes of this Agreement, Partnership net income, loss and gain
shall be determined by the Executive Committee in accordance with generally
accepted accounting principles.
4.3. Distributions. Distributions of net income and other Partnership
proceeds to the Parties shall be made quarterly in accordance with their
Ownership Interests at the time of distribution. However, the amount available,
if any, for each such distribution shall be determined by the Executive
Committee. Distributions of net income shall not exceed such quarter year's net
income, less the amount determined by the Executive Committee to be reasonably
required for non-expensed items in the Partnership's budget, such as payments
of debt principal due or past due, capital investment needs, and working
capital. No Party shall be required to make a capital contribution to provide
the funds necessary to make a distribution, nor shall the Partnership be
required to borrow money for such purpose.
4.4. Tax Allocations. Taxable income, gain or loss, and items of tax
credit of the Partnership for each taxable year shall be determined by the
Executive Committee in accordance with applicable federal income tax laws,
rules, and regulations and shall be allocated among the Parties in proportion to
their Ownership Interests. Income of the Partnership in any taxable year which
is exempt from federal income taxation shall be allocated among the Parties in
proportion to the allocation of taxable income among the Parties for such year.
5. Management
5.1. Voting. Each Party's voting percentage shall equal the percentage of
its Ownership Interest in the Partnership. A Majority Vote shall be required to
act on all matters requiring a vote of the Parties, except that a Supermajority
Vote shall be necessary for (i) the participation of the Partnership in any
business other than the Partnership Business; (ii) the amendment or modification
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of this Agreement; and (iii) the sale or transfer of control of the
Authorization (except for pro forma transfers).
5.2. Meetings. A meeting of the Parties shall be held at least once during
each calendar year beginning after the date of this Agreement. Special meetings
of the Parties may be called at any time by the Executive Committee, or by any
Party or combination of Parties representing in the aggregate at least
thirty-five percent (35%) in Ownership Interests. Parties holding a total of at
least fifty percent (50%) in Ownership Interests shall constitute a quorum
necessary for a meeting. Each Party may designate a person who will represent
such Party at meetings of the Parties, either directly or by proxy, by giving
written notice thereof to the Executive Committee. The person so designated will
continue to be that Party's representative and to hold its proxy until the
Executive Committee receives written notice of the designation of a successor
representative by the Party in question.
5.3. Executive Committee. Except as otherwise provided in this Agreement,
complete and exclusive power to conduct the business affairs of the Partnership
shall be delegated to the Executive Committee. Prior to the first annual meeting
of the Parties, PCI shall be deemed to be the Executive Committee and to have
all the powers thereof. Each member of the Executive Committee shall be elected
at the annual Parties' meeting, and each member may be removed at any time, by
the Majority Vote of the Parties. However, if one Party is entitled or
authorized to vote at least fifty percent of the Partnership votes but less than
seventy-five percent of the Partnership votes, then one Executive Committee
member shall be elected, and may be removed, only by the Majority Vote of the
other Parties. Notwithstanding the foregoing, the Executive Committee may fill
by appointment any vacancy in its membership which occurs between annual
meetings, or if the annual meeting fails to elect all required members of the
Executive Committee. More than one of a Party's representatives may be elected
to membership on the Executive Committee at the same time. Meetings of the
Executive Committee shall be held not less than once each fiscal quarter, and
such meetings may be held by conference telephone call. A majority of the
Executive Committee shall constitute a quorum for the transaction of its
business. Each action of the Executive Committee shall require a vote of a
majority of the Executive Committee members casting a vote.
5.4. Chairman and Employees. The Executive Committee shall elect a
Chairman from among its members. The Chairman
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shall preside at all Executive Committee meetings and all meetings of the
Parties. The Executive Committee may delegate responsibilities and authority to
the Chairman, the System's General Manager, or to other Partnership employees to
the extent it considers appropriate in its sole discretion. The System's General
Manager may be delegated the day-to-day responsibility for conducting the
Partnership Business.
5.5. Meeting Notices. Written notice of each meeting of the Parties and
each meeting of the Executive Committee shall be given by the Chairman of the
Executive Committee to each Party and Executive Committee member, respectively.
The notice shall state the place, date, hour and purpose of the meeting. Notice
of any meeting shall be given not less than ten nor more than thirty days before
the date of the meeting, unless otherwise waived in writing. When a meeting is
adjourned to reconvene at another time or place, it shall not be necessary to
give notice of the reconvened meeting, if the time and place of the reconvened
meeting are announced at the adjourned meeting.
5.6. Minutes. Minutes reflecting the actions taken at meetings of the
Partnership and the Executive Committee shall be kept. Copies of the minutes
shall be maintained at the office of the Partnership and shall be promptly
transmitted to any Party or such Party's representative upon written request.
5.7. Arrangements with Parties. The partnership may enter into reasonable
agreements with any Party or an affiliate of such Party for the performance of
services or the acquisition and/or leasing of equipment or other property.
However, each such agreement shall be on terms not substantially less favorable
to the Partnership than could readily be obtained from a person or entity who is
not a Party or an affiliate of such Party.
5.8. Reasonable Skill and Care. In carrying out its duties and exercising
its powers hereunder, the Executive Committee shall exercise reasonable skill
and care and reasonable business judgment. The Executive Committee shall not be
liable to the Partnership or to the Parties for any act or omission performed or
omitted by it in good faith pursuant to the authority granted to it by this
Agreement, unless such act or omission constitutes gross negligence or willful
misconduct by the Executive Committee.
5.9. Indemnification. The Partnership shall indemnify and hold harmless
the Executive Committee and each of its
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members from any loss or damage, including attorney's fees, incurred by it by
reason of any act performed by it on behalf of the Partnership or in furtherance
of the Partnership Business; provided, however, that such indemnification or
agreement to hold harmless shall be recoverable only out of the assets of the
Partnership and not from the Parties; and provided, further, that the foregoing
indemnity shall extend only to acts or omissions performed or omitted by the
Executive Committee in good faith and in the belief that its acts or omissions
were in the Partnership's interest, and which are not a result of gross
negligence or willful misconduct on the part of the Executive Committee. Nothing
in this Section 5.9 shall prohibit the Executive Committee from acquiring and
entering into contracts of insurance at the expense of the Partnership that will
provide protection to the Executive Committee from liability for its negligence.
5.10. Individual Parties to Have No Authority. No Party shall take any
part in the conduct or control of the Partnership's business or have any right
or authority to act for or on behalf of the Partnership except as (a) a member
of the Executive Committee or (b) an agent or employee of the Partnership.
6. Books and Accounts
6.1. Fiscal Year. The fiscal year of the Partnership shall end on December
31st in each year, or on such other date as may be approved by the Executive
Committee from time to time.
6.2. Books and Records. The Partnership shall maintain proper books and
accounts in accordance with generally accepted accounting principles and the
provisions of this Agreement. Upon the close of each fiscal year ending after
the date of this Agreement, or as otherwise approved by the Executive Committee,
all such books and accounts shall be audited by the accountants for the
partnership selected by the Executive Committee in its sole discretion.
6.3. Reports and Tax Returns. At least fifteen days prior to the
commencement of each fiscal year beginning after the date of this Agreement, the
Executive Committee shall mail to each Party the budget for the Partnership for
the fiscal year. Within one-hundred and twenty days after the end of each fiscal
year ending after the date of this Agreement, except in extraordinary
situations, the Executive Committee shall mail to each Party (i) financial
statements for the Partnership, including its balance sheet as of the
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end of such preceding fiscal year, its statement of income and earnings for the
preceding fiscal year, and a statement of cash flows for the preceding fiscal
year; and (ii) all necessary financial, tax, and other data required for
inclusion in or preparation of tax returns for the Parties. The Executive
Committee may issue other reports from time to time as it considers appropriate.
6.4. Right of Inspection. Each Party shall have the right, at its own
expense, to examine and inspect, at reasonable times during normal business
hours, the books, records, accounts, properties, and operations of the
Partnership. Such examination and inspection may be conducted by a Party or its
authorized agents. However, such examination or inspection shall not
unreasonably interfere with the operation of the Partnership or the System.
7. Transfers of Interests
7.1. Assignment Permitted. Subject to the grant by final order of any
required FCC or other regulatory consent, and subject to the terms of this
Agreement, each Party may sell, assign, or exchange (collectively "Assign") all
or part of its Ownership Interest to or with any other person or entity
("Assignee"). However, the assigning Party shall remain fully liable for any and
all of its obligations as a Party which are incurred prior to the date upon
which the assignment of its Ownership Interest is effective. The Assignee
thereafter shall be subject to all the terms and conditions of this Agreement,
including all obligations under this Agreement which are attributable to the
assigned Ownership Interest.
7.2. Notice of Assignment. A Party who agrees or is required to sell,
assign or exchange all or part of its ownership Interest shall notify the
Executive Committee at least ten (10) days in advance of the consummation of
such sale, assignment, or exchange (collectively "Assignment"). The notice shall
set forth the name, address, citizenship, and other information necessary to
establish the legal qualifications of the Assignee to hold the interest to be
assigned. This notice is for information purposes only, and shall not constitute
the offering of any right of first refusal to purchase the interest.
7.3. Approvals and Documentation. If the prior consent of the FCC, any
state regulatory agency or other governmental authority is required for any
Assignment, such consent shall be obtained by final order prior to the
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consummation of any Assignment and admittance of the Assignee as a Party. The
Assignee shall execute and acknowledge all instruments and applications, in form
and substance satisfactory to counsel for the Partnership, which are necessary
or desirable to obtain such consent, to effectuate the Assignment, to admit the
Assignee as a Party, and to bind the Assignee under all of the terms and
conditions of this Agreement. Prior to admission as a Party, the Assignee shall
reimburse the Partnership for all reasonable expenses, including attorney's
fees, incurred by the Partnership in connection with the Assignment.
7.4. Preservation of Authorization. No Party may assign all or part of its
Ownership Interest to any other person or entity unless the Assignment, in the
opinion of the Partnership's counsel, will not disqualify the Partnership from
receiving or holding the Authorization.
7.5. Involuntary Assignment. Upon the death, bankruptcy, insolvency or
incompetency of any Party, the legal representative, guardian, receiver,
creditor's committee or other successor-in-interest of such Party, as the case
may be, shall notify the Executive Committee in writing of such event and,
subject to section 7.3 and Section 7.4 above, shall be assigned such Party's
Ownership Interest and be admitted as a Party.
7.6. Encumbrance of Ownership Interest. No Party shall pledge,
hypothecate, grant a security interest in, or otherwise encumber its Ownership
Interest in the Partnership, unless (i) such Party gives not less than fifteen
(15) days prior written notice to the Executive Committee of the creation of the
encumbrance; (ii) the encumbrance attaches solely to the subject ownership
Interest, and does not attach to any real, personal or intangible property,
equipment, or other asset of the Partnership; (iii) the secured party is
obligated to comply with Sections 7.2, 7.3, 7.4, and 7.5, above, in the event it
attempts to enforce the encumbrance. Notwithstanding the foregoing, any Party
may be required, by a vote of the Executive Committee, to pledge its Ownership
Interest to a vendor or financial institution if such pledge is reasonably
necessary to finance the construction and/or operation of the System.
8. Representations and Warranties
Each Party to this Agreement hereby represents and warrants that:
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(a) it is duly formed (if not a natural person), validly existing,
and in good standing under the state and local laws to which it is subject, with
full power and authority to enter into and to perform its obligations under this
Agreement;
(b) its execution and performance of this Agreement will not
conflict with, or result in a material breach of or default under, any
agreement, instrument, law, regulation, order, decree or judgment to which it is
subject;
(c) this Agreement is binding and enforceable against it;
(d) it shall appoint a representative who shall have full power and
authority to vote for it on Partnership matters and such authority shall not be
abrogated until a successor representative is appointed;
(e) it is and will remain qualified under applicable FCC standards
to hold the Authorization, and to hold its Ownership Interest in the
Partnership;
(f) it has no knowledge of any fact or circumstance which would
disqualify it or the Partnership from receiving or holding a final grant of the
Authorization;
(g) the statements made in its application for the Authorization are
true, correct and complete and it neither has nor will have any prohibited
cross-interest in any other mutually exclusive application or settlement group;
(h) it has not engaged and shall not engage in any improper act,
practice or omission which, if not timely corrected, would result in
disqualification of the Partnership for the Authorization, or any recision,
revocation or non-renewal of the Authorization;
(i) it is experienced enough in the business of the partnership to
be capable of exercising its partnership voting rights intelligently;
(j) it has received no solicitation or general advertisement, has
attended no seminar or meeting, and has received no other written communication
concerning its acquisition of an interest in the Partnership;
(k) it confirms that no representations or warranties have been made
to it and that it has not relied
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upon any representation or warranty in connection with its acquisition of an
interest in the Partnership;
(1) it acquired its interest in the Partnership for its own account
and not with a view to, or for sale in connection with, the distribution
thereof;
(m) it is aware of and understands that no governmental agency has
made a finding or determination concerning the fairness of an investment in the
Partnership or any recommendation or endorsement of interests therein, and that
interests in the Partnership were not and have not been registered under the
Securities Act of 1933 and cannot be resold unless they are registered under the
Act or unless an exemption from registration is available.
9. Default
9.1. Default. If a Party for any reason breaches any agreement,
representation or warranty contained in this Agreement, and such breach is not
cured within thirty (30) days after written notice of the breach is provided to
the defaulting Party, then the Party shall be considered to be in default under
this Agreement. Any Party who is in default shall be liable to the Partnership
for, and shall indemnify the Partnership against, all damages, losses, and/or
expenses suffered or incurred by the Partnership, including reasonable
attorney's fees and litigation expenses resulting from such default. The
Partnership shall have the right to offset any damages, losses, and/or expenses
suffered or incurred by it, including reasonable attorney's fees and litigation
expenses, as the result of a default by any Partner against any amounts owed by
the Partnership to the defaulting Party. The exercise by the Partnership of its
rights as provided in Section 9.2 below shall not relieve the Party of such
liability or indemnification obligation and shall not constitute a waiver, by
any Party or the Partnership, of any right or remedy against the defaulting
Party under this Agreement, including the right to offset damages, losses and
expenses against any amount owed to the defaulting Party.
9.2. Sale on Material Default. Each Party who is in default under the tens
of this Agreement shall be required, upon the request of the Partnership, and
subject to any required FCC consent, to transfer to the Partnership the whole of
its Ownership Interest in the Partnership, for consideration equal to the
balance of its Capital Account. The provisions of this paragraph may be waived
by the Executive Committee in its sole discretion.
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10. Dissolution and Termination
10.1. Dissolution. Subject to prior FCC and regulatory consent, if any is
required, the Partnership shall be dissolved upon the occurrence of any of the
following events: (i) a Majority Vote to dissolve the Partnership (ii) the sale
or assignment of substantially all of the assets of the Partnership; (iii) the
filing by, or against, the Partnership of any petition in bankruptcy or the
appointment of a creditors committee with respect to the Partnership; and (iv)
any other act of termination by a Party, except for involuntary assignments
addressed by Section 7.5 above.
10.2. Right to Continue. If the Partnership is dissolved pursuant to
Section 10.1 (iv), above, or otherwise by law, the Parties agree to continue the
Partnership Business in order to ensure uninterrupted service to the public
until such time as a successor entity has been established to operate the
system.
10.3. Winding Up. In the event of the dissolution of the Partnership for
any reason, unless the Partnership is continued pursuant to Section 10.2 above,
the Partnership shall be liquidated and its affairs wound up by the Executive
Committee in an orderly yet proper manner. The Parties shall continue to share
all items of income, gain, loss, deduction or credit for tax purposes, and all
profits and losses for accounting purposes, during the period of liquidation in
the same manner as before the dissolution. In order to obtain full market value
from the sale of Partnership assets, the Executive Committee shall have the full
right and discretion to determine the time, manner and terms of each sale of
partnership property pursuant to the liquidation.
10.4. Distribution Upon Liquidation. After paying or providing for the
payment of all debts and liabilities of the Partnership and all expenses of
liquidation, and after reserving funds reasonably sufficient to cover contingent
or unforeseen liabilities or obligations of the Partnership, the proceeds of the
liquidation and any other assets of the Partnership shall be distributed to the
Parties in accordance with their Ownership Interests at the time of
distribution.
11. Power of Attorney.
11.1. Appointment. Each Partner irrevocably constitutes and appoints PCI
as the Partner's true and lawful attorney-in-fact, with full power and authority
in the name,
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place, and stead of such Partner to make, execute, verify, consent to, swear to,
acknowledge, publish, record, and file all the following:
(a) Any amendment to this Agreement approved pursuant to the terms
of this Agreement.
(b) Any certificate, consent, or other instrument that may be
required to be filed by the Partnership or the Partners under the laws of any
state or jurisdiction, if the Executive Committee deems filing necessary or
desirable.
(c) Any documents or other instruments described in Section 12.1.
(d) Any pledge agreement pursuant to Section 7.6 and any financing
statement relating to the pledge of interests in the Partnership.
(e) Any amendments to or modifications of the instruments described
above.
11.2. Power Irrevocable. Each Partner understands and intends that the
foregoing power of attorney is coupled with an interest and is irrevocable. The
foregoing power of attorney shall survive the death, incapacity, or dissolution
of the Partner and the assignment of all or part of the Partner's interest in
the Partnership.
11.3. Evidence of Authority. The execution and delivery by PCI of any
agreement, certificate, consent, or other instrument shall be conclusive
evidence that its execution and delivery was authorized by the foregoing power
of attorney.
12. Miscellaneous
12.1. Mutual Cooperation. Each Party shall, in good faith, cooperate with
each other Party, the Partnership, and the Executive Committee in promptly
undertaking all actions, executing all documents, and filing all materials with
the FCC, any other governmental body, any lender, vendor, or financial
institution as may reasonably be necessary or desirable to fulfill each of the
Party's obligations under this Agreement.
12.2. Other Business. Nothing contained in this Agreement shall restrict
any Party or any affiliate of such Party from engaging in any business outside
of and independent from the Partnership, except that no Party or
<PAGE>
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affiliate of such Party shall be a sales agent or reseller of the wireline
cellular system in the Market.
12.3. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Parties, their legal
representatives, heirs, administrators, executors, successors, and permitted
assigns.
12.4. No Agency. The Parties understand and agree that neither this
Agreement nor the Partnership itself grants or creates in any Party or the
Partnership any power of agency to bind or obligate the Parties, except as
expressly set forth in this Agreement.
12.5. Confidential Information. Under no circumstances shall any Party
utilize or disclose in any manner which is in any way adverse to the interests
of the Partnership or any other Party any confidential information, including
engineering, technical, managerial and marketing information, whether or not
patentable or subject to copyright, disclosed by a Party to the partnership or
to the other Parties in connection with Partnership matters or created by the
Partnership itself or by the Parties in connection with Partnership matters.
12.6. Specific Performance. Each Party acknowledges that monetary damages
for breach of any of the provisions of this Agreement would be inadequate. Each
Party therefore acknowledges that specific performance, temporary and permanent
injunctive relief, and other appropriate remedies may be granted to enforce such
provision without proof of actual damage or the inadequacy of the remedy at law.
12.7. Severability. If any provision of this Agreement is determined by
any court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement shall continue to be in full force and effect.
12.8. Governing Law. This Agreement and the rights of the Parties
hereunder shall be governed, interpreted, and enforced in accordance with the
laws of the State of Georgia.
12.9. Final Order. For purposes of this Agreement, a final order of a
government authority shall mean an order which is effective and is no longer
subject to administrative or court reconsideration, review, appeal or stay.
12.10. Notices. All notices, demands, and Capital Calls required or
permitted under this Agreement shall be in
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writing and shall be conclusively presumed to have been delivered to the
recipient three business days after posting in the United States mail, first
class, postage prepaid, to the recipient's address shown at the time in the
records of the Partnership. Any Party may specify a different address by
notifying each of the Parties or the Executive Committee in writing of the
change in address.
12.11. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
12.12. Headings. All article, section and paragraph titles or captions
contained in this Agreement are for convenience only and shall not be deemed
part of the text of this Agreement.
12.13. Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the context
may require.
12.14. Entire Agreement. This Agreement and the Counterpart Signature
pages specifying the Partnership constitute the entire Agreement between the
parties, superseding all prior agreements or understandings between the Parties.
This Agreement may be modified or amended only by an instrument in writing
adopted in accordance with the provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned has executed this agreement this
______ day of ___________ 1989.
Name of Party:
By:________________________
Name:______________________
Title:______________________
<PAGE>
COUNTERPART SIGNATURE PAGE TO
COLUMBUS CELLULAR TELEPHONE COMPANY
PARTNERSHIP AGREEMENT
The undersigned, being the transferee of general partnership interests of
Columbus Cellular Telephone Company, a Georgia partnership, as of March 21,
1995, hereby accepts and agrees to be bound by all of the terms of the Columbus
Cellular Telephone Company Partnership Agreement, dated as of March 1, 1989, as
a partner thereunder.
PALMER WIRELESS, INC.
Dated: March 21, 1995 By: /s/ William J. Ryan
---------------------------
Name: William J. Ryan
Its: PRESIDENT CEO
<PAGE>
COUNTERPART SIGNATURE PAGE TO
COLUMBUS CELLULAR TELEPHONE COMPANY
PARTNERSHIP AGREEMENT
The undersigned, being the transferee of general partnership interests of
Columbus Cellular Telephone Company, a Georgia partnership, as of March 21,
1995, hereby accepts and agrees to be bound by all of the terms of the Columbus
Cellular Telephone Company Partnership Agreement, dated as of March 1, 1989, as
a general partner thereunder.
PALMER WIRELESS HOLDINGS, INC.
Dated: March 21, 1995 By: /s/ William J. Ryan
----------------------------
Name: William J. Ryan
Its: President and Chief Executive
Officer
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF GENERAL PARTNERSHIP OF
ALBANY CELLULAR PARTNERS
This Agreement, by and among the parties who have timely executed
and delivered a Counterpart Signature Page for this Agreement and who have
contributed their share of the Initial Capital Call pursuant to Sections 2.3 and
2.4 hereof ("Parties"), is to amend and restate the Partnership Agreement of
Albany Cellular Partners (the "Partnership") dated as of December 21, 1987 (the
"Original Agreement"). The Counterpart Signature Pages, together with this
agreement, constitutes the entire agreement of the Parties ("Agreement").
Whereas, each Party is a third-party beneficiary, or a success or
thereof, pursuant to settlement agreements relating to MSA 261 or the Albany,
Georgia market (the "Settlement Agreements"); and
Whereas, Cellcom Corp. is the tentative selectee designated by the
Federal Communications Commission ("FCC") to receive the authorization
("Authorization") to build and operate the non-wireline cellular system
("System") for Albany, Georgia MSA ("Market"); and
Whereas, Cellcom Corp. has transferred the Authorization Cellular
Dynamics Telephone Company of Georgia, a Georgia corporation ("CDTCG") wholly
owned by the Partnership; and
Whereas, in order to effectuate a manageable organizational
structure for the construction and operation of the System, Cellcom Corp. and
Cellcom Telephone Company of Albany as nominee for the parties to the Settlement
Agreement other than Cellcom Corp., formed the Partnership; and
Whereas, in order to formalize each Party's rights and obligations
with respect to the Authorization for the Market, the Parties desire to amend
and restate in its entirety the Original Agreement to fulfill all obligations
and rights pursuant to the Settlement Agreements and to the extent Parties other
than Cellcom Corp. and Cellcom Telephone Company of Albany are admitted to the
Partnership, to correspondingly reduce Cellcom Telephone Company of Albany's
interest in the Partnership.
Now therefore, in consideration of the mutual obligations herein
contained, the receipt and sufficiency of which consideration the Parties hereby
acknowledge, the Parties agree as follows:
<PAGE>
I. Organization
1.1. Governing Agreement. The Partnership shall be governed by the
terms and conditions set forth herein.
1.2 Name and Place of Business. The name of the Partnership shall be
Albany Cellular Partners. The name may be changed from time to time by the
Executive Committee (as defined in Section 4.3 hereof) of the Partnership. The
principal place of business of the Partnership shall be Albany, Georgia or any
other place authorized by the Executive Committee. The Partnership shall exist
under the laws of the State of Georgia.
1.3 Purpose. The purpose and scope of the Partnership is, directly
or through CDTCG or any other subsidiary, to construct and to operate the System
for the Market and the surrounding areas, if obtained by the Partnership
("Partnership Business"). The Partnership may take any and all action necessary,
incidental, or convenient to carry out the Partnership Business, including but
not limited to: (a) leasing, purchasing, and improving property and equipment
for the System; (b) raising money for the operation or improvement of the
System; (c) guaranteeing debt or other obligations; (d) selling service on the
System to wholesale and retail customers; (e) selling, leasing, installing and
maintaining customer units used on the System; (f) reselling or contracting to
resell competing wireline cellular services in the Partnership's Market and any
available surrounding areas; (g) constructing, operating, maintaining,
improving, expanding, buying, owning, selling, conveying, assigning, mortgaging,
refinancing, renting, and leasing real or personal property and any interest
therein; (h) entering into and performing any contracts and agreements; (i)
borrowing money and issuing evidences of indebtedness and securing any such
indebtedness by mortgage, security interest, or other lien; (j) negotiating for
and concluding agreements for the sale, exchange, or other disposition of all or
any part of the property of the Partnership or any subsidiary or for the
purchase or lease of additional property of the Partnership or any subsidiary;
(k) hiring, compensating, and terminating employees, agents, independent
contractors, attorneys, and accountants; (l) bringing and defending lawsuits;
and (m) voting the stock of any subsidiary.
1.4 Term. The term of the Partnership shall commence on December 21,
1987 ("Effective Date"). The term shall continue until the ninety-ninth
anniversary of the Effective Date, or until earlier terminated as provided
herein. Each term may be extended at its expiration date for a similar term upon
approval of the Partners.
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<PAGE>
1.5 Formation. The Partnership shall consist of each Party who has
returned an executed Counterpart Signature Page on or before August 7, 1988.
Third party beneficiaries pursuant to the Settlement Agreement who fail to
become Parties to this Agreement by August 7, 1988 shall forfeit their interest
in the System and all such forfeited shares shall for all purposes be a
continuing interest of Cellcom Telephone Company of Albany, its successors and
assigns.
II. Capital Contributions
2.1 Initial Partnership Share. Cellcom Corp. ("Winning Partner") has
a 51.49876% interest in the Partnership. The other Parties to this Agreement
("Minority Partners") have in the aggregate the remaining ownership interest in
the Partnership as determined by the Settlement Agreements and this Agreement.
All computations under this Agreement shall be to the nearest one-ten-thousandth
of a percent.
2.2 Capital Contributions. Each Party who becomes a Partner
("Partner") hereby contributes to the Partnership all of its direct and indirect
interest in the System, whether obtained as a result of the Settlement Agreement
or otherwise, and shall contribute to the Partnership in cash its pro rata share
of the capital of the Partnership in the amounts requested in writing ("Capital
Call") from time to time by the Executive Committee of the Partnership. Each
Partner's capital contribution, other than the Initial Capital Call which is
payable by August 7, 1988 and deemed for all purposes hereof to have been
requested by the Executive Committee in compliance with the terms of this
Agreement, shall be made within thirty (30) days following the date that the
Capital Call for the contribution is delivered to the Partner pursuant to
Section 10.9 below. For purposes of this Agreement, each Partner's pro rata
share shall equal the percentage of its Ownership Interest (as defined in
Section 2.3 below) in the Partnership at the time of the Capital Call. Capital
Calls to the Partners shall include an explanation of the reasonably anticipated
uses of the funds.
2.3 Ownership Percentages. Each Partner who contributes an amount of
cash equal to its Ownership Interest multiplied by the Initial Capital Call
referred to in Section 2.4 hereof shall initially have an Ownership Interest in
the Partnership as specified on the Counterpart Signature Page and to be
incorporated on Attachment A hereto. Any person not contributing an amount of
cash equal to its Ownership Interest multiplied by the Initial Capital Call
shall not be deemed a Party to this Agreement even if it executes a Counterpart
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<PAGE>
Signature Page. After the contributions have been made in response to each
successive Capital Call, the interest in the Partnership ("Ownership Interest")
held by each Partner shall equal the percentage derived by dividing the
Partner's total capital contributions pursuant to Capital Calls by the total
capital contributions pursuant to Capital Calls made by all of the Partners.
2.4 Initial Capital Call. In connection with the formation hereof,
each Partner has contributed to the Partnership as its initial Capital Call
("Initial Capital Call") an amount relative to its respective Ownership Interest
as set forth on the Counterpart Signature Page multiplied by $900,000. As
Cellcom Corp. has contributed cash and services and is currently personally
responsible to repay in connection with a certain loan from Astronet Corporation
to fund the working capital needs of the System through June 30, 1988 in an
aggregate amount of approximately $560,000, and estimates the Partnership will
require the additional funding or advancing by the Partners of an amount
approximately equal to $300,000 through September 30, 1988, Cellcom Corp. or any
successor to Cellcom Corp.'s interest is not obligated to contribute additional
amounts pursuant to the Initial Capital Call. Rather, such prior contributions
or working capital advances assumed by Cellcom Corp. may be credited to Cellcom
Corp.'s, or any successor to Cellcom Corp.'s interest, initial Capital
Contribution to satisfy its obligation pursuant to the Initial Capital Call.
Amounts contributed pursuant to the Initial Capital Call of all Parties shall be
used first to reimburse Cellcom Corp. for amounts advanced and services
performed by Cellcom Corp. or its affiliates (other than amounts credited
against Cellcom Corp.'s Initial Capital Call) and amounts currently outstanding
to third persons in connection with the Partnership's Business for which Cellcom
Corp. is personally liable to repay, with the balance used to fund additional
working capital needs of the Partnership. If in connection with any Capital
Call, other than the Initial Capital Call, Cellcom Corp. or any successor to
Cellcom's interest has advanced funds to the Partnership or in connection with
the Partnership's Business, and such sum is outstanding, Cellcom Corp. or its
successor may satisfy its obligation pursuant to any Capital Call by forgiving a
similar amount of money owing to it.
2.5 Failures to Contribute. Subject to Section 1.5 hereof, if any
Partner fails to make all or part of a Capital Call when due pursuant to Section
2.2 above, then the Partner shall not be considered to be in material default,
but its Ownership Interest in the Partnership shall be reduced by operation of
Section 2.3 above. No right to cure under this
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<PAGE>
Agreement shall apply to any failure to make a Capital Call when due, unless
approved by a majority vote of the Executive Committee. Each deficiency in
meeting a Capital Call may be met by a further pro rata Capital Call on Partners
other than the Partner responsible for the deficiency. Such further
contributions shall be credited to the Capital Accounts as defined in Section
3.2 below, and the Ownership Interests of the Partners making the further
contributions.
2.6 Application Expenses. No Partner shall be entitled to any credit
as a capital contribution for the expenses the Partner incurred in connection
with its own application or with the dismissal or contribution thereof on behalf
of the Partnership. The costs of prosecuting the Winning Application which are
incurred after the lottery, and developing the Partnership Business shall be
borne by the Partnership, and not individually by the Winning Partner. This
includes all such costs incurred subsequent to the Lottery and prior to or after
the formation of the Partnership.
III. Capital Accounts and Allocations
3.1 Title to Property. The Partnership shall hold sole and exclusive
title to the capital of the Partnership, to stock of entities through which the
Partnership Business is being operated (including but not limited to CDTCG), and
to all applications, authorizations, equipment and other property, whether real,
personal or intangible, acquired by the Partnership. No Partner shall have any
right, in law or equity, to request the partition of any asset or property of
the Partnership, or to demand property other than cash upon any distribution by
the Partnership.
3.2 Capital Accounts. A separate capital account ("Capital Account")
shall be maintained for each Partner on the books of the Partnership in
accordance with generally accepted accounting principles and Section 704 of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder. The Capital Account of each Partner shall (i) be credited with the
Partner's cash or deemed cash capital contributions to the Partnership and with
the net income and gain, if any, of the Partnership allocated to such Partner
and (ii) be charged with the net losses, if any, of the Partnership allocated to
such Partner and with all distributions made by the Partnership to such Partner.
No Partner shall be entitled to interest on its Capital Account. For purposes of
this Agreement, Partnership net income, loss and gain shall be determined by the
Partnership's accountants in accordance with generally accepted accounting
principles and Section 704 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
-5-
<PAGE>
3.3 Distributions. Distributions of net income and other Partnership
proceeds to the Partners shall be made quarterly in accordance with their
Ownership Interests at the time of distribution. However, the amount available,
if any, for each such distribution shall be determined by the Executive
Committee. Distributions of net income shall not exceed such quarter year's net
income, less the amount determined by the Executive Committee to be reasonably
required for nonexpensed items in the Partnership's budget, such as payments of
debt principal due or past due, prepayments of debt, other liabilities of the
Partnership (contingent or otherwise), capital investment needs, and working
capital. No Partner shall be required to make a capital contribution to provide
the funds necessary to make a distribution, nor shall the Partnership be
required to borrow money for such purpose.
3.4 Tax Allocations. Taxable income, gain or loss, and items of tax
credit of the Partnership for each taxable year shall be determined by the
Partnership's accountants in accordance with applicable federal income tax laws,
rules, and regulations and shall be allocated to the Partners in proportion to
their Ownership Interests. Income of the Partnership in any taxable year which
is exempt from federal income taxation shall be allocated in proportion to the
allocation of taxable income in the year.
IV. Management
4.1 Partner Voting. Each Partner's voting percentage shall equal the
percentage of its Ownership Interest in the Partnership. A vote reflecting more
than fifty percent (50%) in Ownership Interest ("Majority Vote") shall be
required to act on all matters requiring a vote of the Partners, except as
specifically set forth in this Agreement.
4.2 Partners Meetings. A meeting of the Partners shall be held at
least once each year for the transaction of business requiring a Partner's vote.
Special meetings of the Partners may be called at any time by the Executive
Committee, or by any Partner or combination of Partners representing in the
aggregate at least thirty five percent (35%) in Ownership Interests. Partners
holding a total of at least fifty percent (50%) in Ownership Interests shall
constitute a quorum necessary for a Partners Meeting. Each Partner may designate
a person who will represent it at Partners Meetings, either directly or by
proxy, by giving written notice thereof to the Executive Committee. The person
so designated will continue to be that Partner's representative and to hold its
proxy until the Executive Committee receives written notice of the designation
of a successor representative by the Partner.
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<PAGE>
4.3 Executive Committee. Complete and exclusive power to conduct the
business affairs of the Partnership shall be delegated to the Executive
Committee of the Partnership ("Executive Committee"), consisting of three
members. Prior to such first annual meeting, the Winning Partner shall be deemed
to be the Executive Committee and have all powers thereof. Each member of the
Executive Committee shall be elected at the Annual Partners Meeting by a
Majority Vote of the Partners, and may be removed at any time, by Majority Vote
of the Partners. There shall be no cumulative voting in the election of members
of the Executive Committee. However, the Winning Partner may fill by appointment
any vacancy in its membership which occurs between Annual Partners meetings or
if the annual Partners Meeting fails to elect all required members of the
Executive Committee. More than one of the Partner's representatives may be
elected to membership at the same time on the Executive Committee. Meetings of
the Executive Committee shall be held not less than once per quarter year, and
such meetings may be held by conference telephone call. A majority (more than
fifty percent) of the Executive Committee shall constitute a quorum for the
transaction of its business. Each action of the Executive Committee shall
require a vote of a majority of the Executive Committee members casting a vote.
4.4 Chairman and Employees. The Executive Committee shall elect a
Chairman from among its members. The Chairman shall preside at all Executive
Committee meetings and all Partners meetings. The Executive Committee may
delegate responsibilities and authority to the Chairman, the System's General
Manager, or other Partnership employees to the extent it considers reasonable.
The System's General Manager may be delegated the day-to-day responsibility for
conducting the Partnership Business.
4.5 Meeting Notices. Written notice of each Partners Meeting and
each Executive Committee meeting shall be given by the Chairman of the Executive
Committee to each Partner and Executive Committee member; respectively. The
notice shall state the place, date, hour and purpose of the meeting. Notice of
any meeting shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, unless otherwise waived in writing. When a
meeting is adjourned to reconvene at another time or place, it shall not be
necessary to give notice of the reconvened meeting, if the time and place of the
reconvened meeting are announced at the adjourned meeting.
4.6 Minutes. Minutes reflecting the actions taken at meetings of the
Partnership and Executive Committee shall be kept. Copies of the minutes shall
be maintained at the office of the Partnership and shall be promptly transmitted
to a Partner or its representative upon written request.
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<PAGE>
4.7 Arrangements With Partners. The Partnership may enter into
reasonable agreements with a Partner or affiliate of a Partner for the
performance of services or the acquisition of the equipment or other property.
4.8 Reasonable Skill and Care. In carrying out its duties and
exercising its powers hereunder, the Executive Committee shall exercise
reasonable skill and care and reasonable business judgment. The Executive
Committee shall not be liable to the Partnership or to the Partners for any act
or omission performed or omitted by it in good faith, pursuant to the authority
granted to it by this Agreement, unless such act or omission constitutes gross
negligence or willful misconduct by the Executive Committee.
4.9 Indemnification. The Partnership shall indemnify and hold
harmless the Executive Committee from any loss or damage, including attorney's
fees, incurred by it by reason of any act performed by it on behalf of the
Partnership or in furtherance of the Partnership's business; provided, however,
that such indemnification or agreement to hold harmless shall be recoverable
only out of the assets of the Partnership and not from the Partners; provided,
further, that the foregoing indemnity shall extend only to acts or omissions
performed or omitted by the Executive Committee in good faith and in the belief
that its acts or omissions were in the Partnership's interest, and which are not
a result of gross negligence or misconduct on the part of the Executive
Committee (unless a court having jurisdiction determines that the Executive
Committee is fairly and reasonably entitled to such indemnification). Nothing in
this Section 4.9 shall prohibit the Executive Committee from acquiring and
entering into contracts of insurance at the expense of the Partnership that will
provide protection to the Executive Committee from liability for its negligence.
4.10 No Partner Authority. No Partner shall take any part in the
conduct or control of the Partnership's business nor have any right or authority
to act for or on behalf of the Partnership, except as (a) a member of the
Executive Committee or (b) an agent or employee of the Partnership. The Parties
understand and agree that neither this Agreement nor the Partnership itself
grants or creates in any Party or the Partnership any power of agency to bind or
obligate the Partners, except as expressly set forth in this Agreement.
-8-
<PAGE>
V. Books and Accounts
5.1 Fiscal Year. The fiscal year of the Partnership shall end on
September 30th in each year, or such other date approved by the Executive
Committee.
5.2 Books and Records. The Partnership shall maintain proper books
and accounts in accordance with generally accepted accounting principles and the
provisions of this Agreement. Upon the close of each fiscal year, or as
otherwise approved by the Executive Committee, all such books and accounts shall
be audited by the Partnership accountants.
5.3 Reports and Tax Returns. Within one-hundred and twenty (120)
days after the end of each fiscal year, except in extraordinary situations the
Executive Committee shall mail to each Partner (i) financial statements for the
Partnership, including its balance sheet as of the end of the year, its
statement of income and earnings for the year, and a statement of changes in its
financial position for the year; (ii) all necessary financial, tax, and other
data required for inclusion in or preparation of tax returns for the Partners;
and (iii) a statement from the Partnership's accountants certifying the accuracy
of any allocations made for the fiscal year pursuant to Section 3.4 hereof. The
Executive Committee may issue other reports from time to time as it considers
appropriate.
5.4 Right of Inspection. Each Partner shall have the right, at its
own expense, to examine and inspect, at reasonable times during business hours,
the books, records, accounts, properties, and operations of the Partnership.
Such examination and inspection may be conducted by the Partner or its
authorized agents. However, such examination or inspection shall not
unreasonably interfere with the operation of the Partnership or the System.
VI. Transfers of Interests
6.1 Assignment Permitted. Subject to the grant by final order of any
required FCC or other regulatory consent, and subject to the terms of this
Agreement, each Partner may sell, assign, or exchange (collectively "Assign")
all or part of its Ownership Interest to or with any other person or entity
("Assignee"). However, the assigning Partner shall remain fully liable for any
and all of its obligations as a Partner which are incurred prior to the date
upon which the assignment of its Ownership Interest is effective. The Assignee
thereafter shall be subject to all the terms and conditions of the Partnership
Agreement, including all obligations under the agreement which are attributable
to the assigned Ownership Interest.
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<PAGE>
6.2 Notice of Assignment. A Partner who agrees or is required to
sell, assign or exchange all or part of its Ownership Interest shall notify the
Executive Committee at least ten (10) days in advance of the consummation of the
sale, assignment, or exchange (collectively "Assignment"). The notice shall set
forth the name, address, citizenship, and other information necessary to
establish the legal qualifications of the Assignee to hold the interest to be
assigned. This notice is for information purposes only, and shall not constitute
the offering of any right of first refusal to purchase the interest.
6.3 Approvals and Documentation. If the prior consent of the FCC,
any state regulatory agency, or other governmental authority is required for the
Assignment, such consent shall be obtained by final order prior to consummation
of the Assignment and admittance of the Assignee as a Partner. The Assignee
shall execute and acknowledge all instruments and applications, in form and
substance satisfactory to counsel for the Partnership, which are necessary or
desirable to obtain such consent, to effectuate the Assignment, to admit the
Assignee as a Partner, and to bind the Assignee under all of the terms and
conditions of the Partnership Agreement. Prior to admission as a Partner, the
Assignee shall reimburse the Partnership for all reasonable expenses, including
attorney's fees, incurred by the Partnership in connection with the Assignment.
6.4 Preservation of Authorization. No Partner may assign all or part
of its Ownership Interest to any other person or entity unless the Assignment,
in the opinion of the Partnership's counsel, will not disqualify the Partnership
from receiving or holding the Authorization.
6.5 Involuntary Assignment. Upon the death, bankruptcy, insolvency
or incompetency of a Partner, the legal representative, guardian, receiver,
creditor's committee or other successor in interest of the Partner, as the case
may be, shall notify the Executive Committee in writing of such event and,
subject to Section 6.3 and 6.4 above, shall be assigned the Partner's Ownership
Interest and admitted as a Partner.
6.6 Encumbrance of Ownership Interest. No Partner shall pledge,
hypothecate, grant a security interest in, or otherwise encumber its Ownership
Interest in the Partnership, unless (i) the Partner gives not less than fifteen
(15) days prior written notice to the Executive Committee of the creation of the
encumbrance; (ii) the encumbrance attaches solely to the subject Ownership
Interest, and does not attach to any real, personal or intangible property,
equipment, or other asset of the Partnership; (iii) the secured party is
obligated to comply with Sections 6.2, 6.3, 6.4, and 6.5 above in the event it
attempts to enforce the encumbrance. Notwithstanding the
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<PAGE>
foregoing, any Partner may be required by a majority vote of the Executive
Committee to pledge its Ownership Interest to a vendor or financial institution
if such pledge is reasonably necessary to finance the construction and/or
operation of the system.
VII. Representations and Warranties
7.1 Representations and Warranties. Each Party or Partner represents
and warrants that: (i) it is duly formed (if not a natural person), validly
existing, and in good standing under the state and local laws to which it is
subject, with full power and authority to enter into and to perform its
obligations under this Agreement; (ii) its execution and performance of this
Agreement will not conflict with, or result in a material breach of or default
under, any agreement, instrument, law, regulation, order, decree or judgment to
which it is subject; (iii) this Agreement is binding and enforceable against it;
(iv) it shall appoint a representative who shall have full power and authority
to vote for it on Partnership matters and such authority shall not be abrogated
until a successor representative is appointed; (v) it is and will remain
qualified under applicable FCC standards to hold the Authorization, and to hold
its Ownership Interest in the Partnership; (vi) it has no knowledge of any fact
or circumstance which would disqualify it or the Partnership from receiving a
final grant of the Authorization; (vii) it has not engaged and shall not engage
in any improper act, practice or omission which, if not timely corrected, would
result in disqualification of the Partnership for the Authorization, or any
rescission, revocation or nonrenewal of the Authorization; and (viii) it is
experienced enough in the business of the Partnership to be capable of
exercising its Partnership voting rights intelligently.
VIII. Default
8.1 Material Default. If a Party for any reason materially breaches
any representation or covenant of this Agreement as contained in Sections 4.10,
6.1-6.6 inclusive, 7.1, 10.1, 10.2, and 10.4 hereof, and the breach is not
cured within fifteen (15) days after written notice of the breach is provided by
the Executive Committee to the defaulting Party, then the Party shall be
considered to be in material default. Any Party who commits such a material
default shall be liable to the Partnership for, and shall indemnify the
Partnership against, all resulting damages, losses, expenses, suffered or
incurred by the Partnership including reasonable attorney's fees and litigation
expenses, suffered or incurred by the Partnership. The exercise of rights
provided in Section 8.2 below shall not relieve the Party of such liability or
indemnification and shall
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<PAGE>
not constitute a waiver, by any Party or the Partnership, of any right or remedy
against the defaulting Party under this Agreement, including the right to offset
damages, losses and expenses against any amount owned to the defaulting Party.
8.2 Sale on Material Default. Each Party who commits a material
default shall be required to forfeit its interest in this Agreement, and subject
to any required FCC consent, to transfer to the other Partners pro rata its
Ownership Interest, if any, for an aggregate amount equal to the lesser of (i)
the balance of its Capital Account; or (ii) the Partnership book value of its
Ownership Interest, as determined in accordance with generally accepted
accounting principles. However, if such material default occurs before the
Party's payment of its share of the Initial Capital Call, the Party's Ownership
Interest shall be forfeited for no compensation whatsoever. The provision of
this paragraph may be waived on a case by case basis by majority vote of the
Executive Committee.
IX. Dissolution and Termination
9.1 Dissolution. Subject to prior FCC and regulatory consent, if any
is required, the Partnership shall dissolve upon the occurrence of any of the
following events: (i) Majority Vote of the Partners to dissolve the Partnership;
(ii) issuance by the FCC of a final order refusing to approve this Agreement, or
the issuance by the FCC of a final order denying the Authorization to the
Partnership; (iii) the sale or assignment of substantially all of the assets of
the Partnership; and (iv) any other act of dissolution of the Partnership by a
Partner, except involuntary assignments addressed by Section 6.6 above.
9.2 Right to Continue. If the Partnership is dissolved pursuant to
Section 9.1 (iv) above, the Partners not causing the dissolution shall continue
the Partnership Business in order to ensure uninterrupted service to the public
until such time as a successor entity has been established to operate the
system.
9.3 Winding Up. In the event of the dissolution of the Partnership
for any reason, unless the Partnership is continued pursuant to Section 9.2
above, the Partnership shall be liquidated and its affairs wound up by the
Executive Committee in an orderly yet proper manner. The Partners shall continue
to share all items of income, gain, loss, deduction or credit for tax purposes,
and all profits and losses for accounting purposes, during the period of
liquidation in the same manner as before the dissolution. In order to obtain
full market value from the sale of Partnership assets, the Executive
-12-
<PAGE>
Committee shall have the full right and discretion to determine the time, manner
and terms of each sale of Partnership property pursuant to the liquidation.
9.4 Distribution Upon Liquidation. After paying or providing for the
payment of all debts and liabilities of the Partnership and all expenses of
liquidation, and after reserving funds reasonably sufficient to cover contingent
or unforeseen liabilities or obligations of the Partnership, the proceeds of the
liquidation and any other assets of the proceeds of the liquidation and any
other assets of the Partnership shall be distributed to the Partners in
accordance with their Ownership Interests at the time of distribution.
X. Miscellaneous
10.1 Mutual Cooperation. Each Party shall, in good faith, cooperate
with each other Party, the Partnership, and the Executive Committee in promptly
undertaking all actions, executing all documents, and filing all materials with
the FCC, any other governmental body, any lender, vendor, or financial
institution as may reasonably be necessary or desirable to fulfill each of the
Party's obligations under this Agreement.
10.2 Other Business. Nothing contained in this Agreement shall
restrict any Partner or affiliate of a Partner from engaging in any business
outside of and independent from the Partnership, except that no Partner or
affiliate of a Partner shall be a sales agent or reseller of the wireline
cellular system in the Market.
10.3 Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Parties, their
legal representatives, heirs, administrators, executors, successors, and
permitted assigns.
10.4 Confidential Information. Under no circumstances shall any
Party utilize or disclose in any manner which is in any way adverse to the
interests of the Partnership or any Party any confidential information,
including engineering, technical, managerial and marketing information, whether
or not patentable or copyrightable, disclosed by a Party to the Partnership or
to the other Parties in connection with Partnership matters or created by the
Partnership itself or by the Parties in connection with Partnership matters.
10.5 Specific Performance. Each Party acknowledges that monetary
damages for breach of any of the provisions of this Agreement would be
inadequate. Each Party therefore
-13-
<PAGE>
acknowledges that specific performance, temporary and permanent injunctive
relief, and other appropriate remedies may be granted to enforce such provision
without proof of actual damage or the inadequacy of the remedy at law.
10.6 Severability. If any provision of this Agreement is determined
by any court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement shall continue to be in full force and effect.
10.7 Governing Law. This Agreement and the rights of the Parties
hereunder shall be governed, interpreted, and enforced in accordance with the
laws of the State of Georgia.
10.8 Final Order. For purposes of this Agreement, a final order of a
government authority shall mean an order which is effective and is no longer
subject to administrative or court reconsideration, review, appeal or stay.
10.9 Notices. All notices, demands, and Capital Calls required or
permitted under this Agreement shall be in writing and shall be conclusively
presumed to have been delivered to the recipient three business days after
posting in the United States mail, first class, postage prepaid, to the
recipient's address shown at the time in the records of the Partnership. Any
Party may specify a different address by notifying each of the Parties or the
Executive Committee in writing of the change in address. All notices or other
communications to be sent to the Partnership and/or the Executive Committee
shall be sent to 500 Pine Avenue, Albany, Georgia 31701.
10.10 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
10.11 Headings. All article, section and paragraph titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the text of this Agreement.
10.12 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
10.13 Tax Matters Partner. Cellcom Corp., or its successor and
assign, shall be the "Tax Matters Partner" of the Partnership for purposes of
Sections 6221 through 6232.
-14-
<PAGE>
10.14 Entire Agreement. This Agreement and the Counterpart Signature
Pages constitute the entire agreement between the Parties, superseding all prior
agreements or understandings between the Parties. This Agreement may be modified
or amended only by giving Partners ten (10) days Notice and receiving the
consent in writing to such modification or amendment, or their successors and
assigns, owning sixty percent (60%) of the Ownership Percentages.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and date set forth below.
CELLCOM CORP.
By: /s/ Jay H. Brown
------------------------------------
Jay H. Brown, President
Date: July 8. 1988
---------------------
---------------------------------------
----------------------
Date:
----------------------
OWNERSHIP INTEREST:_____________%
1098D
-15-
<PAGE>
AMENDMENT OF ARTICLES OF INCORPORATION
OF
CELLCOM TELEPHONE COMPANY OF GEORGIA
Pursuant to the Provisions of Section 22-902 of
the Georgia Business Corporation Code
The undersigned, William S. Taylor, Alison Glynn and Gary McArthur,
being all of the directors, and the President, Vice-President and Secretary,
respectively, of Cellcom Telephone Company of Georgia, a Georgia corporation
(the "Corporation"), do hereby certify as follows:
1. The name of the Corporation is CELLCOM TELEPHONE COMPANY OF
GEORGIA.
2. The Articles of Incorporation of the Corporation were filed on
September 18, 1987.
3. 100 shares of common stock of the Corporation have been issued to
date to one shareholder.
4. The Articles of Incorporation of the Corporation are hereby
amended so as to change the name of the Corporation to CELLULAR DYNAMICS
TELEPHONE COMPANY OF GEORGIA. To effectuate the foregoing, Article "FIRST" of
the Articles of Incorporation is hereby stricken in its entirety and there is
substituted therefor a new Article "FIRST" as follows:
FIRST: The name of the Corporation is:
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
5. The Articles of Incorporation are hereby amended so as to deny
preemptive rights to shareholders of the Corporation by adding new Article
"NINTH" as follows:
NINTH: No Shareholder of the Corporation shall, by reason of his
holding shares of any class, have any preemptive or preferential
right to purchase or subscribe for any shares of any class of the
Corporation now or hereafter to be authorized, whether or not the
issuance of any such shares or the issuance of shares upon exercise
of any rights or options or upon conversion of such other securities
would adversely affect the dividend of voting rights of such
shareholder. The Board of Directors may issue, and grant rights or
options to purchase, shares of any
<PAGE>
class of the Corporation, now or hereafter to be authorized, or any
other securities convertible into or carrying rights or options to
purchase shares of any class, now or hereafter to be authorized,
without offering any such shares of other securities, either in
whole or in part, to the shareholders of any class.
6. The Articles of Incorporation are hereby amended so as to allow a
majority of shareholders to take action without a meeting by adding new Article
"TENTH" as follows:
TENTH: To the extent allowed by law, any action of the shareholders
of the Corporation may, in lieu of a meeting of shareholders, be
taken by the written consent of the holders of a majority of the
shares entitled to vote thereon.
7. The foregoing amendments of the Articles of Incorporation were
approved by unanimous consent of the Board of Directors on March 15, 1988 and by
unanimous consent of the shareholders of the Corporation on March 15, 1988.
IN WITNESS WHEREOF, the undersigned have executed this Certificate
of Amendment this 15th day of March, 1988.
/s/ William Taylor, President, Director
--------------------------------------------
William Taylor, President, Director
/s/ Alison Glynn
--------------------------------------------
Alison Glynn, Director, Vice President
/s/ Gary McArthur
--------------------------------------------
Gary McArthur, Secretary, Director
STATE OF NEW JERSEY)
: ss.:
COUNTY OF PASSAIC )
On the 15 day of March, 1988, before me personally came William S.
Taylor, Alison Glynn and Gary McArthur, to me known, and known to be the
individuals described in, and who executed the foregoing instrument and dully
acknowledged to me that he executed the same.
WITNESS my hand and official seal.
/s/ June R. Elias
--------------------------------------------
Notary Public
[SEAL OMITTED]
JUNE R. ELIAS
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES JULY 23, 1991
<PAGE>
ARTICLES OF INCORPORATION
OF
CELLCOM TELEPHONE COMPANY OF GEORGIA
Pursuant of the Provisions of the
Georgia Business Corporation Code
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Georgia, do hereby set forth as
follows:
FIRST: The name of the corporation is
CELLCOM TELEPHONE COMPANY OF GEORGIA
SECOND: The address of the initial registered office and registered
agent in this state is c/o United Corporate Services, Inc., 4228 First Avenue,
in the City of Tucker, County of DeKalb, State of Georgia 30084 and the name of
the registered agent at said address is United Corporate Services, Inc.
THIRD: The purpose or purposes for which the corporation is
organized are as follows:
To operate a cellular telephone system and engage in all
aspects of cellular telephone sales services and any and all related
business.
To purchase, manufacture, produce, assemble, receive, lease or
in any manner acquire, hold, own, use, operate, install, maintain,
service, repair, process, alter, improve, import, export, sell,
lease, assign, transfer and generally to trade and deal in and with,
raw materials, natural or manufactured articles or products,
machinery, equipment, devices, systems, parts, supplies, apparatus
and personal property of every kind, nature or description, tangible
or intangible, used or capable of being used for any purpose
whatsoever and to engage and participate in any mercantile,
manufacturing or trading business of any kind or character.
To improve, manage, develop, sell, assign, transfer, lease,
mortgage, pledge or otherwise dispose of or turn to account or deal
with all or any part of the property of the corporation and from
<PAGE>
time to time to vary any investment or employment of capital of the
corporation.
To borrow money, and to make and issue notes, bonds,
debentures, obligations and evidences of indebtedness of all kinds,
whether secured by mortgage, pledge or otherwise, without limit as
to amount, and to secure the same by mortgage, pledge or otherwise;
and generally to make and perform agreements and contracts of every
kind and description, including contracts of guaranty or suretyship.
To lend money for its corporate purposes, invest and reinvest
its funds, and take, hold and deal with real and personal property
as security for the payment of funds so loaned or invested.
To the same extent as natural persons might or could do, to
purchase or otherwise acquire, and to hold, own, maintain, work,
develop, sell, lease, exchange, hire, convey, mortgage or otherwise
dispose of and deal in lands and leaseholds, and any interest,
estate and rights in real property, and any personal or mixed
property, and any franchises, rights, licenses or privileges
necessary, convenient or appropriate for any of the purposes herein
expressed.
To apply for, obtain, register, purchase, lease or otherwise
acquire and to hold, own, use, develop, operate and introduce and to
sell, assign, grant licenses or territorial rights in respect to, or
otherwise to turn to account or dispose of, any copyrights, trade
marks, trade names, brands, labels, patent rights, letters patent of
the United State or of any other country or government, inventions,
improvements and processes, whether used in connection with or
secured under letters patent otherwise.
To participate with others in any corporation, partnership,
limited partnership, joint venture, or other association of any
kind, or in any transaction, undertaking or arrangement which the
participating corporation would have power to conduct by itself,
whether or not such participation involves sharing or delegation of
control with or to others; and to be an incorporator, promoter or
manager of other corporations of any type or kind.
To pay pensions and establish and carry out pension, profit
sharing, stock option, stock purchase, stock bonus, retirement,
benefit, incentive and commission plans, trusts and provisions for
any or all of its directors, officers and employees, and for any or
all of the directors, officers and employees of its subsidiaries;
and to provide insurance for its benefit on the life of any of its
directors, officers or employees, or on the life of any stockholders
for the purpose of acquiring at his death shares of its stock owned
by such stockholders.
To acquire by purchase, subscription or otherwise, and to hold
for investment or otherwise, and to use, sell, assign, transfer,
mortgage, pledge or otherwise deal with or dispose of stocks, bonds
or any other obligations or securities of any corporation or
corporations; to merge or consolidate with any corporation in such
<PAGE>
manner as may be permitted by law; to aid in any manner any
corporation whose stocks, bonds or other obligations are held or in
any manner guaranteed by this corporation, or in which this
corporation is in any way interested; and to do any other acts or
things for the preservation, protection, improvement or enhancement
of the value of any such stock, bonds or other obligations; and
while owner of any stock, bonds or other obligations to excercise
all the rights, powers and privileges of ownership thereof, and to
excercise any and all voting powers thereon; and to guarantee the
payment dividends upon any stock, the principal or interest or both,
of any bonds or other obligations, and the performance of any
contracts.
To do all and everything necessary, suitable and proper for
the accomplishment of any of the purposes or the attainment of any
of the objects or the furtherance of any of the powers hereinbefore
set forth, either alone or in association with other corporations,
firms or individuals, and to do every other act or acts, thing or
things incidental or appurtenant to or growing out of or connected
with the aforesaid business or powers or any part or parts thereof,
provided the same be not inconsistent with the laws under which this
corporation is organized.
The business or purpose of the corporation is from time to
time to do any one or more of the acts and things herein above set
forth, and it shall have power to conduct and carry on its said
business, or any part thereof, and to have one or more offices, and
to excercise any or all of its corporate powers and rights, in the
District of Columbia, and in the various other states, territories,
colonies and dependencies of the United States, and in all or any
foreign countries.
The enumeration herein of the objects and purposes of the
corporation shall be construed as powers as well as objects and
purposes and shall not be deemed to exclude by inference any powers,
objects or purposes which the corporation is empowered to excercise,
whether expressly by force of the laws of the District of Columbia
now or hereafter in effect, or implied by the reasonable
construction of the said laws.
FOURTH: The corporation shall be authorized to issue the following
shares:
Class Number of Shares Par Value
----- ---------------- ---------
COMMON 200 NONE
<PAGE>
FIFTH: The number of directors constituting the initial Board of
Directors is three (3); and the names and addresses of those constituting the
initial Board of Directors, to serve until the first annual meeting of
shareholders, or until the successors are elected and qualify, are as follows:
NAME ADDRESS
Ray A. Barr 9 East 40th Street
New York, New York 10016
Mark Skubicki 9 East 40th Street
New York, New York 10016
Maria R. Fischetti 9 East 40th Street
New York, New York 10016
SIXTH: The name and address of the incorporator are as follows:
NAME ADDRESS
Ray A. Barr 9 East 40th Street
New York, New York 10016
SEVENTH: The period of duration of the corporation shall be
perpetual.
EIGHTH: The amount of capital which the corporation shall have
received for the issuance of its shares before commencing business is five
hundred ($500.00) dollars.
IN WITNESS WHEREOF, the undersigned hereby executes this document
and affirms that the facts set forth herein are true under the penalties of
perjury this seventeenth day of September, 1987.
[SEAL OMITTED] /s/ Ray A. Barr
--------------------------------------------
Ray A. Barr, Incorporator
<PAGE>
AMENDMENT OF ARTICLES OF INCORPORATION
OF
CELLCOM TELEPHONE COMPANY OF GEORGIA
Pursuant to the Provisions of Section 22-902 of
the Georgia Business Corporation Code
The undersigned, William S. Taylor, Alison Glynn and Gary McArthur,
being all of the directors, and the President, Vice-President and Secretary,
respectively, of Cellcom Telephone Company of Georgia, a Georgia corporation
(the "Corporation"), do hereby certify as follows:
1. The name of the Corporation is CELLCOM TELEPHONE COMPANY OF
GEORGIA.
2. The Articles of Incorporation of the Corporation were filed on
September 18, 1987.
3. 100 shares of common stock of the Corporation have been issued to
date to one shareholder.
4. The Articles of Incorporation of the Corporation are hereby
amended so as to change the name of the Corporation to CELLULAR DYNAMICS
TELEPHONE COMPANY OF GEORGIA. To effectuate the foregoing, Article "FIRST" of
the Articles of Incorporation is hereby stricken in its entirety and there is
substituted therefor a new Article "FIRST" as follows:
FIRST: The name of the Corporation is:
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
5. The Articles of Incorporation are hereby amended so as to deny
preemptive rights to shareholders of the Corporation by adding new Article
"NINTH" as follows:
NINTH: No Shareholder of the Corporation shall, by reason of his
holding shares of any class, have any preemptive or preferential
right to purchase or subscribe for any shares of any class of the
Corporation now or hereafter to be authorized, whether or not the
issuance of any such shares or the issuance of shares upon exercise
of any rights or options or upon conversion of such other securities
would adversely affect the dividend of voting rights of such
shareholder. The Board of Directors may issue, and grant rights or
options to purchase, shares of any
<PAGE>
class of the Corporation, now or hereafter to be authorized, or any
other securities convertible into or carrying rights or options to
purchase shares of any class, now or hereafter to be authorized,
without offering any such shares of other securities, either in
whole or in part, to the shareholders of any class.
6. The Articles of Incorporation are hereby amended so as to allow a
majority of shareholders to take action without a meeting by adding new Article
"TENTH" as follows:
TENTH: To the extent allowed by law, any action of the shareholders
of the Corporation may, in lieu of a meeting of shareholders, be
taken by the written consent of the holders of a majority of the
shares entitled to vote thereon.
7. The foregoing amendments of the Articles of Incorporation were
approved by unanimous consent of the Board of Directors on March 15, 1988 and by
unanimous consent of the shareholders of the Corporation on March 15, 1988.
IN WITNESS WHEREOF, the undersigned have executed this Certificate
of Amendment this 15th day of March, 1988.
/s/ William Taylor, President, Director
--------------------------------------------
William Taylor, President, Director
/s/ Alison Glynn
--------------------------------------------
Alison Glynn, Director, Vice President
/s/ Gary McArthur
--------------------------------------------
Gary McArthur, Secretary, Director
STATE OF NEW JERSEY)
: ss.:
COUNTY OF PASSAIC )
On the 15 day of March, 1988, before me personally came William S.
Taylor, Alison Glynn and Gary McArthur, to me known, and known to be the
individuals described in, and who executed the foregoing instrument and dully
acknowledged to me that he executed the same.
WITNESS my hand and official seal.
/s/ June R. Elias
--------------------------------------------
Notary Public
[SEAL OMITTED]
JUNE R. ELIAS
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES JULY 23, 1991
<PAGE>
ARTICLES OF INCORPORATION
OF
CELLCOM TELEPHONE COMPANY OF GEORGIA
Pursuant of the Provisions of the
Georgia Business Corporation Code
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Georgia, do hereby set forth as
follows:
FIRST: The name of the corporation is
CELLCOM TELEPHONE COMPANY OF GEORGIA
SECOND: The address of the initial registered office and registered
agent in this state is c/o United Corporate Services, Inc., 4228 First Avenue,
in the City of Tucker, County of DeKalb, State of Georgia 30084 and the name of
the registered agent at said address is United Corporate Services, Inc.
THIRD: The purpose or purposes for which the corporation is
organized are as follows:
To operate a cellular telephone system and engage in all
aspects of cellular telephone sales services and any and all related
business.
To purchase, manufacture, produce, assemble, receive, lease or
in any manner acquire, hold, own, use, operate, install, maintain,
service, repair, process, alter, improve, import, export, sell,
lease, assign, transfer and generally to trade and deal in and with,
raw materials, natural or manufactured articles or products,
machinery, equipment, devices, systems, parts, supplies, apparatus
and personal property of every kind, nature or description, tangible
or intangible, used or capable of being used for any purpose
whatsoever and to engage and participate in any mercantile,
manufacturing or trading business of any kind or character.
To improve, manage, develop, sell, assign, transfer, lease,
mortgage, pledge or otherwise dispose of or turn to account or deal
with all or any part of the property of the corporation and from
<PAGE>
time to time to vary any investment or employment of capital of the
corporation.
To borrow money, and to make and issue notes, bonds,
debentures, obligations and evidences of indebtedness of all kinds,
whether secured by mortgage, pledge or otherwise, without limit as
to amount, and to secure the same by mortgage, pledge or otherwise;
and generally to make and perform agreements and contracts of every
kind and description, including contracts of guaranty or suretyship.
To lend money for its corporate purposes, invest and reinvest
its funds, and take, hold and deal with real and personal property
as security for the payment of funds so loaned or invested.
To the same extent as natural persons might or could do, to
purchase or otherwise acquire, and to hold, own, maintain, work,
develop, sell, lease, exchange, hire, convey, mortgage or otherwise
dispose of and deal in lands and leaseholds, and any interest,
estate and rights in real property, and any personal or mixed
property, and any franchises, rights, licenses or privileges
necessary, convenient or appropriate for any of the purposes herein
expressed.
To apply for, obtain, register, purchase, lease or otherwise
acquire and to hold, own, use, develop, operate and introduce and to
sell, assign, grant licenses or territorial rights in respect to, or
otherwise to turn to account or dispose of, any copyrights, trade
marks, trade names, brands, labels, patent rights, letters patent of
the United State or of any other country or government, inventions,
improvements and processes, whether used in connection with or
secured under letters patent otherwise.
To participate with others in any corporation, partnership,
limited partnership, joint venture, or other association of any
kind, or in any transaction, undertaking or arrangement which the
participating corporation would have power to conduct by itself,
whether or not such participation involves sharing or delegation of
control with or to others; and to be an incorporator, promoter or
manager of other corporations of any type or kind.
To pay pensions and establish and carry out pension, profit
sharing, stock option, stock purchase, stock bonus, retirement,
benefit, incentive and commission plans, trusts and provisions for
any or all of its directors, officers and employees, and for any or
all of the directors, officers and employees of its subsidiaries;
and to provide insurance for its benefit on the life of any of its
directors, officers or employees, or on the life of any stockholders
for the purpose of acquiring at his death shares of its stock owned
by such stockholders.
To acquire by purchase, subscription or otherwise, and to hold
for investment or otherwise, and to use, sell, assign, transfer,
mortgage, pledge or otherwise deal with or dispose of stocks, bonds
or any other obligations or securities of any corporation or
corporations; to merge or consolidate with any corporation in such
<PAGE>
manner as may be permitted by law; to aid in any manner any
corporation whose stocks, bonds or other obligations are held or in
any manner guaranteed by this corporation, or in which this
corporation is in any way interested; and to do any other acts or
things for the preservation, protection, improvement or enhancement
of the value of any such stock, bonds or other obligations; and
while owner of any stock, bonds or other obligations to excercise
all the rights, powers and privileges of ownership thereof, and to
excercise any and all voting powers thereon; and to guarantee the
payment dividends upon any stock, the principal or interest or both,
of any bonds or other obligations, and the performance of any
contracts.
To do all and everything necessary, suitable and proper for
the accomplishment of any of the purposes or the attainment of any
of the objects or the furtherance of any of the powers hereinbefore
set forth, either alone or in association with other corporations,
firms or individuals, and to do every other act or acts, thing or
things incidental or appurtenant to or growing out of or connected
with the aforesaid business or powers or any part or parts thereof,
provided the same be not inconsistent with the laws under which this
corporation is organized.
The business or purpose of the corporation is from time to
time to do any one or more of the acts and things herein above set
forth, and it shall have power to conduct and carry on its said
business, or any part thereof, and to have one or more offices, and
to excercise any or all of its corporate powers and rights, in the
District of Columbia, and in the various other states, territories,
colonies and dependencies of the United States, and in all or any
foreign countries.
The enumeration herein of the objects and purposes of the
corporation shall be construed as powers as well as objects and
purposes and shall not be deemed to exclude by inference any powers,
objects or purposes which the corporation is empowered to excercise,
whether expressly by force of the laws of the District of Columbia
now or hereafter in effect, or implied by the reasonable
construction of the said laws.
FOURTH: The corporation shall be authorized to issue the following
shares:
Class Number of Shares Par Value
----- ---------------- ---------
COMMON 200 NONE
<PAGE>
FIFTH: The number of directors constituting the initial Board of
Directors is three (3); and the names and addresses of those constituting the
initial Board of Directors, to serve until the first annual meeting of
shareholders, or until the successors are elected and qualify, are as follows:
NAME ADDRESS
Ray A. Barr 9 East 40th Street
New York, New York 10016
Mark Skubicki 9 East 40th Street
New York, New York 10016
Maria R. Fisehctti 9 East 40th Street
New York, New York 10016
SIXTH: The name and address of the incorporator are as follows:
NAME ADDRESS
Ray A. Barr 9 East 40th Street
New York, New York 10016
SEVENTH: The period of duration of the corporation shall be
perpetual.
EIGHTH: The amount of capital which the corporation shall have
received for the issuance of its shares before commencing business is five
hundred ($500.00) dollars.
IN WITNESS WHEREOF, the undersigned hereby executes this document
and affirms that the facts set forth herein are true under the penalties of
perjury this seventeenth day of September, 1987.
[SEAL OMITTED] /s/ Ray A. Barr
--------------------------------------------
Ray A. Barr, Incorporator
<PAGE>
BY-LAWS
OF
CELLCOM TELEPHONE COMPANY OF GEORGIA
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. - The registered office shall be
established and maintained at c/o United Corporate Services, Inc., 4228 First
Avenue, Tucker, Georgia 30084 and United Corporate Services, Inc. shall be the
registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. - The corporation may have other offices,
either within or without the State of Georgia, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. - Annual meetings of stockholders for
the election of directors and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Georgia, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of meeting. In the
event the Board of Directors fails to so determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the corporation in Georgia.
If the date of the annual meeting shall fall upon a legal holiday,
the meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of stockholders for any
purpose other than the election of directors may be held at such time and place,
within or without the State of Georgia, as shall be stated in the notice of the
meeting.
<PAGE>
SECTION 3. VOTING. - Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for directors
and the vote upon any question before the meeting, shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Georgia.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 4. QUORUM - Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 5. SPECIAL MEETINGS. - Special meetings of the stockholders
for any purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. - Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than fifty days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
<PAGE>
SECTION 7. ACTION WITHOUT MEETING. - Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. - The number of directors shall be three
(3). The directors shall be elected at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS. - Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES - If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. - Any director or directors may be removed
either for or without cause at any time by the affirmative vote of the holders
of a majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. - The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
<PAGE>
SECTION 6. POWERS. - The Board of Directors shall exercise all of
the powers of the corporation except such as are by law, or by the Certificate
of Incorporation of the corporation or by these By-Laws conferred upon or
reserved to the stockholders.
SECTION 7. COMMITTEES. - The Board of Directors may, by resolution
or resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member or
such committee or committees, the member or members thereof present at any such
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power of authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 8. MEETINGS. - The newly elected Board of Directors may hold
their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent, in
writing, of all the directors.
Unless restricted by the incorporation document or elsewhere in these
By-laws, members of the Board of Directors or any committee designated by such
Board may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such meeting.
Regular meetings of the Board of Directors may be scheduled by a
resolution adopted by the Board. The Chairman of the Board or the President or
Secretary may call, and if requested by any two directors, must call special
meeting of the Board and give five days' notice by mail, or two days' notice
personally or by telegraph or cable to each director. The Board of Directors may
hold an annual meeting, without notice, immediately after the annual meeting of
shareholders.
<PAGE>
SECTION 9. QUORUM. - A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the board there
shall be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum is obtained, and no further notice
thereof need be given other than by announcement at the meeting which shall be
so adjourned.
SECTION 10. COMPENSATION. - Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. - Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if prior to such action a
written consent thereto is signed by all members of the board, or of such
committee as the case may be, and such written consent is filed with the minutes
of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. - The officers of the corporation shall be a
President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors are elected
and qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. - The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. - The Chairman of the Board of Directors, if
one be elected, shall preside at all meetings of the Board of Directors and he
shall have and perform such other duties as from time to time may be assigned to
him by the Board of Directors.
<PAGE>
SECTION 4. PRESIDENT. - The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of
corporation. He shall a preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of corporation. Except as the
Board of Directors shall authorize the execution thereof in some other manner,
he shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. - Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by the
directors.
SECTION 6. TREASURER. - The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by the law or by these By-Laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto directed by the President, or by the directors, or stockholders, upon
whose requisition the meeting is called as provided in these By-Laws. He shall
record all the proceedings of the meetings of the corporation and of the
directors in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the directors or the President. He shall
have the custody of the seal of the corporation and shall affix the same to all
instruments requiring it, when authorized by the directors or the President, and
attest the same.
<PAGE>
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. -
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. - A certificate of stock, signed
by the Chairman or Vice-Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant Treasurer, or
Secretary or Assistant Secretary, shall be issued to each stockholder certifying
the number of shares owned by him in the corporation. When such certificates are
countersigned (1) by a transfer agent other than the corporation or its
employee, or, (2) by a registrar other than the corporation or its employee, the
signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. - A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may direct,
not exceeding double the value of the stock, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss of
any such certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. - The shares of stock of the
corporation shall be transferrable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificate shall be surrendered to the corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. - In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjournment meeting.
<PAGE>
SECTION 5. DIVIDENDS. - Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. - The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "Corporate Seal, Georgia, 1987". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. - The fiscal year of the corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS. - All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. - Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage, prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
Statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation of these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
<PAGE>
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed alteration or repeal of By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws
to be made, be contained in the notice of such special meeting.
<PAGE>
BOOK 672 PAGE 796
FILED
FEB 18 1988
/s/ ILLEGIBLE
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
MONTGOMERY CELLULAR HOLDING CO., INC.
ARTICLE FIRST
The name of the corporation is Montgomery Cellular Holding Co., Inc.
(herein called the "Corporation").
ARTICLE SECOND
The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, Wilmington, Delaware 19801 in the County of
New Castle. The name of the registered agent of the Corporation at such address
is The Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FOURTH
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 150,000 shares, consisting of (A)
100,000 shares of Common Stock, $.0l par value (the "Common Stock"), and (B)
50,000 shares of Preferred Stock, $.0l par value (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. The board of directors of this Corporation is authorized to determine
the designation of any series of Preferred Stock, to fix the number of shares of
any series of Preferred Stock, to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, and within the limitations and restrictions stated in
any resolution or resolutions of the board of directors originally fixing the
number of shares constituting any series, to increase or decrease (but not below
the number of shares of any series then outstanding) the number of shares of any
of such series subsequent to the issue of shares of that series.
<PAGE>
BOOK 672 PAGE 797
ARTICLE FIFTH
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Jacqueline D. Maylath Suite 1000
1015 Fifteenth Street, N.W.
Washington, D.C. 20005
ARTICLE SIXTH
For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and
stockholders, it is further provided:
(a) The number of directors of the Corporation shall be such as from
time to time shall be fixed in the manner provided in the Bylaws of the
Corporation. The election of directors of the Corporation need not be by
ballot unless the Bylaws so require.
(b) In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:
(i) To make, alter, amend or repeal the By-laws in any manner
not inconsistent with the laws of the State of Delaware or this
Certificate of Incorporation.
(ii) Without the assent or vote of the stockholders, to
authorize and issue obligations of the Corporation, secured or
unsecured, and to include therein such provisions as to redemption,
conversion or other terms thereof as the Board of Directors in its
sole discretion may determine, and to authorize the mortgaging or
pledging, as security therefor, of any property of the Corporation,
real or personal, including after-acquired property.
(iii) To determine whether any, and if any, what part, of the
net profits of the Corporation or of its surplus shall be declared
in dividends and paid to the stockholders, and to direct and
determine the use and disposition of any such net profits or such
surplus.
-2-
<PAGE>
BOOK 672 PAGE 798
(iv) To fix from time to time the amount of net profits of the
Corporation or of its surplus to be reserved as working capital or
for any other lawful purpose.
In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the
State of Delaware, of this Certificate of Incorporation and of the By-laws
of the Corporation.
ARTICLE SEVENTH
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application of any
receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE EIGHTH
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director
-3-
<PAGE>
BOOK 672 PAGE 799
derived an improper personal benefit. No amendment to or repeal of this Article
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation hereinbefore named, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of Delaware, does hereby
make this certificate, hereby declaring and certifying that this is her act and
deed and that the facts herein stated are true and accordingly has hereunto set
her hand this 17th day of February, 1988.
/s/ Jacqueline D. Maylath
----------------------------
Jacqueline D. Maylath
-4-
<PAGE>
BYLAWS
OF
MONTGOMERY CELLULAR HOLDING CO., INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of stockholders
shall be held the second Tuesday in March for the election of directors at
either within or without the State of Delaware as may be designated by the Board
of Directors from time to time. Any other proper business may be transacted at
the annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may
be called at any time by the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
<PAGE>
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these bylaws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these bylaws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
his absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. Voting at meetings of
stockholders need not be by written ballot and need not be
-2-
<PAGE>
conducted by inspectors unless the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at such meeting shall so determine. At all meetings of stockholders for
the election of directors, a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise provided by law
or by the certificate of incorporation or these bylaws, be decided by the vote
of the holders of a majority of the outstanding shares of all classes of stock
entitled to vote thereon present in person or by proxy at the meeting, provided
that (except as otherwise required by law or by the certificate of
incorporation) the Board of Directors may require a larger vote upon any
election or question.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any
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stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof and may be inspected by any
stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors, except as
may be otherwise provided by law or in the certificate of incorporation. The
Board shall consist of one or more members, the number thereof to be determined
from time to time by the Board. Directors need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until the annual meeting of
stockholders next succeeding his election and until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Unless otherwise provided
in the certificate of incorporation or these bylaws, vacancies and newly created
directorships resulting from any increase in the authorized number of directors
or from
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<PAGE>
any other cause may be filled by a majority of the directors then in office,
although less than a quorum, or by the sole remaining director.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so
determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the certificate of incorporation or these bylaws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this bylaw shall constitute presence in person at such
meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of
the Board of Directors a majority of the entire Board shall constitute a quorum
for the transaction of business. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board unless
the certificate of incorporation or these bylaws shall require a vote of a
greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee
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<PAGE>
thereof, may be taken without a meeting if all members of the Board or of such
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have power or authority
in reference to amending the certificate of incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
bylaws; and, unless the resolution expressly so provided, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its
business pursuant to Article II of these bylaws.
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ARTICLE IV
Officers
Section 4.1. Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and may
give any of them such further designations or alternate titles as it considers
desirable. Each such officer shall hold office until the first meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. The Board may remove any officer with or without cause at any time.
Any such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election or appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be held by the same person. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers
of the Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board. The Board may require any officer, agent or employee
to give security for the faithful performance of his duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer,
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<PAGE>
or the Secretary or an Assistant Secretary, of the Corporation, certifying the
number of shares owned by him in the Corporation. If such certificate is
manually signed by one officer or manually countersigned by a transfer agent or
by a registrar, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance
of New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
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<PAGE>
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these bylaws.
Section 6.4. Indemnification of Directors, Officers and Employees.
The Corporation shall have power to indemnify to the full extent authorized by
law any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or intestate is or was a director, officer or
employee of the Corporation or any predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee at the request of
the Corporation or any predecessor of the Corporation.
Section 6.5. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be
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converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 6.7. Amendment of By-Laws. These bylaws may be altered or
repealed, and new bylaws made, by the Board of Directors, but the stockholders
may make additional bylaws and may alter or repeal any bylaw whether or not
adopted by them.
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<PAGE>
CORP 0153 PAGE 0568
STATE OF ALABAMA ss.
ss.
MONTGOMERY COUNTY ss.
ARTICLES OF INCORPORATION
OF
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
The undersigned, acting as incorporator of a corporation under the Alabama
Business Corporation Act, hereby adopts the following Articles of Incorporation
for such corporation:
FIRST: The name of the corporation is Montgomery Cellular Telephone
Company, Inc.
SECOND: The period of its duration is perpetual.
THIRD: The purpose or purposes for which the corporation is organized are:
(A) To participate in the development, management, and operation of
cellular telephone systems, and to transact any business related thereto.
(B) To buy, sell, own, trade, and otherwise handle and deal in, either as
principal or agent, and upon commission or otherwise, all kinds of personal and
real property whatsoever, and to render services of all kinds and descriptions.
(C) To transact any and all lawful business for which corporations may be
incorporated under the Alabama Business Corporation Act.
This Instrument Prepared By:
Robert S. Richard
57 Adams Avenue
Montgomery, Alabama 36104
<PAGE>
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is 5,000 shares of common stock of par value of $1.00 each,
being $5,000.00 authorized capital stock. All of said stock shall be common
stock and none shall be preferred stock or stock of a different class.
FIFTH: Provisions for the regulation of the internal affairs of the
corporation are:
(A) No shareholder of the corporation shall have preemptive rights to
purchase any shares of any issuance of the corporation.
(B) The corporation shall have the right to purchase, take, receive, or
otherwise acquire, hold, own, pledge, and transfer or otherwise dispose of its
own shares, to the extent of its unreserved and unrestricted capital surplus
available therefor.
(C) The initial Bylaws of the corporation shall be adopted by the
shareholders. The power to alter, amend, or repeal the Bylaws or adopt new
Bylaws shall be vested in the Board of Directors; provided, however, that the
Board of Directors may not alter, amend, or repeal any bylaw establishing what
constitutes a quorum at shareholders' meetings.
(D) Directors of the corporation need not be shareholders of the
corporation and need not be residents of the State of Alabama.
(E) The Board of Directors may from time to time distribute to the
shareholders out of the capital surplus of the corporation
2
<PAGE>
a portion of the corporation's assets, in cash or property, in the manner
prescribed by and subject to the limitations imposed by the Alabama Business
Corporation Act.
SIXTH: The address of the initial registered office of the corporation is
1450 Ann Street, Montgomery, Alabama 36107, and the name of its initial
registered agent at such address is Edward J. Forks.
SEVENTH: The number of directors constituting the initial board of
directors of the corporation is one. The name and address of the person who is
to serve as director until the first annual meeting of shareholders or until his
successor is elected and shall qualify are:
NAME ADDRESS
- ---- -------
Edward J. Forks P. O. Box 20088
Montgomery, Alabama 36120-0088
EIGHTH: The name and address of the incorporator are:
NAME ADDRESS
- ---- -------
Montgomery Cellular P. O. Box 20088
Holding Co., Inc. Montgomery, Alabama 36120-0088
(a Delaware Corporation) 01 INDEX 1.00
02 REC FE 35.00
TOTAL 36.00
Dated: February 19, 1988. 02-19-88 71361
MONTGOMERY CELLULAR HOLDING
CO., INC. (a Delaware corporation)
By: /s/ Edward J. Forks (President)
---------------------------------
Edward J. Forks
As Its President
INCORPORATOR
STATE OF ALA.
MONTGOMERY CO.
I CERTIFY THIS INSTRUMENT
WAS FILED ON
FEB 19 347 PM '88
/s/ [ILLEGIBLE]
JUDGE OF PROBATE
3
<PAGE>
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
------------------
BYLAWS
------------------
ARTICLE I
LOCATION OF CORPORATION
Section 1. PRINCIPAL OFFICE. The principal office of this corporation
shall be located in the City of Montgomery, County of Montgomery, State of
Alabama.
Section 2. REGISTERED OFFICE. The registered office of the corporation,
required by the Alabama Business Corporations Act to be maintained in the State
of Alabama may be, but need not be, identical with the principal office in the
State of Alabama, and the address of the registered office may be changed from
time to time by the Board of Directors in its discretion.
Section 3. OTHER OFFICES. This corporation may also have offices at such
other places within and without the State of Alabama as the Board of Directors
may from time to time designate.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders of this
corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting, shall be held at the principal
office of this corporation, or at such other place within or without the state
as
<PAGE>
may be designated from time to time, on the second Tuesday of ___________ in
each year, at 10:00 o'clock in the forenoon, (commencing with the year 1989) or
in the event that the same shall fall upon a legal holiday, then upon the next
succeeding business day. If the election of the directors shall not be held on
the day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as conveniently may
be.
Section 2. NOTICE OF ANNUAL MEETING. Notice of any annual meeting of the
shareholders of this corporation shall be given in writing, personally or by
mail, by the secretary to each shareholder of record not less than ten (10) nor
more than fifty (50) days before such meeting. The notice shall state the time
and place of such meeting. If notice of the annual meeting is mailed, it shall
be deemed to have been given when deposited in the United States mail, addressed
to the shareholder at his address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid. If one of the purposes of the
annual meeting is to consider an increase of the stock or bonded indebtedness of
this corporation, notice of such meeting shall be given in the manner prescribed
in this section not less than thirty (30) nor more than fifty (50) days before
such meeting.
Section 3. SPECIAL MEETING. A special meeting of the shareholders of this
corporation may be called at any time by the Board of Directors, or the
president, or by shareholders holding at
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least ten (10%) percent of the capital stock of this corporation then issued and
outstanding and entitled to vote. Such meeting may be held at any time and at
any place within or without the state, time and place of which shall be
specified in such request. No business other than that specified in the notice
of the meeting shall be transacted.
Section 4. NOTICE OF SPECIAL MEETING. Notice of any special meeting of the
shareholders of this corporation shall be given in writing, personally or by
mail, by the secretary to each shareholder of record not less than ten (10) nor
more than fifty (50) days before such meeting. The notice shall state the time
and place of such meeting, and such notice shall also state the purpose, or
purposes, for which the meeting is called. If notice of a special meeting is
mailed, it shall be deemed to have been given when deposited in the United
States mail, addressed to the shareholder of record at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid. If
the purpose of the special meeting is to increase the stock or bonded
indebtedness of this corporation, thirty (30) days' notice of such meeting shall
be given in the manner prescribed in this section.
Section 5. WAIVER OF NOTICE. Any shareholder entitled to notice pursuant
to these Bylaws may waive notice either of the annual or any special meeting of
the shareholders before or after the time stated in such notice. A waiver of
notice in writing
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<PAGE>
signed by the shareholder entitled to such notice shall be equivalent to the
giving of such notice.
Section 6. ACTION WITHOUT MEETING. Any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the actions so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as an unanimous vote of the
shareholders, and may be stated as such in any writing or document.
Section 7. QUORUM. Except as otherwise specially provided by law or by the
Articles of Incorporation, the holders of a majority of the issued and
outstanding capital stock of this corporation entitled to vote, present or
represented by proxy at any meeting of the shareholders, shall constitute a
quorum, except that if less than a quorum of the shareholders be present or
represented by proxy at any meeting, a majority of those present or represented
thereat may, after the lapse of at least half an hour, adjourn the meeting from
time to time without further notice. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 8. VOTING. Each shareholder of this corporation shall be entitled
to one vote, in person or by proxy, for each share of capital stock standing in
the name of such shareholder on the books of this corporation.
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<PAGE>
Section 9. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the Bylaws of such other corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such other corporation
may determine. Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him without a transfer of such shares into his
name and no corporate trustee shall be entitled to vote in the election of
directors shares held by it solely in a fiduciary capacity if such shares are
shares issued by the corporate trustee itself. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer thereof into
his name of authority so to do be contained in an appropriate order of the court
by which such receiver was appointed. A shareholder whose shares are pledged
shall be entitled to vote such shares until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred. Neither treasury shares of its own stock held by
the corporation, nor shares held by another corporation if a majority of the
shares entitled to vote for the election of directors of such other corporation
is held by the corporation, shall be voted
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<PAGE>
at any meeting or counted in determining the total number of outstanding shares
at any given time.
Section 10. PROXIES. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy.
Section 11. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty (50) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, such books
shall be closed for at least ten (10) days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty (50) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the date on which
the particular
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<PAGE>
action, requiring such determination of shareholders, is to be taken. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of closing
has expired.
Section 12. VOTING RECORD. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten (10) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at each meeting of shareholders or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each. For a period of ten (10) days prior to any meeting of
shareholders, such list shall be kept on file at the principal office of the
corporation and shall be subject to inspection by any shareholder making written
request therefor at any time during usual business hours. The list shall also be
produced and kept open at the time and place of the meeting and
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<PAGE>
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
ARTICLE III
DIRECTORS
Section 1. NUMBER, QUALIFICATION, AND ELECTION. The business, affairs, and
property of this corporation shall be managed under the direction of the Board
of Directors, consisting of not less than one nor more than six members with the
original Board of Directors consisting of one member, who shall be elected at
the annual meeting of the shareholders by a majority of the votes cast at such
election by ballot or, in absence of objection by or on behalf of any
shareholder present or represented at such meeting, in any manner other than by
ballot. Such director shall hold office for one year and thereafter until his
successor shall be elected and shall qualify. Directors need not be
shareholders. Directors need not be residents of the State of Alabama.
Section 2. VACANCIES AND REMOVAL. If the office of any director shall
become vacant between annual meetings by reason of death, resignation, or
disqualification, the remaining directors (if any) may, by a majority vote,
though less than a quorum of the Board of Directors, elect a director in the
place and stead of the one so dying, resigning, or disqualifying, and any
director so elected shall hold office until the next annual meeting of the
shareholders, and until his successor shall have been duly elected by the
shareholders. Any director may resign at any time. The
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shareholders shall have the right at any time to remove any director of this
corporation, with or without cause, by a majority vote of the issued and
outstanding shares of capital stock entitled to vote on the election of
directors, at a meeting of the shareholders called expressly for that purpose.
If a director be removed or if the number of directors be increased, a director
to fill the vacancy or additional directors shall be elected by a majority vote
of the issued and outstanding capital stock entitled to vote on the election of
directors, to hold office until the next annual meeting of the shareholders, and
until his or their successors shall have been duly elected.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the shareholders, and
at such other times as shall be determined by the Board of Directors. Regular
meetings of the Board of Directors may be held either within or without the
State of Alabama. No notice shall be required of regular meetings of the Board
of Directors.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called at any time by the president or by any two members of the Board of
Directors, if there be more than one member. Notice of any special meeting of
the Board of Directors shall be given in writing, personally or by mail or by
telegram, to each director not less than two (2) days before such meeting. The
notice shall state the time and place, but need not state the purpose, or
purposes, for which the meeting is called. If notice
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of a special meeting is mailed, it shall be deemed to have been given when
deposited in the United States mail, postage prepaid, addressed to the director
at his last known post office address. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.
Section 5. WAIVER OF NOTICE OF SPECIAL MEETINGS. Notice of any special
meeting of the Board of Directors may be waived either before or after the time
stated in such notice. A waiver of notice in writing signed by the director
entitled to such notice shall be equivalent to the giving of such notice. A
director of the corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
Section 6. PLACE OF MEETINGS. All regular and special meetings of the
Board of Directors shall be held at the principal office of this corporation, or
at such other place or places within or without the state, as said Board may
designate. Members of the Board of Directors may participate in a meeting of
such Board by means of a conference telephone or similar communications
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equipment by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall constitute
presence in person at a meeting.
Section 7. ACTION WITHOUT MEETING. Any action which may be taken at a
meeting of the Board of Directors may be taken without a meeting if a consent in
writing, setting forth the actions so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as an unanimous vote of the
directors, and may be stated as such in any writing or document.
Section 8. COMMITTEES. The Board of Directors may by resolution or
resolutions, passed by a majority of the whole Board, designate from among its
members one or more committees, each committee to consist of one or more of the
directors of the corporation, which to the extent provided in such resolution or
resolutions or in the Bylaws of the corporation, shall have and may during
intervals between the meeting of the Board exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation
(except as restricted by law) and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it. The designation of
such committee and the delegation thereto of authority shall not operate to
relieve the Board of Directors, or any member thereof, of any responsibility
imposed upon it or him by law.
Section 9. QUORUM. A majority of the directors of this corporation shall
constitute a quorum for the transaction of
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business at any regular or special meeting of the Board of Directors, but if
less than a majority is present at a meeting a majority of the directors present
may adjourn the meeting from time to time without further notice. If a quorum is
present when the meeting is convened, the directors present may continue to do
business, taking action by a vote of a majority of a quorum, until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum
present, or the refusal of any director present to vote.
Section 10. VOTING. At all meetings of the Board of Directors each
director shall have one vote.
Section 11. COMPENSATION. The Board of Directors shall have authority to
fix the compensation to be paid for directors' services as directors and
reimbursement for their expenses. Nothing shall preclude any director from
serving the corporation in any other capacity as an officer, agent or otherwise,
and receiving compensation therefor.
ARTICLE IV
OFFICERS
Section 1. ELECTION AND APPOINTMENT. At the initial meeting of the Board
of Directors, the directors shall choose a president, who shall be a director,
and shall be responsible for the general management of the corporation's
business, and a secretary, and a treasurer, and may choose a vice president or
vice presidents (who may be numerically designated or designated by functions)
and such other officers as the corporation from time to time may need, none
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of whom need be directors. Any two offices or more may be held by one person.
All of said officers shall hold office until the annual meeting of the Board of
Directors following the next annual meeting of the shareholders and until their
respective successors shall be duly elected and shall qualify. Any vacancy may
be filled for the remainder of the term by the Board of Directors, at a regular
or special meeting thereof, and any officer so elected shall hold office until
his successor shall be duly elected and shall qualify.
Section 2. SUSPENSION AND REMOVAL. Any officer of the corporation
appointed by the Board of Directors may be removed or suspended by a majority
vote of the Board of Directors at any time, with or without cause. Any agent or
employee appointed or employed by the president may be removed or discharged or
suspended by him at any time, with or without cause.
Section 3. POWERS AND DUTIES OF THE PRESIDENT. It shall be the duty of the
president when present to preside at shareholders meetings and at all meetings
of the Board of Directors. The president, subject to the approval of the Board
of Directors, shall appoint and remove, employ and discharge, and fix the
compensation of all agents and employees of this corporation other than officers
appointed by the Board. The president shall sign or countersign all certificates
of stock, and notes, drafts or bills of exchange, acceptances, and other
instruments, for the payment of money duly drawn by the treasurer. He shall
submit a report of the operations of this corporation for each year to the
directors
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at their last regular meeting in such year, or at a special meeting called for
that purpose before the annual meeting of shareholders, and to the shareholders
at their annual meeting, and from time to time he shall report to the directors
all matters within his knowledge which the interest of this corporation may
require to be brought to their notice. In general, he shall perform all duties
incident to his office and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 4. POWERS AND DUTIES OF THE VICE PRESIDENT OR VICE PRESIDENTS. The
vice presidents of this corporation shall generally assist the president and
shall perform such duties as may be assigned by the Board of Directors from time
to time. In the event of the death, resignation, absence or inability to act of
the president, the designated senior vice president (if more than one) shall
assume and discharge pro tempore the powers and duties of the president of this
corporation.
Section 5. POWERS AND DUTIES OF THE SECRETARY. The secretary shall be ex
officio secretary of the Board of Directors. He shall keep the minutes of all
meetings of the Board of Directors and shareholders. He shall have charge of the
corporate books and records. He shall keep in safe custody the seal of this
corporation, and when authorized by the Board of Directors shall affix the seal
to any instrument requiring the same. He shall be authorized to sign
certificates of stock with the president. He shall keep accounts of stock
registered and transferred in the manner prescribed by law. He shall give and
serve all notices to the
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shareholders and directors, except that notice for special meetings of directors
called at the request of two directors, as provided in Section 4 of Article III
of these Bylaws, may be issued by such directors. In general, he shall perform
all the duties incident to his office and such other duties as may be assigned
to him by the president or by the Board of Directors from time to time.
Section 6. POWERS AND DUTIES OF THE TREASURER. The treasurer shall have
the care and custody of and be responsible for all the funds, securities,
evidences of indebtedness and other valuable documents of the corporation, and
deposit all such funds in the name of the corporation in such banks, or trust
companies, or other depositaries, or in such safe deposit vaults as the Board of
Directors may designate. The treasurer and/or those other persons designated by
the Board of Directors shall sign, make, and endorse in the name of the
corporation all checks, notes, drafts, bills of exchange, acceptances and other
instruments for the payment of money, and pay out and dispose of same and
receipt therefor. The treasurer shall render a statement of the condition of the
finances of the corporation of each regular meeting of the Board of Directors,
and at such other times as shall be required of him, and a full financial report
at the annual meeting of the shareholders. The treasurer shall keep at the
office of the corporation full and accurate books of account of all its business
and transactions and such other books of account as the Board of Directors may
require, and shall exhibit the same to any
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director of the corporation upon application therefor. He shall be authorized to
sign certificates of stock with the president. In general, he shall perform all
the duties incident to his office and such other duties as from time to time may
be assigned to him by the president or by the Board of Directors from time to
time. He shall give the corporation a bond for the faithful discharge of his
duties in such amount and with such surety as the Board of Directors shall
prescribe.
Section 7. RETURNS AND STATEMENTS. It shall be the duty of each officer of
this corporation to make and file any and all returns, reports, lists, or
statements required by law to be made and filed by him, and to make full report
to the Board of Directors respecting the affairs of the corporation in his
charge whenever he may be requested to do so.
Section 8. COMPENSATION. The salaries of all officers shall be fixed by
the Board of Directors, and the fact that any officer is a director shall not
preclude him from receiving a salary or from voting upon the resolution
providing the same. Any payments made to or for an officer of the corporation
such as salary, commission, or reimbursement, or payment of expenses, which
shall be disallowed in whole or in part as a deductible expense by the Internal
Revenue Service, shall be reimbursed by such officer to the corporation to the
full extent of such disallowance. In lieu of such payment by the officer,
subject to the determination of the directors, proportionate
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amounts may be withheld from his future compensation payments until the amount
owed to the corporation has been recovered.
ARTICLE V
CAPITAL STOCK
Section 1. ISSUE AND REGISTRATION. The certificates of stock of the
corporation shall be in such form as shall be approved by the Board of
Directors. Certificates of stock shall be signed by the president or any vice
president, and the secretary or treasurer, and sealed with the seal of the
corporation. They shall be numbered consecutively and registered in the order in
which they are issued. They shall be bound in a book and shall be issued
therefrom, and in this book there shall be entered the names of the persons
owning the shares, the dates of issuance thereof. All certificates exchanged or
returned to the corporation shall be marked "cancelled," and the dates of
cancellation affixed thereto, and each cancelled certificate shall be preserved
and attached to the stub from which the same was taken. No new certificates
shall be issued until the old certificate shall have been cancelled; provided,
however, that in case any certificate shall be lost, the directors may order a
new certificate to be issued in its place upon receiving such proof of loss and
such bond of indemnity therefor (if any be required by the directors) as may be
satisfactory to them.
Section 2. TRANSFERS. Transfers of shares shall be made upon the books of
the corporation by the holder in person or by attorney duly authorized, and upon
the surrender of the
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certificate or certificates properly endorsed. No certificate shall be issued
for any share until such share is fully paid.
Section 3. RECORD HOLDERS. This corporation shall be entitled to treat the
holder of record of any share or shares of its capital stock as the holder in
fact thereof and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly provided by
law.
Section 4. LOST, STOLEN, DESTROYED, OR MUTILATED CERTIFICATES. No
certificate for shares of stock in the corporation shall be issued in place of
any certificate alleged to have been lost, destroyed, or stolen, except on
production of such evidence of such loss, destruction or theft as the Board of
Directors may in its discretion require, and on delivery to the corporation, if
the Board of Directors shall so require, of a bond of indemnity, upon such terms
and secured by such surety as the Board of Directors may in its discretion
require.
ARTICLE VI
MISCELLANEOUS
Section 1. CORPORATE SEAL. The directors shall provide a suitable
corporate seal, which seal shall bear the following words:
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
CORPORATE SEAL
ALABAMA
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Section 2. CONTRACTS, ETC. The Board of Directors may authorize any
officer or officers, agent or agents, employee or employees to enter into any
contract or other instrument on behalf of this corporation, and such authority
may be general or confined to specific instances. Except as herein provided or
as authorized by the Board of Directors, no officer, agent, or employee, other
than the president, vice president, secretary, or treasurer, shall have any
power or authority to bind this corporation by any contract or engagement, or to
pledge its credit or to render it liable, for any purpose or for any amount.
Section 3. DEPOSITS, CHECKS, AND DRAFTS. All checks and drafts or funds of
this corporation shall be deposited from time to time to the credit of this
corporation in such banks, or trust companies, or to other depositaries, as the
Board of Directors may from time to time designate. All checks shall be drawn
out of the regular check books of this corporation and upon the stub of each
such check, the purpose and amount for which the same is drawn shall be
specified. All checks, notes, drafts, bills of exchange, acceptances or other
orders for the payment of money or other evidences of the indebtedness of this
corporation, shall be signed as shall from time to time be designated by
resolution of the Board of Directors.
Section 4. DIVIDENDS. The directors may from time to time declare
dividends upon the capital stock from the earned surplus arising from the
business of the corporation as and when they deem expedient. Before declaring
any dividend there may be reserved
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out of the accumulated profits such sum or sums as the directors from time to
time in their discretion think proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends, or for such other purposes
as, in the opinion of the directors, is conducive to the interest of the
company.
Section 5. INDEMNITY. Any person made a party to any action, suit or
proceeding by reason of the fact that he, his testator or his intestate, is or
was a director, officer or employee of the corporation or of any corporation
which he served as such at the request of the corporation shall be indemnified
by the corporation against the reasonable expenses, including attorney's fees,
actually and necessarily incurred by him in connection with any appeal therein,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such officer, director or employee is liable for
negligence or misconduct in the performance of his duties. The corporation may
also reimburse to any director, officer, or employee the reasonable cost of
settlement of any such action, suit or proceeding if it be found by a majority
of the directors to be the best interest of the company that such settlement be
made, and that such officer, director or employee was not guilty of negligence
or misconduct.
The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
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The amount of indemnity to which any officer or director may be entitled
shall be fixed by the shareholders.
ARTICLE VII
AMENDMENT OF BYLAWS
Section 1. ALTERATIONS, AMENDMENTS, OR REPEALS. The directors may alter,
amend, or repeal the Bylaws of the corporation, or adopt new Bylaws, by vote of
a majority of the directors at any regular or special meeting thereof. The Board
of Directors may not, however, alter, amend, or repeal any Bylaws establishing
what constitutes a quorum at shareholders' meetings.
CERTIFICATION
I, Edward J. Forks, Secretary of Montgomery Cellular Telephone Company,
Inc., do hereby certify that the foregoing is a true and complete copy of the
Bylaws of this corporation as adopted as the Bylaws of this corporation by
action of the sole shareholder by consent in writing in lieu of a first meeting,
dated February 19, 1988, and that the same are now in full force and effect.
DATED: February 19, 1988.
/s/ Edward J. Forks
----------------------------------------
Edward J. Forks, Secretary of
Montgomery Cellular Telephone
Company, Inc.
(Corporate Seal)
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FILED
OCT 7 1987
10 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
CELLULAR SYSTEMS OF SOUTHEAST
ALABAMA, INC.
FIRST: The name of the Corporation is Cellular Systems of Southeast
Alabama, Inc.
SECOND: Its registered office in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. The name and address of its registered agent is The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The amount of total authorized capital stock of this
Corporation is One Hundred Thousand (100,000) shares of Common Stock, which
shall be divided into three distinct classes, as follows: Five Thousand and One
(5,001) shares of Class A Common Stock, par value One Cent ($.01) per share;
Four Thousand Nine Hundred and Ninety-Nine (4,999) shares of Class B Common
Stock, par value One Cent ($.01) per share; and Ninety Thousand (90,000) shares
of Class C Common Stock, par value One Cent ($.01) per share. The board of
directors shall have the authority to establish the voting powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of the shares of Class C Common
Stock in the resolution or resolutions providing for the issue thereof. Except
as otherwise provided in any such resolution or in this Certificate of
Incorporation or any Amendment of this Certificate of Incorporation, all rights
and preferences of the three distinct classes of Common Stock of the Corporation
shall be identical in all respects.
FIFTH: Each registered holder of the shares of Class A Common Stock
and Class B Common Stock shall be entitled to a preemptive right to purchase or
subscribe for, in proportion to the number of shares of Common Stock held by him
and on the same terms and conditions offered to any other party, any unissued
stock of any class or any additional shares of any class to be issued by reason
of any increase of the authorized capital stock of the Corporation, and any
bonds, certificates of indebtedness, debentures or other securities convertible
into stock of the Corporation, or carrying any rights to purchase stock of any
class, whether issued for cash, property, or any other lawful consideration.
Such preemptive right shall terminate upon the issuance by the Corporation of
its Common Stock to the public pursuant to a public offering or upon its merger
into another corporation.
<PAGE>
SIXTH: The board of directors of the Corporation shall consist of no
less than three directors. The holders of the shares of Class A Common Stock
shall have the right by a majority in number of shares of the Class A Common
Stock issued and outstanding to elect a majority in number of the full board of
directors of the Corporation, such majority to consist of the smallest number of
directors sufficient to constitute a majority in number of such full board of
directors, and the directors so elected shall be known as Class A Directors. The
holders of the shares of Class B Common Stock shall have the right by the vote
of a majority in number of shares of the Class B Common Stock issued and
outstanding to elect a minority in number of the full board of directors of the
Corporation, such minority to consist of the largest number of directors which
will constitute a minority in number of such full board of directors, and the
directors so elected shall be known as Class B Directors.
SEVENTH: In the event that the board of directors designates an
executive committee to manage the business and affairs of the Corporation, such
committee shall consist of no less than three members. The Class A Directors
shall have the right by a majority in number of votes of Class A Directors to
designate a majority in number of the full executive committee, such majority to
consist of the smallest number of members sufficient to constitute a majority in
number of such full committee. The Class B Directors shall have a right by a
majority in number of votes of Class B Directors to designate a minority in
number of the full executive committee, such minority to consist of the largest
number of members which will constitute a minority in number of such full
committee.
EIGHTH: The board of directors shall have the power to issue bonds,
debentures or other obligations convertible into Common Stock of the Corporation
upon such terms, in such manner and under such conditions as may be fixed by
resolution of the board prior to the issuance thereof. Unless and until such
bonds, debentures, or other obligations have been converted into Common Stock,
such bonds, debentures or other obligations shall not be deemed to be shares of
stock and shall not entitle the holders thereof to the power to vote in respect
to the corporate affairs and management of the Corporation or to the right of
inspection of the books, accounts and other records of the Corporation or to any
other rights which the stockholders of the Corporation have or may have by
reason of the provisions of this Certificate of Incorporation or the General
Corporation Law of Delaware.
NINTH: Any shares of the Common Stock of the Corporation may be
redeemed at the option of the Corporation to the extent necessary to prevent the
loss of any permit or license issued by the Federal Communications Commission to
the Corporation for the conduct of its business, or to reinstate
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such permit or license. The terms and conditions of any such redemption shall be
payment by the Corporation in cash of the appraised fair market value of said
shares as determined by a disinterested appraiser appointed by agreement of the
Corporation and the registered holder(s) of the shares which are subject to
redemption, unless otherwise agreed.
TENTH: The books of the Corporation may be kept, subject to any
provision contained in the General Corporation Law of Delaware, outside the
State of Delaware at such place or places as may be designated from time to time
by the Directors or in the Bylaws.
ELEVENTH: The Corporation shall have the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceedings, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, upon a plea of
nolo contendere or equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
TWELFTH: No director shall be personally liable to the Corporation
or its stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
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THIRTEENTH: The Board of Directors of the Corporation shall have the
power to make, alter, amend or repeal the Bylaws of the Corporation.
FOURTEENTH: The duration of this Corporation shall be perpetual.
FIFTEENTH: Whenever a compromise or arrangement is proposed between
the Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
SIXTEENTH: The name and mailing address of the incorporator is as
follows:
Name Mailing Address
---- ---------------
William F. Bavinger III Suite 1000
1015 Fifteenth Street, N.W.
Washington, D.C. 20005
I, William F. Bavinger III, for the purpose of forming a corporation
under the laws of the State of Delaware, do make, file and record this
Certificate, and do certify that the facts herein stated are true; and I have
accordingly hereunto set my hand this 6th day of October, A.D. 1987.
/s/ William F. Bavinger III
---------------------------
William F. Bavinger III
RECEIVED FOR RECORD
OCT 09 1987
William M. Honey, Recorder
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BYLAWS
OF
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. Each year during the first two weeks
of April an annual meeting of stockholders shall be held for the election of
directors at such date, time and place either within or without the State of
Delaware as may be designated by the Board of Directors from time to time. Any
other proper business may be transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may
be called at any time by the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting. Special meetings may be called for the
separate election of Class A and Class B directors.
Section 1.3. Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record
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date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these bylaws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these bylaws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
his absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to as many votes as shall equal the number of
shares of stock held by him which have voting power upon the matter in question.
The holders of fractional shares shall be entitled to exercise voting rights.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is
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irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. All elections
and questions other than the election of directors shall, unless otherwise
provided by law or by the certificate of incorporation or these bylaws, be
decided by the vote of the holders of a majority of the outstanding shares of
all classes of stock entitled to vote thereon present in person or by proxy at
the meeting, voting together as a single class, provided that (except as
otherwise required by law or by the certificate of incorporation) the Board of
Directors may require a larger vote upon any election or question.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the
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stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be kept on file at the
registered office of the Corporation and shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 1.11. Preemptive Rights. Each registered holder of the
shares of Class A Common Stock and Class B Common Stock shall be entitled to a
preemptive right to purchase or subscribe for, in proportion to his holdings and
on the same terms and conditions offered to any other party, any unissued stock
of any class or any additional shares of any class to be issued by reason of any
increase of the authorized capital stock of the Corporation, or bonds,
certificates of indebtedness, debentures or other securities convertible into
stock of the Corporation, or carrying any rights to purchase stock of any class,
whether issued for cash, property, or any other lawful consideration. Such
preemptive right shall terminate upon the issuance by the Corporation of its
common stock to the public pursuant to a public offering or upon its merger into
another corporation.
Section 1.12. Restrictions on Transfer of Shares. Each share of
Class A Common Stock and Class B Common Stock has been issued without
registration under the Securities Act of 1933 or under the securities laws of
any state, and may not be transferred or sold unless registered by the
Corporation pursuant to such Act and any applicable state securities laws or
unless the Corporation first receives an opinion of counsel,
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reasonably acceptable to it, that exemptions from such registration are
available. The certificates for shares of Class A Common Stock and Class B
Common Stock shall bear a restrictive legend setting forth these restrictions on
transfer and sale.
Section 1.13. Redemption of Shares. Any shares of the Common Stock
of the Corporation may be redeemed at the option of the Corporation to the
extent necessary to prevent the loss of any permit or license issued by the
Federal Communications Commission to the Corporation for the conduct of its
business, or to reinstate such permit or license. The terms and conditions of
any such redemption shall be payment by the Corporation in cash of the appraised
fair market value of said shares as determined by a disinterested appraiser
appointed by agreement of the Corporation and the registered holder(s) of the
shares which are subject to redemption, unless otherwise agreed.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors, except as
may be otherwise provided by law or in the certificate of incorporation. The
Board shall consist of three or more members, the number thereof to be
determined from time to time by the Board. Directors need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. The holders of the shares of Class A Common Stock shall have the
right by a majority in number of shares of the Class A Common Stock issued and
outstanding to elect a majority in number of the full board of directors of the
Corporation, such majority to consist of the smallest number of directors
sufficient to constitute a majority in number of such full board of directors,
and the directors so elected shall be known as Class A Directors. The holders of
the shares of Class B Common Stock shall have the right by the vote of a
majority in number of shares of the Class B Common Stock issued and outstanding
to elect a minority in number of the full board of directors of the Corporation,
such minority to consist of the largest number of directors which will
constitute a minority in number of such full board of directors, and the
directors so elected shall be known as Class B Directors. Each director shall
hold office until the annual meeting of stockholders next succeeding his
election and until
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his successor is elected and qualified or until his earlier resignation or
removal. Any director may resign at any time upon written notice to the Board of
Directors or to the President or the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so
determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the certificate of incorporation or these bylaws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this bylaw shall constitute presence in person at such
meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of
the Board of Directors a majority of the entire Board shall constitute a quorum
for the transaction of business. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board unless
the certificate of incorporation or these bylaws shall require a vote of a
greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
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Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9. Personal Liability of Directors. No director shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty by such director as a director. Notwithstanding
the foregoing sentence, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
Section 3.2. Executive Committee. The board of directors may
designate three or more directors to constitute and serve as an executive
committee, which committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease
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or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
bylaws; and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. The Class A Directors shall have the right by a majority in
number of votes of Class A Directors to designate a majority in number of the
full executive committee, such majority to consist of the smallest number of
members sufficient to constitute a majority in number of such full committee.
The Class B Directors shall have a right by a majority in number of votes of
Class B Directors to designate a minority in number of the full executive
committee, such minority to consist of the largest number of members which will
constitute a minority in number of such full committee.
Section 3.3. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and may
give any of them such further designations or alternate titles as it considers
desirable. Each such officer shall hold office until the first meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until
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his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. The Board may remove any officer with or without cause at any time.
Any such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election or appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be held by the same person. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers
of the Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board. The Board may require any officer, agent or employee
to give security for the faithful performance of his duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
certifying the number of shares owned by him in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance
of New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1. Indemnification of Directors and Officers;
Non-Derivative Actions. The Corporation shall indemnify any director or officer
of the Corporation, if such director or officer was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the director or officer involved did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.2. Indemnification of Directors and Officers; Derivative
Actions. The Corporation shall indemnify any director or officer of the
Corporation, if such director or officer was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
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the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit and any appeal therefrom if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery of Delaware or such other court shall deem proper.
Section 6.3. Indemnification To Be Made Unless Contrary
Determination. Any indemnification under Sections 6.1 and 6.2 of these by-laws
(unless otherwise ordered by a court) shall be made by the Corporation unless a
determination is made (i) by the Board of Directors by a majority vote of a
quorum (as defined in these by-laws) consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders, that indemnification of the director or officer involved is not
proper in the circumstances because such director or officer has not met the
applicable standard of conduct set forth in Sections 6.1 and 6.2 of these
by-laws.
Section 6.4. Indemnification of Directors for Breach of Fiduciary
Duties; Loyalty; Bad Faith. No director of this Corporation shall have personal
liability to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that this provision shall not
eliminate the liability of a director: (i) for breach of the director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) pursuant to Section 174 of the Delaware General Corporation Law; or
(iv) for any transaction from which the director derived an improper personal
benefit.
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Section 6.5. Advancement of Expenses. Expenses incurred in defending
a civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer or other individual
involved to repay such amount in the event that it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in these by-laws.
Section 6.6. Indemnification and Advancement of Expenses
Non-Exclusive. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of these by-laws shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer of the Corporation and shall inure to the benefit of the heirs,
executors and administrators of such a person. Notwithstanding the provisions of
these by-laws, the Corporation may indemnify any person referred to in Sections
6.1 and 6.2 of these by-laws to the full extent permitted under the laws of
Delaware and any other applicable laws, now or hereafter in effect. Any repeal
or modification of these by-laws or any repeal or modification of relevant
provisions of the Delaware General Corporation Law or any other applicable laws
shall not in any way diminish any rights to indemnification of any director or
officer or the obligations of the Corporation arising hereunder.
Section 6.7. Corporation's Power to Indemnify. The Corporation shall
have the power to indemnify any officer, employee or agent of the Corporation,
at such time and upon such terms as the Board of Directors of the Corporation
may deem appropriate.
Section 6.8. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the
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power to indemnify him against such liability under the provisions of these
by-laws.
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall
begin on January 1 and end on December 31.
Section 7.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these bylaws.
Section 7.4. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
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disinterested directors be less than a quorum; or (2) the material facts as to
his relationship or interest and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair as to the Corporation as of the time
it is authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 7.5. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.6. Amendment of By Laws. The Board of Directors of the
Corporation shall have the power to alter, amend or repeal these Bylaws.
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ARTICLES OF AMENDMENT TO ARTICLES OF
INCORPORATION OF CELLULAR ONE OF
SOUTHEAST ALABAMA, INC.
STATE OF ALABAMA,
HOUSTON COUNTY.
TO THE HONORABLE R. J. STEMBRIDGE, JUDGE OF PROBATE:
We, the undersigned Billy Joe Rutledge and James D. Farmer, as
President and Secretary, respectively, of Cellular One of Southeast Alabama,
Inc., a Corporation, hereby certify that all of the members of the Board of
Directors and all of the Shareholders of Cellular One of Southeast Alabama,
Inc., a Corporation, have unanimously consented and agreed that the name of the
Corporation be changed from Cellular One of Southeast Alabama, Inc., a
Corporation, to Dothan Cellular Telephone Company, Inc., a Corporation, and that
the Articles of Incorporation of Cellular One of Southeast Alabama, Inc., a
Corporation, be amended in accordance with these Articles of Amendment.
(1) That the name of the Corporation, prior to the filing of the
Articles of Amendment, was Cellular One of Southeast Alabama, Inc., a
Corporation.
(2) That the Articles of Incorporation of the Corporation be amended
so that the name of the Corporation be changed from Cellular One of Southeast
Alabama, Inc. to Dothan Cellular Telephone Company, Inc.
<PAGE>
(3) That the date of adoption of the Amendment by unanimous written
consent of the Shareholder was September 30, 1988.
(4) That the number of shares of common stock outstanding and
entitled to vote on said Amendment is two hundred (200) shares, and that a total
of two hundred (200) shares voted for said Amendment.
(5) That the undersigned Billy Joe Rutledge, as President, and James
D. Farmer, as Secretary, respectively, of the Corporation, were authorized to
execute these Articles of Amendment, under the Corporate Seal as provided by
law.
IN WITNESS WHEREOF, we, Billy Joe Rutledge and James D. Farmer, as
President and Secretary, respectively, of Cellular One of Southeast Alabama,
Inc., a Corporation, have signed the foregoing Articles of Amendment under the
Corporate Seal of the Corporation as of this the 30th day of September, 1988.
/s/ Laura L. Kirwan /s/ Billy Joe Rutledge
- ---------------------- ------------------------
Witness Billy Joe Rutledge
President
/s/ Laura L. Kirwan /s/ James D. Farmer
- ---------------------- ------------------------
Witness James D. Farmer
Secretary
<PAGE>
STATE OF ALABAMA,
HOUSTON COUNTY,
Before me, the undersigned authority in and for said County and
State, personally appeared James D. Farmer, who, being first duly sworn, deposes
and says that he is the Secretary of Cellular One of Southeast Alabama, Inc., a
Corporation, and that he has personal knowledge of the facts set forth in the
Articles of Amendment, and that the facts therein stated are true and correct.
/s/ James D. Farmer
-------------------------
James D. Farmer
Sworn to and subscribed before me, this 30th day of September, 1988.
/s/ Laura L. Kirwan
-------------------------
Notary Public
My Commission Expires 8-30-89
<PAGE>
OFFICE OF THE PROBATE JUDGE,
HOUSTON COUNTY, ALABAMA
CERTIFICATION OF AMENDMENT
OF
CELLULAR ONE OF SOUTHEAST ALABAMA, INC.
The undersigned, as Judge of Probate of Houston County, Alabama,
hereby certifies that Articles of Amendment to the Articles of Incorporation of
Cellular One of Southeast Alabama, Inc., duly signed and verified pursuant to
the provisions of the Alabama Business Corporation Act, have been received in
this Office and are found to conform to law; that the Articles of Amendment
change the name of the Corporation; and that the amended name is now reserved
with the Secretary of State, State of Alabama.
ACCORDINGLY the undersigned, as such Judge of Probate and by virtue
of the authority vested in him by law, hereby issues this Certificate of
Amendment to the Articles of Incorporation of Cellular One of Southeast Alabama,
Inc., and attaches hereto a certified copy of the Articles of Amendment.
Dated this 30th day of September, 1988.
/s/ R.J. Stembridge
-----------------------
JUDGE OF PROBATE
<PAGE>
STATE OF ALABAMA )
)
HOUSTON COUNTY )
ARTICLES OF INCORPORATION
OF
COSA II, INC.
The undersigned, acting as incorporator of a Corporation under the
Alabama Business Corporation Act, hereby adopts the following Articles of
Incorporation for such Corporation:
FIRST: The name of the Corporation is COSA II, Inc.
SECOND: The period of its duration is perpetual.
THIRD: The purpose or purposes for which the Corporation is
organized are:
(A) To participate in the development, management, and operation of
cellular telephone systems, and to transact any business related thereto.
(B) To buy, sell, own, trade, and otherwise handle and deal in,
either as principal or agent, and upon commission or otherwise, all kinds of
personal and real property whatsoever, and to render services of all kinds and
descriptions.
(C) To transact any and all lawful business for which corporations
may be incorporated under the Alabama Business Corporation Act.
This Instrument Prepared By:
James D. Farmer, Esq.
Farmer & Farmer, P.A.
112 West Troy Street
Dothan, AL 36303
(205) 794-8596
<PAGE>
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 3,000 shares. All of said stock shall be common
stock, par value $.O1 per share, and none shall be preferred stock or stock of a
different class.
FIFTH: Provisions for the regulation of the internal affairs of the
Corporation are:
(A) No shareholder of the Corporation shall have preemptive rights
to purchase any shares of any issuance of the Corporation.
(B) The Corporation shall have the right to purchase, take, receive,
or otherwise acquire, hold, own, pledge, and transfer or otherwise dispose of
its own shares, to the extent of its unreserved and unrestricted capital surplus
available therefor.
(C) The initial Bylaws of the Corporation shall be adopted by the
shareholders. The power to alter, amend, or repeal the Bylaws or adopt new
Bylaws shall be vested in the Board of Directors; provided, however, that the
Board of Directors may not alter, amend, or repeal any bylaw establishing what
constitutes a quorum at shareholders' meetings.
(D) Directors of the Corporation need not be shareholders of the
Corporation and need not be residents of the State of Alabama.
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(E) The Board of Directors may from time to time distribute to the
shareholders out of the capital surplus of the Corporation a portion of the
Corporations assets, in cash or property, in the manner prescribed by and
subject to the limitations imposed by the Alabama Business Corporation Act.
SIXTH: The address of the initial registered office of the
Corporation is 2312 Montgomery Highway, Suite 102, Dothan, Alabama 36303, and
the name of its initial registered agent at such address is Marcus D. Yeager.
SEVENTH: The number of directors constituting the initial board of
directors of the Corporation is three. The name and address of the persons who
are to serve as directors until the first annual meeting of shareholders or
until their successors are elected and shall qualify are:
NAME ADDRESS
Billy Joe Rutledge 2312 Montgomery Highway
Suite 102
Dothan, AL 36303
Tom Albert, Jr. 1470 Tyne Boulevard
Nashville, TN 37215
James D. Farmer 112 West Troy Street
Dothan, AL 36303
EIGHTH: The name and address of the incorporator are:
NAME ADDRESS
James D. Farmer 112 West Troy Street
Dothan, AL 36303
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<PAGE>
NINTH: The board of directors shall have the power to issue bonds,
debentures or other obligations convertible into common stock of the Corporation
upon such terms, in such manner and under such conditions as may be fixed by
resolution of the board prior to the issuance thereof. Unless and until such
bonds, debentures, or other obligations have been converted into common stock,
such bonds, debentures or other obligations shall not be deemed to be shares of
stock and shall not entitle the holders thereof to the power to vote in respect
to the corporate affairs and management of the Corporation or to the right of
inspection of the books, accounts and other records of the Corporation or to any
other rights which the stockholders of the Corporation have or may have by
reason of the provisions of these Articles of Incorporation or the Alabama
Business Corporation Act.
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Alabama may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of section l0-2A-196 of the Alabama Business Corporation Act or on
the application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of
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<PAGE>
section 10-2A-196 of the Alabama Business Corporation Act order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
Dated: June 7, 1988.
/s/ James D. Farmer
-----------------------
James D. Farmer
INCORPORATOR
<PAGE>
BYLAWS
OF
CELLULAR ONE OF SOUTHEAST ALABAMA, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. Each year during the first two weeks
of April an annual meeting of stockholders shall be held for the election of
directors at such date, time and place either within or without the State of
Delaware as may be designated by the Board of Directors from time to time. Any
other proper business may be transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may
be called at any time by the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record
<PAGE>
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these bylaws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these bylaws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
his absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to as many votes as shall equal the number of
shares of stock held by him which have voting power upon the matter in question.
The holders of fractional shares shall be entitled to exercise voting rights.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is
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<PAGE>
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. At all
meetings of stockholders for the election of directors, a plurality of the votes
cast shall be sufficient to elect. All other elections and questions shall,
unless otherwise provided by law or by the certificate of incorporation or these
bylaws, be decided by the vote of the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at the meeting, provided that (except as otherwise required by law or by
the certificate of incorporation) the Board of Directors may require a larger
vote upon any election or question.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the
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<PAGE>
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be kept on file at the
registered office of the Corporation and shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 1.11. Restrictions on Transfer of Shares. Each share of
stock of the Corporation has been issued without registration under the
Securities Act of 1933 or under the securities laws of any state, and may not be
transferred or sold unless registered by the Corporation pursuant to such Act
and any applicable state securities laws or unless the Corporation first
receives an opinion of counsel, reasonably acceptable to it, that exemptions
from such registration are available. The certificates for the shares of Stock
of the Corporation shall bear a restrictive legend setting forth these
restrictions on transfer and sale.
Section 1.12. Redemption of Shares. Any shares of the Common Stock
of the Corporation may be redeemed at the option of the corporation to the
extent necessary to prevent the loss of any permit or license issued by the
Federal Communications Commission to the Corporation for the conduct of its
business, or to reinstate such permit or license. The terms and conditions of
any such redemption shall be payment by the Corporation in cash of the appraised
fair market value of said shares as determined by a disinterested appraiser
appointed by agreement of the Corporation and the registered holder(s) of the
shares which are subject to redemption, unless otherwise agreed.
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<PAGE>
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors, except as
may be otherwise provided by law or in the certificate of incorporation. The
number of directors which shall constitute the whole board shall be as
determined from time to time by the Board of Directors. The initial Board shall
consist of one director.
Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until the annual meeting of
stockholders next succeeding his election and until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Unless otherwise provided
in the certificate of incorporation or these bylaws, vacancies and newly created
directorships resulting from any increase in the authorized number of directors
or from any other cause may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so
determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the certificate of incorporation or these bylaws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this bylaw shall constitute presence in person at such
meeting.
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<PAGE>
Section 2.6. Quorum; Vote Required for Action. At all meetings of
the Board of Directors a majority of the entire Board shall constitute a quorum
for the transaction of business. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board unless
the certificate of incorporation or these bylaws shall require a vote of a
greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9. Personal Liability of Directors. No director shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty by such director as a director. Notwithstanding
the foregoing sentence, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment.
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<PAGE>
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who nay replace any absent or disqualified member at any meeting of the
committee.
Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and may
give any of them such further designations or alternate titles as it considers
desirable. Each such officer shall hold office until the first meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. The Board may remove any
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<PAGE>
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation, but the election or appointment of an officer shall not of itself
create contractual rights. Any number of offices may be held by the same person.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise may be filled for the unexpired portion of the term by the
Board at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers
of the Corporation shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board. The Board may require any officer, agent or employee
to give security for the faithful performance of his duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
certifying the number of shares owned by him in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance
of New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it
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<PAGE>
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1. Indemnification of Directors and Officers;
Non-Derivative Actions. The Corporation shall indemnify any director or officer
of the Corporation, if such director or officer was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the director or officer involved did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.2. Indemnification of Directors and Officers; Derivative
Actions. The Corporation shall indemnify any director or officer of the
Corporation, if such director or officer was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or
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<PAGE>
suit and any appeal therefrom if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of Delaware
or such other court shall deem proper.
Section 6.3. Indemnification To Be Made Unless Contrary
Determination. Any indemnification under Sections 6.1 and 6.2 of these by-laws
(unless otherwise ordered by a court) shall be made by the Corporation unless a
determination is made (i) by the Board of Directors by a majority vote of a
quorum (as defined in these by-laws) consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders, that indemnification of the director or officer involved is not
proper in the circumstances because such director or officer has not met the
applicable standard of conduct set forth in Sections 6.1 and 6.2 of these
by-laws.
Section 6.4. Indemnification of Directors for Breach of Fiduciary
Duties; Loyalty; Bad Faith. No director of this Corporation shall have personal
liability to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that this provision shall not
eliminate the liability of a director: (i) for breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) pursuant to Section 174 of the Delaware General Corporation Law; or
(iv) for any transaction from which the director derived an improper personal
benefit.
Section 6.5. Advancement of Expenses. Expenses incurred in defending
a civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer or other individual
involved to repay such amount in the event that it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in these by-laws.
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<PAGE>
Section 6.6. Indemnification and Advancement of Expenses
Non-Exclusive. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of these by-laws shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer of the Corporation and shall inure to the benefit of the heirs,
executors and administrators of such a person. Notwithstanding the provisions of
these by-laws, the Corporation may indemnify any person referred to in Sections
6.1 and 6.2 of these by-laws to the full extent permitted under the laws of
Delaware and any other applicable laws, now or hereafter in effect. Any repeal
or modification of these by-laws or any repeal or modification of relevant
provisions of the Delaware General Corporation Law or any other applicable laws
shall not in any way diminish any rights to indemnification of any director or
officer or the obligations of the Corporation arising hereunder.
Section 6.7. Corporation's Power to Indemnify. The Corporation shall
have the power to indemnify any officer, employee or agent of the Corporation,
at such time and upon such other terms as the Board of Directors of the
Corporation may deem appropriate, to the full extent permitted under the laws of
Delaware and any other applicable laws, now or hereafter in effect.
Section 6.8. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of these by-laws.
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall
begin on January 1 and end on December 31.
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<PAGE>
Section 7.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these bylaws.
Section 7.4. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
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<PAGE>
Section 7.5. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.6. Amendment of ByLaws. The Board of Directors of the
Corporation shall have the power to alter, amend or repeal these Bylaws.
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<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
PALMER WIRELESS HOLDINGS, INC.
Palmer Wireless Holdings, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), the original
Certificate of Incorporation of which was filed with the Secretary of State of
the State of Delaware on January 28, 1994, HEREBY CERTIFIES that this Restated
Certificate of Incorporation restating, integrating and amending its Certificate
of Incorporation was duly adopted by its Board of Directors and stockholders in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware (the "Delaware General Corporation Law").
1. NAME
The name of this corporation is PALMER WIRELESS HOLDINGS, INC. (the
"Corporation").
2. REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be located at 1013
Centre Road, Wilmington, Delaware 19805 in the County of New Castle. The
registered agent of the Corporation at such address shall be Corporation Service
Company.
3. PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law. The Corporation shall have all power necessary or helpful to
engage in such acts and activities.
4. CAPITAL STOCK
4.1. Authorized Shares
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is one thousand (1,000). All one
thousand (1,000) shares shall be Common Stock having a par value of $.01 per
share ("Common Stock").
<PAGE>
4.2. Common Stock
4.2.1. Relative Rights
Each share of Common Stock shall have the same relative rights as
and be identical in all respects to all the other shares of Common Stock.
4.2.2. Dividends
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of shares of any class of stock having preference over
the Common Stock as to the payment of dividends, the full amount of dividends
and of sinking fund or retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then dividends may be
paid on the Common Stock and on any class or series of stock entitled to
participate therewith as to dividends, out of any assets legally available for
the payment of dividends thereon, but only when and as declared by the Board of
Directors of the Corporation.
4.2.3. Dissolution, Liquidation, Winding Up
In the event of any dissolution, liquidation, or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
shall become entitled to participate in the distribution of any assets of the
Corporation remaining after the Corporation shall have paid, or set aside for
payment, to the holders of any class of stock having preference over the Common
Stock in the event of dissolution, liquidation or winding up the full
preferential amounts (if any) to which they are entitled.
4.2.4 Voting Rights
Each holder of shares of Common Stock shall be entitled to attend
all special and annual meetings of the stockholders of the Corporation and,
share for share, to cast one vote for each outstanding share of Common Stock so
held upon any matter or thing (including, without limitation, the election of
one or more directors) properly considered and acted upon by the stockholders.
5. BOARD OF DIRECTORS
5.1. Classification
Except as otherwise provided in this Certificate of Incorporation,
the number of directors of the Corporation shall be as fixed from time to time
by or pursuant to the Bylaws of the Corporation. The directors shall be
classified, with respect to the time for which they severally hold office, into
three classes, Class I,
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<PAGE>
Class II and Class III, which shall be as nearly equal in number as possible,
and shall be adjusted from time to time in the manner specified in the Bylaws of
the Corporation to maintain such proportionality. Each initial director in Class
I shall hold office for a term expiring at the 1997 annual meeting of
stockholders, each initial director in Class II shall hold office for a term
expiring at the 1996 annual meeting of stockholders, and each initial director
in Class III shall hold office for a term expiring at the 1995 annual meeting of
stockholders. Notwithstanding the foregoing provisions of this Section 5.1, each
director shall serve until such director's successor is duly elected and
qualified or until such director's earlier death, resignation or removal. At
each annual meeting of stockholders, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election and until their successors have been duly elected and
qualified or until any such director's earlier death, resignation or removal.
5.2. Election
Unless and except to the extent that the bylaws of the Corporation
shall otherwise require, the election of the directors of the Corporation need
not be by written ballot.
5.3. Change of Authorized Number
In the event of any increase or decrease in the authorized number of
directors, the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to maintain such classes as nearly equal as
possible. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
5.4. Limitation of Liability
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the Corporation or its stockholders; (b) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (c) for
the types of liability set forth in Section 174 of the Delaware General
Corporation Law; or (d) for any transaction from which the director received any
improper personal benefit. Any repeal or modification of this Section 5.4 by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
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<PAGE>
6. INDEMNIFICATION
To the extent permitted by law, the Corporation shall fully
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that
such person is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
To the extent permitted by law, the Corporation may fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
The Corporation shall advance expenses (including attorneys' fees)
incurred by a director or officer in advance of the final disposition of such
action, suit or proceeding upon the receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that such director or officer is not entitled to indemnification. The
Corporation may advance expenses (including attorneys' fees) incurred by an
employee or agent in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
7. AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors is expressly authorized
and empowered to adopt, amend and repeal the Bylaws of the Corporation, subject
to the right of the stockholders entitled to vote with respect thereto to amend
or repeal Bylaws adopted by the Board of Directors as provided for in this
Certificate of Incorporation or in the Bylaws of the Corporation.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
of Incorporation to be signed by its President and attested by its Assistant
Secretary this 19 day of April, 1995.
PALMER WIRELESS, INC
By: /s/ William J. Ryan
-----------------------------
William J. Ryan
President and Chief Eecutive
Officer
Attest:
By: /s/ K. Patrick Meehan
--------------------------------
K. Patrick Meehan
Vice-President - General Counsel
and Assistant Secretary
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<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:00 PM 01/28/1994
944009129 - 2373985
CERTIFICATE OF INCORPORATION
OF
PALMER WIRELESS HOLDINGS, INC.
1. NAME
The name of this corporation is PALMER WIRELESS HOLDINGS, INC. (the
"Corporation").
2. REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be located at 1013
Centre Road, Wilmington, Delaware 19805 in the County of New Castle. The
registered agent of the Corporation at such address shall be Corporation Service
Company.
3. PURPOSE AND POWERS
3.1. Purposes
The sole purpose for which the Corporation is organized is to engage
in "cellular telephone and mobile communications services businesses," including
the conduct of all activities necessary or incidental thereto (collectively
"Permitted Business"). The Corporation may not own a subsidiary which is engaged
in a business other than a Permitted Business.
For purposes of this Certificate of Incorporation, "cellular
telephone and mobile communications services businesses" are defined as
communications services where either the terminal from which the communications
originated or on which the communications are received, or both, are mobile
radio communications devices (including, in each case, mobile communications
devices that are being used in a fixed mode). These include, but are not limited
to, cellular telephone service, cellular telephone equipment sales and related
services, specialized mobile radio service, specialized mobile radio and
equipment sales and related services, paging and mobile voice/data service,
paging and mobile voice/data equipment sales and related services, personal
communications services, personal communications services equipment sales and
related services, local area personal communications networks; and all
activities reasonably necessary or incidental thereto.
At any time, the holders of a majority of the outstanding voting
stock of the Company may, by written notification to the Corporation, authorize
the
<PAGE>
Corporation to engage in any lawful business, whether or not a Permitted
Business, on such terms and subject to such conditions and limitations as shall
be set forth in such notification.
The limitations on the businesses in which the Corporation may
engage shall lapse and, thereafter the Corporation shall be entitled to engage
in any lawful business for which corporations may be organized under the
Delaware General Corporation Law, if and when the aggregate voting power of all
outstanding shares of capital stock of the Corporation, and each other
corporation holding 20% or more of the total voting power of all outstanding
shares of capital stock of the Corporation, held directly or indirectly by
Palmer Communications Incorporated (or any successor thereto) shall be less
than 20% of the total voting power of all outstanding shares of capital stock
of the Corporation irrespective of class.
3.2. Certain Opportunities
Notwithstanding any provision of the law of any jurisdiction in
which the Corporation is incorporated, qualified to do business, or otherwise
subject to process, neither the Corporation nor any stockholder of the
Corporation shall have any claim or cause of action against Palmer
Communications Incorporated ("PCI") or any successor thereto, direct or indirect
subsidiary thereof, or any officer, director, controlling person, or affiliate
of any of the foregoing (each an "Interested Person"), for any breach or alleged
breach of a fiduciary duty or loyalty or fair dealing arising out of a claim
that an opportunity, transaction, agreement, or other arrangement (each an
"Opportunity") to which PCI (or a successor), or any person (other than the
Corporation) in which PCI has or acquires a direct or indirect financial
interest, is or shall become a party, constitutes the property or a corporate
opportunity of the Corporation or any direct or indirect subsidiary of the
Corporation unless (i) such Opportunity relates primarily to the business in
which the Corporation is authorized to engage by Section 3.1, and (ii) the Board
of Directors of the Corporation does not by Affirmative Action (as defined
below) determine not to claim on behalf of the Corporation rights under or to
such Opportunity. For purposes of this Section 3.2, "primarily" means, with
respect to any entity, that 80% or more of its revenues or assets are derived
from or dedicated to businesses in which the Corporation is permitted to engage.
If the number of directors of the Corporation who are not affliates of PCI (or a
successor) or of an Interested Person ("Disinterested Directors") constitutes a
majority of the total number of directors of the Corporation, then authorized
Affirmative Action shall mean vote or consent by a majority of the Disinterested
Directors. If the number of Disinterested Directors constitutes less than a
majority of the total number of directors of the Corporation, then Affirmative
Action shall mean the vote or consent of all the Disinterested Directors. In
either case, such Affirmative Action must be taken not later than sixty (60)
days after the Opportunity is presented to the Board of Directors of the
Corporation for consideration.
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<PAGE>
If an Opportunity would be subject to the provisions of the prior
paragraph except that such Opportunity does not relate primarily to the
businesses in which the Corporation is authorized to engage by Section 3.1, and
if PCI (or a successor), or a person in which PCI has or acquires a direct or
indirect financial interest, offers to the Corporation the right to participate
in such Opportunity to the extent permitted by this Certificate of
Incorporation, all determinations as to whether the Corporation will so
participate and the terms of such participation shall be made only by the
Affirmative Action of the Board of Directors of the Corporation.
Nothing in this Section 3.2 of this Section shall create or be
deemed to create any claim or cause of action for breach of a fiduciary duty by
any director of the Corporation where none would exist but for the provisions
thereof.
4. CAPITAL STOCK
4.1. Authorized Shares
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is one thousand (1,000). All one
thousand (1,000) shares shall be Common Stock having a par value of $.0l per
share ("Common Stock").
4.2. Common Stock
4.2.1. Relative Rights
Each share of Common Stock shall have the same relative rights as
and be identical in all respects to all the other shares of Common Stock.
4.2.2.Dividends
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of shares of any class of stock having preference over
the Common Stock as to the payment of dividends, the full amount of dividends
and of sinking fund or retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then dividends may be
paid on the Common Stock and on any class or series of stock entitled to
participate therewith as to dividends, out of any assets legally available for
the payment of dividends thereon, but only when and as declared by the Board of
Directors of the Corporation.
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<PAGE>
4.2.3. Dissolution, Liquidation, Winding Up
In the event of any dissolution, liquidation, or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
shall become entitled to participate in the distribution of any assets of the
Corporation remaining after the Corporation shall have paid, or set aside for
payment, to the holders of any class of stock having preference over the Common
Stock in the event of dissolution, liquidation or winding up the full
preferential amounts (if any) to which they are entitled.
4.2.4.Voting Rights
Each holder of shares of Common Stock shall be entitled to attend
all special and annual meetings of the stockholders of the Corporation and,
share for share, to cast one vote for each outstanding share of Common Stock so
held upon any matter or thing (including, without limitation, the election of
one or more directors) properly considered and acted upon by the stockholders.
5. INCORPORATOR; INITIAL DIRECTORS
5.1. Incorporator
The name and mailing address of the incorporator (the
"Incorporator") are Hogan & Hartson, 555 Thirteenth Street, N.W., Washington,
D.C. 20004-1109. The powers of the Incorporator shall terminate upon the filing
of this Certificate of Incorporation.
5.2. Initial Directors
The following persons, having the following mailing addresses, shall
serve as the directors of the Corporation until their successors are elected and
qualified:
NAME MAILING ADDRESS
CLASS I
Vickie A. Palmer 3535 East Kimberly Road
Davenport, Iowa 52807
Thomas P. McCloskey 730 East Durant, Suite 202
Aspen, Colorado 81611
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<PAGE>
NAME MAILING ADDRESS
CLASS II
Kermit S. Sutton 400 5th Avenue South
Suite 301
Naples, Florida 33940
William J. Ryan 12800 University Drive
Suite 500
Fort Myers, Florida 33907
CLASS III
Robert G. Engelhardt 12800 University Drive
Suite 500
Fort Myers, Florida 33907
6. BOARD OF DIRECTORS
6.1. Classification
Except as otherwise provided in this Certificate of Incorporation,
the number of directors of the Corporation shall be as fixed from time to time
by or pursuant to the Bylaws of the Corporation. The directors shall be
classified, with respect to the time for which they severally hold office, into
three classes, Class I, Class II and Class III, which shall be as nearly equal
in number as possible, and shall be adjusted from tune to time in the manner
specified in the Bylaws of the Corporation to maintain such proportionality.
Each initial director in Class I shall hold office for a term expiring at the
1997 annual meeting of stockholders, each initial director in Class II shall
hold office for a term expiring at the 1996 annual meeting of stockholders, and
each initial director in Class III shall hold office for a term expiring at the
1995 annual meeting of stockholders. Notwithstanding the foregoing provisions of
this Section 6.1, each director shall serve until such director's successor is
duly elected and qualified or until such director's earlier death, resignation
or removal. At each annual meeting of stockholders, the successors to the class
of directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election and until their successors have been duly
elected and qualified or until any such director's earlier death, resignation or
removal.
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<PAGE>
6.2.Election
Unless and except to the extent that the bylaws of the Corporation
shall otherwise require, the election of the directors of the Corporation need
not be by written ballot.
6.3. Change of Authorized Number
In the event of any increase or decrease in the authorized number of
directors, the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to maintain such classes as nearly equal as
possible. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
6.4. Limitation of Liability
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the Corporation or its stockholders; (b) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (c) for
the types of liability set forth in Section 174 of the Delaware General
Corporation Law; or (d) for any transaction from which the director received any
improper personal benefit. Any repeal or modification of this Section 6.4 by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
7. INDEMNIFICATION
To the extent permitted by law, the Corporation shall fully
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that
such person is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
To the extent permitted by law, the Corporation may fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was an
-6-
<PAGE>
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as an employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding.
The Corporation shall advance expenses (including attorneys' fees)
incurred by a director or officer in advance of the final disposition of such
action, suit or proceeding upon the receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that such director or officer is not entitled to indemnification. The
Corporation may advance expenses (including attorneys' fees) incurred by an
employee or agent in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
8. AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors is expressly authorized
and empowered to adopt, amend and repeal the Bylaws of the Corporation, subject
to the right of the stockholders entitled to vote with respect thereto to amend
or repeal Bylaws adopted by the Board of Directors as provided for in this
Certificate of Incorporation or in the Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned, being the Incorporator hereinabove
named, for the purpose of forming a corporation pursuant to the Delaware General
Corporation Law, hereby certifies that the facts hereinabove stated are truly
set forth, and accordingly executes this Certificate of Incorporation this 27th
day of January, 1994.
HOGAN & HARTSON
Incorporator
By: /s/ David Martin
-----------------------------
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<PAGE>
BYLAWS
OF
PALMER WIRELESS HOLDINGS, INC.
1. OFFICES
1.1. Registered Office
The initial registered office of the Corporation shall be in
Wilmington, Delaware, and the initial registered agent in charge thereof shall
be Corporation Service Company.
1.2. Other Offices
The Corporation may also have offices at such other places, both
within and without the State of Delaware, as the Board of Directors may from
time to time determine or as may be necessary or useful in connection with the
business of the Corporation.
2. MEETINGS OF STOCKHOLDERS
2.1. Place of Meetings
All meetings of the stockholders shall be held at such place as may
be fixed from time to time by the Board of Directors, the Chief Executive
Officer or the President.
2.2. Annual Meetings
The Corporation shall hold annual meetings of stockholders, on the
first Tuesday in May at 9 a.m. or at such other date and time as shall be
designated from time to time by the Board of Directors, the Chairman of the
Board or the Chief Executive Officer, at which stockholders shall elect a Board
of Directors and transact such other business as may properly be brought before
the meeting.
2.3. Special Meetings
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Board of Directors,
the Chairman of the Board or the Chief Executive Officer.
<PAGE>
2.4. Notice of Meetings
Notice of any meeting of stockholders, stating the place, date and
hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the meeting (except to the
extent that such notice is waived or is not required as provided in the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law"). Such notice shall be given in accordance with, and shall be deemed
effective as set forth in, Section 222 (or any successor section) of the
Delaware General Corporation Law.
2.5. Waivers of Notice
Whenever the giving of any notice is required by statute, the
Certificate of Incorporation or these Bylaws, a waiver thereof, in writing and
delivered to the Corporation, signed by the person or persons entitled to said
notice, whether before or after the event as to which such notice is required,
shall be deemed equivalent to notice. Attendance of a stockholder at a meeting
shall constitute a waiver of notice (a) of such meeting, except when the
stockholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (b) of consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the matter
when that matter is first presented for consideration.
2.6. Business at Special Meetings
Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice (except to the extent that such
notice is waived or is not required as provided in the Delaware General
Corporation Law or these Bylaws).
2.7. List of Stockholders
After the record date for a meeting of stockholders has been fixed,
at least 10 days before such meeting, the officer who has charge of the stock
ledger of the Corporation shall make a list of all stockholders entitled to vote
at the meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place in the city where the meeting is
to be held, which place is to be specified in the notice of the meeting, or at
the place where the meeting is to be held. Such list shall also, for the
duration of the meeting, be produced and kept
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open to the examination of any stockholder who is present at the time and place
of the meeting.
2.8. Quorum at Meetings
Stockholders may take action on a matter at a meeting only if a
quorum exists with respect to that matter. Except as otherwise provided by
statute or by the Certificate of Incorporation, the holders of a majority of the
stock issued and outstanding and entitled to vote at the meeting, and who are
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business. Once a share is
represented for any purpose at a meeting (other than solely to object (a) to
holding the meeting or transacting business at the meeting, or (b) to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice), it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for the adjourned meeting.
The holders of a majority of the voting shares represented at a meeting, whether
or not a quorum is present, may adjourn such meeting from time to time. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed.
2.9. Voting and Proxies
Unless otherwise provided in the Delaware General Corporation Law or
in the Corporation's Certificate of Incorporation, and subject to the other
provisions of these Bylaws, each stockholder shall be entitled to one vote on
each matter, in person or by proxy, for each share of the Corporation's capital
stock that has voting power and that is held by such stockholder. No proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed appointment of proxy shall be
irrevocable if the appointment form states that it is irrevocable and if, and
only as long as, it is coupled with an interest sufficient in law to support an
irrevocable power.
2.10. Required Vote
If a quorum exists, action on a matter (other than the election of
directors) is approved if the votes cast favoring the action exceed the votes
cast opposing the action, unless the Certificate of Incorporation or the
Delaware General Corporation Law requires a greater number of affirmative votes
(in which case such different requirement shall apply). Directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in the
election (provided a quorum exists), and the election of directors need not be
by written ballot. The Board of Directors,
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in its discretion, may require that any votes cast at such meeting shall be cast
by written ballot.
2.11. Action Without a Meeting
Any action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting if the action is taken by persons who
would be entitled to vote at a meeting and who hold shares having voting power
to cast not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all stockholders entitled to
vote were present and voted. The action must be evidenced by one or more written
consents describing the action taken, signed by the stockholders entitled to
take action without a meeting, and delivered to the Corporation for inclusion in
the minute book. No consent shall be effective to take the corporate action
specified unless the number of consents required to take such action are
delivered to the Corporation within sixty days of the delivery of the
earliest-dated consent. All stockholders entitled to vote on the record date of
such written consent who do not participate in taking the action shall be given
written notice thereof in accordance with the Delaware General Corporation Law.
3. DIRECTORS
3.1. Powers
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, which may exercise all such
powers of the Corporation and do all such lawful acts and things, subject to any
limitation set forth in the Certificate of Incorporation, these Bylaws, or
agreements among stockholders which are otherwise lawful.
3.2. Number and Election
The number of directors which shall constitute the whole board shall
not be fewer than three nor more than 11. Within the limits above specified, the
number of directors shall be determined by resolution of the Board of Directors.
3.3. Vacancies
Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a concurring
vote of a majority of the directors then in office, whether or not a quorum, and
any director so chosen shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such
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director's successor shall have been elected and qualified or until such
director's earlier resignation or removal.
3.4. Classes; Terms of Office
Unless otherwise provided in the Certificate of Incorporation, the
Board of Directors shall divide the directors into three classes; and, when the
number of directors is changed, shall determine the class or classes to which
the increased or decreased number of directors shall be apportioned; provided,
however, that no decrease in the number of directors shall affect the term of
any director then in office. At each annual meeting of stockholders, directors
elected to succeed those whose terms are expiring shall be elected for a term of
office expiring at the annual meeting of stockholders held in the third year
following their election and until their respective successors are elected and
qualified, or until such director's earlier death, resignation or removal.
3.5. Nomination of Directors.
The Board of Directors shall nominate candidates to stand for election as
directors; and other candidates also may be nominated by any Corporation
stockholder, provided such other nomination(s) are submitted in writing to the
Secretary of the Corporation no later than 90 days prior to the meeting of
stockholders at which such directors are to be elected, together with the
identity of the nominor and the number of shares of the Corporation's stock
owned, directly or indirectly, by the nominor. The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 3.4.
hereof, and each director elected shall hold office until such director's
successor is elected and qualified or until the director's earlier resignation
or removal. Directors need not be stockholders.
3.6. Meetings.
(a) Regular Meetings.
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
(b) Special Meetings.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the Chief Executive Officer on one day's notice to each
director, either personally or by telephone, express delivery service (so that
the scheduled delivery date of the notice is at least one day in advance of the
meeting), telegram or facsimile transmission, and on five days' notice by mail
(effective upon deposit of
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such notice in the mail). The notice need not describe the purpose of a special
meeting.
(c) Telephone Meetings.
Members of the Board of Directors may participate in a meeting of
the Board of Directors by means of conference telephone or similar
communications equipment by means of which all participating directors can
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
(d) Action Without Meeting.
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all members of the Board of
Directors consent thereto in writing, and the writing or writings are delivered
to the Corporation for inclusion in the Minute Book of the Corporation.
(e) Waiver of Notice of Meeting; Presumption of Assent.
A director may waive any notice required by statute, the Certificate
of Incorporation or these Bylaws before or after the date and time stated in the
notice. Except as set forth below, the waiver must be in writing, signed by the
director entitled to the notice, and delivered to the Corporation for inclusion
in the Minute Book of the Corporation. Notwithstanding the foregoing, a
director's attendance at or participation in a meeting waives any required
notice to the director of the meeting unless the director at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting. A director who is present at a meeting is presumed to have assented to
any action taken unless such director enters a dissent or abstention in the
minutes of the meeting or files a written dissent to such action no later than
five days after such director receives a copy of the minutes of the meeting,
provided that the right to dissent shall not apply to a director who votes in
favor of such action.
(f) Quorum and Vote at Meetings.
At all meetings of the Board of Directors, a quorum of the Board of
Directors consists of a majority of the total number of directors prescribed
pursuant to Section 3.2 hereof (or, if no number is prescribed, the number in
office immediately before the meeting begins). The vote of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of
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Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation or by these Bylaws. In the absence of a quorum for
any meeting of the Board of Directors, a majority of the directors present
thereat may adjourn such meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
3.7. Committees of Directors
The Board of Directors may by resolution create one or more
committees and appoint members of the Board of Directors to serve on the
committees at the pleasure of the Board of Directors. To the extent specified in
a resolution adopted by the Board of Directors, each committee may exercise the
full authority of the Board of Directors, except as limited by Section 141 (or
any successor section) of the Delaware General Corporation Law. All provisions
of the Delaware General Corporation Law and these Bylaws relating to meetings,
action without meetings, notice (and waiver thereof), and quorum and voting
requirements of the Board of Directors apply, as well, to such committees and
their members.
3.8. Compensation of Directors
The Board of Directors shall have the authority to fix the
compensation of directors. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
4. OFFICERS
4.1. Positions
The officers of the Corporation shall be a Chief Executive Officer,
a President, a Secretary and a Treasurer, and such other officers as the Board
of Directors (or an officer authorized by the Board of Directors) from time to
time may appoint, including one or more Executive Vice Presidents, Vice
Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer
shall exercise such powers and perform such duties as shall be set forth below
and such other powers and duties as from time to time may be specified by the
Board of Directors or by any officer(s) authorized by the Board of Directors to
prescribe the duties of such other officers. Any number of offices may be held
by the same person, except that in no event shall the President and the
Secretary be the same person.
4.2. Powers.
(a) Each officer shall have, in addition to the duties and powers
set forth herein, such duties and powers as are commonly incident to such
officer's office and
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such additional duties and powers as the Board of Directors may from time to
time authorize.
(b) Powers of attorney, proxies, waivers of notice of meetings,
consents and other instruments relating to securities or partnership interests
owned by the Corporation may be executed in the name of and on behalf of the
Corporation by the Chief Executive Officer or the President and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities, or at any meeting of any partnership in which the Corporation owns
an interest, and at any such meeting shall possess and may exercise any and all
rights and powers incident to the ownership of such securities or partnership
interest and which, as the owner thereof, the Corporation might have possessed
and exercised, if present.
4.3. Chief Executive Officer.
The Chief Executive Officer of the Corporation shall have overall
responsibility and authority for management of the operations of the
Corporation, subject to the authority of the Board of Directors. Unless
otherwise specified by the Board of Directors, the Chief Executive Officer shall
ensure that all orders and resolutions of the Board of Directors and
stockholders are carried into effect. The Chief Executive Officer may execute
bonds, mortgages and other contracts, under the seal of the Corporation, if
required, except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
Corporation, provided that the Chief Executive Officer may sign or execute any
document or instrument where the signing and execution thereof shall be
expressly delegated to the "President" of the Corporation.
4.4. President.
The President shall have such duties and powers as shall be set
forth in these Bylaws or as shall be designated from time to time by the Board
of Directors or by the Chief Executive Officer. The President may execute bonds,
mortgages and other contracts, under the seal of the Corporation, if required,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation.
4.5. Vice President.
Any Vice President shall have such duties and powers as shall be set
forth in these Bylaws or as shall be designated from time to time by the Board
of
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Directors, the Chief Executive Officer or the President. In the absence of the
President or in the event of the President's inability or refusal to act, the
Vice President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the President. Any Vice President may execute bonds,
mortgages and other documents under the seal of the Corporation, except where
required or permitted by law to be otherwise executed and except where the
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
4.6. Secretary.
The Secretary shall have responsibility for preparation of minutes
of meetings of the Board of Directors and of the stockholders and for
authenticating records of the Corporation. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors. The Secretary or an Assistant Secretary also may attest all
instruments signed by any other officer of the Corporation.
4.7. Treasurer.
The Treasurer shall have responsibility for the custody of the
corporate funds and securities and shall see to it that full and accurate
accounts of receipts and disbursements are kept in books belonging to the
Corporation. The Treasurer shall render to the Chief Executive Officer, the
President, the Vice President, and the Board of Directors, upon request, an
account of all financial transactions and of the financial condition of the
Corporation.
4.8. Term of Office
The officers of the Corporation shall hold office until their
successors are chosen and qualify or until their earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. Any
officer elected or appointed by the Board of Directors may be removed at any
time, with or without cause, by the affirmative vote of a majority of the Board
of Directors.
4.9. Compensation
The compensation of officers of the Corporation shall be fixed by
the Board of Directors or by any officer(s) authorized by the Board of Directors
to prescribe the compensation of such other officers.
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4.10. Fidelity Bonds
The Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise.
5. CAPITAL STOCK
5.1. Certificates of Stock; Uncertificated Shares
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors may provide by resolution that some or all
of any or all classes or series of the Corporation's stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates, and upon request every holder
of uncertificated shares, shall be entitled to have a certificate (representing
the number of shares registered in certificate form) signed in the name of the
Corporation by the Chief Executive Officer, the President or any Vice President,
and by the Treasurer, Secretary or any Assistant Treasurer or Assistant
Secretary of the Corporation. Any or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar whose signature
or facsimile signature appears on a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
5.2. Lost Certificates
The Board of Directors, Chief Executive Officer, President or
Secretary may direct a new certificate of stock to be issued in place of any
certificate theretofore issued by the Corporation and alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming that the certificate of stock has been lost, stolen or destroyed. When
authorizing such issuance of a new certificate, the Board of Directors or any
such officer may, as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to advertise the same in such manner as the Board
of Directors or such officer shall require and/or to give the Corporation a
bond, in such sum as the Board of Directors or such officer may direct, as
indemnity against any claim that may be made against the Corporation on account
of the certificate alleged to have been lost, stolen or destroyed or on account
of the issuance of such new certificate or uncertificated shares.
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5.3. Record Date
(a) Actions by Stockholders
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders (or to take any
other action), the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors and shall not be less than 10 nor more than 60
days before the meeting or action requiring a determination of stockholders.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors.
A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting, unless the Board of Directors fixes a new record date.
If no record date is fixed by the Board of Directors, the record
date shall be at the close of business on the day next preceding the day on
which notice is given, or if notice is not required or is waived, at the close
of business on the day next preceding the day on which the meeting is held or
such other action is taken, except that (if no record date is established by the
Board of Directors) the record date for determining stockholders entitled to
consent to corporate action without a meeting is the first date on which a
stockholder delivers a signed written consent to the Corporation for inclusion
in the Minute Book of the Corporation.
(b) Payments
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than 60 days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the
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close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
(c) Stockholders of Record
The Corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
to receive notifications, to vote as such owner, and to exercise all the rights
and powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise may be provided by the Delaware General Corporation Law.
6. INSURANCE
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
(or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) against liability
asserted against or incurred by such person in such capacity or arising from
such person's status as such (whether or not the Corporation would have the
power to indemnify such person against the same liability).
7. GENERAL PROVISIONS
7.1. Inspection of Books and Records
Any stockholder, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorizes the attorney or other agent to
so act on behalf of the stockholder. The demand under oath shall be directed to
the Corporation at its registered office or at its principal place of business.
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7.2. Dividends
The Board of Directors may declare dividends upon the capital stock
of the Corporation, subject to the provisions of the Certificate of
Incorporation and the laws of the State of Delaware.
7.3. Reserves
The Board of Directors may set apart, out of the funds of the
Corporation available for dividends, a reserve or reserves for any proper
purpose and may abolish any such reserve.
7.4. Execution of Instruments
All checks, drafts or other orders for the payment of money, and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
7.5. Fiscal Year
The fiscal year of the Corporation shall begin on January 1 and end
on December 31.
7.6. Seal
The corporate seal shall be in such form as the Board of Directors
shall approve. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
8. AMENDMENTS TO BYLAWS.
The Board of Directors may from time to time adopt, amend and repeal
these Bylaws. Such action by the Board of Directors shall require the
affirmative vote of at least a majority of the directors then in office.
* * * * *
The foregoing Bylaws were adopted by the Board of Directors on
January 28, 1994.
/s/ [ILLEGIBLE]
------------------------------
Secretary
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 09/10/1997
971302449 - 2794867
CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS II, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is "Price Communications Wireless
II, Inc."
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware 19805-1297. The name of its registered
agent at that address is Corporation Service Company, located in New Castle
County.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1,000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Arlene S. Hong, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss. 291 of Title 8 of the Delaware Code or on the application of
trustees In dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss. 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
EIGHTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
NINTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
September, 1997.
/s/ Arlene S. Hong
----------------------
Arlene S. Hong
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS II, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
<PAGE>
when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings; Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be
called by the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive
vice president, if the Board so determines), a secretary and a treasurer. Any
two or more offices may be held by the same person. The board may require any
officer, agent or employee to give security for the faithful performance of
his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS III, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
III, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter G. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
---------------------------
Peter G. Samuels
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS III, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1 .8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS IV, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
IV, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter 0. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
-------------------------
Peter G. Samuels
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS IV, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings: Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number. Qualification. Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings: Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS V, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
V, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter G. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
--------------------------
Peter G. Samuels
Sole Incorporator
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BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS V, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the
vote of the majority of the directors present at the time of the vote, if
there is a quorum, unless otherwise provided by law or these by-laws. In the
absence of a quorum, a majority of the directors present may adjourn any
meeting from time to time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS VI, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
VII, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter 0. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
-------------------------
Peter G. Samuels
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS VI, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings: Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
<PAGE>
when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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<PAGE>
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number. Qualification. Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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<PAGE>
2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings: Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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<PAGE>
2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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<PAGE>
2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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<PAGE>
reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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<PAGE>
its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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<PAGE>
by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS VII, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
IV, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter 0. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
-------------------------
Peter G. Samuels
Sole Incorporator
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BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS VII, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings: Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number. Qualification. Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings: Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS VIII, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
VIII, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter G. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
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the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
-------------------------
Peter G. Samuels
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS VIII, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice; Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS IX, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:
FIRST: The name of the corporation is Price Communications Wireless
IX, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 1000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the incorporator are as
follows:
Peter 0. Samuels
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which
<PAGE>
the said application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the corporation.
SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
NINTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
TENTH: The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
September, 1997.
/s/ Peter G. Samuels
-------------------------
Peter G. Samuels
Sole Incorporator
<PAGE>
BY-LAWS
OF
PRICE COMMUNICATIONS WIRELESS IX, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Tuesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
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when required under section 1.5 below or by law. Each notice of a meeting shall
be given, personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of
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stockholders, except as otherwise provided by law or by section 1.8. Directors
shall be elected in the manner provided in section 2.1. Voting need not be by
ballot, unless requested by a majority of the stockholders entitled to vote at
the meeting or ordered by the chairman of the meeting. Each stockholder entitled
to vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from its date,
unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting. Prompt notice of the taking of
any such action shall be given to those stockholders who did not consent in
writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of 3 directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
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2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
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2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
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2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be
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reported to the Board at its next meeting. Each committee shall adopt rules of
procedure and shall meet as provided by those rules or by resolutions of the
Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by
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<PAGE>
its terms, shall not be necessary to make it effective. Any officer elected or
appointed by the Board or appointed by an executive officer or by a committee
may be removed by the Board either with or without cause, and in the case of an
officer appointed by an executive officer or by a committee, by the officer or
committee that appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall
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<PAGE>
have such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president(10) or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose
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<PAGE>
of any other action. The record date may not be more than 60 or fewer than 10
days before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these
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<PAGE>
by-laws shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The corporation may, by action
of its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel
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<PAGE>
or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he has met that standard of conduct, nor an actual
determination by the corporation (including its Board, its independent counsel
or its stockholders) that the claimant has not met that standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
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<PAGE>
6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders.
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================================================================================
PRICE COMMUNICATIONS WIRELESS, INC.,
as Issuer,
THE GUARANTORS
party hereto from time to time,
and
BANK OF MONTREAL TRUST COMPANY,
--------------------
as Trustee
INDENTURE
--------------------
Dated as of June 16, 1998
$1,000,000,000
9-1/8% Senior Secured Notes due 2006
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Act Indenture
Section Section
------- -------
310(a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5)................................................... 7.10
(b)...................................................... 7.10
(c)...................................................... N.A.
311(a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312(a)...................................................... 2.05
(b)...................................................... 13.03
(c)...................................................... 13.03
313(a)...................................................... 7.06
(b)...................................................... 7.06
(c)...................................................... 7.06
(d)...................................................... 7.06
314(a)(1)................................................... 4.09
(a)(2)................................................... N.A.
(a)(3)................................................... 4.09
(a)(4)................................................... 4.08
(b)...................................................... 10.03
(c)(1)................................................... 13.04
(c)(2)................................................... 13.04
(c)(3)................................................... N.A.
(d)...................................................... 10.06
(e)...................................................... 13.05
(f)...................................................... N.A.
315(a)...................................................... 7.01
(b)...................................................... 7.05
(c)...................................................... 7.01
(d)...................................................... 7.01
(e)...................................................... 6.13
316(a)(1)(A)................................................ 6.11
(a)(1)(B)................................................ 6.12
(a)(2)................................................... N.A.
(b)...................................................... 6.08
(c)...................................................... N.A.
317(a)(1)................................................... 6.03
(a)(2)................................................... 6.04
(b)...................................................... 2.04
318(a)...................................................... 13.01
(b)...................................................... N.A.
(c)...................................................... N.A.
- ----------
N.A. means "Not Applicable"
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions................................................1
SECTION 1.02. Incorporation by Reference of the Trust Indenture
Act.....................................................25
SECTION 1.03. Rules of Construction.....................................25
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating...........................................26
SECTION 2.02. Execution and Authentication..............................26
SECTION 2.03. Registrar and Paying Agent................................28
SECTION 2.04. Paying Agent to Hold Assets in Trust......................28
SECTION 2.05. Securityholder Lists......................................29
SECTION 2.06. Transfer and Exchange.....................................29
SECTION 2.07. Replacement Securities....................................36
SECTION 2.08. Outstanding Securities....................................36
SECTION 2.09. Treasury Securities.......................................37
SECTION 2.10. Temporary Securities......................................37
SECTION 2.11. Cancellation..............................................37
SECTION 2.12. Defaulted Interest........................................37
ARTICLE 3
REDEMPTION
SECTION 3.01. Optional Redemption.......................................39
SECTION 3.02. Notices to Trustee........................................40
SECTION 3.03. Selection of Securities to Be Redeemed....................40
SECTION 3.04. Notice of Redemption......................................40
SECTION 3.05. Effect of Notice of Redemption............................41
SECTION 3.06. Deposit of Redemption Price...............................42
SECTION 3.07. Securities Redeemed in Part...............................42
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ARTICLE 4
COVENANTS
SECTION 4.01. Limitation on Sale and Leaseback Transactions.............43
SECTION 4.02. Payment of Securities.....................................43
SECTION 4.03. Maintenance of Office or Agency...........................43
SECTION 4.04. Limitation on Restricted Payments.........................44
SECTION 4.05. Corporate Existence.......................................45
SECTION 4.06. Payment of Taxes and Other Claims.........................46
SECTION 4.07. Maintenance of Properties and Insurance...................46
SECTION 4.08. Compliance Certificate; Notice of Default.................47
SECTION 4.09. Reports; Rule 144A Information Requirement................47
SECTION 4.10. Limitation on Status as Investment Company................48
SECTION 4.11. Limitation on Transactions with Related Persons...........48
SECTION 4.12. Limitation on Incurrence of Additional
Indebtedness............................................49
SECTION 4.13. Limitations on Restricting Subsidiary Dividends...........51
SECTION 4.14. Limitations on Liens; Impairment of Security
Interest................................................52
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary
Stock...................................................53
SECTION 4.16. Waiver of Stay, Extension or Usury Laws...................59
SECTION 4.17. [Reserved]................................................59
SECTION 4.18. Limitation on Lines of Business...........................60
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary
Stock...................................................60
SECTION 4.20. Limitation on Guarantees..................................60
SECTION 4.21. Minimum Coverage Ratio....................................60
SECTION 4.22. Separate Account..........................................61
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation...............62
SECTION 5.02. Successor Corporation Substituted.........................63
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.........................................63
SECTION 6.02. Acceleration of Maturity Date; Rescission and
Annulment...............................................65
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SECTION 6.03. Collection of Indebtedness and Suits for
Enforcement by Trustee..................................66
SECTION 6.04. Trustee May File Proofs of Claim..........................67
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities..............................................68
SECTION 6.06. Priorities................................................68
SECTION 6.07. Limitation on Suits.......................................69
SECTION 6.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest.........................69
SECTION 6.09. Rights and Remedies Cumulative............................70
SECTION 6.10. Delay or Omission Not Waiver..............................70
SECTION 6.11. Control by Holders........................................70
SECTION 6.12. Waiver of Past Default....................................70
SECTION 6.13. Undertaking for Costs.....................................71
SECTION 6.14. Restoration of Rights and Remedies........................71
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.........................................72
SECTION 7.02. Rights of Trustee.........................................73
SECTION 7.03. Individual Rights of Trustee..............................74
SECTION 7.04. Trustee's Disclaimer......................................74
SECTION 7.05. Notice of Default.........................................75
SECTION 7.06. Reports by Trustee to Holders.............................75
SECTION 7.07. Compensation and Indemnity................................75
SECTION 7.08. Replacement of Trustee....................................76
SECTION 7.09. Successor Trustee by Merger, Etc..........................77
SECTION 7.10. Eligibility; Disqualification.............................78
SECTION 7.11. Preferential Collection of Claims Against Company.........78
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..............................................78
SECTION 8.02. Legal Defeasance and Discharge............................78
SECTION 8.03. Covenant Defeasance.......................................79
SECTION 8.04. Conditions to Legal or Covenant Defeasance................79
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SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions..........................81
SECTION 8.06. Repayment to the Company..................................81
SECTION 8.07. Reinstatement.............................................81
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders........82
SECTION 9.02. Amendments, Supplemental Indentures and Waivers
with Consent of Holders.................................82
SECTION 9.03. Compliance with TIA.......................................84
SECTION 9.04. Revocation and Effect of Consents.........................84
SECTION 9.05. Notation on or Exchange of Securities.....................85
SECTION 9.06. Trustee to Sign Amendments, Etc...........................85
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. Security..................................................86
SECTION 10.02. Security Documents........................................86
SECTION 10.03. Recording and Opinions....................................86
SECTION 10.04. Reserved..................................................87
SECTION 10.05. Release of Collateral.....................................87
SECTION 10.06. Certificates of the Company...............................88
SECTION 10.07. Authorization of Actions To Be Taken by the
Trustee Under the Security Documents....................88
SECTION 10.08. Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents..........................88
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder
upon a Change of Control................................89
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ARTICLE 12
GUARANTEE OF SECURITIES
SECTION 12.01. Guarantee.................................................91
SECTION 12.02. Execution and Delivery of Guarantee.......................93
SECTION 12.03. Guarantee Unconditional, Etc..............................93
SECTION 12.04. Limitation of Guarantor's Liability.......................94
SECTION 12.05. Contribution..............................................95
SECTION 12.06. Release...................................................95
SECTION 12.07. Additional Guarantors.....................................95
SECTION 12.08. Successors and Assigns....................................95
SECTION 12.09. Waiver of Stay, Extension or Usury Laws...................96
SECTION 12.10. No Personal Liability of Partners, Stockholders,
Officers, Directors.....................................96
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls..............................................96
SECTION 13.02. Notices...................................................96
SECTION 13.03. Communications by Holders with Other Holders..............97
SECTION 13.04. Certificate and Opinion as to Conditions Precedent........97
SECTION 13.05. Statements Required in Certificate or Opinion.............98
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.................98
SECTION 13.07. Legal Holidays............................................98
SECTION 13.08. Governing Law.............................................98
SECTION 13.09. No Adverse Interpretation of Other Agreements.............99
SECTION 13.10. No Recourse Against Others................................99
SECTION 13.11. Successors................................................99
SECTION 13.12. Duplicate Originals.......................................99
SECTION 13.13. Severability..............................................99
SECTION 13.14. Table of Contents, Headings, Etc.........................100
SECTION 13.15. Qualification of Indenture...............................100
SECTION 13.16. Registration Rights......................................100
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<PAGE>
Exhibit A Form of Security
Exhibit B Form of Guarantee
Exhibit C Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
Exhibit D Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit E Form of Security Agreement
Exhibit F Form of Intercreditor Agreement
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<PAGE>
INDENTURE, dated as of June 16, 1998 between Price Communications
Wireless, Inc., a Delaware corporation (the "Company"), the Guarantors party
hereto from time to time, and Bank of Montreal Trust Company, a New York banking
corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
9-1/8% Series A Senior Secured Notes due 2006 and the 9-1/8% Series B Senior
Secured Notes due 2006 which may be exchanged for the 9-1/8% Series A Senior
Secured Notes due 2006:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceptance Amount" shall have the meaning specified in Section
4.15.
"Accumulated Amount" shall have the meaning specified in Section
4.15.
"Acquired Person" shall have the meaning specified in the definition
of "Permitted Investment."
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such specified Person or (ii) any
officer, director, or controlling stockholder of such other Person. For purposes
of this definition, the term "control" means (a) the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, or without limiting the foregoing, the beneficial ownership of 10%
or more of the voting power of the voting common equity of such Person (on a
fully diluted basis) or of warrants or other rights to acquire such equity
(whether or not presently exercisable).
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Annualized Operating Cash Flow" on any date means, with respect to
any Person, the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction
Date") means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated
<PAGE>
-2-
Indebtedness of such Person and its Subsidiaries on the Transaction Date (after
giving pro forma effect to the Incurrence of any Indebtedness on such
Transaction Date) divided by (ii) the aggregate amount of Annualized Operating
Cash Flow of such Person (determined on a pro forma basis after giving effect to
all acquisitions or dispositions of businesses made by such Person and its
Subsidiaries from the beginning of the Reference Period through the Transaction
Date as if such acquisition or disposition had occurred at the beginning of such
Reference Period); provided that for purposes of such computation, in
calculating Annualized Operating Cash Flow and consolidated Indebtedness, (a)
the transaction giving rise to the need to calculate the Annualized Operating
Cash Flow Ratio will be assumed to have occurred (on a pro forma basis) on the
first day of the Reference Period; (b) the Incurrence of any Indebtedness during
the Reference Period or subsequent thereto and on or prior to the Transaction
Date (and the application of the proceeds therefrom to the extent used to retire
Indebtedness or to acquire businesses) will be assumed to have occurred (on a
pro forma basis) on the first day of such Reference Period; (c) Consolidated
Interest Expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the Transaction Date had been the applicable rate for the entire
period; (d) all members of the consolidated group of such Person on the
Transaction Date that were acquired during the Reference Period or thereafter
and on or prior to the Transaction Date shall be deemed to be members of the
consolidated group of such Person for the entire Reference Period; and (e)
consolidated Indebtedness shall include any Indebtedness constituting Permitted
Parent Securities to the extent that the aggregate outstanding amount thereof
exceeds $153.4 million; provided, however, that with respect to any such
Indebtedness, the amount thereof included pursuant to this clause (e) as of any
date shall be limited to the proportion of such Indebtedness, if any, that is
equal to the proportion of the interest on such Indebtedness that as of the most
recent interest payment date in respect thereof was paid with cash distributed
by the Company pursuant to clause (ii) of the second paragraph of Section 4.04.
When the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at June 15, 2002 (such redemption price being
described in Section 3.01), plus (2) all remaining required interest payments
(excluding accrued but unpaid interest) due on such Security through June 15,
2002, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, over (B) the then outstanding principal amount of such Security.
"Asset Sale" shall have the meaning specified in Section 4.15.
<PAGE>
-3-
"Asset Sale Offer" shall have the meaning specified in Section 4.15.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.15.
"Asset Sale Offer Period" shall have the meaning specified in
Section 4.15.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.15.
"Asset Sale Purchase Date" shall have the meaning specified in
Section 4.15.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, as of the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Leaseback Transaction (including any period for
which such lease has been extended).
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock
of such Person and shares, interests, participations or other ownership
interests (however designated) of any Person and any rights (other than debt
securities convertible into capital stock), warrants and options to purchase any
of the foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
<PAGE>
-4-
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit to the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing within one year after the date of acquisition and
(iii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) and (ii) above.
"Cellular System" shall have the meaning specified in Section 4.21.
"Change of Control" means (i) other than any transaction in which
the resulting transferee Person need not assume the Securities as provided in
the proviso to clause (i)(b) of Section 5.01, any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of the Company or Parent, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction, any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than an Excluded Person or Excluded Group, is or becomes the
"beneficial owner" (as such term is used in Rule 13d-3 promulgated pursuant to
the Exchange Act), directly or indirectly, of more than 50% of the equity of the
transferee, (ii) any person or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 50% of the equity of the Company or Parent
then outstanding normally entitled to vote in elections of directors, or (iii)
during any period of 12 consecutive months after the Issue Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of the Company or Parent (together with any new directors whose election by such
Board or whose nomination for election by the shareholders of the Company or
Parent was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute at least a majority of the Board of Directors of the
Company or Parent then in office.
"Change of Control Offer" shall have the meaning specified in
Section 11.01.
<PAGE>
-5-
"Change of Control Offer Period" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Date" shall have the meaning specified
in Section 11.01.
"Change of Control Purchase Price" shall have the meaning specified
in Section 11.01.
"Change of Control Put Date" shall have the meaning specified in
Section 11.01.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute.
"Collateral" shall have the meaning specified in the Security
Agreement.
"Collateral Account" means an account maintained with the Trustee or
with any financial institution into which cash collateral and Eligible
Investments securing the Securities are deposited pursuant to the terms of the
Security Agreement.
"Collateral Pool" shall have the meaning specified in Section 4.21.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means such
successor.
"Company Systems" shall have the meaning specified in Section 4.15.
"Computation Period" shall have the meaning specified in Section
4.04.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (i) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to the Capitalized Lease Obligations) of such
Person and its consolidated Subsidiaries during such period, including (a)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (b) the interest portion of all deferred payment obligations, and
(c) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period, and (ii) the amount of dividends accrued or payable by such Person or
any of its consolidated Subsidiaries in respect of Preferred Stock (other than
by Restricted Subsidiaries of such Person to such Person or such
<PAGE>
-6-
Person's Wholly Owned Subsidiaries). For purposes of this definition, (x)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by the Company to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP and (y)
interest expense attributable to any Indebtedness represented by the guaranty by
such Person or a Subsidiary of such Person of an obligation of another Person
shall be deemed to be the interest expense attributable to the Indebtedness
guaranteed. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss)
and without duplication) (i) all extraordinary gains and losses and gains and
losses that are nonrecurring (including as a result of Asset Sales outside the
ordinary course of business), (ii) the net income, if positive, of any Person
that is not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (a) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (b) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, (iii), except as provided in the
definition of "Annualized Operating Cash Flow Ratio" above, the net income (or
loss) of any Subsidiary acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (iv) the net income, if
positive, of any Subsidiary of such Person (other than a Non-Recourse Restricted
Subsidiary) to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms of
its charter or any agreement or instrument applicable to such Subsidiary. When
the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which address as of the date hereof is 88 Pine Street, 19th Floor,
New York, New York 10005.
"Covenant Defeasance" shall have the meaning specified in Section
8.03.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
<PAGE>
-7-
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
2.12.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 3 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Capital Stock" means, with respect to any Person,
Capital Stock of such Person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be redeemed
or repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity; provided, however, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"DLJ Pop Book" means The Wireless Communications Industry survey
published by Donaldson, Lufkin & Jenrette Securities Corporation.
"DTC" shall have the meaning specified in Section 2.03.
"Eligible Investments" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or by any agency
thereof, in either case maturing not more than one year from the date of
acquisition thereof by such Person; (b) time deposits, certificates of deposit
or bankers' acceptances (including eurodollar deposits) issued by any bank or
trust company organized under the laws of the United States of America or any
state thereof and having capital, surplus and undivided profits of at least $500
million and a deposit rating of investment grade; (c) commercial paper rated A-1
or better by S&P or P-1 or better by Moody's maturing not more than 180 days
from the date of acquisition thereof by such Person; (d) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above; (e) securities with maturities of
six months or
<PAGE>
-8-
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or A by
Moody's; or (f) money market mutual funds that invest primarily in the foregoing
items.
"Equity Offering" means with respect to any Person, the sale or
offering of any Capital Stock of such Person that is not Disqualified Capital
Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, from time to time, and the rules and regulations promulgated by the SEC
thereunder, and any successor statute.
"Exchange Capital Stock" shall have the meaning specified in Section
4.15.
"Exchange Securities" means 9-1/8% Series B Senior Secured Notes due
2006 to be issued pursuant to this Indenture in connection with the offer to
exchange Exchange Securities for the Initial Securities or for additional 9-1/8%
Series A Secured Notes due 2006 issued pursuant to this Indenture that may be
made by the Company pursuant to the Registration Rights Agreement or otherwise.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided, however, that the voting power of the Capital Stock of the Company or
Parent "beneficially owned" (as such term is used in Rule 13d-3 promulgated
under the Exchange Act) by such Excluded Persons (without attribution to such
Excluded Persons of the ownership by other members of the "group") represents a
majority of the voting power of the Capital Stock "beneficially owned" (as such
term is used in Rule 13d-3 promulgated under the Exchange Act) by such group.
"Excluded Person" means Robert Price, Parent (so long as not
controlled by anyone other than Robert Price) and any Affiliate of any of the
foregoing that is wholly owned by any of the foregoing
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"Final Put Date" shall have the meaning specified in Section 4.15.
<PAGE>
-9-
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board ("FASB") or, if FASB
ceases to exist, any successor thereto; provided, however, that for purposes of
determining compliance with covenants in this Indenture, "GAAP" means such
generally accepted accounting principles as in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as Exhibit A.
"Guarantee" shall have the meaning specified in Section 12.01.
"Guarantors" means each Restricted Subsidiary of the Company (other
than a Non-Recourse Restricted Subsidiary) that has executed and delivered the
Indenture or a supplement thereto to become a Guarantor, and "Guarantor" means
any of them.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"Holdings" means Price Communications Cellular Holdings, Inc., a
Delaware corporation, and its successors and assigns.
"Incur" shall have the meaning specified in Section 4.12.
"Indebtedness" of any Person means, without duplication, (i) all
liabilities and obligations, contingent or otherwise, of such Person, (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, notes, debentures or similar instruments, (c) representing the balance
deferred and unpaid of the purchase price of any property or services, except
(other than accounts payable or other obligations to trade creditors which have
remained unpaid for more than 90 days past their original due date or to
financial institutions, which obligations are not being contested in good faith
and for which appropriate reserves have not been established) those Incurred in
the ordinary course of its business that would constitute ordinarily a trade
payable to trade creditors, (d) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (e) for the payment of money relating
to a Capitalized Lease Obligation, or (f) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(ii) all obligations of such Person under Interest Swap and Hedging Obligations;
(iii) all liabilities of others of
<PAGE>
-10-
the kind described in the preceding clauses (i) or (ii) that such Person has
guaranteed or that is otherwise its legal liability or which are secured by any
assets or property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock; (iv) all Disqualified Capital Stock of such Person
and all Preferred Stock of such Person's Subsidiaries; and (v) any and all
deferrals, renewals, extensions, refinancing and refundings (whether direct or
indirect) of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (i), (ii), (iii), or (iv) or
this clause (v), whether or not between or among the same parties; provided that
the outstanding principal amount at any date of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such date.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Initial Purchasers" means NatWest Capital Markets Limited,
Donaldson, Lufkin & Jenrette Securities Corporation, Nesbitt Burns Securities
Inc., and Wasserstein Perella Securities, Inc.
"Initial Securities" means the $525.0 million of 9-1/8% Series A
Senior Secured Notes due 2006 issued pursuant to this Indenture.
"Intercreditor Agreement" means an intercreditor agreement
substantially in the form of Exhibit F hereto.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligations" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of this Indenture, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligations shall be the net amount so determined, plus
any premium due upon default by such Person.
<PAGE>
-11-
"Investment" by any Person in any other Person means (without
duplication) (i) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such other Person or any agreement to
make any such acquisition; (ii) the making by such Person of any deposit with,
or advance, loan or other extension of credit to, such other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (iii) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (iv) the
making of any capital contribution by such Person to such other Person; and (v)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of Section 4.04, (x) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (y) the amount of any
Investment shall be the fair market value of such Investment plus the fair
market value of all additional Investments by the Company or any of its
Restricted Subsidiaries at the time any such Investment is made; provided,
however that, for purposes of this sentence, the fair market value of net assets
in excess of $5,000,000 shall be as determined by an independent appraiser of
national reputation.
"Issue Date" means the time and date of the first issuance of the
Securities under this Indenture.
"Junior Indebtedness" means Indebtedness of the Company that (i)
requires no payment of principal prior to or on the date on which all principal
of and interest on the Securities is paid in full and (ii) is subordinate and
junior in right of payment to the Securities in all respects.
"Legal Defeasance" shall have the meaning specified in Section 8.02.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"Lien" means any mortgage, lien, pledge, charge, security interest,
or other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease
<PAGE>
-12-
deemed to constitute a security interest and any option or other agreement to
give any security interest).
"Maturity Date" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer, Proceeds Purchase
Offer or Asset Sale Offer).
"Minimum Accumulation Date" shall have the meaning specified in
Section 4.21.
"Minimum Collateral Value" shall have the meaning specified in
Section 4.21.
"Moody's" means Moody's Investors Service, Inc.
"MSA" shall have the meaning specified in the definition of "Pops".
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents of
(A) any note or installment receivable at any time, or (B) any other property as
and when any cash and Cash Equivalents are received in respect of any property
received in an Asset Sale but only to the extent such cash and Cash Equivalents
are received within one year after such Asset Sale), less the sum of (i) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by the Board of Directors of the Company) of income, franchise, sales and other
applicable taxes required to be paid by the Company or any Restricted Subsidiary
of the Company in connection with such Asset Sale and (ii) the aggregate amount
of cash so received which is used to retire any existing Senior Indebtedness of
the Company or Indebtedness of its Restricted Subsidiaries, as the case may be,
which is required to be repaid in connection with such Asset Sale or is secured
by a Lien on the property or assets of the Company or any of its Restricted
Subsidiaries, as the case may be; provided, however, that the provisions of this
clause (ii) shall not permit any non-pro rata application of the proceeds of any
Asset Sale to Permitted Pari Passu Secured Indebtedness to the disadvantage of
the Securities.
"Net Pops" of any Person with respect to any Cellular System means
the Pops of the MSA or RSA served by such Cellular System multiplied by the
direct and/or indirect percentage interest of such Person in the entity licensed
or designated to receive an
<PAGE>
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authorization by the Federal Communications Commission to construct or operate a
Cellular System in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business, in an amount reasonably determined by
the Board of Directors of the Company for amounts less than or equal to
$5,000,000 and by a financial advisor or appraiser of national reputation for
greater amounts) received by a Person from any Equity Offering (other than to a
Subsidiary of such Person) after payment of out-of-pocket expenses, commissions
and discounts incurred in connection therewith.
"Non-Recourse Restricted Subsidiary" shall have the meaning
specified in the definition of "Permitted Acquisition Indebtedness".
"Obligation" means any principal, premium, interest (including
interest accruing subsequent to a bankruptcy or other similar proceeding whether
or not such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"Offering Memorandum" means that certain Offering Memorandum of the
Company, dated June 9, 1998 relating to the original issuance and sale of the
Initial Securities to the Initial Purchasers.
"Officer" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company or any
Parent, a certificate signed by two Officers or by an Officer and an Assistant
Secretary of the Company or such Parent, respectively, and otherwise complying
with the requirements of Sections 13.04 and 13.05.
"Operating Cash Flow" of any Person means (i) with respect to any
period, the Consolidated Net Income of such Person for such period, plus (ii)
the sum, without duplication (and only to the extent such amounts are deducted
from net revenues in determining such Consolidated Net Income), of (a) the
provisions for income taxes for such period for such Person and its consolidated
Subsidiaries, (b) depreciation, amortization and other non-cash charges of such
Person and its consolidated Subsidiaries and (c) Consolidated Interest Expense
of such Person for such period, determined, in each case, on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP,
less
<PAGE>
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(iii) the amount of all cash payments made during such period by such Person and
its Subsidiaries to the extent such payments relate to non-cash charges that
were added back in determining Operating Cash Flow for such period or for any
prior period. When the foregoing definition is used in connection with the
Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the Company
and its Restricted Subsidiaries.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 13.04 and 13.05.
"Parent" means PCC or any direct or indirect Wholly Owned Subsidiary
of PCC that directly or indirectly wholly owns the Company.
"Parent Indenture" means the indenture dated as of August 7, 1997,
by and between Holdings and Bank of Montreal Trust Company, as trustee, under
which the Parent Notes were issued.
"Parent Notes" means the 13-1/2% Senior Secured Discount Notes due
2007 of Holdings.
"Paying Agent" shall have the meaning specified in Section 2.03.
"PCC" means Price Communications Corporation, a New York
corporation, and its successors and assigns.
"Permitted Acquisition Indebtedness" means, with respect to any
Person, Indebtedness Incurred in connection with the acquisition of property,
businesses or assets which, or Capital Stock of a Person all or substantially
all of whose assets, are of a type generally used in a Related Business;
provided, however, that, in the case of the Company or its Restricted
Subsidiaries, as applicable, (x) (i) the Company's Annualized Operating Cash
Flow Ratio, after giving effect to such acquisition and such Incurrence on a pro
forma basis, is no greater than such ratio prior to giving pro forma effect to
such acquisition and such Incurrence; (ii) the Company's consolidated
Indebtedness, divided by the Net Pops of the Company and its Restricted
Subsidiaries, in each case giving pro forma effect to the acquisition and such
Incurrence, does not exceed $175; and (iii) after giving effect to such
acquisition and such Incurrence the acquired property, businesses or assets or
such Capital Stock is owned directly by the Company or a Wholly Owned Restricted
Subsidiary of the Company or (y) (i) under the terms of such Indebtedness and
pursuant to applicable law, no recourse could be had for the payment of
principal, interest or premium with respect to such Indebtedness or for any
claim based thereon against the Company or any Restricted
<PAGE>
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Subsidiary of the Company other than the obligor of such Indebtedness and its
Subsidiaries or any of their property or assets other than the Capital Stock of
such obligor or its Subsidiaries, (ii) the obligor of such Indebtedness shall
have, immediately after giving effect to such acquisition and such Incurrence on
a pro forma basis, a ratio of Annualized Operating Cash Flow as of the date of
such acquisition and Incurrence to the product of Consolidated Interest Expense
for the Reference Period multiplied by four (but excluding from Consolidated
Interest Expense all amounts that are not required to be paid in cash on a
current basis) of at least 1.0 to 1, (iii) since the Issue Date no Permitted
Investment (other than as permitted by clause (viii) of the definition of
"Permitted Investment" below) shall have been made in such obligor or its
Subsidiaries and (iv) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by the Company (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary".
"Permitted Investment" means (i) Investments in Cash Equivalents;
(ii) Investments in the Company or a Restricted Subsidiary (other than a
Non-Recourse Restricted Subsidiary); (iii) Investments in a Person substantially
all of whose assets are of a type generally used in a Related Business (an
"Acquired Person") if, as a result of such Investments, (a) the Acquired Person
immediately thereupon becomes a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (b) the Acquired Person immediately thereupon either
(1) is merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
Section 4.15; (vi) any guarantee issued by a Restricted Subsidiary Incurred in
compliance with this Indenture; (vii) advances and prepayments for asset
purchases in the ordinary course of business in a Related Business of the
Company or a Restricted Subsidiary; (viii) Investments in Non-Recourse
Restricted Subsidiaries with the proceeds of contributions irrevocably and
unconditionally received without restriction by the Company from any Parent; and
(ix) customary loans or advances made in the ordinary course of business to
officers, directors or employees of the Company or any of its Restricted
Subsidiaries for travel, entertainment, and moving and other relocation
expenses.
<PAGE>
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"Permitted Lien" means (a) Liens existing on the Issue Date; (b)
Liens imposed by governmental authorities for taxes, assessments or other
charges not yet subject to penalty or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business;
provided, however, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under this Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not Incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary or is merged with or into the Company or
a Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (k)
Liens arising from Purchase Money Indebtedness permitted under this Indenture;
(l) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders than the terms of the Liens securing such refinanced Indebtedness; (m)
Liens in favor of the Company or a Wholly Owned Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary); (n) Liens securing any Permitted
Pari Passu Secured Indebtedness Incurred in accordance with the provisions of
Section 4.12; provided, however, that (A) the aggregate principal amount of the
Secured Indebtedness as of the date of issuance of such series of Permitted Pari
Passu Secured Indebtedness on a pro forma basis is less than or equal to the
Minimum Collateral Value, (B) the indenture and the related documents for each
such series of Permitted Pari Passu Secured Indebtedness contain provisions with
respect to releases of Collateral that are substantially similar to and no more
re-
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strictive on the Company than the provisions of this Indenture and the Security
Agreement and (C) the trustee for the holders of each series of Permitted Pari
Passu Secured Indebtedness executes and delivers a joinder supplement to the
Intercreditor Agreement; and (o) Liens on assets other than the Collateral
securing Indebtedness (other than Junior Indebtedness) permitted to be incurred
under Section 4.12.
"Permitted Parent Securities" means (i) the Parent Notes, (ii) any
refinancing of the Parent Notes that has a first scheduled cash interest payment
due and payable no earlier than the due date of the first scheduled cash
interest payment of the Indebtedness being refinanced as of the Issue Date and
(iii) any other Indebtedness of Holdings or Parent Incurred after the Issue
Date; provided, however, that (a) the gross proceeds of such Indebtedness do not
exceed $100 million in the aggregate, (b) such Indebtedness has a first
scheduled cash interest payment due and payable no earlier that the due date of
the first scheduled cash interest payment of the Indebtedness described in
clauses (i) or (ii) above and (c) the net proceeds of such Indebtedness are
contributed to the Company or its Restricted Subsidiaries and applied in a
manner permitted by this Indenture. For purposes of this definition, the term
"first scheduled cash interest payment" shall not include any payment date on
which the Issuer (i) may elect to pay interest in cash or (ii) is required to
pay interest in cash as a result of such election.
"Permitted Pari Passu Secured Indebtedness" means Indebtedness of
the Company or any Guarantor Incurred by the issuance of notes, which may (but
need not) be issued under this Indenture (subject to the limitations therein) as
one or more series of additional Securities and/or the related Guarantees;
provided, however, that such Indebtedness shall not mature or have any mandatory
redemption or required prepayment dates (other than a mandatory offer to
repurchase upon the occurrence of a change of control or asset sale) prior to
the final stated maturity date of the Securities and may be fixed rate or
floating rate obligations. The Permitted Pari Passu Secured Indebtedness will
constitute senior Indebtedness of the Company or any Guarantor pari passu with
the Securities and the related Guarantees. The Permitted Pari Passu Secured
Indebtedness may be secured by a first priority Lien on the Collateral pari
passu with the Lien for the benefit of the Holders if (i) the Secured
Indebtedness as of the date of issuance of such series of Permitted Pari Passu
Secured Indebtedness on a pro forma basis is less than or equal to the Minimum
Collateral Value, (ii) the indenture and the related documents for each such
series of Permitted Pari Passu Secured Indebtedness contains provisions with
respect to releases of Collateral that are substantially similar to and no more
restrictive on the Company than the provisions of this Indenture and the
Security Agreement and (iii) the trustee for the holders of each series of
Permitted Pari Passu Secured Indebtedness executes and delivers a joinder
supplement to the Intercreditor Agreement.
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"Person" means any corporation, individual, joint stock company,
joint venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pops" means, as of any date of determination, the greater of the
estimate of the population of a Metropolitan Statistical Area ("MSA") or Rural
Service Area ("RSA") derived from (i) the most recent Donnelly Market Service
and (ii) the most recent DLJ Pop Book; provided, however, that (x) if such
statistics are no longer printed in either the Donnelly Market Service or the
DLJ Pop Book, or either such source is no longer published, the then currently
published source of the two containing such information shall be used; (y) if
such statistics are no longer printed in either such source, or both sources are
no longer published, the statistics in the most recent Rand McNally Commercial
Atlas shall be used; and (z) if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, another nationally recognized source of such information shall be
used.
"Preferred Stock" means Capital Stock, other than common stock of an
issuer having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, applicable premium, if any, on such
Indebtedness.
"property" means any right or interest in or to property or assets
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" means that certain Purchase Agreement dated
June 8, 1998 by and among the Company, the Guarantors as of the Issue Date and
the Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Purchase Money Indebtedness" means Indebtedness of the Company or
its Restricted Subsidiaries Incurred in connection with the purchase of property
or assets for the business of the Company or its Restricted Subsidiaries,
provided that the recourse of the lenders with respect to such Indebtedness is
limited solely to the property or assets so purchased without further recourse
to either the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that
is not Disqualified Capital Stock.
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"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article 3 of this
Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Article 3
of this Indenture and Paragraph 5 in the form of Security, which shall include,
without duplication, in each case, any accrued and unpaid interest to the
Redemption Date.
"Reference Period" with regard to any Person means the last full
fiscal quarter of such Person for which financial information (which the Company
shall use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Securities or this
Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing") any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably Incurred in connection with such
refinancing; provided, however that (A) Refinancing Indebtedness issued by any
Restricted Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders than was the Indebtedness or
Disqualified Capital Stock to be refinanced and
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(C) such Refinancing Indebtedness shall have no installments of principal (or
redemption payment) scheduled to come due earlier than the scheduled maturity of
any installment of principal (or redemption payment) of the Indebtedness or
Disqualified Capital Stock to be so refinanced which was scheduled to come due
prior to the Stated Maturity.
"Registrar" means the office or agency in the Borough of Manhattan,
The City of New York, where the Securities may be presented for registration of
transfer or for exchange.
"Registration Rights Agreement" means the Registration Rights
Agreement dated June 16, 1998, by and among the Company, the Guarantors as of
the Issue Date and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time in accordance with the terms thereof.
"Related Business" means any business directly related to the
ownership, development, operation, and acquisition of wireless cellular
communications systems.
"Related Person" means, with respect to any Person, (i) any
Affiliate of such Person or any spouse, immediate family member, or other
relative who has the same principal residence of any Affiliate of such Person
and (ii) any trust in which any Person described in clause (i) above has a
beneficial interest.
"Related Person Transaction" shall have the meaning specified in
Section 4.11.
"Restricted Partnership" shall have the meaning specified in Section
4.19.
"Restricted Payment" means, with respect to any Person, (i) any
dividend or other distribution on shares of Capital Stock of such Person, its
Parent, or any Subsidiary of such Person, (ii) any payment on account of the
purchase, redemption or other acquisition or retirement for value, or any
payment in respect of any amendment (in anticipation of or in connection with
any such retirement, acquisition or defeasance) in whole or in part, of any
shares of Capital Stock of such Person, its Parent, or any Subsidiary of such
Person held by Persons other than such Person or any of its Restricted
Subsidiaries (other than any Non-Recourse Restricted Subsidiary), (iii) any
defeasance, redemption, repurchase or other acquisition or retirement for value,
or any payment in respect of any amendment (in anticipation of or in connection
with any such retirement, acquisition or defeasance) in whole or in part, of any
Indebtedness of the Company (other than the scheduled repayment thereof at
maturity and any mandatory redemption or mandatory repurchase thereof pursuant
to the terms thereof) by such Person or a Subsidiary of such Person that is
subordinate in right of payment to, or ranks pari passu (other than the
Securities) with, the Securities (other than
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in exchange for Refinancing Indebtedness permitted to be Incurred under this
Indenture and except for any such defeasance, redemption, repurchase, other
acquisition or payment in respect of Indebtedness held by any Restricted
Subsidiary) and (iv) any Investment (other than a Permitted Investment);
provided, however, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on shares of Capital Stock of the
Company or any Restricted Subsidiary solely in shares of Qualified Capital
Stock, (ii) any dividend, distribution or other payment to the Company, or any
dividend to any of its Restricted Subsidiaries (other than any Non-Recourse
Restricted Subsidiary), by any of its Subsidiaries, and (iii) the purchase,
redemption or other acquisition or retirement for value of shares of Capital
Stock of any Restricted Subsidiary (other than Non-Recourse Restricted
Subsidiaries) held by Persons other than the Company or any of its Restricted
Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of the Company which at
the time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately before and after giving effect to
such designation, there would exist no Default or Event of Default and the
Company could Incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of the second paragraph of Section 4.12, on a pro
forma basis taking into account such designation.
"RSA" shall have the meaning specified in the definition of "Pops".
"S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such property.
"Secured Indebtedness" shall have the meaning specified in Section
4.21.
"Securities" means, collectively, (A) the Initial Securities and,
when and if issued as provided in the Registration Rights Agreement, the
Exchange Securities issued upon valid surrender of such Initial Securities in
exchange therefor and (B) any additional securities issued hereunder (and any
Exchange Securities issued upon valid surrender of
<PAGE>
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such additional securities in exchange therefor) that is Permitted Pari Passu
Secured Indebtedness.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC promulgated thereunder,
and any successor statute.
"Securities Custodian" means the Trustee, as custodian for the
Depository with respect to the Securities in global form, or any successor
entity thereto.
"Security Agreement" means the Security Agreement dated June 16,
1998, by and among the Company, the Guarantors as of the Issue Date, and the
Initial Purchasers, as such agreement may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Security Documents" means the Security Agreement, the Intercreditor
Agreement and any other document from time to time entered into by the Company
or any Guarantor to pledge Collateral to the Trustee for its benefit and the
benefit of the Holders.
"Senior Indebtedness" means any Indebtedness of the Company or any
Restricted Subsidiary including the Securities, other than Indebtedness of the
Company or any Restricted Subsidiary as to which the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, provides that
such Indebtedness shall be subordinated or junior in right of payment to the
Securities or the Guarantees, as applicable.
"Senior Subordinated Notes" means the Company's 11-3/4% Senior
Subordinated Notes due 2007.
"Senior Subordinated Notes Indenture" means the indenture dated as
of July 10, 1997, by and between the Company and Bank of Montreal Trust Company,
as trustee, under which the Senior Subordinated Notes were issued.
"Significant Restricted Subsidiary" at any date of measurement,
means one or more Restricted Subsidiaries having an aggregate net book value of
assets in excess of 5% of the net book value of the assets of the Company and
its Restricted Subsidiaries on a consolidated basis.
"Special Rights" shall have the meaning specified in Section 4.19.
"Stated Maturity" means the date fixed for the payment of any
principal or premium pursuant to this Indenture and the Securities, including
the Maturity Date, upon redemption, acceleration, Asset Sale Offer, Change of
Control Offer or otherwise.
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"Subsidiary" with respect to any Person, means (i) a corporation at
least fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to
time.
"Transfer Restricted Security" means a Security, unless or until it
has been (i) disposed of in a transaction effectively registered under the
Securities Act or (ii) distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act; provided that in no
case shall an Exchange Security issued in accordance with this Indenture and the
terms and provisions of the Registration Rights Agreement be a Transfer
Restricted Security.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to June 15, 2002; provided, however, that if the
period from the Redemption Date to June 15, 2002 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
period from the Redemption Date to June 15, 2002 is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means Bank of Montreal Trust Company or any successor
appointed pursuant to the terms of this Indenture.
"Trust Officer" means any officer within the corporate trust
division (or any successor group) of the Trustee or any other officer of the
Trustee customarily performing functions similar to those performed by the
Persons who at that time shall be such officers,
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and also means, with respect to a particular corporate trust matter, any other
officer of the Trustee to whom such trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Unrestricted Subsidiary" means any Subsidiary of the Company that,
at the time of determination, shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary so long as (i) no Default
or Event of Default is existing or will occur as a consequence thereof, (ii)
such Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, (iii) such Subsidiary and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee, or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any property or assets of the Company or any of its Restricted
Subsidiaries (except that such Subsidiary and its Subsidiaries may guarantee the
Securities), and (iv) such Subsidiary is at the time of designation also
designated as an unrestricted subsidiary pursuant to the Senior Subordinated
Notes Indenture and the Parent Indenture; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, that such designation would be
permitted under Section 4.04. Any Subsidiary of the Company that is designated
on the Issue Date as an unrestricted subsidiary pursuant to the Senior
Subordinated Notes Indenture and the Parent Indenture shall be designated to be
an Unrestricted Subsidiary. Each such designation shall be evidenced by filing
with the Trustee a certified copy of the resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"U.S. Legal Tender Equivalents" means securities issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive
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scheduled principal payment of such debt instrument multiplied by the amount of
each such respective principal payment by (ii) the sum of all such principal
payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company,
(i) a Subsidiary that is a corporation, of which not less than 99% of the
Capital Stock (except for directors' qualifying shares or certain minority
interests owned by other Persons solely due to local law requirements that there
be more than one stockholder, but which interest is not in excess of what is
required for such purpose) is owned directly by such Person or through one or
more other Wholly Owned Subsidiaries of such Person, or (ii) any entity other
than a corporation in which such Person, directly or indirectly, owns not less
than 99% of the Capital Stock of such entity.
SECTION 1.02. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
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(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise; and
(8) whenever in this Indenture or the Securities it is provided that
the principal amount with respect to a Security shall be paid, such
provision shall be deemed to require (whether or not so expressly stated)
the simultaneous payment of any accrued and unpaid interest to the date of
payment on such Security payable pursuant to paragraph 1 of the
Securities.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication in respect thereof shall be substantially in the
form of Exhibit A hereto, which Exhibit is part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company shall approve the form of the Securities and
any notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A hereto
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.02. Execution and Authentication. Each Security shall be
signed by at least one Officer for the Company by manual or facsimile signature.
The
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Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities from time to time for
original issue in the aggregate principal amount of up to $1,000,000,000 and
shall authenticate Exchange Securities for original issue in the aggregate
principal amount of up to $1,000,000,000, in each case upon a written order of
the Company in the form of an Officers' Certificate; provided that such Exchange
Securities shall be issuable only upon the valid surrender for cancellation of
Securities of a like aggregate principal amount. The Officers' Certificate shall
specify the amount of Securities to be authenticated and the date on which the
Securities are to be authenticated. The terms of such Securities shall be the
same in all respects as the Initial Securities (or in all respects except for
the payment of interest (i) scheduled and paid prior to the date of issuance of
such Securities or (ii) payable on the first Interest Payment Date following
such date of issuance). The Initial Securities and any additional Securities
issued under the Indenture shall be treated as a single class for all purposes
of the Indenture. The aggregate principal amount of Securities outstanding at
any time may not exceed $1,000,000,000, except as provided in Section 2.07. Upon
the written order of the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of Securities originally
issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof.
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SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York, where
Securities may be presented for registration of transfer or for exchange (the
"Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent") and where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles 3, 8, 10, 11, Section
4.15 and as otherwise specified in this Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.04. Paying Agent to Hold Assets in Trust. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
each Paying Agent shall hold in trust for the benefit of the Holders or the
Trustee all assets held by the Paying Agent for the payment of principal of,
premium, if any, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default in making any such payment.
If either of the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate such assets and hold them as a separate trust fund for the
benefit of the Holders or the Trustee. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent (if
other than the Company) shall have no further liability for such assets.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer Restricted Security is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form set forth on the reverse of the Security); or
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(C) if such Transfer Restricted Security is being transferred
pursuant to any exemption from registration in accordance with
Regulation S under the Securities Act, a certification to that
effect (in substantially the form set forth on the reverse of the
Security); or
(D) if such Transfer Restricted Security is being transferred
to an institutional investor that is an "accredited investor" within
the meaning of Rule 501(a)(1),(2),(3) or (7) under the Securities
Act which delivers a certificate in the form of Exhibit B to this
Indenture to the Trustee; or
(E) if such Transfer Restricted Security is being transferred
in reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the Security)
accompanied by a customary opinion of counsel substantially to the
effect that such transfer may be effected in reliance upon such
exemption.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make,
or to direct the Securities Custodian to make, an endorsement on the
Global Security to reflect an increase in the aggregate principal amount
of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
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(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest in a Transfer Restricted Security only, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred pursuant
to any exemption from registration in accordance with Regulation S
under the Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being transferred
to an institutional investor that is an "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act which delivers a certificate in the form of Exhibit B to this
Indenture to the Trustee; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form set forth on the
reverse of the Security) accompanied by a custom-
<PAGE>
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ary opinion of counsel substantially to the effect that such
transfer may be effected in reliance upon such exemption,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
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(g) Legends.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF THE TRANSFER OF THIS NOTE WITH RESPECT TO SUCH TRANSFER,
RESALE OR OTHERWISE, TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN
<PAGE>
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AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR
PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule
<PAGE>
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144 under the Securities Act or an effective registration statement under
the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legend set forth above and rescind
any restriction on the transfer of such Transfer Restricted Security
in the case of a Rule 144 Transfer, after delivery of a customary
opinion of counsel; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.06(c) hereof); provided, however, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing
(to be accompanied by a customary opinion of counsel) to the
Registrar that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form set forth on the
reverse of the Security).
(h) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or cancelled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer
taxes, assessments, or similar governmental
<PAGE>
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charge payable upon exchanges or transfers pursuant to Section 2.02
(fourth paragraph), 2.10, 3.07, 4.15(8), 9.05, or 11.01 (final
paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3, except
the unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Article 11 or
Section 4.15 hereof or the mailing of a notice of redemption of Securities
pursuant to Article 3 hereof and ending at the close of business on the
day of such mailing.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Trustee or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all the Securities that have been authenticated by the Trustee
(including any Security represented by a Global Security) except those cancelled
by it, those delivered to it for cancellation, those reductions in the interest
in a Global Security effected by the Trustee hereunder and those described in
this Section 2.08 as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security, except as provided in Section 2.09.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of a Company) holds cash sufficient to pay all
of the principal
<PAGE>
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and interest due on the Securities payable on that date and payment of the
Securities called for redemption or payable on such Maturity Date is not
otherwise prohibited pursuant to this Indenture, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Securities. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, amendment, supplement, waiver or consent, Securities owned by the
Company or Affiliates of the Company shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that
the Trustee knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shal1 prepare and the Trustee shall authenticate Definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section 2.11, except as
expressly permitted in the form of Securities and as permitted by this
Indenture.
SECTION 2.12. Defaulted Interest. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on Record Date
for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest
<PAGE>
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payable on the defaulted interest (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered holder on the relevant Record
Date, and such Defaulted Interest may be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed parent, and at the same time
the Company shall deposit with the Trustee an amount of cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears
in the Security register not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
<PAGE>
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ARTICLE 3
REDEMPTION
SECTION 3.01. Optional Redemption.
(a) Right of Redemption. Redemption of Securities, as permitted by
any provision of this Indenture, shall be made in accordance with such provision
and this Article 3. Except as provided below, the Company will not have the
right to redeem any Securities prior to June 15, 2002. On or after June 15,
2002, the Company will have the right to redeem all or any part of the
Securities in cash at the Redemption Prices specified in the form of Security
attached as Exhibit A set forth therein under the caption "Redemption," in each
case, including accrued and unpaid interest, if any, to the applicable
Redemption Date (subject to the right of Holders of record on the relevant
regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date).
Notwithstanding the foregoing paragraph, prior to June 15, 2002, in
the event that the Company or any Parent consummates one or more Equity
Offerings, other than in any circumstances resulting in, or as a series of
transactions that result in, directly or indirectly, a Change of Control, on or
before the third anniversary of the Issue Date, the Company may at its option,
use all or a portion of the cash received by it or contributed to it from such
Equity Offerings to redeem up to 35% of the originally issued aggregate
principal amount of the Securities at a cash redemption price equal to 109.125%
of the principal amount of the Securities so redeemed, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided, however, that (x) at
least 65% of the original aggregate principal amount of the Securities remains
outstanding thereafter (excluding any Securities owned by the Company or any of
its Affiliates), and (y) any such net cash proceeds of such Equity Offering by
any Parent to be used for such a redemption shall be contributed to the Company
in an amount in cash sufficient to redeem the Securities to be redeemed at the
then current redemption price. Notice of any such redemption must be given
within 60 days after the date of the last Equity Offering the proceeds of which
are to be so contributed.
(b) Change of Control Redemption. Notwithstanding subsection (a) of
this Section 3.01, at any time on or prior to June 15, 2002, the Securities may
also be redeemed as a whole at the option of the Company upon the occurrence of
a Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof, plus the Applicable Premium as of, and accrued but unpaid
interest, if any, to, the Redemption Date (subject to the
<PAGE>
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right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date).
SECTION 3.02. Notices to Trustee. If the Company elects or is
required to redeem Securities pursuant to Paragraph 5 of the Securities, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities
to be redeemed pursuant to Paragraph 5 of the Securities by crediting against
any such redemption Securities it has not previously delivered to the Trustee
for cancellation, it shall so notify the Trustee of the amount of the reduction
and deliver such Securities with such notice, provided that no Securities
received by the Company in exchange for Exchange Securities may be made the
basis for such credit.
The Company shall give each notice to the Trustee provided for in
this Section 3.02 with respect to any optional redemption pursuant to Section
3.01(a) at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
SECTION 3.03. Selection of Securities to Be Redeemed. If less than
all of the Securities are to be redeemed pursuant to Paragraph 5(a) thereof, the
Trustee shall select the Securities to be redeemed on a pro rata basis or by
such other method as the Trustee shall determine to be fair and appropriate and
in such manner as complies with any applicable Depository, legal and stock
exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.04. Notice of Redemption. At least 30 days but not more
than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail, postage prepaid, to the Trustee and each Holder
whose Securities are to be redeemed to such Holder's last address as then shown
upon the books of the Registrar. At the Company's request, the Trustee shall
give the notice of redemption in the Company's
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name and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
Redemption Price;
(e) that, unless (i) with respect to a redemption pursuant to
Paragraph 5(a) of the Securities, the Company defaults in its obligation
to deposit cash with the Paying Agent in accordance with Section 3.06
hereof or (ii) such redemption payment is prohibited pursuant to Article
12 hereof or other laws, the interest on securities (or portion thereof)
called for redemption ceases to accrue on and after the Redemption Date
and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, as the case may be, including any
accrued and unpaid interest to the Redemption Date, upon surrender to the
Paying Agent of the Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of
such Security to be redeemed and that, on or after the Redemption Date,
and upon surrender of such Security, a new Security or Securities in a
principal amount equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.04 and
pursuant to the optional redemption provisions of Paragraph 5(a) of the
Securities or the special redemption provisions of Paragraph 5(b) of the
Securities, as the case may be.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.04, Securities called for
redemption
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become due and payable on the Redemption Date and at the Redemption Price
including any accrued and unpaid interest to the Redemption Date, if any. Upon
surrender to the Trustee or Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if any, accrued and
unpaid to the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest shall be payable to the Holder of the redeemed Securities registered on
the relevant Record Date; and provided, further, that if a Redemption Date is a
Legal Holiday payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (other than the
Company or an Affiliate of the Company) cash sufficient to pay the Redemption
Price of, including any accrued and unpaid interest on, all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Company any cash so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the other provisions of this Article 3
and payment of the Securities called for redemption is not prohibited under this
Indenture, interest on the Securities to be redeemed will cease to accrue on the
applicable Redemption Date, whether or not such Securities are presented for
payment. Notwithstanding anything herein to the contrary, if any Security
surrendered for redemption in the manner provided in the Securities shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall continue to accrue and be
paid from the Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate and in the manner provided in Section 4.02
hereof and the Securities.
SECTION 3.07. Securities Redeemed in Part. Upon surrender of a
Security that is to be redeemed in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder, without service charge to
the Holder, a new Security or Securities equal in principal amount to the
unredeemed portion of the Security surrendered.
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ARTICLE 4
COVENANTS
SECTION 4.01. Limitation on Sale and Leaseback Transactions. The
Company will not, and will not permit any Restricted Subsidiary to, enter into
any Sale and Leaseback Transaction; provided, however, that the Company may
enter into a Sale and Leaseback Transaction if (i) the Company could have (a)
Incurred Indebtedness (other than Indebtedness described in the third paragraph
(other than clause (vi) thereof) of Section 4.12) in an amount equal to the
Attributable Debt relating to such Sale and Leaseback Transaction in compliance
with Section 4.12 and (b) Incurred a Lien to secure such Indebtedness in
compliance with the Section 4.14, (ii) the gross cash proceeds of such Sale and
Leaseback Transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such Sale and Leaseback Transaction and (iii) the transfer of assets
in such Sale and Leaseback Transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with, the provisions of Section
4.15.
SECTION 4.02. Payment of Securities. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities. An installment of principal of or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.03. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
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such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.02.
The Company may also, from time to time, designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee as
such office.
SECTION 4.04. Limitation on Restricted Payments. After the Issue
Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if,
immediately prior or after giving effect thereto:
(a) a Default or an Event of Default would exist;
(b) the Company's Annualized Operating Cash Flow Ratio for the
Reference Period would exceed 8.5 to 1; or
(c) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including such proposed
Restricted Payment (if not made in cash, then the fair market value of any
property used therefor, as determined in good faith by the Board of
Directors of the Company) from and after the Issue Date and on or prior to
the date of such Restricted Payment, shall exceed the sum of (i) the
amount determined by subtracting (x) 2.0 times the aggregate Consolidated
Interest Expense of the Company for the period (taken as one accounting
period) from the Issue Date to the last day of the last full fiscal
quarter prior to the date of the proposed Restricted Payment (the
"Computation Period") from (y) Operating Cash Flow of the Company for the
Computation Period, plus (ii) the aggregate Net Proceeds received by the
Company from (x) Equity Offerings (other than to a Subsidiary of the
Company) after the Issue Date and on or prior to the date of such
Restricted Payment or (y) capital contributions to the Company after the
Issue Date, plus (iii) to the extent not otherwise included in clauses (i)
or (ii), above, an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from payments of dividends, repayment
of loans or advances, or other transfers of assets, in each case to the
Company or any Wholly Owned Restricted Subsidiary of the Company from
Unrestricted Subsidiaries, or from redesignations of Unrestricted
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Subsidiaries as Restricted Subsidiaries (valued in each case as provided
in the definition of "Investments"), not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by the
Company and any Restricted Subsidiary in such Unrestricted Subsidiary.
Notwithstanding the foregoing paragraph, the provisions set forth in
clauses (b) and (c) thereof will not prohibit (i) the use of an aggregate of
$10,000,000 to be used for Restricted Payments not otherwise permitted by this
Section 4.04, (ii) the distribution of amounts to Holdings sufficient to pay the
scheduled interest or dividends, as applicable, owed by Holdings on the
Permitted Parent Securities as such interest or dividends become due and payable
so long as Holdings (or any other direct or indirect Wholly Owned Subsidiary of
PCC) is the direct Parent of the Company owning 100% of the Capital Stock of the
Company and (iii) any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid pro rata to all holders
of such Capital Stock, and notwithstanding the foregoing paragraph, the
provisions set forth in clauses (a), (b) and (c) thereof will not prohibit (x)
the payment of any dividend within 60 days after the date of its declaration if
such dividend could have been made on the date of its declaration in compliance
with the foregoing provisions, or (y) the redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness or Capital Stock of the
Company or its Restricted Subsidiaries either in exchange for or out of the Net
Proceeds of any substantially concurrent Equity Offering (in the case of any
redemption, defeasance, repurchase or other acquisition or retirement of any
Junior Indebtedness or Capital Stock of the Company or its Restricted
Subsidiaries and other than to a Subsidiary of the Company) or sale of Junior
Indebtedness (in the case of any redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness of the Company or its Restricted
Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments
in accordance with clause (c) of the first paragraph of this Section 4.04, 100%
of the amounts expended under clauses (i) through (iii) and (x) and (y) of the
immediately preceding paragraph shall be included as Restricted Payments from
and after the Issue Date.
SECTION 4.05. Corporate Existence. Subject to Article 5, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each of them and the rights (charter and statutory)
and corporate franchises of the Company and each of the Company's Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve, with respect to itself, any right or franchise, and with respect to
any Restricted Subsidiaries of the Company, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no
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longer desirable in the conduct of the business of such entity and (b) the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims. Except with respect
to immaterial items, the Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Restricted
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.07. Maintenance of Properties and Insurance. The Company
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.07 shall prevent the Company from discontinuing any
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is (a) in the judgment of the Board of
Directors of the Company, desirable in the conduct of the business of such
entity and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company is adequate and appropriate for the conduct of
the business of the Company and such Restricted Subsidiaries in a prudent
manner, with (except for self-insurance) reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the Board of Directors of
the Company and adequate and appropriate for the conduct of the business of the
Company and such Restricted Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse ef-
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fect on the financial condition or results of operations of the Company or such
Restricted Subsidiary. The Company shall provide, or cause to be provided, the
insurance required under the Security Documents.
SECTION 4.08. Compliance Certificate; Notice of Default. The Company
shall deliver to the Trustee within 120 days after the end of its fiscal year an
Officers' Certificate complying with ss. 314(a)(4) of the TIA and stating that a
review of its activities and the activities of its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled their obligations under this Indenture and further
stating, as to each such officer signing such certificate, whether the signer
knows of any failure by the Company or any Subsidiary of the Company to comply
with any conditions or covenants in this Indenture and, if such signer does know
of such a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its trust officers receives notice thereof from the Company or any of the
Holders.
SECTION 4.09. Reports; Rule 144A Information Requirement. Whether or
not the Company is subject to the reporting requirements of Section 13 or 15 (d)
of the Exchange Act, the Company shall deliver to the Trustee and to each
Holder, within 15 days after it is or would have been required to file such with
the SEC, annual and quarterly financial statements substantially equivalent to
financial statements that would have been included in reports filed with the
SEC, if the Company was subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the SEC, and in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required. In addition, for so long as any
Securities remain outstanding, the Company will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, and, to any beneficial holder of the Securities, if not
obtainable from the SEC,
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information of the type that would be filed with the SEC pursuant to the
foregoing provisions, upon the request of any such holder.
SECTION 4.10. Limitation on Status as Investment Company. The
Company shall not become, nor shall it permit any of its Restricted Subsidiaries
to become, an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
SECTION 4.11. Limitation on Transactions with Related Persons. After
the Issue Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any contract, agreement, arrangement or transaction
with any Related Person (each a "Related Person Transaction"), or any series of
Related Person Transactions, except for transactions made in good faith, the
terms of which are (i) fair and reasonable to the Company or such Subsidiary, as
the case may be, and (ii) at least as favorable as the terms that could be
obtained by the Company or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's length basis with Persons who are not Related
Persons.
Without limiting the foregoing, (a) any Related Person Transaction
or series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute
Related Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or Incurred by such Persons, as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment not prohibited by Section 4.04, (iv) any loan or advance
by the Company or a Restricted Subsidiary to employees of the Company or a
Restricted Subsidiary in the ordinary course of business, in an aggregate amount
at any one time outstanding not to exceed $500,000, and (v) any payment pursuant
to a tax-sharing agreement between the Company and any other Person with which
the Company is required or permitted to file a consolidated tax return or with
which the Company is or could be part of a consolidated
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group for tax purposes, which payments are not in excess of the tax liabilities
attributable solely to the Company and its Restricted Subsidiaries (as a
consolidated group).
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
After the Issue Date, the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, issue, create, incur,
assume, guarantee or otherwise directly or indirectly become liable for
(including as a result of an acquisition), or otherwise become responsible for,
contingently or otherwise (individually or collectively, to "Incur" or, as
appropriate, an "Incurrence"), any Indebtedness. Neither the accrual of interest
(including the issuance of "pay in kind" securities or similar instruments in
respect of such accrued interest) pursuant to the terms of Indebtedness Incurred
in compliance with this covenant, nor the accretion of original issue discount,
nor the mere extension of the maturity of any Indebtedness shall be deemed to be
an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event
of Default immediately prior and subsequent thereto, the Company may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness, the
Company's Annualized Operating Cash Flow Ratio would have been less than 8.0 to
1.
In addition, if there exists no Default or Event of Default
immediately prior and subsequent thereto, the foregoing limitations will not
apply to the Incurrence of:
(i) Indebtedness by the Company or any of its Restricted
Subsidiaries constituting Existing Indebtedness, reduced by repayments of
and permanent reductions in commitments in satisfaction of the Net Cash
Proceeds application requirement under Section 4.15 and by repayments and
permanent reductions in amounts outstanding pursuant to scheduled
amortization and mandatory prepayments in accordance with the terms
thereof;
(ii) unsecured Indebtedness Incurred by the Company or any Guarantor
in an aggregate principal amount outstanding at any time not to exceed
$100,000,000 reduced by amounts Incurred pursuant to clause (x) below, so
long as such amounts Incurred pursuant to clause (x) remain outstanding;
(iii) Indebtedness Incurred by the Company evidenced by the Initial
Securities and the Exchange Securities therefor and the guarantees thereof
by Restricted Subsidiaries;
(iv) (a) Permitted Acquisition Indebtedness by the Company that
satisfies the provisions of clause (x) of the definition thereof or (b)
Permitted Acquisition In-
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debtedness by any Restricted Subsidiary that satisfies the provisions of
clause (y) of the definition thereof;
(v) Indebtedness between the Company and any Restricted Subsidiary
of the Company or between Restricted Subsidiaries of the Company;
provided, however, that, in the case of Indebtedness of the Company, such
obligations shall be unsecured and subordinated in all respects to the
Holders' rights pursuant to the Securities, and the date of any event that
causes a Restricted Subsidiary no longer to be a Restricted Subsidiary
shall be an Incurrence Date with respect to such Indebtedness;
(vi) Capitalized Lease Obligations and Purchase Money Indebtedness
in an aggregate amount or aggregate principal amount, as the case may be,
outstanding at any time not to exceed in the aggregate $15,000,000;
provided, however, that in the case of Purchase Money Indebtedness, such
Indebtedness shall not constitute less than 75% nor more than 100% of the
cost (determined in accordance with GAAP) to the Company or such
Restricted Subsidiary of the property purchased or leased with the
proceeds thereof;
(vii) Indebtedness of the Company or any Restricted Subsidiary
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of the
Company or its Restricted Subsidiaries pursuant to such agreements, in any
case Incurred in connection with the disposition of any business, assets
or Restricted Subsidiary of the Company to the extent none of the
foregoing results in the obligation to repay an obligation for money
borrowed by any Person and are limited in aggregate amount to no greater
than 10% of the fair market value of such business, assets or Restricted
Subsidiary so disposed of;
(viii) any guarantee by any Restricted Subsidiary of any
Indebtedness Incurred in compliance with Section 4.20;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reimbursement obligations with respect
thereto issued in the ordinary course of business and consistent with
industry practices limited in aggregate amount to $5,000,000 at any one
time outstanding; and
(x) Refinancing Indebtedness Incurred to extend, renew, replace or
refund Indebtedness permitted under clauses (i) (as so reduced in amount),
(ii) (as so reduced in amount), (iii), (iv) and (x) of this paragraph.
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For purposes of determining compliance with this Section 4.12, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories described above or is entitled to be incurred pursuant to the
second paragraph of this Section 4.12, the Company shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this Section 4.12 and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the second
paragraph of this Section 4.12. In addition, the Company may, at any time,
change the classification of an item of Indebtedness (or any portion thereof) to
any other clause or to the second paragraph of this Section, provided that the
Company would be permitted to incur such item of Indebtedness (or such portion
thereof) pursuant to such other clause or the second paragraph of this Section,
as the case may be, at such time of reclassification.
Indebtedness of any Person that is not a Restricted Subsidiary of
the Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.13. Limitations on Restricting Subsidiary Dividends. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
with respect to securities issued directly thereby or with respect to which they
are obligors, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions on the
Capital Stock of any Restricted Subsidiary of the Company or pay or satisfy any
obligation to the Company or any of its Restricted Subsidiaries or otherwise
transfer assets or make or pay loans or advances to the Company or any of its
Restricted Subsidiaries, except encumbrances and restrictions existing under
(i) this Indenture, the Securities and any Permitted Pari Passu
Secured Indebtedness;
(ii) any Existing Indebtedness;
(iii) any applicable law or any governmental or administrative
regulation or order;
(iv) Refinancing Indebtedness permitted under this Indenture;
provided, however, that the restrictions contained in the instruments
governing such Refi-
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nancing Indebtedness are no more restrictive in the aggregate than those
contained in the instruments governing the Indebtedness (in the good faith
judgment of the Company's Board of Directors) being refinanced immediately
prior to such refinancing;
(v) restrictions with respect solely to a Restricted Subsidiary of
the Company imposed pursuant to a binding agreement which has been entered
into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary; provided, however,
that such restrictions apply solely to the Capital Stock or assets (in the
good faith judgment of the Company's Board of Directors) being sold of
such Restricted Subsidiary;
(vi) restrictions contained in any agreement relating to the
financing of the acquisition of a Person or property, business or assets,
after the Issue Date which are not applicable to any Person or property,
business or assets, other than the Person or property so acquired and
which either (a) were not put in place in anticipation of or in connection
with such acquisition or (b) constituted Permitted Acquisition
Indebtedness of a Person satisfying the provisions of clause (y) of the
definition thereof; or
(vii) any agreement (other than those referred to in clause (vi)) of
a Person acquired by the Company or a Restricted Subsidiary of the
Company, which restrictions existed at the time of acquisition and were
not put in place in anticipation of or in connection with such
acquisition.
Notwithstanding the foregoing, neither (A) customary provisions
restricting subletting or assignment of any lease entered into the ordinary
course of business, consistent with past practices nor (B) Permitted Liens shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such agreement or assets, as the
case may be.
SECTION 4.14. Limitations on Liens; Impairment of Security Interest.
The Company will not and will not permit any Restricted Subsidiary, directly or
indirectly, to Incur or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Permitted Liens.
Neither the Company nor any of its Restricted Subsidiaries will take
or omit to take any action which action or omission would have the result of
adversely affecting or impairing the security interest in favor of the Trustee,
on behalf of itself and the Holders, with respect to the Collateral. Neither the
Company nor any of its Restricted Subsidiaries will enter into any agreement or
instrument that by its terms requires the proceeds received from any sale of
Collateral to be applied to repay, redeem, defease or otherwise acquire or
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retire any Indebtedness of any Person, other than pursuant to this Indenture,
the Securities and the Security Documents.
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary
Stock. After the Issue Date, the Company will not, and will not permit any of
its Restricted Subsidiaries to, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, businesses or assets, including by merger or consolidation,
and including any sale or other transfer or issuance of any Capital Stock of any
Restricted Subsidiary of the Company, whether by the Company or a Restricted
Subsidiary (any such transaction an "Asset Sale"), unless
(1) (a) within 360 days after the date of such Asset Sale, an amount
equal to the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount")
is applied to the optional redemption of the Securities in accordance with
the terms of Section 3.01 and other Senior Indebtedness of the Company
(including any Permitted Pari Passu Secured Indebtedness) from time to
time outstanding with similar provisions requiring the Company to make an
offer to purchase or to redeem such Indebtedness with the proceeds from
asset sales, pro rata in proportion to the respective principal amounts
(or accreted values in the case of Indebtedness issued with an original
issue discount) of the Securities and such other Indebtedness then
outstanding or to the repurchase of the Securities and such other
Indebtedness pursuant to an irrevocable, unconditional offer (pro rata in
proportion to the respective principal amounts (or accreted values in the
case of Indebtedness issued with an original issue discount) of the
Securities and such other Indebtedness then outstanding) (the "Asset Sale
Offer") to repurchase such Indebtedness at a purchase price (the "Asset
Sale Offer Price") of 100% of the principal amount of Securities to be
repurchased or redeemed in the case of the Securities or 100% of the
principal amount of such other Indebtedness to be repurchased or redeemed
(or accreted value in the case of Indebtedness issued with an original
issue discount) plus, in each case, accrued interest to the date of
payment, made within 330 days of such Asset Sale, or (b) within 330 days
of such Asset Sale, the Asset Sale Offer Amount is (i) invested (or
committed, pursuant to a binding commitment subject only to reasonable,
customary closing conditions, to be invested, and in fact is so invested,
within an additional 90 days) in assets and property (other than notes,
obligations or securities), which in the good faith reasonable judgment of
the Board of Directors of the Company are of a type used in a Related
Business, or Capital Stock of a Person (which, if such Person becomes a
Subsidiary of the Company by virtue of such Asset Sale, shall initially be
designated a Restricted Subsidiary) all or substantially all of whose
assets and property (in the good faith reasonable judgment of the Board of
Directors of the Company) are of a type used in a Related Business
(provided, however, that, with respect
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to such Capital Stock, all of the requirements of the last proviso of
clause (v) of the following paragraph shall have been satisfied), or (ii)
used to retire permanently any Senior Indebtedness of the Company or any
Restricted Subsidiary (other than a Non-Recourse Restricted Subsidiary);
(2) with respect to any transaction or related series of
transactions of securities, property or assets with an aggregate fair
market value in excess of $1,000,000, at least 75% of the value of
consideration for the assets disposed of in such Asset Sale (excluding (a)
Indebtedness (other than Indebtedness which by its terms is subordinated
to the Securities) (and any Refinancing Indebtedness issued to refinance
any such Indebtedness) or the Indebtedness of any Restricted Subsidiary
assumed by a transferee which assumption permanently reduces the amount of
Indebtedness outstanding on the Issue Date and permitted to have been
Incurred pursuant to Section 4.12 (including that in the case of a
revolver or similar arrangement that makes credit available, such
commitment is permanently reduced by such amount), (b) Purchase Money
Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are
promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equivalents; provided, however, that any cash or Cash Equivalents received
within 12 months following any such Asset Sale upon conversion of any
property or assets (other than in the form of cash or Cash Equivalents)
received in consideration of such Asset Sale shall be applied promptly in
the manner required of Net Cash Proceeds of any such Asset Sale as set
forth above, and the other conditions to such release of Collateral, if
applicable, are satisfied;
(3) no Default or Event of Default shall occur or be continuing
after giving effect to, on a pro forma basis, such Asset Sale, unless such
Asset Sale is in consideration solely of cash or Cash Equivalents and such
consideration is applied immediately to the permanent reduction of the
principal amount of Indebtedness outstanding pursuant to Senior
Indebtedness of the Company or any Restricted Subsidiary;
(4) the Board of Directors of the Company determines in good faith
that the Company or such Restricted Subsidiary, as applicable, would
receive fair market value in consideration of such Asset Sale; and
(5) immediately after giving pro forma effect to such Asset Sale,
the Company would be in compliance with the provisions of Section 4.21.
Each Asset Sale Offer shall remain open for 20 Business Days
following its commencement and no longer, except as otherwise required by
applicable law (the "Asset
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Sale Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount, plus an amount equal to accrued
interest, to the purchase of all Indebtedness properly tendered (on a pro rata
basis as described above if the Asset Sale Offer Amount is insufficient to
purchase all Indebtedness so tendered) at the Asset Sale Offer Price (together
with accrued interest).
Notwithstanding the foregoing provisions of the second preceding
paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article 5;
(iii) the Company and its Restricted Subsidiaries may sell or
dispose of damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer necessary for the
proper conduct of the business of the Company or such Restricted
Subsidiary, as applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets (other than FCC
licenses) to the Company or any of its Restricted Subsidiaries other than
to any Non-Recourse Restricted Subsidiary if, with respect to any such
conveyance, sale, lease, transfer, assignment or other disposition to any
Restricted Subsidiary that is not a Guarantor or the stock of which has
not been pledged pursuant to the Security Agreement, immediately after
giving pro forma effect thereto the Company would be in compliance with
the provisions of Section 4.21; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of
the proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which are, or
Capital Stock of a Person all or substantially all of whose assets are, of
a type used in a Related Business (provided that such Person shall
initially be designated a Restricted Subsidiary if such Person becomes a
Subsidiary of the Company by virtue of such Asset Sale), or a combination
of any such property, businesses or assets, or Capital Stock of such a
Person and cash or Cash Equivalents; provided, however, that
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(a) there shall not exist immediately prior or subsequent thereto a
Default or an Event of Default; (b) a majority of the independent
directors of the Board of Directors of the Company shall have approved a
Board Resolution that such exchange is fair to the Company or such
Restricted Subsidiary, as the case may be; (c) any cash or Cash
Equivalents received pursuant to any such exchange shall be applied in the
manner applicable to Net Cash Proceeds from an Asset Sale as set forth
pursuant to the provisions of the immediately preceding paragraph of this
Section 4.15; (d) immediately after giving pro forma effect thereto, the
Company would be in compliance with the provisions of Section 4.21; and
(e) any Capital Stock of a Person received in an Asset Sale pursuant to
this clause (v) shall be owned directly by the Company or a Restricted
Subsidiary, and, when combined with the Capital Stock of such Person
already owned by the Company and its Restricted Subsidiaries, shall
constitute a majority of the voting power and Capital Stock of such
Person, unless (A) (I) the Company has received a binding commitment from
such Person (or the direct or indirect parent of such Person) that such
Person (or the direct or indirect parent of such Person) will distribute
to the Company in cash an amount equal to the Company's Annualized
Operating Cash Flow (determined as of the date of such Asset Sale)
attributable to the property, business or assets of the Company and its
Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until the Company shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall
have been satisfied), (II) immediately after such Asset Sale the aggregate
number of Net Pops of the Cellular Systems in which the Company or any of
its Restricted Subsidiaries has ownership interests ("Company Systems")
that are owned directly by a Person or Persons a majority of whose voting
power and Capital Stock is owned directly or indirectly by the Company is
no less than 80% of the aggregate number of Net Pops of Company Systems
immediately prior to such Asset Sale and (III) upon consummation of such
Asset Sale, on a pro forma basis, the ratio of such Person's Annualized
Operating Cash Flow to the product of Consolidated Interest Expense for
the Reference Period multiplied by four (but excluding from Consolidated
Interest Expense all amounts that are not required to be paid in cash on a
current basis) shall be at least 1.0 to 1, or (B) in the case of Capital
Stock of a Person that is not a Subsidiary of the Company owned by the
Company or a Restricted Subsidiary that is exchanged (the "Exchanged
Capital Stock") for Capital Stock of another Person all or substantially
all of whose assets are of a type used in a Related Business, either (i)
the Exchanged Capital Stock shall not have been acquired prior to such
Asset Sale in reliance upon clause (A) of this proviso or (ii) the
requirements of subclauses (A) (I) (based on the original guaranteed cash
flow) and (A) (III) shall be satisfied with respect to any Capital Stock
acquired in consideration of the Exchanged Capital Stock.
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Restricted Payments that are made in compliance with, and are
counted against amounts available to be made as Restricted Payments pursuant to
clause (c) of Section 4.04, without giving effect to clause (i) of the second
paragraph thereof, shall not be deemed to be Asset Sales.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws.
The Company shall accumulate all Net Cash Proceeds and the aggregate
amount of such accumulated Net Cash Proceeds not used for the purposes permitted
and within the time provided by clause (1)(b) of the first paragraph of this
Section 4.15 is referred to as the "Accumulated Amount."
For purposes of this Section 4.15, "Minimum Accumulation Date" means
each date on which the Accumulated Amount exceeds $5,000,000. Not later than 10
Business Days after each Minimum Accumulation Date, the Company will commence an
Asset Sale Offer, which shall be consummated on a date (the "Asset Sale Purchase
Date") which shall be no later than 40 Business Days after the Minimum
Accumulation Date related thereto. Notice of an Asset Sale Offer will be sent 20
Business Days prior to the close of business on the earlier of (a) the third
Business Day prior to the Asset Sale Purchase Date and (b) the third Business
Day following the expiration of the Asset Sale Offer (such earlier date being
the "Final Put Date"), by first-class mail, by the Company to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders will
contain all information, instructions and materials required by applicable law
or otherwise material to such Holders' decision to tender Securities pursuant to
the Asset Sale Offer. The notice to Holders, which (to the extent consistent
with this Indenture) shall govern the terms of the Asset Sale Offer, shall
state:
(1) that the Asset Sale Offer is being made pursuant to such notice
and this Section 4.15;
(2) the Asset Sale Offer Amount, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), the Final Put Date,
and the Asset Sale Purchase Date, which Asset Sale Purchase Date shall be
on or prior to 40 Business Days following the Minimum Accumulation Date;
(3) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest;
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(4) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the penultimate paragraph of this Section
4.15 or such payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or portion thereof
purchased pursuant to an Asset Sale Offer will be required to surrender
the Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent (which may
not for purposes of this Section 4.15, notwithstanding anything in this
Indenture to the contrary, be the Company or any Affiliate of the Company)
at the address specified in the notice prior to the close of business on
the Final Put Date;
(6) that Holders will be entitled to withdraw their elections, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section, notwithstanding any other provision of this Indenture, be the
Company or any Affiliate of the Company) receives, up to the close of
business on the Final Put Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Securities the Holder is withdrawing and a statement that such Holder
is withdrawing his election to have such principal amount of Securities
purchased;
(7) that if Indebtedness in a principal amount in excess of the
principal amount of Securities to be acquired pursuant to the Asset Sale
Offer is tendered and not withdrawn, the Company shall purchase
Indebtedness on a pro rata basis in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) thereof (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in part will
be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; and
(9) a brief description of the circumstances and relevant facts
regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable
provisions of applicable Federal and state laws, rules and regulations,
including those regulating tender of-
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fers, if applicable, and any provisions of this Indenture that conflict with
such laws shall be deemed to be superseded by the provisions of such laws.
On or before an Asset Sale Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Asset Sale Offer on or before the Final Put
Date (on a pro rata basis if required pursuant to paragraph (7) hereof), (ii)
deposit with the Paying Agent cash sufficient to pay the Asset Sale Offer Price
for all Securities or portions thereof so tendered and accepted and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on each Asset Sale Purchase Date mail or deliver
to Holders of securities so accepted payment in an amount equal to the Asset
Sale Offer Price for such Securities, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Security not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof.
If the amount required to acquire all Indebtedness properly tendered
by Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") made
pursuant to this Section 4.15 is less than the Asset Sale Offer Amount, the
excess of the Asset Sale Offer Amount over the Acceptance Amount may be used by
the Company for general corporate purposes without restriction, unless otherwise
restricted by the other provisions of this Indenture. Upon consummation of an
Asset Sale offer made in accordance with the terms of this Indenture, the
Accumulated Amount will be reduced to zero irrespective of the amount of
Indebtedness tendered pursuant to the Asset Sale Offer.
SECTION 4.16. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.17. [Reserved].
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SECTION 4.18. Limitation on Lines of Business. The Company shall
not, nor shall it permit any of its Restricted Subsidiaries to, engage directly
or indirectly in any line or lines of business activity other than that which,
in the reasonable, good faith judgment of the Board of Directors of the Company,
is a Related Business.
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock.
The Company will not sell, and will not permit any of its Restricted
Subsidiaries to issue or sell, any shares of Capital Stock of any Restricted
Subsidiary of the Company to any Person other than the Company or a Wholly Owned
Restricted Subsidiary of the Company, except for shares of common stock with no
preferences or special rights or privileges and with no redemption or prepayment
provisions ("Special Rights"); provided, however, that, in the case of a
Restricted Subsidiary that is a partnership or joint venture partnership (a
"Restricted Partnership") the Company or any of its Restricted Subsidiaries may
sell or such Restricted Partnership may issue or sell Capital Stock of such
Restricted Partnership with Special Rights no more favorable than those held by
the Company or such Restricted Subsidiary in such Restricted Partnership.
SECTION 4.20. Limitation on Guarantees. The Company will not permit
any of its Restricted Subsidiaries that is not a Guarantor to guarantee the
payment of any Indebtedness of the Company unless such Restricted Subsidiary (i)
executes and delivers a supplemental indenture in a form reasonably satisfactory
to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Securities
and this Indenture on the terms set forth in Article 12 of this Indenture and
(ii) delivers to the Trustee an opinion of counsel that such supplemental
indenture has been duly authorized, executed and delivered by such Restricted
Subsidiary and constitutes a legal, valid, binding and enforceable obligation of
such Restricted Subsidiary subject to customary exceptions. Thereafter, such
Restricted Subsidiary shall be a Guarantor for all purposes of this Indenture
unless and until its Guarantee is released in accordance with this Indenture.
SECTION 4.21. Minimum Coverage Ratio. So long as any of the
Securities remain outstanding, neither the Company nor any of its Restricted
Subsidiaries may make any Asset Sale (other than any Asset Sale described in
clauses (i), (ii) or (iii) of the second paragraph of Section 4.15) or issue any
Permitted Pari Passu Secured Indebtedness that is secured by the Collateral
unless immediately after giving effect to any such Asset Sale or issuance, on a
pro forma basis, the sum of the aggregate principal amount of the Securities
plus the aggregate principal amount (or the aggregate accreted amount in the
case of Permitted Pari Passu Secured Indebtedness, if any, with an original
issue discount) of any Permitted Pari Passu Secured Indebtedness that is secured
by the Collateral then outstanding (such sum, the "Secured Indebtedness") shall
be less than or equal to the sum of (i) the aggregate amount of cash collateral
and Eligible Investments held
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in the Collateral Account and (ii) the product of (a) the aggregate number of
Net Pops of the MSAs and RSAs in the Collateral Pool and (b) $175 (the sum of
the items described in clauses (i) and (ii), the "Minimum Collateral Value").
The term "Collateral Pool" shall mean as of any date each MSA or RSA
for which the Company or any Guarantor (other than a Non-Recourse Restricted
Subsidiary) has obtained a license from the FCC to operate a domestic public
cellular mobile radio telecommunications system (each, a "Cellular System");
provided, however, that (a) to the extent that a Lien thereon can be perfected
solely by filing a financing statement in the applicable jurisdictions, the
Company has granted to the Trustee pursuant to the Security Agreement as of the
Issue Date and not released a perfected Lien (subject to any Permitted Liens) on
all of its property located in such MSA or RSA and (b) in the event that such
license has been granted to a Guarantor (other than a Non-Recourse Restricted
Subsidiary), (1) the Company and such Guarantor, as applicable, have granted to
the Trustee pursuant to the Security Agreement and not released a perfected Lien
(subject to any Permitted Liens) on all of the issued and outstanding shares of
Capital Stock of such Guarantor owned by the Company or any of the Restricted
Subsidiaries, and (2) to the extent that a Lien thereon can be perfected solely
by filing a financing statement in the applicable jurisdictions, such Guarantor
has granted to the Trustee pursuant to the Security Agreement and not released a
perfected Lien (subject to any Permitted Liens) on all of its property and
assets located in such MSA or RSA in each case to the extent contemplated by the
Security Agreement; provided that there shall be excluded from the Collateral
Pool any MSA or RSA for which the FCC license to operate a Cellular System was
acquired by the Company or a Guarantor after the Issue Date and for which the
average annual per capita income was less than $15,000 at the time of such
acquisition (as most recently reported at the time of acquisition by the
applicable source cited in the definition of "Pops").
SECTION 4.22. Separate Account. On the Issue Date, the Company will
deposit $80,000,000 of cash into a separate account (which may but need not be
the Collateral Account), which amount may only be used by the Company (i) for
acquisitions or (ii) to purchase, redeem or otherwise acquire or retire for
value or make any payment of principal, interest or premium in respect of the
Securities or any Permitted Pari Passu Secured Indebtedness.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation. The
Company will not consolidate with or merge with or into another Person, or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of its
and its Restricted Subsidiaries' assets (computed on a consolidated basis),
whether in a single transaction or a series of related transactions, to another
Person or group of affiliated Persons, unless
(i) either (a) the Company is the continuing entity or (b) the
resulting surviving or transferee entity is a corporation organized under
the laws of the United States, any state thereof or the District of
Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities, this
Indenture and the Security Documents; provided, however, that in the case
of a sale, lease, conveyance, transfer or other disposition of all or
substantially all of the Company's and its Restricted Subsidiaries'
assets, the provisions of this clause (i)(b) need not be met if all of the
consideration in respect of such transaction is received by the Company
and its Restricted Subsidiaries (other than any Non-Recourse Restricted
Subsidiary);
(ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction;
(iii) (a) immediately after giving pro forma effect to such
transaction, the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), the
Company) would immediately thereafter be permitted to Incur at least $1.00
of additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.12 or (b),
if the requirement of clause (a) is not satisfied, (x) any Indebtedness of
the resulting surviving or transferee entity (or, in the case contemplated
by the proviso to clause (i)(b), the Company) in excess of the amount of
the Company's Indebtedness immediately prior to such transaction is
Permitted Acquisition Indebtedness and (y) the requirement of clause (a)
is not satisfied solely due to the Incurrence of such Permitted
Acquisition Indebtedness;
(iv) immediately after giving pro forma effect thereto the Secured
Indebtedness of the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), of the
Company) would either (x) not exceed the Minimum Collateral Value of the
consolidated resulting surviving or
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transferee entity (or, in the case contemplated by the proviso to clause
(i)(b), of the Company) or (y) not exceed such Minimum Collateral Value by
an amount greater than the Secured Indebtedness of the Company exceeded
the Minimum Collateral Value of the Company and its Restricted
Subsidiaries immediately prior to such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, if applicable, confirming
compliance with the requirements of this Section 5.01.
SECTION 5.02. Successor Corporation Substituted. Upon any
consolidation or merger or any transfer of all or substantially all of the
assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall (other than as provided in the proviso to
clause (i)(b) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the
Securities and this Indenture.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the failure by the Company to pay any installment of interest on
the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same
become due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price;
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(c) the failure by the Company or any Guarantor to observe or
perform any other covenant or agreement contained in the Securities or
this Indenture and, subject to certain exceptions, the continuance of such
failure for a period of 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Securities outstanding;
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or any of its
Significant Restricted Subsidiaries as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization of the Company or any
of its Significant Restricted Subsidiaries under any bankruptcy or similar
law, and such decree or order shall have continued undischarged and
unstayed for a period of 60 days; or a decree or order of a court of
competent jurisdiction over the appointment of a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of the Company, any of
its Significant Restricted Subsidiaries, or of the property of any such
Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall
have remained in force undischarged and unstayed for a period of 60 days;
(e) the Company or any of its Significant Restricted Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization under
any bankruptcy or similar law or similar statute, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
Custodian in bankruptcy or insolvency of it or any of its assets or
property, or shall make a general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as they
become due, or shall, within the meaning of any Bankruptcy Law, become
insolvent, fails generally to pay its debts as they become due, or takes
any corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing;
(f) the failure to pay at final stated maturity (giving effect to
any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary of
the Company or the acceleration of the final stated maturity of any
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $15,000,000 or more at any time, except that such
dollar amount shall not apply to any Permitted Pari Passu Secured
Indebtedness that is secured by the Collateral;
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(g) final unsatisfied judgments not covered by insurance aggregating
in excess of $5,000,000, at any one time rendered against the Company or
any of the Company's Restricted Subsidiaries and not stayed, bonded or
discharged within 60 days;
(h) the failure of any Guarantee to be in full force and effect or
declaration of any Guarantee to be null and void and unenforceable or
finding of any Guarantee to be invalid or denial by any Guarantor of its
liability under its Guarantee (other than by reason of release of such
Guarantor in accordance with the terms of this Indenture); or
(i) the failure of any of the Security Documents to be in full force
and effect or to give the Trustee the Liens, rights, powers and privileges
purported to be created thereby.
If a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.02. Acceleration of Maturity Date; Rescission and
Annulment. If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (d) or (e) of Section 6.01 relating to the
Company or any Significant Restricted Subsidiary), then in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of 25% in aggregate principal amount
of the Securities then outstanding, by notice in writing to the Company (and to
the Trustee if given by Holders) may declare all principal and accrued interest
thereon to be due and payable and the same shall become immediately due and
payable. If an Event of Default specified in clause (d) or (e) of Section 6.01,
relating to the Company or any Significant Restricted Subsidiary, occurs, all
principal and accrued interest thereon will be immediately due and payable on
all outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article 6, the Holders of a
majority in aggregate principal amount of then-outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee cash
sufficient to pay
(A) all overdue interest on all Securities,
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(B) the principal of (and premium, if any, applicable to any
Securities which would become due otherwise than by such
declaration of acceleration, and interest thereon at the
rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the
Securities,
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.12, including, if applicable, any Event of
Default relating to the covenants contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent Default or impair any
right consequent thereon.
In the event of a declaration of acceleration of the Securities
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in Section 6.01(f), the declaration
of acceleration of the Securities shall be automatically annulled if the holders
of all Indebtedness described in Section 6.01 (f) (without any payment to any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all Events of Default, except nonpayment of principal interest on the
Securities that became due solely because of the acceleration of the Securities,
have been cured or waived.
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement
by Trustee. The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of
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such Securities, the whole amount then due and payable on such Securities for
principal, premium (if any) and interest, and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal
(and premium, if any) and on any overdue interest, at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the reasonable costs and expenses of collection, including Compensation
to, and expenses, disbursements and advances of, the Trustee, its agents and
counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or the Security
Documents or in aid of the exercise of any power granted herein or therein, or
to enforce any other proper remedy.
Each Holder, by accepting a Security, acknowledges that the exercise
of remedies by the Trustee with respect to the Collateral is subject to the
terms and conditions of the Security Documents and the proceeds received upon
realization of the Collateral shall be applied by the Trustee in accordance with
the provisions of the Intercreditor Agreement.
SECTION 6.04. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have
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the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agent and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6.06. Priorities. Any money collected by the Trustee
pursuant to this Article 6 shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium (if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.07;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without prefer-
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ence or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
SECTION 6.07. Limitation on Suits. No Holder of any Security shall
have any right to order or direct the Trustee to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of
then-outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
accrued interest on, such Security on the Maturity Date of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of a Change of Control Payment, on
the applicable Change of Control Payment Date, and, in the case of an
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Asset Sale Offer, the Asset Sale Offer Price on the Asset Sale Purchase Date)
and to institute suit for the enforcement of any such payment after such
respective dates, and such rights shall not be impaired without the consent of
such Holder.
SECTION 6.09. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in Section 2.07, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver. No delay or omission by
the Trustee or by any Holder of any Security to exercise any right or remedy
arising upon any Event of Default shall impair the exercise of any such right or
remedy or constitute a waiver of any such Event of Default. Every right and
remedy given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 6.11. Control by Holders. The Holder or Holders of a
majority in aggregate principal amount of then outstanding Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
upon the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.12. Waiver of Past Default. Subject to Section 6.08, the
Holder or Holders of not less than a majority in aggregate principal amount of
the outstanding Securities may, on behalf of all Holders, prior to the
declaration of the acceleration of the maturity of the Securities, waive any
past default hereunder and its consequences, except a default
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(A) in the payment of the principal of, or interest on, any Security
as specified in clauses (a) and (b) of Section 6.01, or
(B) in respect of a covenant or provision hereof which, under
Article 9, cannot be modified or amended without the consent of the Holder
of a greater specified percentage of the aggregate principal amount of the
Notes then outstanding without the consent of such greater percentage.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall he deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.13 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 100% in aggregate principal amount
of the outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest on,
any Security on or after the Maturity Date expressed in such Security
(including, in the case of redemption, on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
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ARTICLE 7
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee. (a) If a Default or an Event of
Default has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
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(d) No provision of this Indenture shall require the trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.04 and 13.05. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee will not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) The Trustee will not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit.
(f) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have
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offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture,
any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance
of the covenants in Article 4 hereof. In addition, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.01(a), 6.01(b) and
4.02, or (ii) any Default or Event of Default of which the Trustee shall
have received written notification or obtained actual knowledge.
(i) Subject to Section 9.02 hereof, the Trustee may (but shall not
be obligated to), without the consent of the Holders, give any consent,
waiver or approval required under the Security Documents or by the terms
hereof with respect to the Collateral, but shall not without the consent
of the Holders of not less than a majority in aggregate principal amount
of the Securities at the time outstanding (i) give any consent, waiver or
approval or (ii) agree to any amendment or modification of the Security
Documents, in each case, that shall have a material adverse effect on the
interests of any Holder. The Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any
consent, waiver, approval, amendment or modification shall have a material
adverse effect on the interests of any Holder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or any of the Company's Subsidiaries, or
their respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities and it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement in the
Securities, other than the Trustee's certificate of authentication, or the use
or application of any funds received by a Paying Agent other than the Trustee.
The Trustee shall not be responsible for and makes no representation
as to the value or condition of the Collateral or any part thereof, or as to the
title of the Company
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or its Restricted Subsidiaries thereto, or as to the security afforded thereby
or hereby, or as to the validity or genuineness of any Collateral pledged and
deposited with the Trustee. The Trustee makes no representations with respect to
the effectiveness or adequacy of the Security Documents, or the validity or
perfection, if any, of Liens granted under this Indenture or the Security
Documents. The Trustee shall not be responsible for independently ascertaining
or maintaining such validity or perfection, if any, and shall be fully protected
in relying upon certificates and opinions delivered to it in accordance with the
terms of this Indenture or the Security Documents.
SECTION 7.05. Notice of Default. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the case
of a Default or an Event of Default in payment of principal (or premium, if any)
of, or interest on, any Security (including the payment of the Change of Control
Purchase Price on the Change of Control Payment Date, the payment of the
Redemption Price on the Redemption Date and the payment of the Offer Price on
the Purchase Date), the Trustee may withhold the notice if and so long as a
Trust Officer in good faith determines that withholding the notice is in the
interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each December 15 beginning with the December 15 following the date of this
Indenture, the Trustee shall, if required by law, mail to each Securityholder a
brief report dated as of such December 15 that complies with TIA ss. 313(a). The
Trustee also shall comply with TIA ss. 313(b) and ss. 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed, in accordance with and to the extent
required by TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity. The Company agrees to pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel.
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The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on its part, arising out of or in connection with the administration of
this trust and its rights or duties hereunder and under the Security Documents
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder and under the Security Documents. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's expense in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel; provided that the Company will not be required to
pay such fees and expenses if they assume the Trustee's defense and there is no
conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not pay for any settlement made without their written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities, including, without limitation, assets held in the Collateral
Account.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article 8 of this Indenture
and any rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Securities may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. The Company may remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.07
have been paid, the retiring Trustee shall transfer all property held by it as
trustee (including the Collateral Account) to the successor Trustee, subject to
the lien provided in Section 7.07, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustees pursuant to this Section
7.08, the Company's obligations under Section 7.07 all continue for the benefit
of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
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SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a)(1), (2) and (5). The
Trustee shall have a combined capital and surplus of at least $10,000,000 as set
forth in its most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee, in its capacity as Trustee hereunder and in its capacity as Collateral
Agent under the Security Documents, shall comply with TIA ss. 311(a), excluding
any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned
or been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at its option and at any time, elect to have
Section 8.02 or Section 8.03 applied to al1 outstanding Securities and Security
Documents upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.02, the
Company and the Guarantors shall be deemed to have been discharged from their
obligations with respect to all outstanding Securities and Security Documents on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 and the other Sections of
this Indenture referred to in (a) and (b) below, and this Indenture, Guarantees
and Security Documents shall cease to be of further effect (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Section 8.04, and as more fully set forth in such Section 8.04, payments in
respect of the principal of, premium, if any, and interest on such Securities
when such payments are due, (b) the Company's obligations with respect to such
Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.03, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may
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exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 with respect to the Securities.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in Sections 4.04,
4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.18, 4.19, 4.20, 4.21,
Article 5 (other than the obligation of any successor to assume the obligations
of the Company hereunder) and Article 11 with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Company need not
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.02 or
Section 8.03 to the outstanding Securities:
(a) The Company must irrevocably deposit or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article
8 applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (a) U.S. Legal
Tender, or (b) non-callable government securities, or (c) a combination
thereof, in such amounts, as in each case will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge (i) the principal of, premium, if
any, and interest on the outstanding Securities on the Stated Maturity or
on the applicable Redemption Date, as the case may be, of such principal
or installment of principal, premium, if any, or interest and the Holders
of Securities shall have a valid, perfected, exclusive security interest
in the assets of such trust; provided that the Trustee shall have been
irrevocably instructed to apply
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such cash and the proceeds of such U.S. Government Obligations or U.S.
Legal Tender Equivalents to said payments with respect to the Securities;
(b) In the case of an election under Section 8.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date hereof, there as been a change in
the applicable Federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) In the case of an election under Section 8.03, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of the
outstanding Securities will not recognize income gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax in the same amount, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) No Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit or such deposit) shall have occurred and be continuing on the date
of such deposit or, insofar as Section 6.01(e) or 6.01(f) is concerned, at
any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition is a condition subsequent
which shall not be deemed satisfied until the expiration of such period,
but in the case of Covenant Defeasance, the covenants which are defeased
under Section 8.03 will cease to be in effect unless an Event of Default
under Section 6.01(e) or 6.01(f) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under any other material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them is bound;
(f) In the case of an election under either Section 8.02 or 8.03,
the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election
under Section 8.02 or 8.03 was not made by the Company with the intent of
preferring the Holders over any other
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creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating
to either the Legal Defeasance under Section 8.02 or the Covenant
Defeasance under Section 8.03 (as the case may be) have been complied with
as contemplated by this Section 8.04.
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06, all cash, U.S. Legal Tender Equivalents and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.06. Repayment to the Company. Subject to any applicable
escheat or abandoned property laws, any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment, of the
principal of, premium, if any, or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Company on its request; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is
unable to apply any cash, U.S. Legal Tender Equivalents or U.S. Government
Obligations in accordance with Section 8.02 or 8.03, as the case may be, by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 until such time as the Trustee or Paying Agent is permitted to apply such
money in accordance with Sections 8.02 and 8.03, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the cash held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company and the Guarantors, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power conferred upon the Company
herein or in the Security Documents or to make any other change hereto or
thereto that does not adversely affect the rights of any Holder, provided
that the Company has delivered to the Trustee an Opinion of Counsel
stating that such change does not adversely affect the rights of any
Holder;
(3) to provide for additional collateral or guarantors for the
Securities;
(4) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article 5;
(5) to comply with the TIA; or
(6) to provide for the issuance and authorization of the Exchange
Securities.
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders. Subject to Section 6.08, with the consent of the Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said Holders delivered to the Company and the
Trustee, the Company and the Guarantors, when authorized by Board Resolutions,
and the Trustee may amend or supplement this Indenture or the Securities or
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner
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or eliminating any of the provisions of this Indenture or the Securities or of
modifying in any manner the rights of the Holders under this Indenture or the
Securities. Subject to Section 6.08, the Holder or Holders of not less than a
majority in principal amount of then outstanding Securities may waive compliance
by the Company with any provision of this Indenture or the Securities.
Notwithstanding any of the above, however, no such amendment, supplemental
indenture or waiver shall, without the consent of each Holder affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement, supplemental indenture
or waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on
any Security or any premium payable upon the redemption thereof;
(3) reduce the principal amount of any Security, the Change of
Control Purchase Price, the Asset Sale Offer Price or the Redemption
Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article 3 or paragraph 5 of
the Securities or the terms or provisions (or the definitions related
thereto) of Article 11, in any case, in a manner adverse to any Holder;
(6) make any changes in Section 6.08, 6.12 or this Section 9.02
except to increase any required percentage or to provide that certain
other provisions of this Indenture cannot be modified without the consent
of each Holder affected thereby;
(7) make the Principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this
Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable and the Securities as in effect on the date hereof); or
(8) make the Securities subordinated in right of payment to any
extent or under any circumstances to any other indebtedness.
With the consent of Holders of 66 2/3% of the aggregate principal
amount of the Securities at the time outstanding, the Company and the Trustee
may change the Change of Control Purchase Date and the Asset Sale Offer Period.
In addition, no such amendment, supplemental indenture or waiver shall permit
(x) a release of Collateral (not otherwise permitted under the Security
Documents) that relates to more than 25% of the fair
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market value (as determined in good faith by the Company's Board of Directors)
of the Collateral at the date of release, without the consent of the Holders of
66 2/3% of the aggregate principal amount of the Securities then outstanding or
(y) a release (not otherwise permitted under the Security Documents) of all or
substantially all of the Collateral or any amendment of or modification to this
Indenture or the Security Documents that has the substantial effect thereof
without the consent of Holders of 75% of the aggregate principal amount of
Securities then outstanding.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.02 or
Section 9.04 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article 9, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03. Compliance with TIA. Every amendment, waiver or
supplement of this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of his Security by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
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The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee or require the
Holder to put an appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
9; provided that the Trustee may, but shall not be obligated to, execute any
such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture.
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ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. Security. The Securities will be secured by the
Collateral as and to the extent provided in the Security Agreement. Upon the
acceleration of the maturity of the Securities as provided in Article 6, the
Trustee shall foreclose upon the Collateral as provided in the Security
Documents.
The Lien in favor of the Trustee with respect to substantially all
of the Collateral will be perfected to the extent contemplated by the Security
Agreement on the Issue Date or the date of acquisition thereof by the Company or
the applicable Guarantor.
SECTION 10.02. Security Documents. The due and punctual payment of
the principal of, premium, if any, and interest on the Securities when and as
the same shall be due and payable, whether on an interest payment date, at
maturity, by acceleration, repurchase, redemption or otherwise, and interest on
the overdue principal of and interest (to the extent permitted by law), if any,
on the Securities and performance of all other Obligations of the Company and
the Guarantors to the Securityholders or the Trustee under this Indenture, the
Securities and the Guarantees, according to the terms hereunder or thereunder,
shall be secured as provided in the Security Documents. Each Securityholder, by
its acceptance of a Security, consents and agrees to the terms of the Security
Documents (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and hereof and
authorizes and directs the Trustee as collateral agent to enter into each of the
Security Documents and to perform its respective obligations and exercise its
respective rights thereunder in accordance therewith.
Anything in the Security Documents to the contrary notwithstanding,
none of the Company or any Guarantor will be required to grant Liens on any
property acquired after the Securities are issued if such Lien on such property
is expressly prohibited from being pledged pursuant to another contractual
obligations binding on any such Person, such prohibition was not incurred by
such Person with the intent of negating the requirements of this Section 10.02,
and such Person, after using reasonable efforts, has been unable to terminate or
modify such prohibition in order to permit such pledge and such property is not
pledged to any other Person.
SECTION 10.03. Recording and Opinions. (a) The Company shall furnish
to the Trustee, promptly after the execution and delivery of this Indenture or
any Security Documents , other than the Intercreditor Agreement, executed and
delivered after the
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date of this Indenture, an Opinion of Counsel either (i) stating that, in the
opinion of such counsel, all action has been taken with respect to the
recording, registering and filing of this Indenture, the Security Documents,
financing statements or other instruments necessary to make effective the Liens
intended to be created by the Security Documents, and reciting the details of
such action or (ii) stating that, in the opinion of such counsel, no such action
is necessary to make such Liens effective.
(b) The Company shall furnish to the Trustee, within three months
after each anniversary of the date of this Indenture, an Opinion of Counsel,
dated as of such date, stating either that (i) in the opinion of such counsel,
all action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and refiling of all supplemental indentures,
financing statements, continuation statements or other instruments of further
assurance as is necessary to maintain the Liens to the extent required by the
Security Documents and reciting the details of such action or (ii) in the
opinion of such counsel, no such action is necessary to maintain such Liens.
SECTION 10.04. Reserved.
SECTION 10.05. Release of Collateral. (a) Subject to subsection (c)
of this Section 10.05 and Section 10.06, Collateral may be released from the
Lien and security interest created by the Security Documents at any time or from
time to time at the sole cost and expense of the Company (x) upon payment in
full of the Securities in accordance with the terms thereof and of this
Indenture and all other Obligations of the Company and the Guarantors then due
and owing under this Indenture, the Securities, the Guarantees and the Security
Documents, including any defeasance pursuant to Article 8 and (y) as otherwise
expressly permitted by the Security Documents. In addition, the Lien and
security interests created by the Security Documents in any asset shall
terminate and be released immediately without any further action upon the
disposition of such asset in any transaction permitted under the Indenture. Upon
compliance with the above provisions and the provisions of Section 13.04 hereof,
the Trustee shall execute, deliver or acknowledge any necessary or proper
instruments or termination, satisfaction or release provided by or on behalf of
the Company to evidence the release of any Collateral permitted to be released
pursuant to this Indenture or the Security Documents.
(b) Each other release of Collateral must comply with Section 9.02.
(c) At any time when a Default or Event of Default shall have
occurred and be continuing and the maturity of the Securities shall have been
accelerated (whether by declaration or otherwise) and the Trustee shall have
delivered a notice of acceleration to the Company, no release of Collateral
pursuant hereto shall be effective as against the Securities.
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(d) No purchaser or grantee of any property or rights purporting to
be released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Company and the Subsidiary Guarantors be under any
obligation to ascertain or inquire into the authority of the Company or any
Subsidiary Guarantor to make such sale or other disposition.
SECTION 10.06. Certificates of the Company. To the extent
applicable, the Company and the Guarantors shall comply with (a) TIA ss. 314(b),
relating to Opinions of Counsel regarding the Lien of the Security Documents and
(b) TIA ss. 314(d), relating to the release of Collateral from the Lien of the
Security Documents and Officers' Certificates or other documents regarding fair
value of the Collateral. Any certificate or opinion required by TIA ss. 314(d)
may be made by an Officer of or an engineer, appraiser or other expert employed
by the Company or any other obligor upon the Securities, as applicable, to the
extent permitted by TIA ss. 314(d).
SECTION 10.07. Authorization of Actions To Be Taken by the Trustee
Under the Security Documents. The Trustee may, in its sole discretion and
without the consent of the Securityholders, on behalf of the Securityholders,
take all actions it deems necessary or appropriate in order to (a) enforce any
of the terms of the Security Documents and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company and the Guarantors
hereunder. The Trustee shall have the power to institute and to maintain such
suits and proceedings (subject to the terms of the Intercreditor Agreement) as
it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interest and the interests of the Securityholders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Securityholders or of the Trustee).
SECTION 10.08. Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents. The Trustee is authorized to receive any funds
for the benefit of the Securityholders distributed under the Security Documents,
and to make further distributions of such funds to the Securityholders according
to the provisions of this Indenture and the Security Documents.
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ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder upon
a Change of Control. (a) In the event that a Change of Control occurs, unless
the Company has elected to redeem all of the Securities upon the occurrence of a
Change of Control as set forth in Article 3, each Holder will have the right, at
such Holder's option, to require the Company to repurchase all or any part of
such Holder's Securities (provided that the principal amount of such securities
at stated maturity must be $1,000 or an integral multiple thereof) pursuant to
an unconditional, irrevocable offer by the Company (the "Change of Control
Offer") on a date that is no later than 45 Business Days after the occurrence of
such Change of Control (the "Change of Control Purchase Date"), at a cash price
(the "Change of Control Purchase Price") equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to and
including the Change of Control Purchase Date.
(b) In the event that pursuant to this Section 11.01 the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 11.01 as follows:
(1) the Change of Control Offer shall commence within 20 Business
Days following the Change of Control date;
(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a longer period is required by applicable
law (the "Change of Control Offer Period");
(3) upon the expiration of a Change of Control Offer Period, the
Company shall purchase all of the properly tendered and not properly
withdrawn Securities in response to the Change of Control Offer;
(4) the Company shall provide the Trustee with notice of the Change
of Control Offer at least five Business Days before the commencement of
any Change of Control Offer; and
(5) on or before the commencement of any Change of Control Offer,
the Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture)
shall govern the terms of the Change of Control Offer and shall state:
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(i) that the Change of Control Offer is being made pursuant to
such notice and this Section 11.01 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest), the Change of Control
Purchase Date and the Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing cash with
the Paying Agent in accordance with the last paragraph of this
clause (b) or such payment is prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be
required to surrender the Security, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of this
Section 11.01, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) at the
address specified in the notice prior to the close of business on
the earlier of (a) the third Business Day prior to the Change of
Control Purchase Date and (b) the third Business Day following the
expiration of the Change of Control Offer (such earlier date being
the "Change of Control Put Date");
(vi) that Holders will be entitled to withdraw their election,
in whole or in part, if the Paying Agent (which may not for purposes
of this Section 11.01, notwithstanding anything in this Indenture to
the contrary, be the Company or any Affiliate of the Company)
receives, up to the close of business on the Change of Control Put
Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Securities
the Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of Securities
purchased; and
(vii) a brief description of the events resulting in such
Change of Control.
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Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state securities laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company will
(i) accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) for all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent will on the Change of Control
Purchase Date promptly deliver to Holders of Securities so accepted payment in
an amount equal to the Change of Control Purchase Price for such Securities,
together with any accrued but unpaid interest, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
ARTICLE 12
GUARANTEE OF SECURITIES
SECTION 12.01. Guarantee. (a) Each Guarantor, jointly and severally,
irrevocably and unconditionally, guarantees, as a primary obligor and not as a
surety, to each Holder of a Security now or hereafter authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company hereunder or thereunder, (i) the
due and punctual payment of the principal, premium, if any, interest (including
post-petition interest in any proceeding under any Bankruptcy Law whether or not
an allowed claim in such proceeding) on overdue principal, premium, if any, and
interest, if lawful on such Security, and (ii) all other monetary Obligations
payable by the Company under this Indenture (including under Section 7.07
hereof) and the Securities (all of the foregoing being hereinafter collectively
called the "Guarantees"), when and as the same shall become due and payable,
whether by acceleration thereof, call for redemption or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code), in accordance with the terms of any such
Security
<PAGE>
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and of this Indenture, subject, however, in the case of (i) and (ii) above, to
the limitations set forth in Section 9.04 hereof. The Guarantees will rank pari
passu with all other senior indebtedness of each Guarantor and senior in right
of payment to all subordinated indebtedness of each Guarantor. Each Guarantor
hereby agrees that its Obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any failure to
enforce the provisions of any such Security or this Indenture, any waiver,
modification or indulgence granted to the Company with respect thereto, the
recovery of any judgment against the Company, any action to enforce the same, by
the Securityholders or the Trustee, the recovery of any judgment against the
Company, any action to enforce the same, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or guarantor.
Each Guarantor hereby waives diligence, presentment, filing of claims with a
court in the event of a merger or bankruptcy of the Company, any right to
require a proceeding first against the Company, the benefit of discussion,
protest or notice with respect to any such Security or the Indebtedness
evidenced thereby and all demands whatsoever, and covenants that its Guarantee
shall not be discharged as to any such Security except by payment in full of the
principal thereof, premium, if any, and all accrued interest thereon.
(b) Each Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Securityholder or the Trustee to any security held for payment of the
Guarantees.
(c) Each Guarantor agrees that it shall not be entitled to, and
hereby irrevocably waives, any right of subrogation in relation to the
Securityholders or the Trustee in respect of any Guarantee. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Securityholders and the Trustee, on the other hand, (x) the maturity of the
Guarantee may be accelerated as provided in Article 6 for the purposes of such
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guarantees, and (y)
in the event of any Declaration of Acceleration of such Guarantees as provided
in Article 6 hereof, such Guarantees (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purpose of this
Article 12.
(d) Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any
Securityholder in enforcing any rights under this Article 12.
(e) Each Guarantor also agrees that, as the Securities, the
Guarantees will be secured pursuant to Article 10.
<PAGE>
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(f) Each Guarantor agrees to become a party to the Collateral
Documents whereby the Guarantees will be secured in the manner set forth in such
Security Documents.
(g) The Guarantee set forth in this Article 12 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 12.02. Execution and Delivery of Guarantee. (a) To evidence
each Guarantor's Guarantee set forth in this Article 12, each Guarantor hereby
agrees that a notation of such Guarantee (the form of which is attached hereto
as Exhibit B) shall be attached to each Security authenticated and delivered by
the Trustee.
(b) This Indenture shall be executed on behalf of each Guarantor,
and an Officer of each Guarantor shall sign the notation of the Guarantee on the
Security, by manual or facsimile signature. If an Officer whose signature is on
this Indenture or the notation of Guarantee no longer holds that office at the
time the Trustee authenticates the Security on which the Guarantee is endorsed,
the Guarantee shall be valid nevertheless. Each Guarantor hereby agrees that the
Guarantee set forth in Section 12.01 hereof shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of the
Guarantee.
(c) The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
SECTION 12.03. Guarantee Unconditional, Etc. Upon failure of payment
when due of any Guarantee for whatever reason, each Guarantor will be obligated
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of: the
recovery of any judgment against the Company or any Guarantor; any extension,
renewal, settlement, compromise, waiver or release in respect of any obligation
of the Company under this Indenture or any Security, by operation of law or
otherwise; any modification or amendment of or supplement to this Indenture or
any Security; any change in the corporate existence, structure or ownership of
the company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Indenture or any
Security; the existence or any claim, set-off or other rights which any
Guarantor may have at any time against the Company, the Trustee, any
Securityholder or any other Person, whether in connection herewith or any
unrelated transactions; provided, that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim; any
<PAGE>
-94-
invalidity or unenforceability relating to or against the Company for any reason
of this Indenture or any Security, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of the principal,
premium, if any, or interest on any Security or any other Guarantee; or any
other act or omission to act or delay of any kind by the Company, the Trustee,
any Securityholder or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of the Guarantors' obligations hereunder. Each Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demand
whatsoever and covenants that this Guarantee will not be discharge except by the
complete performance of the obligations contained in the Securities, this
Indenture and in this Article 12. Each Guarantor's obligations hereunder shall
remain in full force and effect until this Indenture shall have terminated and
the principal of and interest on the Securities and all other Guarantees shall
have been paid in full. If at any time any payment of the principal of or
interest on any Security or any other payment in respect of any Guarantee is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, each Guarantor's
obligations hereunder with respect to such payment shall be reinstated as though
such payment had been due but not made at such time, and this Article 12, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor irrevocably waives any and all rights to which it may be
entitled, by operation of the law or otherwise, upon making any payment
hereunder to be subrogated to the rights of the payee against the Company with
respect to such payment or otherwise to be reimbursed, indemnified or exonerated
by the Company in respect thereof.
SECTION 12.04. Limitation of Guarantor's Liability. Each Guarantor,
and by its acceptance of a Security, each Securityholder, hereby confirms that
it is the intention of all such parties that the guarantee by such Guarantor
pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for
purposes of the Bankruptcy Law, Federal and state fraudulent conveyance laws or
other legal principles. To effectuate the foregoing intention, the
Securityholders and each Guarantor hereby irrevocably agree that the obligations
of such Guarantor under the Guarantee shall be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Guarantee or pursuant to Section 12.05 hereof, result in
the obligations of such Guarantor under the Guarantee not constituting such
fraudulent transfer or conveyance under federal or state law.
<PAGE>
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SECTION 12.05. Contribution. In order to provide for just and
equitable contribution amount the Guarantors, the Guarantors agree, inter se,
that in the event any payment or distribution is made by a Guarantor (a "Funding
Guarantor") under the Guarantee, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
Adjusted Net Assets of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's obligations with respect to the Securities or any other
Guarantor's obligations with respect to the Guarantees.
SECTION 12.06. Release. Upon the sale, exchange or other transfer of
all of the outstanding Capital Stock, or all or substantially all of the assets,
of a Guarantor owned by the Company or by any other Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary) to a Person that is not an Affiliate
of the Company, which is otherwise in compliance with this Indenture, the
Guarantee of such Guarantor shall be automatically and unconditionally released
and discharged without any further action required on the part of the Trustee or
any Securityholder. The Trustee shall execute an appropriate instrument prepared
by the Company evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate certifying as to the compliance with
this Section 12.06. Any Guarantor not so released remains liable for the full
amount of principal, premium, if any, and interest on the Securities as provided
in this Article 12.
SECTION 12.07. Additional Guarantors. Any Person that was not a
Guarantor on the date of this Indenture may become a Guarantor by executing and
delivering to the Trustee (a) a supplemental indenture in form and substance
satisfactory to the Trustee, which subjects such Person to the provisions of
this Indenture as a Guarantor and (b) an Opinion of Counsel to the effect that
such supplemental indenture has been duly authorized and executed by such Person
and constitutes the legal, valid, binding and enforceable obligation of such
Person (subject to such customary exceptions concerning creditors' rights and
equitable principles as may be acceptable to the Trustee in its discretion). The
Guarantee of each Person described in this Section 12.07 shall apply to all
Securities theretofore executed and delivered, notwithstanding any failure of
such Securities to contain a notation of such Guarantee thereon.
SECTION 12.08. Successors and Assigns. This Article 12 shall be
binding upon each Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Securityholders
and, in the event of any transfer or assignment of rights by any Securityholder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
<PAGE>
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SECTION 12.09. Waiver of Stay, Extension or Usury Laws. Each
Guarantor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive each such Guarantor from performing its Guarantee
as contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) each Guarantor hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 12.10. No Personal Liability of Partners, Stockholders,
Officers, Directors. No direct or indirect stockholder, partner, employee,
officer or director, as such, past, present or future of any Guarantor or any
successor entity shall have any personal liability in respect of the obligations
of any Guarantor or any successor entity under this Agreement by reason of his
or its status as such stockholder, partner, employee, officer or director.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls. If any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by operation of the TIA,
the imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 13.02. Notices. Any notices or other communications to the
Company or the Trustee required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
<PAGE>
-97-
if to the Trustee:
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 701-7698
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
<PAGE>
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(2) an opinion of Counsel (in form and substance reasonably
Satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. The
Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 13.07. Legal Holidays. If a payment date is a Legal Holiday
at such place, payment may be made at such place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 13.08. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION
<PAGE>
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OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
SECTION 13.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any of its respective Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others. No direct or indirect
employee, stockholder, director or officer, as such, past, present or future of
the Company, or any successor entity, shall have any personal liability in
respect of the obligations of the Company under the Securities or this indenture
by reason of his or its status as such stockholder, employee director or
officer. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver an release are part of he consideration for the
issuance of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.12. Duplicate Originals. All parties may sign any number
of copies or counterparts of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent the same
agreement.
SECTION 13.13. Severability. In case any one or more of the
provisions in this Indenture or in the Securities shall be held invalid, illegal
or unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or
<PAGE>
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impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.
SECTION 13.14. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and the Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 13.15. Qualification of Indenture. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all costs and expenses (including
attorneys' fees for the Company and the Trustee) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification of
the Indenture and the Securities and printing this Indenture and the Securities.
The Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.
SECTION 13.16. Registration Rights. Certain Holders of the
Securities are entitled to certain registration rights with respect to such
Securities pursuant to, and subject to the terms of, the Registration Rights
Agreement.
[Signature Pages Follow]
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
-------------------------------------
Name:
Title:
ALBANY CELLULAR PARTNERS
By: Palmer Wireless Holdings, Inc.,
its managing partner
By:
-------------------------------------
Name:
Title:
COLUMBUS CELLULAR TELEPHONE COMPANY
By: Palmer Wireless Holdings, Inc.,
its managing partner
By:
-------------------------------------
Name:
Title:
<PAGE>
S-2
MACON CELLULAR TELEPHONE SYSTEMS
LIMITED PARTNERSHIP
By: CEI Communications, Inc., its
general partner
By:
-------------------------------------
Name:
Title:
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
By: Palmer Wireless Holdings, Inc.,
its general partner
By:
-------------------------------------
Name:
Title:
PANAMA CITY CELLULAR TELEPHONE
COMPANY, LTD.
By: Panama City Communications, Inc.,
its general partner
By:
-------------------------------------
Name:
Title:
<PAGE>
S-3
PANHANDLE CELLULAR PARTNERSHIP
By: Palmer Wireless Holdings, Inc.,
its managing partner
By:
-------------------------------------
Name:
Title:
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
S-4
Accepted and agreed to as of the date first above written:
NATWEST CAPITAL MARKETS LIMITED, on
behalf of and as Representative of
the Purchasers
By:
------------------------------
Name:
Title:
<PAGE>
S-5
BANK OF MONTREAL TRUST
COMPANY, Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
{FORM OF SECURITY}
9-1/8% SERIES {A/B} SENIOR SECURED NOTE DUE 2006
No.
CUSIP No.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of $_________ Dollars,
on December 15, 2006.
Interest Payment Dates: December 15 and June 15 of each year;
commencing December 15, 1998.
Record Dates: December 1 and June 1.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be
duly executed.
Dated:
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By: _____________________________________
Name:
Title:
A-1
<PAGE>
{FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION}
This is one of the Securities described in the within-mentioned
Indenture.
Bank of Montreal Trust Company,
as Trustee
By:______________________________
Authorized Signatory
Dated:
A-2
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
9-1/8% Series {A/B} Senior Secured Note due 2006
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation, ("DTC"), to the Company
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED
STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE
WITH RESPECT TO SUCH TRANSFER, RESALE OR OTHERWISE, TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
A-3
<PAGE>
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "UNITED STATES PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS
1. Interest.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate and in the manner specified below. Interest
will accrue at 9-1/8% per annum and will be payable semi-annually in cash on
each December 15 and June 15, commencing December 15, 1998, or if any such day
is not a Business Day on the next succeeding Business Day (each an "Interest
Payment Date") to Holders of record of the Securities at the close of business
on the immediately preceding December 1 or June 1, whether or not a Business
Day. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance. To the extent lawful, the Company shall pay interest on overdue
principal at the rate of the then applicable interest rate on the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
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<PAGE>
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Bank of Montreal Trust Company (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to Note Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
June 16, 1998 (the "Indenture"), between the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are secured
obligations of the Company limited in aggregate principal amount to
$1,000,000,000.
5. Redemption.
(a) Except as set forth below, the Company will not have the right
to redeem any Securities prior to June 15, 2002. On or after June 15, 2002, the
Company will have the right to redeem all or any part of the Securities in cash
at the redemption prices (expressed as a percentage of the aggregate principal
amount thereof) set forth below, in each case including accrued and unpaid
interest, if any, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period beginning June 15 of the years indicated below:
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<PAGE>
Year Redemption Price
---- ----------------
2002 104.56250%
2003 102.28125%
2004 and thereafter 100.00000%
Notwithstanding the optional redemption provisions described in the
preceding paragraph (a), prior to June 15, 2002, in the event that the Company
or any Parent consummates one or more Equity Offerings, other than in an
circumstances resulting in, or as part of a series of transactions resulting in,
directly or indirectly, a Change of Control, on or before the third anniversary
of the date of the issuance of the Securities, the Company may at its option,
use all or a portion of the cash received by it or contributed to it from such
offerings to redeem up to 35% of the originally issued aggregate principal
amount of the Securities at a cash redemption price equal to 109.125% of the
principal amount of the Securities so redeemed, plus accrued and unpaid interest
thereon, if any, to the Redemption Date; provided that (x) at least 65% of the
original aggregate principal amount of the Notes remains outstanding thereafter
(excluding any Securities owned by the Company or any of its Affiliates), and
(y) any such net cash proceeds of such Equity Offering by any Parent to be used
for such a redemption shall be contributed to the Company in an amount in cash
sufficient to redeem the Securities to be redeemed at the then current
redemption price. Notice of any such redemption must be given within 60 days
after the date of the last Equity Offering the proceeds of which are to be so
contributed.
In the case of a partial redemption, the Trustee shall select the
Securities or portions thereof for redemption on a pro rata basis or in such
other manner as it deems appropriate and fair. The Securities may be redeemed in
part in multiples of $1,000 only.
The Securities will not have the benefit of a sinking fund.
Any such redemption will comply with Article 3 of the Indenture.
(b) In addition, notwithstanding the optional redemption provisions
described above, at any time on or prior to June 15, 2002, the Securities may
also be redeemed as a whole at the option of the Company upon the occurrence of
a Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof, plus the Applicable Premium as of, and accrued but unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to a Redemption Date, to the Holder of each
Security to be re-
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<PAGE>
deemed at such Holder's last address as then shown upon the registry books of
the Registrar.
Any notice which relates to a Security to be redeemed in part only
must state the portion of the principal amount to be redeemed and must state
that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities in a principal amount equal to the
unredeemed portion thereof will be issued. On and after the date fixed for
redemption, interest will cease to accrue on the portions of the Securities
called for redemption.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption prior to 15 days after the
notice of redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, cash, U.S.
Legal Tender Equivalents, U.S. Government Obligations or a combination thereof,
in such amounts as will be sufficient in the opinion of a nationally recognized
firm of independent public accountants selected by the Trustee, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding their obligation to
pay the principal of and interest on the Securities). Upon satisfaction of
certain additional condi-
A-7
<PAGE>
tions set forth in the Indenture, the Company may elect to have its obligations
discharged with respect to outstanding Securities.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
or make any other change that does not adversely affect the rights of any Holder
of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, incur additional
Indebtedness, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
13. Ranking.
Payment of principal, premium, if any, and interest on the
Securities is (i) senior in the right of payment to all subordinated
Indebtedness of the Company and (ii) effectively senior in right of payment to
all unsecured Indebtedness of the Company to the extent of the value of the
Collateral (as defined in the Indenture) available for payment of the
Securities.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, unless the Company has elected
to redeem all of the Securities as set forth under Section 3.01(b) of the
Indenture, the Company shall be required to offer to purchase on the Change of
Control Payment Date all outstanding Securities at a purchase price equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the Change of Control Payment Date. Holders of Securities
will receive a Change of Control Offer from the Company prior to any related
Change of Control Payment Date and may elect to have such Securities purchased
by completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
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<PAGE>
(b) The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale as described in the Indenture or to make an offer to purchase each
Holder's Securities at 100% of the principal amount thereof, plus accrued
interest, if any, to the purchase date.
15. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. The Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest), if it determines
that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past,
present or future, of the Company or any successor corporation shall have any
personal liability in respect of the obligations of the Company under the
securities or the Indenture by reason of his or its status as such stockholder,
director, officer or employee. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
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<PAGE>
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Securities under
the Indenture, Holders of Securities shall have all the rights set forth in the
Registration Rights Agreement.
A-10
<PAGE>
{FORM OF} ASSIGNMENT
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
________________________________________________________________________________
and irrevocably appoint _________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: _______________ Signed:_______________________________
________________________________________________________________________________
(Sign exactly as name appears on the other side of this Security)
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Article 11 of the Indenture, check the appropriate
box:
{_} Section 4.15 {_} Article 11
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Article 11 of the Indenture, as the case
may be, state the principal amount you want to be purchased: $_____________
Date:_________________ Signature:___________________________________
(Sign exactly as your name appears
on the other side of this security)
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
Amount of
increase
Amount of in Principal Amount Signature of
decrease in Principal of this Global authorized
Principal Amount of Security officer of
Amount of this following such Trustee or
Date of this Global Global decrease (or Securities
Exchange Security Security increase) Custodian
- -----------------------------------------------------------------------------
- ----------
(2) This schedule should only be added if the Security is issued in global
form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES(3)
Re: 9-1/8% SERIES A SENIOR SECURED NOTES DUE 2006 OF PRICE COMMUNICATIONS
WIRELESS, INC.
This Certificate relates to $ principal amount of Securities held in
4__________ book-entry or(4) __________ definitive form by (the "Transferor").
1. The Transferor:*
{_} (a) has requested the Trustee by written order to deliver in exchange or its
beneficial interest in the Global Security held by the Depository a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
{_} (b) has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
2. In connection with any such request prior to the date which is
two years after the later of the issuance of this Security (or any predecessor
Security) and the sale hereof by an Affiliate (as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")) of the Company
(computed in accordance with paragraph (d) of Rule 144 under the Securities Act)
or by a Transferor that was at the date of such transfer or during the three
months preceding such date of transfer an Affiliate of the Company, and in
respect of each such Security, the Transferor does hereby certify that
Transferor is familiar with the Indenture relating to the above-captioned
Securities and as provided in Section 2.06 of such Indenture, the transfer of
this Security does not require registration under the Securities Act because:*
{_} (a) Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
{_} (b) Such Security is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that is aware that the transfer is being made in
- ----------
(3) The following should be included only for Initial Securities.
(4) Check applicable box.
A-14
<PAGE>
reliance on Rule 144A (in satisfaction of Section 2.06(a)(ii)(B), Section
2.06(b)(i) or Section 2.06(d)(i)(B) of the Indenture).
{_} (c) Such Security is being transferred pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
{_} (d) Such Security is being transferred to an institutional investor that is
an "accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7)
under the Securities Act which delivers a certificate in the form of Exhibit B
to the Indenture to the Trustee (in satisfaction of Section 2.06(a)(ii)(D) or
Section 2.06(d)(i)(D) of the Indenture).
{_} (e) Such Security is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(E) or Section 2.06(d)(i)(E) of the
Indenture).
_________________________________
{INSERT NAME OF TRANSFEROR}
By:______________________________
Date:_______________
3. Affiliation with the Company {check if applicable}
{_} (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was not an Affiliate
of the Company at all time during which it held this Security, indicate the
periods during which the undersigned was an Affiliate of the Company:
__________________________.
(c) If 3(a) above is checked and if the Transferee will not pay the full
purchase price for the transfer of this Security on or prior to the date of
transfer, indicate when such purchase price will be paid:
__________________________.
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<PAGE>
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:_________________ ________________________________________
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S.
Person" (as defined in Regulation S under the Securities Act of 1933, as
amended).
Dated:_________________ ________________________________________
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:_________________ _________________________________________
NOTICE: The signature of the Holder to this
assignment must correspond with the name as
written upon the face of this Security
particular, without alteration or enlargement
or any change whatsoever.
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<PAGE>
EXHIBIT B
[FORM OF GUARANTEE]
For value received, the undersigned hereby fully and unconditionally
guarantees to the Holder of this Security the cash payments, in U.S. dollars, of
principal of, premium, if any, and interest on, this Security in the amounts and
at the time when due and interest on the overdue principal, premium, if any, and
interest, if any, on this Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or the Securities, to
the Holder of this Security and the Trustee, all in accordance with and subject
to the terms and limitations of this Security, Article Twelve of the Indenture
and this Guarantee. This Guarantee will become effective in accordance with
Article Twelve of the Indenture and its terms shall be evidenced therein. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Security. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Indenture
dated as of June 16, 1998, by and among Price Communications Wireless, Inc.,
each of the Guarantors party thereto, the undersigned and Bank of Montreal Trust
Company, as Trustee, as amended or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities and
to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth in Article Twelve of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantee and all of the other provisions
of the Indenture to which this Guarantee relates.
No direct or indirect stockholder, partner, employee, officer or
director, as such, past, present or future of any Guarantor or any successor
entity shall have any personal liability in respect of the obligations of any
Guarantor or any successor entity under this Agreement by reason of his or its
status as such stockholders, partner, employee, officer or director.
THIS NOTE GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE GUARANTOR HEREUNDER AGREES TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE, THE NOTES OR THIS NOTE GUARANTEE.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
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<PAGE>
IN WITNESS WHEREOF, the undersigned Guarantor has caused this
Guarantee to be duly executed.
Dated:
[NAME OF GUARANTOR]
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
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<PAGE>
EXHIBIT C
[Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors]
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: Price Communications Wireless, Inc.
9-1/8% Senior Secured Notes due 2006
Ladies and Gentlemen:
In connection with our proposed purchase of 9-1/89% Senior Secured
Notes due 2006 (the "Securities") of Price Communications Wireless, Inc. (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated June 16, 1998 relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i),
(ii), (iii), and (iv) of the Offering Memorandum and in the section entitled
"Transfer Restrictions on the Notes" of the Offering Memorandum including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Securities (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Securities prior to the
date which is two years after the original issuance of the Securities, we will
do so only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
in-
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<PAGE>
stitutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
inside the United States to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the Trustee (as defined in the Indenture relating to
the Securities), a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Securities, (iv)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will
not transfer the Securities to, any pension or welfare plan (as described in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions on the Notes" of the
Offering Memorandum.
5. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
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<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
By: ________________________________
Name:
C-3
<PAGE>
EXHIBIT D
[Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S]
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: Price Communications Wireless, Inc.
(the "Company") 9 1/8% Senior Secured
Notes due 2006 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $_________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
D-1
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ________________________________
Authorized Signature
D-2
<PAGE>
EXHIBIT E
[Form of Security Agreement]
E-1
<PAGE>
EXHIBIT F
[Form of Increditor Agreement]
F-1
<PAGE>
Exhibit 5.1
December , 1998
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Ladies and Gentlemen:
We have acted as special counsel to Price Communications Wireless,
Inc. (the "Company") in connection with the Company's offer (the "Exchange
Offer") to exchange its 9 1/8% Series B Senior Secured Notes due 2006 (the
"New Notes") for any and all of its outstanding 9 1/8% Series A Senior
Secured Notes due 2006 (the "Old Notes") and the guarantee (the "Guarantees")
of the New Notes by all of the Company's direct and indirect subsidiaries
(the "Guarantor Subsidiaries").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as we have deemed necessary or advisable
for the purpose of rendering this opinion.
Upon the basis of the foregoing and assuming the due execution and
delivery of the New Notes and the Guarantees, we are of the opinion that the New
Notes, when executed, authenticated and delivered in exchange for the Old Notes
in accordance with the Exchange Offer, will be valid and binding obligations of
the Company enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights generally and equitable principles. We
express no opinion as to the enforceability of the security interest purported
to be created thereby.
<PAGE>
Price Communications Wireless, Inc. December , 1998
2
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer. We also consent to the
reference to us under the caption "Legal Matters" in the Prospectus contained in
such Registration Statement.
This opinion is rendered to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose.
Very truly yours
<PAGE>
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS DECEMBER 31,
ENDED -------------------------------
SEPTEMBER 30, 1997 1996 1995 1994
------------------ --------- --------- ---------
<S> <C> <C> <C> <C>
FIXED CHARGES
Interest expense......................................... $ 24,467 $ 31,462 $ 21,213 $ 12,715
Portion of rent expense representative of interest....... 696 1,172 821 531
------- --------- --------- ---------
Total fixed charges.................................... 25,163 32,634 22,034 13,246
------- --------- --------- ---------
------- --------- --------- ---------
EARNINGS
Income from operations before minority interest and
taxes.................................................. 11,582 9,286 4,682 2,298
Fixed charges above...................................... 25,163 32,634 22,034 13,246
------- --------- --------- ---------
Total earnings......................................... 36,745 41,920 26,716 15,544
------- --------- --------- ---------
------- --------- --------- ---------
Ratio of earnings to fixed charges........................... 1.45x 1.28x 1.21x 1.17x
------- --------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Price Communications Wireless, Inc.
(formerly Palmer Wireless, Inc.):
We consent to the inclusion of our reports dated January 30, 1997, with respect
to the consolidated financial statements of Price Communications Wireless, Inc.
and subsidiaries (formerly Palmer Wireless, Inc.); Palmer Wireless Holdings,
Inc.; Cellular Systems of Southeast Alabama, Inc. and subsidiary; Albany
Cellular Partners and subsidiary (a Georgia Partnership); Cellular Dynamics
Telephone Company of Georgia; Columbus Cellular Telephone Company (a Georgia
Partnership); Dothan Cellular Telephone Company, Inc.; Macon Cellular Telephone
Systems Limited Partnership (A New Hampshire Limited Partnership); Montgomery
Cellular Holding Co. Inc. and subsidiary; Montgomery Cellular Telephone Company,
Inc.; Panama City Cellular Telephone Company, Ltd.; and Panhandle Cellular
Partnership as of December 31, 1996, and for each of the years in the two-year
period ended December 31, 1996, and the consolidated financial statements of
Savannah Cellular Limited Partnership (a Delaware Limited Partnership) as of
December 31, 1996, and for the year then ended, which reports appear in the Form
S-4 of Price Communications Wireless, Inc. and to the reference to our firm
under the heading "Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
December 16, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
New York, New York
December 17, 1998
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a trustee Pursuant to
Section 305(b) ____
BANK OF MONTREAL TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-4941093
(Jurisdiction of incorporation or organization (I.R.S. employer
if not a US national bank) identification no.)
88 Pine Street
New York, New York 10005
(Address of principal executive offices) (Zip code)
Mark F. McLaughlin
Bank of Montreal Trust Company
Wall Street Plaza, 88 Pine Street, New York, NY 10005
(212) 701-7602
(Name, address and telephone number of agent for service)
------------------------------------
PRICE COMMUNICATIONS WIRELESS, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3956941
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
<TABLE>
<CAPTION>
Exact name of Guarantor Registrants as I.R.S. employer
Specified in their respective charters State of formation identification number
- -------------------------------------- ------------------ ---------------------
<S> <C> <C>
Panama City Communications, Inc. Florida 59-2863688
Panama City Cellular Telephone Company, Ltd. Florida 59-2881586
Panhandle Cellular Partnership Florida 65-0083886
Savannah Cellular Limited Partnership Delaware 58-1896629
CEI Communications, Inc. Delaware 94-3032437
Macon Cellular Telephone Systems, L.P. New Hampshire 02-0414924
Columbus Cellular Telephone Company Georgia 58-1802141
Albany Cellular Partners Georgia 22-2918690
Cellular Dynamics Telephone Company of Georgia Georgia 58-1761830
Montgomery Cellular Holding Co., Inc. Delaware 42-1330618
Montgomery Cellular Telephone Company, Inc. Alabama 63-0972220
Cellular Systems of Southeast Alabama, Inc. Delaware 63-0964897
Dothan Cellular Telephone Company, Inc. Alabama 63-0964898
Palmer Wireless Holdings, Inc. Delaware 65-0477815
Price Communications Wireless II, Inc. Delaware 13-3966848
Price Communications Wireless III, Inc. Delaware 13-3970561
Price Communications Wireless IV, Inc. Delaware 13-3970562
Price Communications Wireless V, Inc. Delaware 13-3970564
Price Communications Wireless VI, Inc. Delaware 13-3970565
Price Communications Wireless VII, Inc. Delaware 13-3970566
Price Communications Wireless VIII, Inc. Delaware 13-3970567
Price Communications Wireless IX, Inc. Delaware 13-3970569
</TABLE>
45 Rockefeller Center
New York, New York 10020
(Address of principal executive offices)
--------------------------------------
9 1/8% Notes due 2006
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- 2 -
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York
33 Liberty Street, New York NY 10045
State of New York Banking Department
2 Rector Street, New York, NY 10006
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. Copy of Organization Certificate of Bank of Montreal Trust
Company to transact business and exercise corporate trust
powers; incorporated herein by reference as Exhibit "A" filed
with Form T-1 Statement, Registration No. 33-46118.
2. Copy of the existing By-Laws of Bank of Montreal Trust
Company; incorporated herein by reference as Exhibit "B" filed
with Form T-1 Statement, Registration No. 33-80928.
3. The consent of the Trustee required by Section 321(b) of the
Act; incorporated herein by reference as Exhibit "C" with Form
T-1 Statement, Registration No. 33-46118.
4. A copy of the latest report of condition of Bank of Montreal
Trust Company published pursuant to law or the requirements of
its supervising or examining authority, attached hereto as
Exhibit "D".
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939 the Trustee, Bank of Montreal Trust Company, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 15th day of December, 1998.
BANK OF MONTREAL TRUST COMPANY
By /s/ Amy Roberts
---------------------
Amy Roberts
Vice President
<PAGE>
EXHIBIT "D"
STATEMENT OF CONDITION
BANK OF MONTREAL TRUST COMPANY
NEW YORK
---------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Due From Banks $ 677,400
-----------
Investment Securities:
State & Municipal 16,513,582
Other 100
----------
Total Securities 16,513,682
Loans and Advances
Federal Funds Sold 20,900,000
Overdrafts 12,169
----------
Total Loans and Advances 20,912,169
Investment in Harris Trust, NY 8,725,608
Premises and Equipment 475,614
Other Assets 2,636,845
----------
1,838,067
----------
TOTAL ASSETS $49,941,318
-----------
-----------
LIABILITIES
Trust Deposits $ 8,191,549
Other Liabilities 16,944,443
-----------
TOTAL LIABILITIES 25,135,992
CAPITAL ACCOUNTS
Capital Stock, Authorized, Issued and
Fully Paid - 10,000 Shares of $100 Each 1,000,000
Surplus 4,222,188
Retained Earnings 19,605,350
Equity - Municipal Gain/Loss (22,212)
-----------
TOTAL CAPITAL ACCOUNTS 24,805,326
----------
TOTAL LIABILITIES
AND CAPITAL ACCOUNTS $49,941,318
-----------
-----------
</TABLE>
I, Mark F. McLaughlin, Vice President, of the above-named bank do
hereby declare that this Report of Condition is true and correct to the best of
my knowledge and belief.
Mark F. McLaughlin
June 30, 1998
We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declared that it has been examined by
us, and to the best of our knowledge and belief has been prepared in conformance
with the instructions and is true and correct.
Sanjiv Tandon
Kevin O. Healy
Steven R. Rothbloom
<PAGE>
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1998
(THE "EXPIRATION DATE")
UNLESS EXTENDED BY PRICE COMMUNICATIONS WIRELESS, INC.
EXCHANGE AGENT:
BANK OF MONTREAL TRUST COMPANY
BY MAIL, BY OVERNIGHT
COURIER OR BY HAND
Bank of Montreal Trust Company
77 Water Street, 4th Floor
Attn: Amy Roberts,
Corporate Trust Department
New York, NY 10005
BY FACSIMILE:
(212) 701-7684
CONFIRM BY TELEPHONE:
(212) 701-7653
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of Price Communications Wireless, Inc. (the "Company")
which, together with this Letter of Transmittal (the "Letter of Transmittal"),
describes the Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of 9 1/8% Series B Senior Secured Notes due 2006 (the "New
Notes") for each $1,000 in principal amount of outstanding 9 1/8% Series A
Senior Secured Notes due 2006 (the "Old Notes"). The terms of the New Notes are
identical in all material respects (including principal amount, interest rate
and maturity) to the terms of the Old Notes for which they may be exchanged
pursuant to the Exchange Offer, except that the offering of the New Notes will
have been registered under the Securities Act of 1933, as amended (the
"Securities Act") and, therefore, the New Notes will not bear legends
restricting the transfer thereof.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
<CAPTION>
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT PRINCIPAL
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBER(S)* BY NOTES* TENDERED**
<S> <C> <C> <C>
Total
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the full
aggregate principal amount represented by Old Notes. See Instruction 2.
</TABLE>
2
<PAGE>
This Letter of Transmittal is to be used either if certificates for Old
Notes are to be forwarded herewith or if delivery of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" in the Prospectus. Delivery of documents to
a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder or any person whose Old
Notes are hold of record by DTC who desires to deliver such Old Notes by
book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under "The Exchange
Offer;--Guaranteed Delivery Procedures."
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
____________________________________________________________________________
The Depository Trust Company:
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s): ______________________________________________
____________________________________________________________________________
Name of Eligible Institution that Guaranteed Delivery:
____________________________________________________________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number: ____________________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of the
Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent acts as the agent
of the undersigned in connection with the Exchange Offer) to cause the Old Notes
to be assigned, transferred and exchanged. The undersigned represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Old Notes and to acquire New Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes or transfer ownership of such Old Notes on the
account books maintained by DTC.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under "The Exchange Offer." The undersigned recognizes that as a
result of these conditions (which may be waived, in whole or in part, by the
Company), as more particularly set forth in the Prospectus, the Company may not
be required to exchange any of the Old Notes tendered hereby and, in such event,
the Old Notes not exchanged will be returned to the undersigned at the address
shown below the signature of the undersigned.
By tendering, each Holder of Old Notes represents to the Company that (i)
the New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is such Holder, (ii) neither the Holder of Old Notes nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer or is a broker-dealer but will not receive new Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the Holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act. If the
tendering Holder is a broker-dealer (whether or not it is also an "affiliate")
that will receive New Notes for its own account in exchange for Old Notes, it
represents that the Old Notes to be exchanged for the New Notes were acquired by
it as a result of market-making activities or other trading activities, and
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. By acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Old Notes may be withdrawn
at any time prior to the Expiration Date.
Certificates for all New Notes delivered in exchange for tendered Old Notes
and any Old Notes delivered herewith but not exchanged, in each case registered
in the name of the undersigned, shall be delivered to the undersigned at the
address shown below the signature of the undersigned.
4
<PAGE>
- --------------------------------------------------------------------------------
TENDERING HOLDERS(S) SIGN HERE
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF HOLDERS(S)
Dated: ___________________, 199
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted herewith or,
if the Old Notes are held of record by DTC, the person in whose name such
Old Notes are registered on the books of DTC. If signature by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative
capacity, please set forth the full title of such person.) See Instruction
3.
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.: ( )__________________________________________
Tax Identification No.: ____________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTION 3)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
Title: _____________________________________________________________________
Address: ___________________________________________________________________
Name of Firm: ______________________________________________________________
Area Code and Telephone No.: _______________________________________________
Date: ____________________, 199
----------------------------------------------------------------------------
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates for
all physically delivered Old Notes or confirmation of any book-entry transfer to
the Exchange Agent's account at DTC of Old Notes tendered by book-entry
transfer, as well as a properly completed and duly executed copy of this Letter
of Transmittal or facsimile thereof, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at its address set
forth herein on or prior to the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED
THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other required documents to the Exchange Agent on or
prior to the Expiration Date or comply with book-entry transfer procedures on a
timely basis may tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures." Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution (as defined therein); (ii) on or prior to
the Expiration Date the Exchange Agent must have received from such Eligible
Institution, a letter, telegram or facsimile transmission setting forth the name
and address of the tendering Holder, the names in which such Old Notes are
registered, and, if possible, the certificate numbers of the Old Notes to be
tendered; and (iii) all tendered Old Notes (or a confirmation of any book-entry
transfer of such Old Notes into the Exchange Agent's account at DTC) as well as
this Letter of Transmittal and all other documents required by this Letter of
Transmittal must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such letter, telegram or
facsimile transmission, all as provided in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
all denominations of $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering Holder must fill in the principal amount
tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the Expiration Date.
All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable, except
that Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent. Any such notice of withdrawal must specify the person named in
the Letter of Transmittal as having tendered Old Notes to be withdrawn, the
certificate numbers of the Old Notes to be withdrawn, the principal amount of
Old Notes delivered for exchange, a statement that such a Holder is withdrawing
its election to have such Old Notes exchanged, and the name of the registered
Holder of such Old Notes, and must be signed by the Holder in the same manner as
the original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly
6
<PAGE>
following receipt of notice of withdrawal. If Old Notes have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn Old Notes or otherwise comply with DTC's procedures.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of certificates without
alteration, enlargement or any change whatever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered Holder or
Holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If the Letter of Transmittal is signed by a person other than the registered
Holder or Holders of the Old Notes listed, such Notes must be endorsed or
accompanied by separate written instruments of transfer or exchange in form
satisfactory to the Company and duly executed by the registered Holder, in
either case signed exactly as the name or names of the registered Holder or
Holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separated written
instruments of transfer or exchange are signed by trustee, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
Holder of such Old Notes and the certificates for New Notes to be issued in
exchange therefor are to be issued (or any untendered amount of Old Notes are to
be reissued) to the registered Holder; or (ii) for the account of any Eligible
Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to it or its order pursuant
to the Exchange Offer. If, however, New Notes are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
Holder of the Old Notes tendered hereby, or if a transfer tax is imposed for any
reason other than the transfer of Old Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange Agent
at the address indicated below for further instructions.
7
<PAGE>
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth below. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Company at 45 Rockefeller Plaza, New York, New York 10020. Attention: [Ashley B.
Dixon (212) 757-5600.]
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the right to waive any irregularities or conditions of tender as to the
particular Old Notes covered by any Letter of Transmittal or tendered pursuant
to such letter. None of the Company, the Exchange Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Company's interpretation of the terms and conditions of the Exchange Offer shall
be final and binding.
9. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and not
otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR OLD NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
8
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER TO EXCHANGE
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
---------------
Registered holders of outstanding 9 1/8% Series A Senior Secured Notes due
2006 (the "Old Notes") who wish to tender their Old Notes in exchange for a like
principal amount of 9 1/8% Series B Senior Secured Notes due 2006 (the "New
Notes") and, in each case, whose Old Notes are not immediately available or who
cannot deliver their Old Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to Bank of Montreal Trust
Company (the "Exchange Agent") prior to the Expiration Date, may use this Notice
of Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight delivery) or mail to the Exchange Agent. See "The Exchange Offer --
Guaranteed Delivery Procedures" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
BANK OF MONTREAL TRUST COMPANY
BY MAIL, BY OVERNIGHT
COURIER OR BY HAND:
Bank of Montreal Trust Company
77 Water Street, 4th Floor
Attn: Amy Roberts,
Corporate Trust Department
New York, NY 10005
BY FACSIMILE:
(212) 701-7684
CONFIRM BY TELEPHONE:
(212) 701-7653
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution, such signature guarantee must appear in
the applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOTE TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office, branch, agency or
correspondent in the United States, hereby guarantees to deliver to the Exchange
Agent at one of its addresses set forth above, the certificates representing the
Old Notes, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, and
any other documents required by the Letter of Transmittal within five New York
Stock Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm:
(Authorized Signature)
Address: Title:
Name:
(Zip Code) (Please type or print)
Area Code and Telephone Number:
Date:
</TABLE>
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. NOTES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER OF PARTICIPANT FROM OWNER
OF
PRICE COMMUNICATIONS WIRELESS, INC.
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
TO REGISTERED HOLDER AND/OR PARTICIPANT OF THE BOOK-ENTRY TRANSFER FACILITY:
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of Price Communications Wireless, Inc., a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meaning as ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$ of the 9 1/8% Series A Senior Secured Notes due 2006
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
/ / To TENDER the following Old Notes held by you for the account of the
undersigned (insert principal amount of Old Notes to be tendered, if any):
$ of the 9 1/8% Series A Senior Secured Notes due 2006
/ / NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for the
account of the undersigned, it is understood that you are authorized to make, on
behalf of the undersigned (and the undersigned, by its signature below, hereby
makes to you), the representation and warranties contained in the Letter of
Transmittal that are to be made with respect to the undersigned as a beneficial
owner, including but not limited to the representations, that (i) the New Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the undersigned, (ii) neither the undersigned nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such New Notes, (iii) if the undersigned is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the undersigned nor any such other
person is engaged in or intends to participate in the distribution of such New
Notes and (iv) neither the undersigned nor any such person is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"). If the undersigned is a broker-dealer (whether
or not it is also an "affiliate") that will receive New Notes for its own
account in exchange for Old Notes, it represents that such old Notes were
acquired as a result of market-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such New Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
<PAGE>
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Names(s) (please print): _______________________________________________________
Address: _______________________________________________________________________
Telephone Number: ______________________________________________________________
Taxpayer Identification or Social Security Number: _____________________________
Date: __________________________________________________________________________
2
<PAGE>
OFFER TO EXCHANGE
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1998, of Price
Communications Wireless, Inc. (the "Company"), a Delaware corporation, and a
related Letter of Transmittal (which together constitute the "Exchange Offer")
relating to the offer by the Company to exchange its 9 1/8% Series B Senior
Secured Notes due 2006 (the "New Notes"), pursuant to an offering registered
under the Securities Act of 1933, as amended (the "Securities Act"), for a like
principal amount of its issued and outstanding 9 1/8% Series A Senior Secured
Notes due 2006 (the "Old Notes") upon the terms and subject to the conditions
set forth in the Exchange Offer.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
We are the holder of record and/or participant in the book-entry transfer
facility of Old Notes held by us for your account. A tender of such Old Notes
can be made only by us as the record holder and/or participant in the book-entry
transfer facility and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but will
not receive New Notes for its own account in exchange for Old Notes, neither the
holder nor any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act. If the tendering holder is a broker-dealer (whether or not it is
also an "affiliate") that will receive New Notes for its own account in exchange
for Old Notes, we will represent on behalf of such broker-dealer that the Old
Notes to be exchanged for the New Notes were acquired by it as a result of
market-making activities or other trading activities, and acknowledge on behalf
of such New Notes, such broker-dealer that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. By acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes, such broker-dealer is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Very truly yours,
<PAGE>
OFFER TO EXCHANGE
9 1/8% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
9 1/8% SERIES A SENIOR SECURED NOTES DUE 2006
OF
PRICE COMMUNICATIONS WIRELESS, INC.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer by
Price Communications Wireless, Inc. (the "Company"), a Delaware corporation, to
exchange its 9 1/8% Series B Senior Secured Notes due 2006 (the "New Notes"),
pursuant to an offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of its issued and
outstanding 9 1/8% Series A Senior Secured Notes due 2006 (the "Old Notes") upon
the terms and subject to the conditions set forth in the Company's Prospectus,
dated , 1998, and the related Letter of Transmittal (which together
constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer Participant
from Owner; and
5. Letter which may be sent to your clients for whose account you hold Old
Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE EXCHANGE
OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998 UNLESS
EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but will
not receive New Notes for its own account in exchange for Old Notes, neither the
holder nor any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act. If the tendering holder is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes, you will represent on
behalf of such broker-dealer that the Old Notes to be exchanged for the New
Notes were acquired by it as a result of market-making activities or other
trading activities, and acknowledge on behalf of such broker-dealer that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes, such
broker-dealer is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The enclosed Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner contains an authorization by the beneficial owners of the
Old Notes for you to make the foregoing representations.
<PAGE>
The Company will not pay any fee or commission to any broker or dealer or to
any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Offer. The Company will pay
or cause to be paid any transfer taxes payable on the transfer of Old Notes to
it, except as otherwise provided in Instruction 4 of the enclosed Letter of
Transmittal
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
BANK OF MONTREAL TRUST COMPANY
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF PRICE COMMUNICATIONS WIRELESS, INC. OR BANK OF MONTREAL TRUST COMPANY
OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN
CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
