SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____to____
Commission File No. 0-11174
WARWICK VALLEY TELEPHONE COMPANY
(Exact name of registrant as specified in its charter)
New York 14-1160510
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47-49 Main Street, Warwick, New York 10990
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 986-1101
Securities registered pursuant to Section 12(b) of the Act: None
Common Stock (Without Par Value)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES ____ NO _____
Aggregate market value of voting stock held by non-affiliates as of March 20,
1996 - (no organized market exists)
Common shares outstanding, March 20, 1996 - 618,957
DOCUMENTS INCORPORATED BY REFERENCE
Name Incorporated Into
Annual Report to Shareholders for the year
ended December 31, 1995 Parts II and IV
Proxy statement for the 1996 Annual Meeting
of Shareholders Part III
The Exhibit Index for this report is located on page 11. The total number of
pages contained in this report is 110.
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Part 1.
Item 1. BUSINESS.
Warwick Valley Telephone Company (the "Company") was incorporated in
New York on January 16, 1902 and is qualified to do business as a foreign
corporation in New Jersey. The Company's executive offices are located at 47-49
Main Street, Warwick, New York 10990 (Tel. No. 914-986-8080).
The Company is an independent telephone company with 13,506 access
lines in New York State and 8,286 in New Jersey at December 31, 1995. It
provides telephone service to customers in the contiguous towns of Warwick and
Goshen, New York, and the townships of West Milford and Vernon, New Jersey. The
Company operates exchanges in Warwick (9,207 access lines), Florida (2,960
access lines) and Pine Island (1,341 access lines), New York and Vernon (5,846
access lines) and Upper Greenwood Lake (2,446 access lines), New Jersey. The
Company's service area is primarily rural and has an estimated population of
50,000.
In 1995, 19,817,962 toll calls were made on the Company's system,
representing an increase of 7.2% from 18,482,545 in 1994. Business customers
represent 21.1% of total access lines, and no single customer's annual billings
represent a significant portion of the Company's gross revenues.
The Company has installed advanced digital switching equipment in all
of its exchanges and fiber optic routes between central offices and to most
neighboring telephone companies, and is currently constructing fiber optic
routes in certain other locations.
The Company sells, as well as leases, telephone equipment both within
its territory and with the territories of other telephone companies. Residential
telephone equipment sales are made through the Company's retail stores, which
are located in the Company's main office in Warwick, New York and at Route 515
and Guthrie Drive in Vernon, New Jersey. The Company also sells and leases
business telephone systems both in its own territory and elsewhere. At present,
the sale of telephone and other equipment does not constitute a material part of
the Company's business.
The Company holds a 7.5% limited partnership interest in a cellular
mobile telephone partnership which is licensed to operate as the wire-line
licensee in both Orange and Dutchess Counties, New York. The general partner is
New York Cellular Geographic Service Area, Inc. (An affiliate of Bell Atlantic
NYNEX Mobile), and the other limited partners are Highland Telephone Company,
Sylvan Lake Telephone Company and Taconic Telephone Corporation. Since the
inception of the partnership, the Company has made capital contributions of
$249,750; no further capital contributions are expected to be required in 1995.
The partnership began offering cellular service in both counties in February
1988. The partnership's pre-tax income for the year ended December 31, 1995 was
$3,970,000, and the Company's share of that pre-tax income was $297,750.
The Company has four wholly-owned subsidiaries. Warwick Valley Mobile
Telephone Company, Inc. ("WVMT") resells cellular telephone service to the
Company's subscribers as well as to others. WVMT also sells and installs
cellular telephone sets. For the year ended December 31, 1995, WVMT had a
pre-tax profit of $19,927. Warwick Valley Long Distance Company, Inc. ("WVLD")
resells toll telephone service to the Company's subscribers. WVLD commenced
operation in New Jersey in December, 1993 and in New York in May, 1994. WVLD had
a pre-tax profit in 1995 of $315,216. Warwick Valley Networks, Inc. ("WVN") was
established during 1994 and is a partner in the New York State Independent
Network ("NYSINET"), which was created by the independent telephone companies of
New York to build and operate a data connections network. NYSINET will make it
unnecessary for its member companies to rely on outside companies for these
services and may also offer services to companies who are not members, creating
a potential source of additional revenue. The NYSINET network is expected to be
in operation during 1996. Hometown Online,
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Inc.("Online") was established during 1995. It is the entity through which WVTC
offers connectivity to the Internet as well as local and regional information
services to personal computer users. Service is offered within WVTC's service
area as well as in nearby areas in New York, New Jersey and Pennsylvania.
Online, which began business in July, 1995, had a pre-tax loss of $200,003 in
1995.
COMPETITION
Residential customers can purchase telephone sets (including cellular
sets) and equipment compatible and operational with the Company's telephone and
cellular systems at other retail outlets inside and outside the Company's
territory and not affiliated with the Company. Such outlets include other
telephone company telephone stores, department stores, discount stores and
mail-order services. Businesses in the Company's service area are also allowed
to purchase equipment compatible and operational with the Company's system from
other telephone and "interconnect" companies. The Company's territory is
surrounded by the territories of NYNEX, Bell Atlantic, Citizens Utilities,
Sprint-United Telephone and Frontier Telephone, all of which offer residential
and business telephone equipment. There are also several interconnect companies
located within a 30-mile radius of Warwick, New York.
The Telecommunications Act of 1996 (the "Act"), which recently became
law, creates a nationwide structure in which competition is allowed and
encouraged between local exchange carriers, interexchange carriers, competitive
access providers, cable TV companies and other entities. Because the states are
responsible for implementing many of the Act's provisions, the impact on WVTC
will be dependent primarily on proceedings currently underway in New York and
New Jersey. The markets most likely to be affected first are the regional toll
areas in both states. The competition in these areas is expected to have the
effect of reducing Warwick's revenues. The extent of such reductions cannot yet
be determined, but is expected to be small in New York, where carrier access is
the main revenue source. In the ongoing New Jersey proceeding, the Company has
urged that it be allowed to realign its local, toll and access rates to prevent
a shortfall which could result from the loss of a significant portion of the
regional toll market. Currently the Company's revenues from toll and access in
the intrastate New Jersey market approximate $2,300,000. The effects of
competition will be felt both in market share retained by the Company and the
level of its toll rates required in order to remain competitive. Although any
loss of toll revenue will be partially offset by increased access revenue, the
current level of access rates will also be reduced. It is expected that regional
toll competition in both states will be implemented before the end of 1996. The
Company anticipates that local competition, as permitted by the Act, will occur
first in major cities. It is impossible, at this time, to determine the extent,
or the timing, of the advent of competition in the Company's service area, which
is defined as rural under provisions of the Act. There are special provisions in
the Act governing competition in rural areas but it is the responsibility of the
States to implement them. To prepare for competition, which is expected to arise
eventually, the Company is taking steps such as establishing subsidiaries as
listed in this section, to compete in various markets, reengineering its
processes, establishing a local business office in New Jersey and planning for
cooperation with providers of personal communications services.
The cellular partnership referred to above is in competition with two
non-wire-line licensees, one of which is currently operating a cellular system
in Dutchess County, New York, and the other in Orange County, New York.
WVMT competes against Bell Atlantic-NYNEX Mobile Communication Retail
Company, Orange County Cellular Telephone Corporation and others offering either
cellular service or the sale and installation of cellular equipment.
The Company currently provides access to the national and international
calling markets as well as a significant portion of the intrastate calling
markets through all interested inter-exchange carriers, including WVLD. Equal
2
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access ("one-plus") service to all toll carriers has been available to the
Company's customers since August 1, 1991. Access to the remainder of the
intrastate calling markets is provided through NYNEX and Bell Atlantic. WVLD, as
an inter-exchange carrier, competes against all such other carriers, providing
full toll services to its customers at discounted rates.
Online has numerous competitors whose services are available to
customers throughout our marketing area. The Company competes both on the basis
of service and price. Despite the presence of many competitors, it is
experiencing a level of growth which exceeds Management's expectations. If
customer growth continues and current levels of pricing can be maintained,
profitability is anticipated during 1996. Whether growth and pricing levels can
be maintained depends, in part, on the actions of existing competitors and on
the possible entry into the market of new competitors, such as AT&T or cable TV
companies.
Should NYSINET offer services to non-members, WVN will indirectly be
competing against NYNEX and others.
STATE AND FEDERAL REGULATION
The Company's New York telephone service operations are subject to the
jurisdiction of the New York State Public Service Commission (the "NYSPSC"); its
New Jersey telephone service operations, to the jurisdiction of the New Jersey
Board of Public Utilities (the "NJBPU"). These two bodies have regulatory
authority over the Company with respect to rates, facilities, services, reports,
issuance of securities and other matters. Interstate toll and access services
are subject to the jurisdiction of the FCC.
The Company, like many other telephone companies of its size, depends
heavily for its revenues on inter-and intrastate toll usage, receiving
approximately 68.7% of its revenues from these sources.
With regard to interstate toll calls, the Company receives
reimbursement from toll carriers in the form of charges for providing toll
carriers access to and from the Company's local network.
Pursuant to FCC requirements, the Company is obligated to make
contributions to a long-term support fund of the National Exchange Carrier
Association. During 1995, the Company paid approximately $54,000 to that fund.
The Company's contributions to the fund are expected to be approximately $75,000
in 1996. Such fund contributions are considered as part of the Company's cost of
providing access services and are recoverable from inter-exchange carriers that
use the Company's network.
The Company also receives access charges from toll carriers for all
intrastate/interLATA toll usage. In New York State, the Company also provides
access to NYNEX; the Company is obligated to make contributions to the New York
State Access Settlement Pool (the "NYSASP") but does not pool its toll or access
revenues therein. The NYSASP began operations on October 1, 1992 and supports
the operations of certain telephone companies other than the Company. The
Company is obligated to contribute approximately $220,000 to the NYSASP during
the period January 1 to September 30. A current proceeding before the NYSPSC
will determine the future of the NYSASP and the Company's obligation after that
date.
In the Company's two New Jersey exchanges, intrastate/interLATA toll
revenues are retained by toll carriers and the associated access charges are
retained by the Company. New Jersey intrastate/intraLATA toll revenues are
generally retained by the filing company; those of such revenues resulting from
traffic between the Company and Bell Atlantic are, however, adjusted by charges
payable to each company for terminating traffic. It is anticipated that in late
1996, the intrastate/intraLATA relationships just described will be replaced by
competition. The impact of such a change on the Company was discussed in the
previous section on Competition.
3
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In addition to charging for access to and from the Company's local
network, the Company bills and collects charges for most inter- and intrastate
toll messages carried on its facilities. Interstate billing and collection
services provided by the Company are not regulated. They are provided under
contract by the Company. Intrastate billing and collection remain regulated, and
are provided under tariff. Some carriers provide their own billing and
collection services.
The Tax Reform Act of 1986, while reducing the potential liability of
the Company for income taxes, also affects the rates the Company is permitted to
charge to customers. The NJBPU has ruled that any reduction of tax liability
must be passed on to the Company's subscribers in the form of reduced rates.
Rate reductions in the New Jersey exchanges commenced July 1, 1987 and
approximate $180,000 on an annual basis. The NYSPSC has taken the position that
all benefits realized from such reduction in tax liability should be deferred.
The Company's deferred tax savings were applied during 1994, and will continue
to be applied in subsequent years, as an offset against the amount the NYSPSC
requires the Company to contribute to a fund for the payment of post-retirement
health benefits for the Company's employees.
For further information concerning compensation for toll usage see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report to Shareholders filed as an exhibit hereto.
EMPLOYEES
The Company has 95 full-time and part-time employees, including 73
non-management employees. Forty of the non-management employees (primarily the
office staff and operators) are represented by the Warwick Valley Telephone
Company Employees' Association ("WVTEA"). The current three-year agreement
between the Company and WVTEA expires November 5, 1998.
Twenty-eight (28) non-management employees (primarily plant employees)
are represented by Local 503 of the International Brotherhood of Electrical
Workers (IBEW). The current three-year contract between the Company and Local
503 expires on April 30, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position and Period Served
Fred M. Knipp 65 President since 1988
Philip S. Demarest 59 Vice President since 1989; Vice President-
Finance and Administration 1977-1989;
Secretary since 1972; Treasurer since 1989;
Assistant Treasurer 1982-1989
Herbert Gareiss, Jr. 50 Vice President since 1989; Treasurer 1982-
1989; Assistant Treasurer since 1989;
Assistant Secretary since 1980
John P. Nye, Vice President of the Company retired on October 1, 1995.
There are no arrangements between any officer and any other person
pursuant to which he was selected an officer.
Item 2. PROPERTIES
The Company owns an approximately 22,000 square-foot building in
Warwick, New York, which houses its general offices, operators, data processing
equipment and the central office switch for the Warwick exchange. In addition,
the Company owns several smaller buildings which serve as workshops, storage
space or garages or which house switching equipment at the Company's other
exchanges. Of the Company's investment in telephone plant in service, central
office equipment represents approximately 44.1%; connecting lines and related
equipment, 36.7%; telephone instruments and related equipment, 3.5%; land and
buildings, 6.7%; and other telephone plant, 9.0%. A substantial portion of the
Company's properties is subject to the lien of the Company's Indenture or
Mortgage.
4
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Part II.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS. (1)
Item 6. SELECTED FINANCIAL DATA. (1)
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (1)
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. (1)
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
Part III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (2)
Item 11. EXECUTIVE COMPENSATION. (2)
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (2)
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (2)
1 The material called for by Items 5, 6, 7, and 8 is included on the
Company's Annual Report to its Shareholders for the year ended December 31,
1995, which pages have been incorporated.
2 With the exception of the identification of executive officers as listed on
page 4, the material called for by Items 10-13 is included in the Company's
definitive proxy statement, incorporated by reference herein, for its 1996
Annual Meeting of Shareholders, to be filed pursuant to Section 14(a) of
the Securities Exchange Act of 1934.
5
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Part IV.
Item 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements: The following financial statements of the Company,
included in the Annual Report of the Company to its Shareholders for the year
ended December 31, 1995, are incorporated herein by reference:
Reference Pages
Annual Report
On Form 10-K
Consolidated Statement of Income - Years
Ended December 31, 1995, 1994 and 1993 96
Consolidated Balance Sheet - December 31, 94-95
1995 and 1994
Consolidated Statement of Stockholders' 97
Equity - Years Ended December 31, 1995,
1994 and 1993
Consolidated Statement of Cash Flows - Years 98
Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements 99-107
2. Financial Statement Schedules:
Report of Independent Certified 9
Public Accountants on Financial
Statement Schedules
Schedules:
VIII. Valuation and Qualifying Accounts 10
6
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3. Exhibits:
Exhibit No. Description of Exhibit Reference
3(a) Articles of Incorporation, Incorporated by reference
as amended to Exhibit 3(a) to the
Company's Annual Report of
Form 10-K for 1990
3(b) By-Laws Incorporated by reference to
Exhibit 3(b) to the Company's
Annual Report on Form 10-K
for 1993
4(a) Form of Common Stock Incorporated by reference to
Certificate Exhibit 4(a) to the Company's
Annual Report on Form 10-K
for 1990
4(b) Loan Agreement, dated Incorporated by reference to
June 1,1976, with Stromberg- Exhibit 4(c) to the Company's
Carlson Corporation Registration Statement on
Form 10 (File No. 0-11174),
dated April 29, 1983
4(c) Indenture of Mortgage, dated Incorporated by reference to
November 1, 1952, and all Exhibit 4(d) to the Company's
indentures supplemental Registration Statement on
thereto, except the Eighth Form 10 (File No. 0-11174),
Supplemental Indenture dated April 29, 1983
4(d) Eighth Supplemental Incorporated by reference to
Indenture, dated as of Exhibit 4(d) to the Company's
May 1, 1990, to the Annual Report on Form 10-K
Indenture of Mortgage, for 1990
dated November 1, 1952,
including form of 9.05%
First Mortgage Bond,
Series I, Due May 1, 2000
4(e) Ninth Supplemental Incorporated by reference
Indenture, dated as of Exhibit 4(e) to the Company's
October 1, 1993, to the Annual Report on Form 10-K
Indenture of Mortgage, for 1993
dated November 1, 1952,
including form of 7.05%
First Mortgage Bond,
Series J, Due October
1, 2003
13 Annual Report to Share- Filed herewith
holders for the year ended
December 31, 1995, together
with separate manually
executed Independent
Auditor's Report.
23 Consent of Independent Filed herewith
Auditor
(b) No reports on Form 8-K were filed during the last quarter
of the year ended December 31, 1995.
7
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WARWICK VALLEY TELEPHONE COMPANY
Dated: March ____, 1996 By______________________________
Fred M. Knipp
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated and on the ____ day of March, 1996.
Signature Title
_______________________________________ President and Director
Fred M. Knipp (Principal Executive Officer)
_______________________________________ Vice President, Treasurer,
Philip S. Demarest Secretary and Director
(Principal Financial
and Accounting Officer)
_______________________________________ Director
Earl V. Barry
_______________________________________ Director
Wisner H. Buckbee
_______________________________________ Director
Howard Conklin, Jr.
_______________________________________ Director
Joseph E. DeLuca
_______________________________________ Director
Corinna S. Lewis
_______________________________________ Director
Victor J. Marotta
_______________________________________ Director
Henry L. Nielsen, Jr.
8
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BUSH & GERMAIN, PC
CERTIFIED PUBLIC ACCOUNTANTS
901 LODI STREET
SYRACUSE, NEW YORK 13203
PHONE: (315) 424-1145
CONSENT OF INDEPENDENT AUDITORS
February 8, 1996
We consent to the incorporation by reference in this Annual Report (Form 10-K)
for the year ended December 31, 1995 of Warwick Valley Telephone Company of our
report dated February 8, 1996, included in the 1995 Annual Report to
Shareholders of Warwick Valley Telephone Company.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-46836) pertaining to the Warwick Valley Telephone Company of
our report dated February 8, 1996 with respect to the consolidated financial
statements of Warwick Valley Telephone Company incorporated herein by reference
and our report dated February 8, 1996 with respect to schedules of Warwick
Valley Telephone Company included in this Annual Report (Form 10-K) for the year
ended December 31, 1995.
Bush & Germain, P.C.
Syracuse, New York
/26
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WARWICK VALLEY TELEPHONE COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1995, 1994 and 1993
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions of Period
(Note a) (Note b) (Note c)
Allowance for
uncollectibles:
Year 1995 $65,155 $59,956 $18,509 $78,466 $65,154
Year 1994 $65,155 $25,144 $10,262 $35,406 $65,155
Year 1993 $65,638 $28,718 $15,440 $44,641 $65,155
(a) Provision for uncollectibles as stated in statements of income.
(b) Amounts previously written off which were credited directly to this account
when recovered.
(c) Amounts written off as uncollectible.
10
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EXHIBIT INDEX
Exhibit No. Description of Exhibit Page
3 (a) Articles of Incorporation, as amended 12
4 (a) Form of Common Stock Certificate 80
4 (d) Eighth Supplemental Indenture, dated as of
May 1, 1990, to the Indenture of Mortgage,
dated November 1, 1952, including form of
9.05% First Mortgage Bond, Series I,
Due May 1, 2000 81
13 Annual Report to Shareholders for the year
ended December 31, 1995 89
Exhibit 3(b) is incorporated by reference to Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1988. Exhibits 4(b)
and 4(c) are incorporated by reference to Exhibits 4(b) and 4(c), respectively,
to the Company's Registration Statement on Form 10 (File No. 0-11174), dated
April 29, 1983. Exhibit 10 is incorporated by reference to Exhibit 10 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1989.
11
EXHIBIT 3A
Duplicate.
Treasurer's Office - State of New York.
$5.00. Albany, January 16, 1902.
Received from Warwick Valley Telephone Company, Five Dollars in full of
Tax of one-twenthieth of one per centum upon the Capital Stock of $10,000. of
the above named company for the privilege of organization pursuant to Chapter
448 Laws of 1901.
B. H. Davis,
Deputy Treasurer.
Thos. P. Gilman
Deputy Comptroller
Certificate of Incorporation
of the
Warwick Valley Telephone Company.
State of New York,
County of Orange, SS:-
Village of Warwick
We, Clinton W. Wisner, Michael N. Kane, George H. Strong, Sidney H.
Sanford, Hiram Tate, George F. Ketchum, John W. Sanford, William A. Hynard,
Frank M. Cummins, Fred C. Cary, William E. Bailey, Charles A. Crissey, William
H. Chardavoyne, Wilbur C. Lazear, Benjamin B. Sayer, Francis B. Sanford, G. Fred
Pitts, Ferdinand V. Sanford, Joshua C. Wilson, Milton L. Sanford, Charles G.
Pierson, Wilson W. Van Duzer, Pierson E. Sanford, James H. Vealey, James B.
Lawrence, Henry Pelton, Benjamin F. Vail, Patrick O'Hehir, Sherman Rightmeyer,
Albert C. Gullman, Dwight Dutcher, John J. Beattie, Lewis J. Campbell, James W.
Benedict, Albert Burk, and Fred C. Raynor, all of whom are of full age and
citizens of the United States and residents of this State, do by these presents
associate ourselves together to form a corporation for the purpose of
constructing, owning, using and maintaining a line or lines of Electric
Telephone pursuant to and in conformity with the provisions of Article VIII of
the Transportation Corporations Law, and for that purpose we do hereby certify
as follows:
I. The name of the proposed Corporation is, the Warwick Valley
Telephone Company.
II. The general route and points to be connected by said line are, the
residences, business and public places in the Village and Town of Warwick, New
York, the County of Orange, New York, and the Counties of Sussex and Passaic,
New Jersey.
III. The amount of its capital stock shall be Ten Thousand Dollars.
IV. The number of shares of which the capital stock shall consist are
One Thousand.
V. The term of its existence shall be fifty years.
VI. The number of its directors shall be nine.
VII. The names and residences of the directors for the first year are
Michael N. Kane, George F. Ketchum, Frank M. Cummins, Fred C. Cary, William E.
Bailey, Sidney H. Sanford, William A. Hynard, Wilbur C. Lazear, and George H.
Strong, all of Warwick, Orange County, New York.
VIII. The Post Office Address of each subscriber, the number of shares
of stock which each agrees to take in said Corporation, are subscribed to this
Certificate.
IN WITNESS WHEREOF, We have hereunto subscribed our names to the
Certificate in duplicate this 11th day of January, 1902.
Names. Residences. No. of Shares.
Michael N. Kane Warwick, N. Y. Ten
George H. Strong " " Ten
Sidney H. Sanford " " "
George F. Ketchum " " "
John W. Sanford " " "
Hiram Tate " " "
W. A. Hynard " " "
Frank M. Cummins " " "
Fred C. Cary " " "
12
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William E. Bailey Warwick, N. Y. Ten
Charles A. Crissey " " "
Wm. H. Chardavoyne " " "
Wilbur C. Lazear " " "
B. B. Sayer " " "
G. Fred Pitts " " "
F. V. Sanford " " "
Joshua C. Wilson " " "
M. L. Sanford " " "
Chas. G. Pierson " " "
Wilson W. Van Duzer " " "
Pierson E. Sanford " " "
James H. Vealey " " "
James B. Lawrence " " "
Henry Pelton " " Five
Benjamin F. Vail " " Five
Patrick P. O'Hehir " " Ten
Sherman Rightmyer " " Five
A. C. Gullman " " "
Dwight Dutcher " " Ten
John J. Beattie " " "
Lewis J. Campbell " " Five
James W. Benedict " " Ten
Albert Burk " " Five
Fred C. Raynor " " "
State of New York,
County of Orange, SS:-
On this 15th day of January, 1902, before me personally appeared,
Michael N. Kane, George H. Strong, Sidney H. Sanford, Hiram Tate, George F.
Ketchum, John W. Sanford, William A. Hynard, Frank M. Cummins, Fred C. Cary,
William E. Bailey, Charles A. Crissey, William H. Chardavoyne, Wilbur C. Lazear,
Benjamin B. Sayer, G. Fred Pitts, Ferdinand V. Sanford, Joshua G. Wilson, Milton
L. Sanford, Charles G. Pierson, Wilson W. Van Duzer, Pierson E. Sanford, James
H. Vealey, James B. Lawrence, Henry Pelton, Benjamin F. Vail, Sherman Rightmyer,
Albert C. Gullman, Dwight Dutcher, John J. Beattie, Lewis J. Campbell, James W.
Benedict, Albert Burk, and Fred C. Raynor, to me known to be the persons
described in and who executed the foregoing Certificate and they severally
acknowledged to me that they executed the same.
Lewis J. Stage, Notary Public.
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State of New York,
SS;-
Orange County Clerk's Office,
I, James D. McGiffert, Clerk of the County of Orange and also Clerk of
the Supreme and County Courts, in and for said County (Courts of Record) do
hereby certify that I have compared the preceding copy with the original
Certificate of Incorporation of the Warwick Valley Telephone Company filed Jan.
21, 1902 at 9 H. A. M. in my Office and that the same is a true and correct
transcript therefrom and the whole of said original.
Witness my hand and the seal of
said Courts and County at Goshen,
Seal
this 11th day of Sept. 1912.
J. D. McGiffert Clerk.
14
<PAGE>
CERTIFICATE OF INCREASE OF CAPITAL STOCK AND OF NUMBER OF SHARES OF ONE
THOUSAND PURSUANT TO SECTION THIRTY-SIX OF THE STOCK CORPORATION LAW.
We, George H. Strong and George F. Ketchum, being respectively,
president and the secretary thereof, certify
1. The name of the corporation is Warwick Valley Telephone Company.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on the 16th day of January 1902.
3. The total amount of the previously authorized capital stock is
$10,000.
4. The total number of shares which the corporation is authorized to
issue is 1000 common of the par value of $10. each.
5. The designations, preferences, privileges and voting powers, or
restrictions or qualifications of the several classes of shares already
authorized are as follows: 1000 shares common stock with full voting powers.
6. The number of shares of each class issued and outstanding is 1000
shares common.
7. The amount to which the capital stock is increased is $20,000.
8. The number of shares is increased from 1000 to 2000, all of which
are to have a par value of Ten Dollars each, the same as heretofore.
9. The total number of shares which the corporation may henceforth have
is 2000, all of which are to have a par value of Ten Dollars each.
IN WITNESS WHEREOF, we have made and subscribed this certificate in
triplicate, this fifteenth day of May, 1907.
(signed) George H. Strong
President.
(signed) George F. Ketchum
Secretary.
15
<PAGE>
State of New York :
: ss:
County of Orange :
On this 15th day of August, 1927, before me personally came George H.
Strong and George F. Ketchum, to me known to be the persons described in and who
executed the foregoing certificate, and they thereupon duly acknowledged to me
that they executed the same.
(signed) Lawrence Stage
Notary Public, Orange County.
State of New York :
: ss:
County of Orange :
George H. Strong and George F. Ketchum, being duly sworn, depose and
say and each for himself says that he George H. Strong, is the president of
Warwick Valley Telephone Company, and he George F. Ketchum, was the secretary
thereof at the time of the execution of the above certificate, that they have
been duly authorized to execute and file the foregoing certificate of increase
of capital stock and number of shares by the votes of the holders of record of a
majority of the outstanding shares of said corporation entitle to vote thereon,
cast in person or by proxy at a stockholder's meeting held in the rooms of the
Excelsior Hose Company in the Village Building in the Village of Warwick, N. Y.,
on the 7th day March, 1907, at 8 o'clock P.M., upon notice pursuant to Section
forty-five of the Stock Corporation Law.
Subscribed and sworn to before me
(signed) George H. Strong
this 15th day of August, 1927.
(signed) George F. Ketchum
(signed) Lawrence Stage
Notary Public, Orange County.
16
<PAGE>
CERTIFICATE OF INCREASE OF CAPITAL STOCK AND OF NUMBER OF SHARES OF FOUR
THOUSAND SIX HUNDRED SEVEN PURSUANT TO SECTION THIRTY-SIX OF THE STOCK
CORPORATION LAW.
We, George H. Strong and John E. Barry, being respectively, president
and the secretary and treasurer thereof, certify
1. The name of the corporation is Warwick Valley Telephone Company.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on the 16th day of January, 1902.
3. The total amount of the previously authorized capital stock is
$20,000.
4. The total number of shares which the corporation is authorized to
issue is 2000 common of the par value of $10. each.
5. The designations, preferences, privileges and voting powers, or
restrictions or qualifications of the several classes of shares already
authorized are as follows: 2000 shares common stock with full voting powers.
6. The number of shares of each class issued and outstanding is 2000
shares common.
7. The amount to which the capital stock is increased is $66070.
8. The number of shares is increased from 2000 to 6607., all of which
are to have a par value of Ten Dollars each, the same as heretofore.
9. The total number of shares which the corporation may henceforth have
is 6607., all of which are to have a par value of Ten Dollars each.
IN WITNESS WHEREOF, we have made and subscribed this certificate in
triplicate, this fifteenth day of August 1927.
(signed) George H. Strong (signed) John E. Barry
President. Secretary and Treasurer.
17
<PAGE>
State of New York :
: ss:
County of Orange :
On this 15th day of August, 1927, before me personally came George H.
Strong and John E. Barry, to me known to be the persons described in and who
executed the foregoing certificate, and they thereupon duly acknowledged to me
that they executed the same.
(signed) Lawrence Stage
Notary Public, Orange County.
State of New York :
: ss:
County of Orange :
George H. Strong and John E. Barry, being duly sworn, depose and say
and each for himself deposes and says that he George H. Strong, is the president
of Warwick Valley Telephone Company, and he, John E. Barry, is the secretary and
treasurer thereof, that they have been duly authorized to execute and file the
foregoing certificate of increase of capital stock and number of shares by the
votes of the holders of record of a majority of the outstanding shares of said
corporation entitled to vote thereon, cast in person or by proxy at a
stockholders' meeting held in the directors room of the First National Bank, in
the Village of Warwick, N. Y., on the 12th day of August, 1927, at 8:00 o'clock
P.M., upon notice pursuant to Section forty-five of the Stock Corporation Law.
Subscribed and sworn to before me
(signed) George H. Strong
this 15th day of August, 1927.
(signed) John E. Barry
(signed) Lawrence Stage
Notary Public, Orange County.
18
<PAGE>
CERTIFICATE OF INCREASE OF CAPITAL STOCK AND OF NUMBER OF SHARES OF WARWICK
VALLEY TELEPHONE COMPANY PURSUANT TO SECTION THIRTY-SIX OF THE STOCK
CORPORATION LAW.
We, George H. Strong and John E. Barry, being respectively, president
and the secretary and treasurer thereof, certify:
1. The name of the corporation is Warwick Valley Telephone Company.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on the 16th day of January, 1902.
3. The total amount of the previously authorized capital stock is
$66,070.00.
4. The total number of shares which the corporation is authorized to
issue of 6607 common of the par value of $10.00 each.
5. The designations, preferences, privileges and voting powers, or
restrictions or qualifications of the several classes of shares already
authorized are as follows: 6607 shares common stock with full voting powers.
6. The number of shares of each class issued and outstanding is 2000
shares common.
7. The amount to which the capital stock is increased is $94,150.00.
8. The number of shares is increased from 6607 to 9415, all of which
are to have a par value of Ten Dollars each, the same as heretofore.
9. The total number of shares which the corporation may henceforth have
is 9415, all of which are to have a par value of Ten Dollars each.
IN WITNESS WHEREOF, we have made and subscribed this certificate in
triplicate, this sixteenth day of June, 1928.
(signed) George H. Strong
President.
(signed) John E. Barry
Secretary and Treasurer
19
<PAGE>
State of New York :
: ss:
County of Orange :
On this 16th day of June, 1928, before me personally came George H.
Strong and John E. Barry, to me known to be the persons described in and who
executed the foregoing certificate, and they thereupon duly acknowledged to me
that they executed the same.
(signed) Lawrence Stage
Notary Public, Orange County.
State of New York :
: ss:
County of Orange :
George H. Strong and John E. Barry, being duly sworn, depose and say
and each for himself deposes and says that he, George H. Strong, is the
president of the Warwick Valley Telephone Company, and he, John E. Barry, is the
secretary and treasurer thereof; that they have been duly authorized to execute
and file the foregoing certificate of increase of capital stock and number of
shares by the votes of the holders of record of a majority of the outstanding
shares of said corporation entitled to vote thereon, cast in person or by proxy
at a stockholders' meeting held in the trustees room of the Village Building, in
the Village of Warwick, N. Y. on the 15th day of June, 1928, at 8:00 o'clock
P.M., upon notice pursuant to Section forty-five of the Stock Corporation Law.
Subscribed and sworn to before me
(signed) George H. Strong
this 16th day of June, 1928.
(signed) John E. Barry
(signed) Lawrence Stage
Notary Public, Orange County.
20
<PAGE>
Certificate of reduction of number of directors of Warwick Valley
Telephone Company, pursuant to Section 35 of the Stock Corporation Law.
We, the undersigned, being the President and Secretary of said
corporation, hereby certify:
1. The name of the corporation is Warwick Valley Telephone Company.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on the 16th day of January, 1902.
3. The number of directors previously authorized is nine.
4. The number of directors previously authorized is reduced so that the
total number of directors hereafter shall be not less than five nor more than
seven.
IN WITNESS WHEREOF, we have made and subscribed the Certificate in
triplicate this 15th day of April, 1943.
(signed) George H. Strong
(signed) John E. Barry
STATE OF NEW YORK :
: ss.:
COUNTY OF ORANGE :
On this 17th day of April, 1943, before me personally came George H.
Strong and John Barry, to me known to be the persons described in and who
executed the foregoing certificate, and they thereupon severally duly
acknowledged to me that they executed the same.
(signed) Bertha C. Hamel
Notary Public, Orange County.
21
<PAGE>
STATE OF NEW YORK :
: ss.:
COUNTY OF ORANGE :
George H. Strong and John Barry, being duly sworn, depose and say, and
each for himself deposes and says, that he, George H. Strong, is the president
of the Warwick Valley Telephone Company, and he, John Barry, is the secretary
thereof; that they have been authorized to execute and file such certificate by
the votes cast, in person or by proxy, of the holders of record of a majority of
such shares, cast at a stockholders meeting held on April 15th, 1943 upon notice
pursuant to Section 35 of the Stock Corporation Law.
(signed) George H. Strong
(signed) John E. Barry
Sworn to before me this
17th day of April, 1943.
(signed) Bertha C. Hamel
Notary Public.
22
<PAGE>
CERTIFICATE OF INCREASE OF CAPITAL STOCK AND NUMBER OF SHARES
OF WARWICK VALLEY TELEPHONE COMPANY PURSUANT TO SECTION
THIRTY-SIX OF THE STOCK CORPORATION LAW.
We, CHAUNCEY K. CONKLIN and JOHN E. BARRY, being respectively the
President of WARWICK VALLEY TELEPHONE COMPANY, and the Secretary thereof,
certify:
1. The name of the Corporation is WARWICK VALLEY TELEPHONE COMPANY.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on the 16th day of January, 1902.
3. The total amount previously authorized capital stock is Ninety-four
Thousand One Hundred Fifty Dollars ($94,150.).
4. The total number of shares which the Corporation is authorized to
issue is Nine Thousand Four Hundred Fifteen (9,415.), all of which have a par
value of Ten Dollars ($10.) each share, and all of which are common shares.
5. The designations, preference, privileges and voting powers or other
restrictions or qualifications of the several classes of shares already
authorized are as follows: 9,415 shares Common Stock with full voting power.
6. The total number of shares issued and outstanding is Nine Thousand
Four Hundred Fifteen (9,415).
7. The amount to which the Capital Stock is increased is One Hundred
Ninety-four Thousand One Hundred Fifty Dollars ($194,150.).
8. The number of shares is increased from Nine Thousand Four Hundred
Fifteen (9,415) to Ten Thousand Four Hundred Fifteen (10,415).
23
<PAGE>
9. The total number of shares which the Corporation may henceforth have
is 10,415 as follows:
The shares are divided into two classes as follows, to wit:
1,000 shares CUMULATIVE PREFERRED Stock, all of which are to have
a par value of One Hundred Dollars ($100.) each share.
9,415 shares COMMON Stock, all of which are to have a par value of
Ten Dollars ($10.) each share.
10. The designations, preferences, privileges and voting powers or
restrictions or qualifications of the several classes of shares of Capital Stock
which the Corporation may henceforth have are:
9,415 shares of Ten Dollars ($10.) par value each share Common
Stock with full voting power.
1,000 shares of $4. Cumulative Preferred Stock to have the
following preferences, voting powers, or restrictions or qualifications.
(a) It will be entitled up to Four Dollars ($4) per share
and no more before Common participates in any
dividends, said dividends to be paid on March 31, June
30, September 30 and December 31 in each year.
(b) In case of dissolution or other distribution of assets,
holders of Preferred Stock will be entitled to
distribution of the assets up to par value of the
Preferred Stock and accumulated dividends prior to
holders of Common Stock.
(c) It will have no voting powers except, if default is
made in four quarterly dividend payments the Preferred
Stockholders shall have the right to elect a majority
of the Board of Directors, such voting rights to
continue until all of the dividends in arrears shall
have been paid.
24
<PAGE>
(d) Any or all of the shares of Preferred Stock may be
called for redemption on any dividend payment date at
the option of the company on not less than 30 days
prior published notice or in writing, at par and
accumulated dividends to the date fixed for redemption,
except that, if less than all of the said shares are to
be so redeemed, the shares to be redeemed shall be
drawn by lot.
11. That the total number of shares which the Corporation may
henceforth have is 10,415, 1,000, of which is to have a par value of One Hundred
Dollars ($100.) each and is to be CUMULATIVE PREFERRED Stock, and 9,415 of which
is to be COMMON Stock with a par value of Ten Dollars ($10.) each.
IN WITNESS WHEREOF, we have made and subscribed this certificate, this
28th day of June, 1947.
(signed) Chauncey K. Conklin
President.
(signed) John E. Barry
Secretary
STATE OF NEW YORK :
ss.:
COUNTY OF ORANGE :
On this 28th day of June, 1947, before me personally came CHAUNCEY K.
CONKLIN and JOHN E. BARRY, being respectively the president and secretary of
WARWICK VALLEY TELEPHONE COMPANY, to me known and known to me to be the persons
described in and who executed the foregoing certificate, and they severally duly
acknowledged to me that they executed the same.
(signed) Bertha C. Hamel
Notary Public.
25
<PAGE>
STATE OF NEW YORK :
ss.:
COUNTY OF ORANGE :
CHAUNCEY K. CONKLIN and JOHN E. BARRY, being severally duly sworn,
depose and say, and each for himself, deposes and says that he, CHAUNCEY K.
CONKLIN, is the President of WARWICK VALLEY TELEPHONE COMPANY, and he, JOHN E.
BARRY, is the Secretary thereof; that they have been duly authorized to execute
and file the foregoing certificate by the votes of the holders of record of
two-thirds of the outstanding shares entitled to vote at a stockholders' meeting
at which such votes were cast with relation to the preceeding provided for in
the certificate; that such votes were cast in person or by proxy at a
stockholders' meeting held at No. 80 Main Street, in the Village of Warwick, New
York, on the 28th day of June, 1947, at eight o'clock P.M., upon notice pursuant
to Section 45 of the Stock Corporation Law.
(signed) Chauncey K. Conklin
(signed) John E. Barry
Severally subscribed and sworn
to before me this 28th day of
June, 1947.
(signed) Bertha C. Hamel
Notary Public.
26
<PAGE>
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
Albany, N. Y., August 12, 1947
CASE 12867 - Petition of Warwick Valley Telephone Company for approval of an
amendment of its certificate increasing its capital stock and for authority to
issue preferred stock.
The Public Service Commission hereby consents to and approves this
Certificate of Increase of Capital Stock and Number of Shares of Warwick Valley
Telephone Company Pursuant to Section Thirty-Six of the Stock Corporation Law, -
as provided in the attached certificate executed June 28, 1947, - in accordance
with the order of this Commission of August 7, 1947.
By the Commission,
(signed)
Secretary.
Seal
27
<PAGE>
CERTIFICATE OF INCREASE OF CAPITAL STOCK AND
NUMBER OF SHARES OF WARWICK VALLEY TELEPHONE
COMPANY, PURSUANT TO SECTION THIRTY-SIX OF
THE STOCK CORPORATION LAW
We, CHAUNCEY K. CONKLIN and JOHN E. BARRY, being respectively the
President of WARWICK VALLEY TELEPHONE COMPANY, and the Secretary thereof,
certify:
1. The name of the Corporation is WARWICK VALLEY TELEPHONE COMPANY.
2. The certificate of incorporation was filed in the office of the
Secretary of State on the 16th day of January 1902.
3. That certificate of increase of the capital stock was filed in the
office of the Secretary of the State on the 15th day of August 1947.
4. The total amount previously authorized capital stock is One Hundred
Ninety-four Thousand One Hundred Fifty ($194,150) Dollars.
5. The total number of shares of the capital stock which the
corporation is authorized to issue is Nine Thousand Four Hundred Fifteen
(9,415), which are to have a par value of Ten Dollars ($10) each, and One
Thousand (1,000) shares $4.00 Cumulative Preferred Stock, all of which are to
have a par value of One Hundred ($100) Dollars each.
6. The designations, preference, privileges and voting powers or other
restrictions or qualifications of the several classes of shares already
authorized are as follows:
9,415 shares common stock with full voting power.
1,000 shares of $4 Cumulative Preferred Stock, having the
following preferences, voting powers or restrictions or qualifications:
a. It will be entitled up to Four Dollars ($4) per share and no more
before common participants in any dividends, said dividends to be paid on March
30, June 30, September 30, and December 31st.
b. In case of dissolution or other distribution of assets, holders of
Preferred Stock will be entitled to distribution of the assets up to par value
of the Preferred Stock and accumulated dividends, prior to holders of Common
Stock.
28
<PAGE>
c. It will have no voting powers except, if preferred dividends are not
paid for two years, the preferred stockholders may vote share for share with the
common stockholders so long as two years' arrears exist.
d. The right to call at any dividend date any or all of this Preferred
Stock at option of the Company is reserved with payment of all accrued dividends
and at 100 per cent of par value.
7. The total number of shares of the Common Stock issued and
outstanding is Nine Thousand Four Hundred Fifteen (9,415), and the total number
of shares of cumulative preferred stock issued and outstanding is One Thousand
(1,000).
8. The amount to which the capital stock is increased is Three Hundred
Forty-Four Thousand One Hundred Fifty ($344,150) Dollars.
9. The number of shares is increased from Ten Thousand Four Hundred
Fifteen (10,415) to Eleven Thousand Nine Hundred Fifteen (11,915).
10. The total number of shares which the Corporation may henceforth
have is 11,915, as follows:
The shares are divided into two classes as follows, to wit:
2,500 shares $4.00 CUMULATIVE PREFERRED stock, all of which are to have
a par value of One Hundred Dollars ($100) each share.
9,415 shares COMMON Stock, all of which are to have a par value of Ten
Dollars ($10) each share.
29
<PAGE>
11. The designations, preferences, privileges and voting powers or
restrictions or qualifications of the several classes of shares of Capital Stock
which the Corporation may henceforth have are not to be changed.
12. That the total number of shares which the Corporation may
henceforth have is 11,915; 2,500 of which are to have a par value of One Hundred
($100) Dollars each and is to be $4.00 CUMULATIVE PREFERRED Stock, and 9,415 of
which is to be COMMON Stock with a par value of Ten Dollars ($10) each.
IN WITNESS WHEREOF, we have made and subscribed this certificate, this
19th day of November 1948.
(signed) Chauncey K. Conklin
President
(signed) John E. Barry
Secretary
STATE OF NEW YORK :
: ss.:
COUNTY OF ORANGE :
On this 19th day of November 1948, before me personally came CHAUNCEY
K. CONKLIN and JOHN E. BARRY, being respectively the President and Secretary of
WARWICK VALLEY TELEPHONE COMPANY, to be known and known to me to be the persons
described in and who executed the foregoing certificate, and they severally duly
acknowledged to me that they executed the same.
(signed) Lawrence Stage
LAWRENCE STAGE
Notary Public in the State of New York
Appointed in Orange County, No. 1238
Commission expires March 30, 1950
30
<PAGE>
STATE OF NEW YORK :
: ss.:
COUNTY OF ORANGE :
CHAUNCEY K. CONKLIN and JOHN E. BARRY, being severally duly sworn,
deposes and say, and each for himself, deposes and says that he, CHAUNCEY K.
CONKLIN, is the President of WARWICK VALLEY TELEPHONE COMPANY, and he, JOHN E.
BARRY, is the Secretary thereof; that they have been duly authorized to execute
and file the foregoing certificate by the votes of the holders of record of
two-thirds of the outstanding shares entitled to vote at a stockholders' meeting
at which such votes were cast with relation to the proceeding provided for in
the certificate; that such votes were cast in person or by proxy at a
stockholders' meeting held at No. 80 Main Street, in the Village of Warwick, New
York, on the 17th day of November 1948, at eight o'clock P.M. upon notice
pursuant to Section 45 of the Stock Corporation Law.
(signed) Chauncey K. Conklin
President
(signed) John E. Barry
Secretary
Severally subscribed and sworn
to before me this 19th day of
November 1948.
(signed) Lawrence Stage
LAWRENCE STAGE
Notary Public in the State of New York
Appointed in Orange County, No. 1238
Commission expires March 30, 1950
31
<PAGE>
"C O P Y"
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
Albany, N. Y. June 17, 1949
CASE 14097 - Petition of Warwick Valley Telephone Company for approval of an
increase of its capital stock and the number of authorized shares thereof and
for authority to issue certain cumulative preferred stock.
The Public Service Commission hereby consents to and approves this
Amended Certificate of Increase of Capital Stock and number of Shares of Warwick
Valley Telephone Company, pursuant to Section Thirty-Six of the Stock
Corporation Law, as provided in the attached certificate executed November 19,
1948, in accordance with the order of this Commission dated May 18, 1949.
By the Commission,
Maurice J. Tanner
Secretary.
32
<PAGE>
CERTIFICATE OF REVIVAL OF EXISTENCE OF WARWICK VALLEY TELEPHONE COMPANY,
PURSUANT TO SECTION 49 OF THE GENERAL CORPORATION LAW
I, the undersigned subscriber, being the President of the Warwick
Valley Telephone Company last elected to such office of said corporation do
hereby certify:
1. The name of this corporation is Warwick Valley Telephone Company.
2. The certificate of incorporation was filed in the Office of the
Secretary of State on the 16th day of January, 1902.
3. The term of existence specified in the original certificate of
incorporation of this corporation expired 50 years from the said date thereof on
the 11th day of January, 1952.
4. The existence of this corporation is to be hereby revived and its
duration shall be perpetual.
IN WITNESS WHEREOF, I have executed this certificate this 12th day of
September, 1952.
(signed) Chauncey K. Conklin
33
<PAGE>
STATE OF NEW YORK :
SS.
COUNTY OF ORANGE :
On this 12th day of September, 1952, before me personally appeared
Chauncey K. Conklin, to me personally known, and known to me to be the person
described in and who executed the above instrument and he duly acknowledged to
me that he executed the same.
(signed) Donald G. Janes
Notary Public.
DONALD G. JANES
Notary Public in the State of New York
My commission expires March 30, 1954
STATE OF NEW YORK :
SS.
COUNTY OF ORANGE :
Chauncey K. Conklin, being duly sworn, deposes and says that he,
Chauncey K. Conklin, is the President of Warwick Valley Telephone Company
mentioned in the foregoing certificate; that he was and is the person who held
such office in such corporation at the time of the expiration of its existence
and now holds such office; that he was duly authorized to execute and file the
foregoing certificate by the consent of the holders of record of a majority of
the shares of each and every class of stock of the corporation issued and
outstanding, that such consent was given by vote, cast in person or by proxy at
a stockholders' meeting called for that purpose and held upon notice to all
holders of record of shares of the corporation, given in the manner required for
a special meeting of stockholders of the corporation, which meeting was held at
47-49 Main Street in the Village of Warwick, New York on the 12th day of
September, 1952 at 8:00 o'clock P.M.
34
<PAGE>
That the certificate of incorporation does not require the consent of
more than a majority of the shares of any class of stock of the corporation to
revive it and does not require the consent of more than a majority of the shares
of any class of stock to extend the corporate existence.
Subscribed and sworn to before (signed) Chauncey K. Conklin
me this 12th day of September,
1952.
(signed) Donald G. Janes
Notary Public.
DONALD G. JANES
Notary Public in the State of New York
My commission expires March 30, 1954
35
<PAGE>
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF
WARWICK VALLEY TELEPHONE COMPANY
PURSUANT TO SECTION 36 OF THE STOCK CORPORATION LAW.
We, Chauncey K. Conklin and John E. Barry, being respectively the
President of Warwick Valley Telephone Company, and the Secretary thereof,
certify:
1. The name of this corporation is Warwick Valley Telephone Company.
2. The certificate of incorporation was filed in the Office of the
Secretary of State on the 16th day of January, 1902.
3. The certificate of incorporation is hereby amended as authorized in
Sub-division 2 of Section 35 of the Stock Corporation Law by amending and
changing that portion or said certificate of incorporation which reads as
follows:
"the number of its directors shall be nine" to hereafter read as
follows:
"the number of its directors shall be not less than three nor more than
ten".
IN WITNESS WHEREOF, we have made and subscribed this certificate this
16th day of April, 1953.
(signed) Chauncey K. Conklin
President
(signed) John E. Barry
Secretary
36
<PAGE>
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
On this 16th day of April, 1953, before me, the subscriber personally
appeared Chauncey K. Conklin and John E. Barry, being respectively the President
and Secretary of Warwick Valley Telephone Company, to me known and known to me
to be the same persons described in and who executed the within instrument, and
they severally, duly acknowledged to me that they executed the same.
(signed) Harold W. Schofield
Notary Public
Harold W. Schofield
Notary Public in the State of New York
My commission expires March 30, 1955
Orange County Clerk's No. 526
37
<PAGE>
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
Chauncey K. Conklin and John E. Barry, being severally duly sworn,
depose and say, each for himself deposes and says that he, Chauncey K. Conklin
is the President of Warwick Valley Telephone Company and he, John E. Barry, is
the Secretary thereof; that they have been duly authorized to execute and file
the foregoing certificate by the votes of the holders of record of a majority of
the outstanding shares entitled to vote at a stockholders meeting, at which such
votes were cast with relation to the proceedings provided for in the
certificate; that neither the certificate of incorporation nor any other
certificate filed pursuant to law requires a larger proportion of votes; that
such votes were cast in person or by proxy at a stockholders meeting held at the
office of the company at 47-49 North Main Street, Warwick, New York, on the 15th
day of April, 1953, upon notice pursuant to Section 45 of the Stock Corporation
Law.
(signed) Chauncey K. Conklin
(signed) John E. Barry
Severally subscribed and sworn to
before me this 16th day of April 1953.
(signed) Harold W. Schofield
Notary Public
Harold W. Schofield
Notary Public in the State of New York
My commission expires March 30, 1955
Orange County Clerk's No. 526
38
<PAGE>
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF
WARWICK VALLEY TELEPHONE COMPANY
PURSUANT TO SECTION 36 OF THE STOCK CORPORATION LAW.
We, Chauncey K. Conklin and John E. Barry, being respectively the
president of Warwick Valley Telephone Company and the Secretary thereof,
certify:
1. The name of the corporation is Warwick Valley Telephone Company.
2. The certificate of incorporation was filed in the office of the
Secretary of State on the 16th day of January, 1902.
3. The certificate of incorporation is amended to change the presently
authorized 9415 shares of the class of Common Stock, with a par value of $10 per
share, into 9415 shares of common stock, with no par value, as authorized by
sub-paragraph five of paragraph (c) of subdivision two of Section Thirty-five of
the Stock Corporation Law, to adopt a statement respecting capital as authorized
by sub-paragraph six of paragraph (c) of subdivision two of Section Thirty-five
of the Stock Corporation Law and to authorize 15,585 new shares of common stock
with no par value as authorized by sub-paragraph one of paragraph (c) of
subdivision two of Section Thirty-five of the Stock Corporation Law.
4. Paragraphs III and IV of the certificate of incorporation as
heretofore added or amended by certificates filed pursuant to law, relating to
the amount of its capital stock and to the number and class of shares in which
such capital stock is to be divided and the par value per share, are amended to
read as set forth below:
"The capital of the Corporation shall be at least equal to the
sum of the aggregate par value of all issued shares having par value,
plus the aggregate amount of consideration received by the Corporation
for the issuance of shares without par value, plus such amounts as,
from time to time, by resolution of the board of directors, may be
transferred thereto."
"The total number of shares which the Corporation shall have
authority to issue is twenty-seven thousand five hundred (27,500)
shares, of which two thousand five hundred (2,500) shares shall be
$4.00 CUMULATIVE PREFERRED shares having a par value of $100 each and
twenty-five thousand (25,000) shares shall be common shares without
par value."
5. The terms upon which shares of the common stock with a par value of
$10 per share are to be changed into the common stock with no par value are as
follows: Each share of the common stock with a par value of $10 per share
heretofore authorized shall be changed into one (1) share of the common stock
with no par value.
39
<PAGE>
6. 9415 shares of the common stock with a par value of $10 per share
heretofore authorized which are to be changed are issued shares and are now
outstanding.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
16th day of April, 1957.
(signed) Chauncey K. Conklin
President
(signed) John E. Barry
Secretary
40
<PAGE>
STATE OF NEW YORK:
ss
COUNTY OF ORANGE :
On this 16th day of April, 1957, before me, the subscriber, personally
appeared Chauncey K. Conklin and John E. Barry, being respectively the President
and Secretary of Warwick Valley Telephone Company, to me known and known to me
to be the same persons described in and who executed the within instrument, and
they severally, duly acknowledged to me that they executed the same.
(signed) Harold W. Schofield
Notary Public
Harold W. Schofield
Notary Public in the State of New York
My commission expires March 30, 1959
Orange County Clerk's No. 526
STATE OF NEW YORK :
ss.
COUNTY OF ORANGE :
Chauncey K. Conklin and John E. Barry, being severally, duly sworn,
depose and say and each for himself deposes and says that he, Chauncey K.
Conklin is the President of Warwick Valley Telephone Company and he, John E.
Barry, is the Secretary thereof, that they have been duly authorized to execute
and file the foregoing certificate of amendment by the votes cast in person or
by proxy, of the holders of record of two-thirds of the outstanding shares
entitled to vote and of the holders of record of two-thirds of the outstanding
shares of each class which will be adversely affected and entitled to vote, at
the stockholders' meeting at which such votes were cast with relation to the
proceedings provided for in the certificate; that neither the certificate of
incorporation nor any other certificate filed pursuant to law requires a larger
proportion of votes; that such votes were cast in person or by proxy at a
stockholders' meeting held on the 15th day of April, 1957, upon notice as
required by section 45 of the Stock Corporation Law.
(signed) John E. Barry
Severally subscribed and sworn
to before me this 16th day of
April, 1957.
(signed) Harold W. Schofield
Notary Public
41
<PAGE>
STATE OF NEW YORK :
ss.
COUNTY OF ORANGE :
John E. Barry, being duly sworn, deposes and says: That he is the
Treasurer of Warwick Valley Telephone Company, that
(a) The number of additional shares not resulting from a
change of shares which the Corporation is hereby
authorized to issue is fifteen thousand five hundred
eighty-five (15,585) and the number of such additional
shares with par value is none; and
(b) The number of shares changed is ninety-four hundred
fifteen (9415) and the par value thereof is Ten Dollars
($10) per share, and the number of shares resulting from
such change is ninety-four hundred fifteen (9415) none of
which has a par value.
(signed) John E. Barry
Treasurer
Subscribed and sworn to
before me this 16th day
of April, 1957.
(signed) Harold W. Schofield
Notary Public
Harold W. Schofield
Notary Public in the State of New York
My commission expires March 30, 1959
Orange County Clerk's No. 526
42
<PAGE>
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF
WARWICK VALLEY TELEPHONE COMPANY
PURSUANT TO SECTION 36 OF STOCK CORPORATION LAW
We, Chauncey K. Conklin and John E. Barry being respectively the
President of Warwick Valley Telephone Company, and the Secretary thereof
certify:
1. The name of the corporation is Warwick Valley Telephone Company.
2. The certificate of incorporation was filed in the Office of the
Secretary of State on the 16th day of January, 1902.
3. Pursuant to the authorization contained in Subdivisions 2 and 3 of
Section 35 of the Stock Corporation Law, the certificate of incorporation is
hereby changed and amended to increase the number of authorized shares, to
provide that the preferred shares may be issued in series and to create a series
of 5% preferred shares, fixing the designations, preferences, privileges, voting
powers, restrictions and qualifications thereof.
4. To accomplish such amendment, that portion of Paragraphs III and IV
of the certificate of incorporation as amended which fixed the total number of
shares that may be issued at 27,500, of which 25,000 were common shares having
no par value and 2500 were preferred shares having a par value of $100. each, is
hereby changed and amended to read as follows:
The total number of shares which the corporation shall have
authority to issue is 32,500 shares, of which 7500 shares
shall be preferred shares having a par value of $100 each
and 25,000 shares shall be common shares without par value.
The preferred shares may be issued in series to be known as
"________ series preferred shares" the blank to be completed
by a distinctive designation for each series which may be
issued.
The capital of the corporation shall be at least equal to
the sum of the aggregate par value of all issued shares
having par value, plus the aggregate amount the
consideration received by the corporation for the issuance
of shares without par value, plus such amounts as from time
to time by resolution of the Board of Directors, may be
transferred thereto.
43
<PAGE>
5. A series of preferred shares to known as "5% Series Preferred
Shares" is hereby created.
The designations, preferences, privileges, voting powers,
restrictions and qualifications of the 5% series preferred
shares are as follows:
5% Series Preferred Shares
The holders of the 5% Series Preferred Shares shall be
entitled to cumulative dividends thereon at the rate of five
per cent (5%) per annum on the par value thereof, payable
quarterly on March 31, June 30, September 30, and December
31 of each year, in priority to the payments of dividends on
the common shares. Said dividends shall be cumulative so
that if the corporation shall fail in any fiscal year to pay
such dividends upon all the issued and outstanding 5% Series
Preferred Shares, the deficiency shall be fully paid without
interest, before any dividends shall be set apart or paid on
the common shares. Subject to the foregoing provisions, the
5% Series Preferred Shares shall not be entitled to
participate in any other or additional surplus or earnings
of the corporation. The Board of Directors, in its
discretion, may declare and pay dividends on the common
shares concurrently with dividends on the 5% Series
Preferred Shares for any dividend period for any fiscal year
when such dividends are applicable to the common shares,
provided, however, that all accumulated dividends on the 5%
Series Preferred Shares for all previous fiscal years and
all dividends for the previous dividend periods for that
fiscal year shall have been paid in full.
In case of the liquidation or dissolution or distribution of
the assets of the corporation the holders of 5% Series
Preferred Shares shall be paid the par value thereof and the
amount of all unpaid accrued dividends thereon before any
amount shall be payable to the holders of the common shares.
The 5% Series Preferred Shares may be redeemed in whole or
in part on any day on which a dividend shall be payable upon
payment to the holders thereof the sum of One Hundred
Dollars ($100.00) per share, and the amount of all unpaid
accrued dividends thereon at the date of such redemption.
The 5% Series Preferred Shares to be redeemed if less than
the whole thereof, shall be determined by lot in such manner
as the Board of Directors shall determine. Thirty days
notice of such redemption shall be mailed to the holder of
each such share to be redeemed at his last known post office
address as the same appears in the books of the corporation
and upon the expiration of such thirty days all the rights
and privileges of such redeemed shares and the holders
thereof, except the right to receive the redemption price
and accrued unpaid dividends, shall cease and terminate.
The 5% Series Preferred Shares shall have no voting power
except as otherwise herein specifically provided and shall
not vote in a proceeding for the mortgaging of the property
and franchises of the corporation pursuant to section
sixteen of the Stock Corporation Law, for guaranteeing the
bonds of another corporation pursuant to section nineteen of
the Stock Corporation Law, for the sale of franchises and
property of the corporation pursuant to section twenty of
the Stock Corporation Law for the making of any amendment to
the certificate of incorporation pursuant to sections
thirty-five and thirty-six of the Stock Corporation Law
44
<PAGE>
except when otherwise required by the provisions of Section
fifty-one of the Stock Corporation Law or any other
applicable provisions of law for consolidation pursuant to
section eighty-six of the Stock Corporation Law, for
voluntary dissolution pursuant to section one hundred five
of the Stock Corporation Law or for change of name pursuant
to the General Corporation Law, provided, however that upon
default in the payment of six quarterly dividends upon the
5% Series Preferred Shares, the holders of the 5% Series
Preferred Shares shall thereafter, and until such default
shall have been cured, be entitled to cast one vote for each
such share upon all questions upon which the holders of
common shares shall have the authority to vote, and, voting
separately as a class together with the holders of any other
series preferred shares to elect the majority of the Board
of Directors, the remaining members of the Board of
Directors to be elected by the holders of the common shares.
The entire voting power shall be vested in the common
shares, except in the event of default in the payment of
dividends upon the series preferred shares in which event
said series shall have voting power as herein provided, and,
except as otherwise provided for the preference stock of the
several classes and series, the common shares shall be
vested with the whole interest in the earnings and assets of
the corporation.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
23rd day of May, 1960.
(signed) Chauncey K. Conklin
President
(signed) John E. Barry
Secretary
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
On this 23rd day of May, 1960, before me, the subscriber, personally
appeared Chauncey K. Conklin and John E. Barry, being respectively the President
and Secretary of Warwick Valley Telephone Company, to me known and known to me
to be the same persons described in and who executed the within Instrument, and
they severally, duly acknowledged to me that they executed the same.
(signed) Donald G. Janes
Notary Public
DONALD G. JANES
Notary Public in the State of New York
My commission expires March 30, 1962
45
<PAGE>
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
Chauncey K. Conklin and John E. Barry, being severally, duly sworn,
depose and say, each for himself deposes and says that he, Chauncey K. Conklin
is the President of Warwick Valley Telephone Company and he, John E. Barry is
the Secretary thereof; that they have been duly authorized to execute and file
the foregoing certificate by the votes cast in person or by proxy of the holders
of record of two-thirds of the outstanding shares entitled to vote and of the
holders of record of two-thirds of the outstanding shares of each class which
will be adversely affected and entitled to vote at a stockholders meeting, at
which such votes were cast with relation to the proceedings provided for in the
certificate; that neither the certificate of incorporation nor any other
certificate filed pursuant to law requires a larger proportion of votes; that
such votes were cast in person or by proxy at a stockholders meeting held on the
20th day of May, 1960, upon notice pursuant to Section 45 of the Stock
Corporation Law.
(signed) Chauncey K. Conklin
(signed) John E. Barry
Severally subscribed and sworn
to before me this 23rd day of
May, 1960
(signed) Donald G. Janes
Notary Public
DONALD G. JANES
Notary Public in the State of New York
My commission expires March 30, 1962
46
<PAGE>
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
John E. Barry, being duly sworn, deposes and says that he is the
Treasurer of Warwick Valley Telephone Company, that the number of additional
shares not resulting from a change of shares which the corporation is hereby
authorized to issue is 5,000 shares and the number of such additional shares
with par value is 5,000 shares and the par value thereof is $100. per share.
(signed) John E. Barry
Subscribed and sworn to before
me this 23rd day of May 1960.
(signed) Donald G. Janes
Notary Public
DONALD G. JANES
Notary Public in the State of New York
My commission expires March 30, 1962
47
<PAGE>
632131
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the president and the secretary of Warwick
Valley Telephone Company, do hereby certify and set forth:
1. The name of the corporation is Warwick Valley Telephone Company.
2. The certificate of incorporation was filed by the Department of
State on the 16th day of January, 1902.
3. The certificate of incorporation is hereby amended, pursuant to
section 801 (b) (7) of the Business Corporation Law, to effect an increase in
the aggregate number of shares which the corporation shall have authority to
issue from 32,500 shares to 43,500 shares of which 7,500 shall be preferred
shares having a par value of $100.00 each and 36,000 shares shall be common
shares without par value.
4. That portion of the certificate of incorporation as amended which
sets forth the number of authorized shares is hereby further amended as follows:
"The total number of shares of the corporation which may be
issued is 43,500 to consist of 7,500 preferred shares having a par
value of $100.00 each and 36,000 common shares without par value.
48
<PAGE>
5. The manner in which this amendment to the certificate of
incorporation was authorized was by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of the
shareholders of said corporation duly called and held on the 28th day of July,
1967, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed and signed this
certificate this 31st day of July, 1967.
(signed) John W. Sanford
John W. Sanford, President
(signed) John E. Barry
John E. Barry, Secretary
49
<PAGE>
STATE OF NEW YORK:
ss.
COUNTY OF ORANGE :
John W. Sanford, being first duly sworn, deposes and says that he is
the president of Warwick Valley Telephone Company, that he has read the
foregoing certificate and knows the contents thereof and that the statements
therein contained are true.
(signed) John W. Sanford
John W. Sanford
Sworn to before me this
31st day of July, 1967.
(signed) Doris S. Minturn
Notary Public
DORIS S. MINTURN
Notary Public, State of New York
Appointed in Orange County
Commission Expires March 30, 1969
50
<PAGE>
917683 CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW.
The undersigned, being the executive vice president and the
secretary of Warwick Valley Telephone Company, do hereby certify and set forth:
1. The name of the corporation is Warwick Valley Telephone
Company.
2. The certificate of incorporation was filed by the
Department of State on the 16th day of January, 1902.
3. The certificate of incorporation is hereby amended,
pursuant to section 801(b) (7) of the Business Corporation Law, to effect an
increase in the aggregate number of shares which the corporation shall have
authority to issue from 43,500 to 50,000 shares of which 7,500 shall be
preferred shares having a par value of $100.00 each and 42,500 shares shall be
common shares without par value.
4. The portion of the certificate of incorporation as amended
which sets forth the number of authorized shares is hereby further amended as
follows:
"The total number of shares of the corporation which
may be issued is 50,000 to consist of 7,500 preferred shares
having a par value of $100.00 each and 42,500 common shares
without par value."
51
<PAGE>
5. The manner in which this amendment to the certificate of
incorporation was authorized was by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of the
shareholders of said corporation duly called and held on the 30th day of April,
1971, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed and signed
this certificate this 30th day of April, 1971.
(signed) George C. Bensen
George C. Bensen, Executive Vice President
(signed) John E. Barry
John E. Barry, Secretary
STATE OF NEW YORK:
SS.
COUNTY OF ORANGE :
George C. Bensen, being first duly sworn, deposes and says
that he is the executive vice president of Warwick Valley Telephone Company,
that he has read the foregoing certificate and knows the contents thereof and
that the statements therein contained are true.
(signed) George C. Bensen
George C. Bensen
Sworn to before me this
30th day of April, 1971.
(signed) Herbert N. Roe
Notary Public
HERBERT N. ROE
Notary Public State of New York
Residing in Orange County
My Commission Expires Mar. 30, 1972
52
<PAGE>
A 89245 CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW.
The undersigned, being the president and the secretary of
Warwick Valley Telephone Company, do hereby certify and set forth:
1. The name of the corporation is Warwick Valley Telephone
Company.
2. The Certificate of Incorporation was filed by the
Department of State on the 16th day of January, 1902.
3. The Certificate of Incorporation is hereby amended,
pursuant to Section 801(b) (12) of the Business Corporation Law, to eliminate
the pre-emptive rights to acquire shares or other securities of the corporation.
4. To accomplish such amendment the following shall be added
to the Certificate of Incorporation as amended:
No holder of any share of stock of this Corporation
either common or preferred shall be entitled as a matter of
right, to subscribe for, purchase or receive any part of the
unissued stock of the corporation or any stock of the
corporation to be issued by reason of any increase of the
authorized capital stock of the corporation or any stock of
the corporation purchased by the corporation or by its nominee
or nominees, or to subscribe for, purchase or receive any
rights to or options to purchase any such stock or any bonds,
certificates of indebtedness, debentures or other securities
convertible into or carrying options or warrants to purchase
stock or other securities of the corporation, or have any
other pre-emptive rights as now or hereafter defined by the
laws of the State of New York.
53
<PAGE>
5. The manner in which this amendment to the Certificate of
Incorporation of Warwick Valley Telephone Company was authorized, was by the
affirmative vote of the holders of a majority of all outstanding shares entitled
to vote thereon and by the vote of the holders of a majority of all outstanding
shares of each class or each series of a class adversely affected or
subordinated at a meeting of the shareholders of said corporation duly called
and held on the 27th day of April, 1973.
IN WITNESS WHEREOF, the undersigned have executed and signed
this certificate this 27th day of April, 1973.
(signed) John W. Sanford
President
(signed) Philip S. Demarest
Secretary
54
<PAGE>
STATE OF NEW YORK:
COUNTY OF ORANGE :
JOHN W. SANFORD, being first duly sworn, deposes and says that
he is the president of WARWICK VALLEY TELEPHONE COMPANY, that he has read the
foregoing certificate and knows the contents thereof and that the statements
therein contained are true.
(signed) John W. Sanford
JOHN W. SANFORD
Subscribed and sworn to
before me this 2 day
of May, 1973.
(signed) Mildred S. Littell
NOTARY PUBLIC
MILDRED S. LITTELL
Notary Public, State of New York
Appointed in Orange County
Commission Expires March 30, 1974
No. 36-7570-750
55
<PAGE>
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
Albany, N. Y., July 26, 1973
CASE 26435 - Petition of Warwick Valley Telephone Company for approval of an
amendment of its certificate of incorporation to eliminate all pre-emptive
rights to acquire shares or other securities of the corporation.
The Public Service Commission hereby consents to and approves
this CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF WARWICK
VALLEY TELEPHONE COMPANY UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW,
executed April 27, 1973, in accordance with the order of the Public Service
Commission dated June 29, 1973.
By the Commission,
(signed) Samuel R. Madison
Secretary
56
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW.
The undersigned, being the president and the secretary of
Warwick Valley Telephone Company, do hereby certify and set forth:
1. The name of the corporation is Warwick Valley Telephone
Company.
2. The certificate of incorporation was filed by the
Department of State on the 16th day of January, 1902.
3. The certificate of incorporation is hereby amended,
pursuant to section 801(b) (7) of the Business Corporation Law, to effect an
increase in the aggregate number of shares which the corporation shall have
authority to issue from 50,000 shares to 107,500 shares of which 7,500 shall be
preferred shares having a par value of $100.00 each and 100,000 shares shall be
common shares without par value.
4. That portion of the certificate of incorporation as amended
which sets forth the number of authorized shares is hereby further amended as
follows:
"The total number of shares of the corporation which
may be issued is 107,500 to consist of 7,500 preferred shares
having a par value of $100.00 each and 100,000 common shares
without par value."
57
<PAGE>
5. The manner in which this amendment to the certificate of
incorporation was authorized was by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of the
shareholders of said corporation duly called and held on the 30th day of April,
1976, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed and signed
this certificate this 30th day of April, 1976.
(signed) John W. Sanford
John W. Sanford, President
(signed) Philip S. Demarest
Philip S. Demarest, Secretary
58
<PAGE>
STATE OF NEW YORK :
SS.:
COUNTY OF ORANGE :
John W. Sanford, being first duly sworn, deposes and says that
he is the president of Warwick Valley Telephone Company, that he has read the
foregoing certificate and knows the contents thereof and that the statements
therein contained are true.
(signed) John W. Sanford
John W. Sanford
Sworn to before me this
30th day of May, 1976.
(signed) Mildred S. Littell
Notary Public
MILDRED S. LITTELL
Notary Public, State of New York
Appointed in Orange County
Commission Expires March 30, 1978
No. 36-7570-750
59
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and Secretary of Warwick
Valley Telephone Company, do hereby certify and set forth:
1. The name of corporation is Warwick Valley Telephone
Company.
2. The certificate of incorporation was filed by the
Department of State on the 16th day of January, 1902.
3. The certificate of incorporation is hereby amended,
pursuant to section 801 (b) (7) of the Business Corporation Law, to effect an
increase in the aggregate number of shares which the corporation shall have
authority to issue from 107,500 to 127,500 shares of which 7,500 shall be
preferred shares having a par value of $100.00 each and 120,000 shares shall be
common shares without par value.
4. The portion of the certificate of incorporation as amended
which sets forth the number of authorized shares is hereby further amended as
follows:
"The total number of shares of the corporation which
may be issued is 127,500 to consist of 7,500 preferred shares
having a par value of $100.00 each and 120,000 common shares
without par value."
60
<PAGE>
5. The manner in which this amendment to the certificate of
incorporation was authorized was by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of the
shareholders of said corporation duly called and held on the 24th day of April,
1981, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed and signed
this certificate this 24th day of April, 1981.
(signed) J. Russell Langwig, Jr.
J. Russell Langwig, Jr., President
(signed) Philip S. Demarest
Philip S. Demarest, Secretary
61
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and the Secretary of
Warwick Valley Telephone Company (the "Corporation"), do hereby certify:
1. The name of the Corporation is Warwick Valley Telephone
Company.
2. The Corporation's certificate of incorporation was filed by
the Department of State on January 16, 1902.
3. The certificate of incorporation is amended as authorized
by Section 801 (b) (11) to change the presently authorized 120,000 common shares
without par value into 360,000 common shares without par value.
4. The first sentence of Paragraph IV of the certificate of
incorporation, which refers to the number of authorized shares, is hereby
amended to read in its entirety as follows:
"The total number of shares of the corporation which may be
issued is 367,500, to consist of 7,500 preferred shares
having a par value of $100.00 each and 360,000 common shares
without par value."
The remainder of Paragraph IV is not amended and shall remain in full force and
effect.
5. The number of common shares without par value currently
issued and outstanding is 103,636, and the number of authorized, but unissued
common shares without par value is 16,364. The terms of the change are as
follows: Each authorized common share, whether issued or unissued, will be split
3-for-1. As a result, for each issued and outstanding common share without par
value, the holder thereof will receive two additional common shares without par
value, giving a total of 310,908 common shares without par value issued and
outstanding. The stated capital of the Corporation will be neither reduced nor
increased; pursuant to Section 806 (b) (1) of the Business Corporation Law this
existing stated capital will be the stated capital with respect to the 310,908
common shares without par value outstanding after the split has been
effectuated. Upon the effectuation of the 3-for-1 split, 49,092 authorized but
unissued common shares without par value will remain. The stated capital with
respect to such remaining, unissued 49,092 common shares without par value will
be determined from time to time upon their issuance.
6. The amendment to the certificate of incorporation was
authorized as follows: Upon the unanimous vote of the Corporation's Board of
Directors, the amendment was submitted to the Annual Meeting of the
Corporation's common shareholders on April 24, 1987, where the amendment was
authorized by the affirmative vote of a majority of the issued and outstanding
common shares entitled to vote thereon, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed this
certificate of amendment this 15th day of May, 1987.
(signed) J. Russell Langwig, Jr.
J. Russell Langwig, Jr., President
(signed) Philip S. Demarest
Philip S. Demarest, Secretary
62
<PAGE>
State of New York :
: ss.:
County of Orange :
J. Russell Langwig, Jr., being duly sworn, deposes and says
that he is one of the persons described in and who executed the foregoing
certificate, that he has read the same and knows the content thereof, and that
the statements contained therein are true.
(signed) J. Russell Langwig, Jr.
J. Russell Langwig, Jr.
Sworn to before me this
15th day of May, 1987.
(signed) Bonnie A. Jackowitz
Notary Public
BONNIE A. JACKOWITZ
Notary Public, State of New York
No. 4802628 Certified in Orange County
Commission Expires May 31, 1988
63
<PAGE>
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
Albany, NY, August 11, 1987
CASE 29610 - Petition of Warwick Valley Telephone Company for approval to amend
its Certificate of Incorporation to permit the company to increase its
authorized shares in order to effect a three-for-one stock split.
The Public Service Commission hereby consents to and approves
this Certificate of Amendment of The Certificate of Incorporation of Warwick
Valley Telephone Company under Section 806 (b) (1) of the Business Corporation
Law, executed May 15, 1987, in accordance with the order of the Public Service
Commission dated August 5, 1987.
By the Commission,
(signed) John J. Kelliher
Secretary
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B549274 CERTIFICATE OF AMENDMENT UNI
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and the Secretary of
Warwick Valley Telephone Company (the "Corporation"), do hereby certify:
1. The name of the Corporation is Warwick Valley Telephone
Company.
2. The Corporation's certificate of incorporation was filed by
the Department of State on January 16, 1902.
3. The certificate of incorporation is amended as authorized
by Section 801 (b) (14) to effect the following changes:
(a) To add a Paragraph VIII requiring the Board of Directors
to consider certain factors when evaluating certain transactions
involving the Corporation;
(b) To add a Paragraph IX requiring that certain mergers and
similar transactions of the Corporation must be approved by a vote of
at least 70% of the shares of the Corporation's voting stock and
two-thirds (2/3) of the shares of the Corporation's voting stock held
by "disinterested" shareholders, unless certain "fair price" provisions
are satisfied; and
(c) To add a Paragraph X requiring that certain significant
corporate transactions, such as mergers and sales of substantially all
of the Corporation's assets, be approved by a vote of at least 70% of
the shares of the Corporation's voting stock.
4. To effect the amendments described in paragraph 3 above the
Corporation's certificate of incorporation shall be amended as follows:
(a) A new Paragraph VIII shall be added to the Corporation's
certificate of incorporation, which Paragraph VIII shall read in its
entirety as follows:
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"VIII. The Board of Directors of the corporation, when evaluating any offer of
another party to (i) purchase, or exchange any securities or property for, any
outstanding equity securities of the corporation or any subsidiary; (ii) merge
or consolidate the corporation or any subsidiary with another company; or (iii)
purchase or otherwise acquire all or substantially all of the properties and
assets of the corporation or any subsidiary, shall, in connection with the
exercise of its judgment in determining what is in the best interest of the
corporation and its shareholders, give due consideration not only to the price
or other consideration being offered but also to all other relevant factors,
including, without limitation, (i) the financial and managerial resources and
future prospects of the offeror; (ii) the possible effects on the business of
the corporation and its subsidiaries and on the ratepayers, and other customers,
employees, suppliers and creditors of the corporation and its subsidiaries and
(iii) the possible effects on the communities in which the facilities of the
corporation and its subsidiaries are located. In so evaluating any such offer,
the Board of Directors shall be deemed to be acting in accordance with its duly
authorized duties and in good faith, in the best interests of the corporation."
(b) A new Paragraph IX shall be added to the
Corporation's certificate of incorporation, which Paragraph IX
shall read in its entirety as follows:
"IX. The vote of the shareholders of the corporation required to
approve any Business Combination shall be as set forth in this Paragraph IX. The
term "Business Combination" shall have the meaning ascribed to it in
sub-paragraph 1.(B) of this Paragraph IX. Each other capitalized term shall have
the meaning ascribed to it in sub-paragraph 3 of this Paragraph IX.
1.(A) In addition to any affirmative vote required by law or this
certificate of incorporation and except as otherwise expressly provided in sub-
paragraph 2 of this Paragraph IX:
(1) any merger or consolidation of the corporation or any
Subsidiary with (i) any Interested Shareholder or (ii) any other person
(whether or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate of an Interested
Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate of any Interested
Shareholder of assets of the corporation or any Subsidiary having an
aggregate Fair Market Value of $1,000,000 or more; or
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(3) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $1,000,000 or more, other than
the issuance of securities upon the conversion of convertible
securities of the corporation or any Subsidiary which were not acquired
by such Interested Shareholder (or such Affiliate) from the corporation
or a Subsidiary; or
(4) the adoption of any plan or proposal for the liquidation
or dissolution of the corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate of any Interested Shareholder;
or
(5) any transaction involving the corporation or any
Subsidiary (whether or not with or into or otherwise involving an
Interested Shareholder), and including without limitation, any
reclassification of securities (including any reverse stock split), or
recapitalization or reorganization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any
self tender offer for or repurchase of securities of the corporation by
the corporation or any Subsidiary or any other transaction (whether or
not with or into or otherwise involving an Interested Shareholder),
which in any such case has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any
class of equity securities or securities convertible into equity
securities of the corporation or any Subsidiary which is directly or
indirectly beneficially owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 70 percent of the
combined voting power of the then outstanding shares of the Voting Stock, in
each case voting together as a single class (it being understood that for
purposes of this Paragraph IX each share of the Voting Stock shall have the
number of votes granted to it pursuant to this certificate of incorporation or
the terms of any series of the corporation's preferred shares), which vote shall
include the affirmative vote of at least two-thirds (2/3) of the combined voting
power of the outstanding shares of Voting Stock held by shareholders other than
the Interested Shareholder. Such affirmative vote shall be required
notwithstanding any provision of law or any other provision of this certificate
of incorporation or any agreement which might permit a lesser vote or no vote
and in addition to any affirmative vote required of the holders of any class or
series of Voting Stock pursuant to law, this certificate of incorporation or the
terms of any series of the corporation's preferred shares.
(B) The term "Business Combination" as used in this Paragraph IX shall
mean any transaction that is referred to in any one or more clauses (1) through
(5) of sub-paragraph 1.(A) of this Paragraph IX.
2. The provisions of sub-paragraph 1.(A) of this Paragraph IX shall not
be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as may be required by law,
any other provision of this certificate of incorporation, or the terms of any
series of the corporation's preferred shares, if, in the case of a Business
Combination that does not involve any cash or other consideration being received
by the shareholders of the corporation, solely in their
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respective capacities as shareholders of the corporation, the condition
specified in the following sub-paragraph (A) is met, or, in the case of any
other Business Combination, the conditions specified in the following sub-
paragraph (A) or the conditions specified in the following sub-paragraph (B) are
met:
(A) such Business Combination shall have been approved by a majority of
the Disinterested Directors; or
(B) each of the conditions specified in the following clauses (1)
through (5) shall have been met:
(1) the aggregate amount of the cash and Fair Market Value as
of the Consummation Date of any consideration other than cash to be
received per share by the holders of common shares in such Business
Combination shall be at least equal to the highest of the following (it
being intended that the requirements of this clause (B)(1) shall be met
with respect to all common shares outstanding whether or not the
Interested Shareholder has acquired any common shares):
(i) if applicable, the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid in order to acquire any common
shares beneficially owned by the Interested Shareholder which
were acquired beneficially by such Interested Shareholder (x)
within the two-year period immediately prior to the
Announcement Date or (y) in the transaction in which it became
an Interested Shareholder, whichever is higher; or
(ii) The Fair Market Value per common share on the
Announcement Date or on the Determination Date, whichever is
higher; or
(iii) the amount which bears the same percentage
relationship to the Fair Market Value of the common shares on
the Announcement Date as the highest per share price
determined in (B)(1)(i) above bears to the Fair Market Value
of the common shares on the date of the commencement of the
acquisition of common shares by such Interested Shareholder;
and
(2) the aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of any consideration other than cash to be
received per share by holders of the shares of any class or series of
outstanding Voting Stock other than common shares shall be at least
equal to the highest of the following (it being intended that the
requirements of this clause (B)(2) shall be met with respect to every
class and series of such Voting Stock, whether or not the Interested
Shareholder has previously acquired any shares of a particular class or
series of such Voting Stock):
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(i) if applicable, the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid in order to acquire any shares
of such class or series of Voting Stock beneficially owned by
the Interested Shareholder which were acquired beneficially by
such Interested Shareholder (x) within the two-year period
immediately prior to the Announcement Date or (y) in the
transaction in which it became the Interested Shareholder,
whichever is higher; or
(ii) if applicable, the highest preferential amount
per share to which the holders of shares of such class or
series of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the Company; or
(iii) the Fair Market Value per share of such class
or series of Voting Stock on the Announcement Date or the
Determination Date, whichever is higher; or
(iv) the amount which bears the same percentage to
the Fair Market Value of such class or series of Voting Stock
on the Announcement Date as the highest per share price in
clause (B)(2)(i) above bears to the Fair Market Value of such
Voting Stock on the date of the commencement of the
acquisition of such Voting Stock by such Interested
Shareholder; and
(3) the consideration to be received by holders of a
particular class or series of outstanding Voting Stock (including
common shares) shall be in cash or in the same form as was previously
paid in order to acquire beneficially shares of such class or series of
Voting Stock that are beneficially owned by the Interested Shareholder
and, if the Interested Shareholder beneficially owns shares of any
class or series of Voting Stock that were acquired with varying forms
of consideration, the form of consideration to be received by each
holder of shares of such class or series of Voting Stock shall be, at
the option of such holder, either cash or the form used by the
Interested Shareholder to acquire beneficially the largest number of
shares of such class or series of Voting Stock beneficially acquired by
it prior to the Announcement Date; and
(4) after such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination:
(i) such Interested Shareholder shall not have become
the beneficial owner of any additional shares of Voting Stock
of the corporation, except as part of the transaction in which
it became an Interested Shareholder or upon conversion of
convertible securities acquired by it prior to becoming an
Interested Shareholder or as a result of a pro rata stock
dividend or stock split; and
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(ii) such Interested Shareholder shall not have
received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or tax
credits or other tax advantages provided by the corporation or
any Subsidiary, whether in anticipation of or in connection
with such Business Combination or otherwise; and
(iii) such Interested Shareholder shall not have
caused any material change in the corporation's business or
capital structure including, without limitation, the issuance
of shares of capital stock of the corporation to any third
party; and
(iv) there shall have been (x) no failure to declare
and pay at the regular date therefore the full amount of
dividends (whether or not cumulative) on any outstanding
preferred shares of the Company except as approved by a
majority of the Disinterested Directors, (y) no reduction in
the annual rate of dividends paid on common shares (except as
necessary to reflect any subdivision of the Common shares),
except as approved by a majority of the Disinterested
Directors, and (z) an increase in such annual rate of
dividends (as necessary to prevent any such reduction) in the
vent of any reclassification (including any reverse stock
split), recapitalization, reorganization, self tender offer or
any similar transaction which has the effect of reducing the
number of outstanding common shares, unless the failure so to
increase such annual rate was approved by a majority of the
Disinterested Directors; and
(5) a proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules and
regulations), whether or not the corporation is then subject to such
requirements, shall be mailed by and at the expense of the Interested
Shareholder at least thirty days prior to the Consummation Date of such
Business Combination to the public shareholders of the corporation
(whether or not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions), and may contain
at the front thereof in a prominent place (i) any recommendations as to
the advisability (or inadvisability) of the Business Combination which
the Disinterested Directors, if any, may choose to state, and (ii) the
opinion of a reputable national or regional investment banking firm
with expertise in telecommunications as to the fairness (or not) of
such Business Combination from the point of view of the remaining
public shareholders of the corporation (such investment banking firm to
be engaged solely on behalf of the remaining public shareholders, to be
paid a reasonable fee for its services by the corporation upon receipt
of such opinion, to be unaffilated with such Interested Shareholder,
and, if there are at the time any Disinterested Directors, to be
selected by a majority of the Disinterested Directors).
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3. For purposes of this Paragraph IX:
(A) A "person" shall include, without limitation, any individual, firm,
corporation, group (as such term is used in Regulation 13D-G of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1987) or other entity.
(B) "Interested Shareholder" shall mean any person (other than the
corporation or any Subsidiary or any employee benefit plan of the corporation or
any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly, of more
than 10 percent of the combined voting power of the then outstanding
shares of Voting Stock; or
(2) is an Affiliate of the corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10 percent or more of the
combined voting power of the then outstanding shares of Voting Stock;
or
(3) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were at any
time within the two-year period immediately prior to the date in
question beneficially owned by an Interested Shareholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(C) A person shall be a "beneficial owner" of any Voting Stock:
(1) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(2) which such person or any of its Affiliates or Associates
has (a) the right to acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
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(D) For the purposes of determining whether a person is an Interested
Shareholder pursuant to sub-paragraph 3.(B) of this Paragraph IX, the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned by such Interested Shareholder through application of sub-paragraph 3.(C)
of this Paragraph IX but shall not include any other shares of Voting Stock that
may be issuable pursuant to any agreement, arrangements or understanding, or
upon exercise of conversion rights, warrants or options, or otherwise.
(E) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on January 1, 1987.
(F) "Subsidiary" shall mean any person more than 50 percent of whose
outstanding equity securities having ordinary voting power in the election of
directors is owned, directly or indirectly, by the corporation or by a
Subsidiary or by the corporation and one or more Subsidiaries; provided,
however, that for the purposes of the definition of Interested Shareholder set
forth in sub-paragraph 3.(B) of this Paragraph IX, the term "Subsidiary" shall
mean only a person of which a majority of each class of stock ordinarily
entitled to vote for the election of directors is owned, directly or indirectly,
by the corporation.
(G) "Disinterested Director" shall mean any member of the Board of
Directors of the corporation who is unaffiliated with, and not a nominee of, the
Interested Shareholder and was a member of the Board prior to the time that the
Interested Shareholder became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with, and not a nominee of, the
Interested Shareholder and who is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the Board of
Directors.
(H) "Fair Market Value" shall mean: (1) in the case of stock, the
highest closing sale price during the 30-day period commencing on the 40th day
preceding the date in question of a share of such stock on the Composite Tape
for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on
the New York Stock Exchange Composite Tape, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or if such stock is not listed on any such exchange,
the highest closing sale price or bid quotation with respect to a share of such
stock during the 30-day period commencing on the 40th day preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations are
available, the Fair Market Value on the date in question of a share of such
stock as determined by a majority of the Disinterested Directors in good faith;
and (2) in the case of property other than cash or stock, the Fair Market Value
of such property on the date in question as determined by a majority of the
Disinterested Directors in good faith.
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(I) In the event of any Business Combination in which the corporation
survives, the phrase "any consideration other than cash to be received" as used
in sub-paragraphs 2.(B)(1) and 2.(B)(2) of this Paragraph IX shall include the
common shares and/or the shares of any other class or series of outstanding
Voting Stock retained by the holders of such shares.
(J) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Combination.
(K) "Determination Date" shall mean the date on which the Interested
Shareholder became an Interested Shareholder.
(L) "Consummation Date" shall mean the date of the consummation of the
Business Combination.
(M) The term "Voting Stock" shall mean, in any given time, all
outstanding common shares of the corporation and all outstanding shares of any
other classes or series of the corporation's capital stock, the holders of which
are entitled at such time to vote upon all questions upon which the holders of
common shares shall have the authority to vote, in each case voting together as
a single class.
4. A majority of the Disinterested Directors shall have the power and
duty to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this Paragraph IX
including, without limitation:
(A) whether a person is an Interested Shareholder;
(B) the number of shares of Voting Stock or any other stock
beneficially owned by any person;
(C) whether a person is an Affiliate or Associate of another person;
(D) whether the requirements of sub-paragraph 2.(B) of this Paragraph
IX have been met with respect to any Business Combination;
(E) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more; and
(F) all other matters with respect to which a determination is required
under this Paragraph IX.
5. Nothing contained in this Paragraph IX shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.
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6. Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of the holders of at least
70 percent of the combined voting power of the Voting Stock shall be required to
alter, amend or repeal this Paragraph IX or to adopt any provision inconsistent
therewith; provided, however, that if there is an Interested Shareholder on the
record date for the meeting at which such action is submitted to the
shareholders for their consideration, such 70 percent vote must include the
affirmative vote of at least two-thirds (2/3) of the combined voting power of
the outstanding shares of Voting Stock held by shareholders other than the
Interested Shareholder.
7. Nothing contained in this Paragraph IX is intended, or shall be
construed, to affect any of the relative rights, preferences or limitations,
within the meaning of such terms under Section 801(b)(12) of the New York
Business Corporation Law or any successor statute, of any shares of any
authorized class or series of the corporation's stock, whether issued or
unissued."
and
c) A new Paragraph X shall be added to the
Corporation's certificate of incorporation, which Paragraph X
shall read in its entirety as follows:
"X. Except as otherwise specifically provided by law or in this
certificate of incorporation, the affirmative vote in person or by proxy of the
holders of seventy percent (70%) of the combined voting power of the issued and
outstanding common shares of the corporation and the issued and outstanding
shares of any other classes or series of the corporation's capital stock, the
holders of which are entitled at the time to vote upon all questions upon which
the holders of common shares shall have the authority to vote, shall be required
to adopt any plan of merger or consolidation (other than any plan of merger
involving the merger into the corporation of one or more subsidiaries of the
corporation, provided the corporation owns 90% or more of each class of stock of
such subsidiary or subsidiaries) or to approve the sale of all or substantially
all of the corporation's assets. Any amendment to this certificate of
incorporation which amends, deletes or otherwise modifies or changes this
section of this certificate of incorporation or any part thereof, shall be
authorized by a like vote of the shareholders. Nothing contained in this
Paragraph X is intended, or shall be construed, to affect any of the relative
rights, preferences or limitations, within the meaning of such terms under
Section 801(b)(12) of the New York Business Corporation Law or any successor
statute, of any shares of any authorized class or series of the corporation's
stock, whether issued or unissued."
The remainder of the Corporation's certificate of incorporation is not amended
and shall remain in full force and effect.
5. The above amendments to the certificate of incorporation were
authorized as follows: Upon the unanimous vote of the Corporation's Board of
Directors, the amendments were submitted to the Annual Meeting of the
Corporation's common shareholders on April 24, 1987, where the amendments were
authorized by the affirmative vote of a majority of the issued and outstanding
common shares entitled to vote thereon, a quorum being present.
6. The above amendments to the Corporation's certificate of
incorporation do not require the approval of the New York State Public Service
Commission pursuant to Section 108 of the Public Service Law. None of the
amendments is of the type referred to in Section 801(b)(8), (9), (10), (11) or
(12) of the Business Corporation Law and none of the amendments affects the
relative rights, preferences or limitations, within the meaning of such terms
under Section 801 (b) (12) of the Business Corporation Law, of any shares of any
authorized class or series of the Corporation's stock.
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IN WITNESS WHEREOF, the undersigned have executed this
certificate of amendment this 2nd day of September, 1987 and certify, under
penalty of perjury, that the statements herein are true.
/S/ J. Russell Langwig, Jr.
J. Russell Langwig, Jr. President
/S/ Philip S. Demarest
Philip S. Demarest, Secretary
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the First Vice President and the
Secretary of Warwick Telephone Company (the "Corporation"), do hereby certify:
1. The name of the Corporation is Warwick Valley Telephone
Company.
2. The Corporation's certificate of incorporation was filed
by the Department of State on January 16, 1902.
3. The certificate of incorporation is amended as authorized
by Section 801 (b) (14) to effect the following change: To add a Paragraph XII
limiting the liability of Directors for monetary damages to the maximum extent
now and hereafter permitted under the New York Business Corporation Law.
4. To effect the amendment described in paragraph 3 above the
Corporation's certificate of incorporation shall be amended by adding a new
Paragraph XII to the Corporation's certificate of incorporation, which Paragraph
XII shall read in its entirety as follows:
"XII. To the fullest extent now or hereafter provided for or
permitted by law, no director of the Company shall be
personally liable to the Company or its shareholders for
damages for any breach of duty in such capacity. Neither the
amendment or repeal of this Paragraph XII, nor the adoption of
any provision of this Certificate of Incorporation
inconsistent with this Paragraph XII, shall eliminate or
reduce the protection afforded by this Paragraph XII to a
director of the Company in respect to any matter which
occurred, or any cause of action, suit or claim which but for
this Paragraph XII would have accrued or arisen, prior to such
amendment, repeal or adoption."
The remainder of the Corporation's certificate of incorporation is not amended
and shall remain in full force and effect.
5. The above amendment to the certificate of incorporation was
authorized as follows: Upon the unanimous vote of the Corporation's Board of
Directors, the amendment was submitted to the Annual Meeting of the
Corporation's common shareholders on April 29, 1988, where the amendment was
authorized by the affirmative vote of a majority of the issued and outstanding
common shares entitled to vote thereon, a quorum being present.
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6. The above amendment to the Corporation's certificate of
incorporation does not require the approval of the New York State Public Service
Commission pursuant to Section 108 of the Public Service Law. The amendment is
not of the type referred to in Section 801 (b) (8), (9), (10), (11) or (12) of
the Business Corporation Law and the amendment does not affect the relative
rights, preferences or limitations, within the meaning of such terms under
Section 801 (b) (12) of the Business Corporation Law, of any shares of any
authorized class or series of the Corporation's stock.
IN WITNESS WHEREOF, the undersigned have executed this
certificate of amendment this 25th day of May, 1988 and certify, under penalty
of perjury, that the statements herein are true.
(signed) Howard Conklin, Jr.
Howard Conklin, Jr., First Vice
President
(signed) Philip S. Demarest
Philip S. Demarest, Secretary
State of New York )
) ss.:
County of Orange )
Howard Conklin, Jr. being duly sworn, deposes and says that he
is one of the persons described in and who executed the foregoing certificate,
that he has read the same and knows the content thereof, and that the statements
contained therein are true.
(signed) Howard Conklin, Jr.
Howard Conklin, Jr., First Vice
President
Sworn to before me this
25th day of May, 1988
(signed) Bonnie A. Jackowitz
Notary Public
BONNIE A. JACKOWITZ
Notary Public, State of New York
No. 4802628 Certified in Orange County
Commission Expires May 31, 1988
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WARWICK VALLEY TELEPHONE COMPANY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and the Secretary of
Warwick Valley Telephone Company (the "Corporation"), do hereby certify:
1. The name of the Corporation is Warwick Valley Telephone
Company.
2. The Corporation's certificate of incorporation was filed
by the Department of State on January 16, 1902.
3. The certificate of incorporation is amended as authorized
by Section 801 (b) (11) to change the presently authorized 360,000 common shares
without par value into 720,000 common shares without par value.
4. The first sentence of Paragraph IV of the certificate of
incorporation, which refers to the number of authorized shares, is hereby
amended to read in its entirety as follows:
"The total number of shares of the corporation which may be
issued is 727,500, to consist of 7,500 preferred shares
having a par value of $100.00 each and 720,000 common shares
without par value."
The remainder of Paragraph IV is not amended and shall remain in full force and
effect.
5. The number of common shares without par value currently
issued and outstanding is 301,008, and the number of authorized, but unissued
common shares without par value is 58,992. The terms of the change are as
follows: Each authorized common share, whether issued or unissued, will be split
2-for-1. As a result, for each issued and outstanding common share without par
value, the holder thereof will receive one additional common share without par
value, giving a total of 602,016 common shares without par value issued and
outstanding. The stated capital of the Corporation will be neither reduced nor
increased; pursuant to Section 806 (b) (1) of the Business Corporation Law this
existing stated capital will be the stated capital with respect to the 602,016
common shares without par value outstanding after the split has been
effectuated. Upon the effectuation of the 2-for-1 split, 117,984 authorized but
unissued common shares without par value will remain. The stated capital with
respect to such remaining, unissued 117,984 common shares without par value will
be determined from time to time upon their issuance.
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6. The amendment to the certificate of incorporation was
authorized as follows: Upon the unanimous vote of the Corporation's Board of
Directors, the amendment was submitted to the Annual Meeting of the
Corporation's common shareholders on April 27, 1990, where the amendment was
authorized by the affirmative vote of a majority of the issued and outstanding
common shares entitled to vote thereon, a quorum being present.
IN WITNESS WHEREOF, the undersigned have executed this
certificate of amendment this 30th day of May, 1990.
(signed) Fred M. Knipp
Fred M. Knipp, President
(signed) Philip S. Demarest
Philip S. Demarest, Secretary
State of New York )
) ss.:
County of Orange )
Fred M. Knipp, being duly sworn, deposes and says that he is
one of the persons described in and who executed the foregoing certificate, that
he has read the same and knows the content thereof, and that the statements
contained therein are true.
(signed) Fred M. Knipp
Fred M. Knipp
Sworn to before me this
30th day of May, 1990
(signed) Bonnie A. Jackowitz
Notary Public
BONNIE A. JACKOWITZ
Notary Public, State of New York
No. 4802628 Certified in Orange County
Commission Expires May 31, 1990
79
NUMBER EXIBIT 4A SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK
WARWICK VALLEY TELEPHONE COMPANY
TOTAL AUTHORIZED ISSUE 727,500 SHARES
7,500 SHARES PREFERRED STOCK 720,000 SHARES COMMON STOCK
PAR VALUE $100. EACH WITHOUT PAR VALUE
THIS CERTIFIES THAT___________________________________________
is the owner of ______________________ Shares of the Common Stock, without par
value, of WARWICK VALLEY TELEPHONE COMPANY, fully paid and nonassessable,
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
The designations, preferences, privileges and voting powers or
other restrictions or qualifications of the several classes of shares are as
follows:
Common Stock with full voting power.
$5 Cumulative Preferred Stock, having the following
preferences, voting powers or restrictions or qualifications:
a. It will be entitled up to Five Dollars ($5) per share and
no more before Common Participants in any dividends, said dividends to be paid
on March 31, June 30, September 30, and December 31.
b. In case of dissolution of other distributions of assets,
holders of Preferred Stock will be entitled to distribution of the assets up to
par value of the Preferred Stock and accumulated dividends, prior to holders of
Common Stock.
c. It will have no voting powers except if Preferred dividends
are not paid for two years, the Preferred stockholders may vote share for share
with the Common stockholders so long as two years' arrears exist.
d. The right to call at any dividend date any or all of the
Preferred Stock at option of the Company is reserved with payment of all accrued
dividends and at 100 per cent of par value.
IN WITNESS WHEREOF, the said Corporation has caused this
Certificate to signed by its duly authorized officers and its Corporate Seal to
be hereunto affixed this_______ day of___________________ A.D. 19 .
SECRETARY-TREASURER (CORPORATE SEAL) PRESIDENT
80
EXHIBIT 4D
WARWICK VALLEY TELEPHONE COMPANY
TO
THE BANK OF NEW YORK,
AS TRUSTEE
EIGHTH SUPPLEMENTAL INDENTURE
Dated as of May 1, 1990
Supplementing the Indenture of Mortgage
Dated as of November 1, 1952
and creating
9.05% First Mortgage Bonds, Series I,
Due May 1, 2000
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EIGHTH SUPPLEMENTAL INDENTURE, dated as of May 1, 1990, by and
between WARWICK VALLEY TELEPHONE COMPANY, a corporation organized and existing
under the laws of the State of New York (hereinafter called the "Company"), and
THE BANK OF NEW YORK, a corporation organized and existing under the laws of the
State of New York, as Trustee (hereinafter called the "Trustee").
R E C I T A L S:
The background of this Eighth Supplemental Indenture is:
A. The Company heretofore executed and delivered to The First
National Bank of Warwick, as Trustee, its Indenture of Mortgage (hereinafter
referred to as the "Original Indenture" and the Original Indenture and all
supplemental indentures being hereinafter collectively referred to as the
"Indenture"), dated as of November 1, 1952 (to which this instrument is
supplemental), whereby the Company granted, bargained, sold and conveyed unto
the Trustee and to its successors in said trust, all property real, personal and
mixed then owned or thereafter acquired by the Company (other than property
excepted from the lien thereof) to be held by the Trustee in trust in accordance
with the provisions of the Indenture for the equal pro rata benefit and security
of all Bonds issued under the Indenture.
The Company thereafter executed and delivered seven
supplemental indentures to the Original Indenture for the purpose of creating
additional series of Bonds issuable under the Indenture, subjecting additional
property to the lien of the Indenture and amending specific provisions of the
Original Indenture.
The Original Indenture and all supplemental indentures thereto
have been duly recorded in the County Clerk's Office of the County of Orange in
the State of New York and in the County Clerk's Offices of the Counties of
Sussex and Passaic in the State of New Jersey (the only counties in which the
Company owns property).
B. The Bank of New York has become the successor trustee under
the Indenture in accordance with the provisions thereof.
C. The Company proposes (i) to create, issue and establish the
terms and provisions applicable to an additional series of Bonds to be
designated 9.05% First Mortgage Bonds, Series I, due May 1, 2000 (hereinafter
referred to as the "Series I Bonds"), limited in aggregate principal amount to
$3,000,000, and (ii) to mortgage and convey additional properties acquired or
constructed by the Company since the date of the Seventh Supplemental Indenture.
D. All acts and things necessary to make the Series I Bonds,
when executed by the Company and authenticated and delivered by the Trustee as
in the Indenture provided, the valid, binding and legal obligations of the
Company, and by these presents to constitute a valid indenture and agreement
according to its terms, have been done and performed, and the execution of
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this Eighth Supplemental Indenture and the issue of the Series I Bonds have in
all respects been duly authorized, and the Company, in the exercise of the legal
right and power vested in it, executes this Eighth Supplemental Indenture.
NOW, THEREFORE, in consideration of the premises and of the
sum of One Dollar to the Company duly paid by the Trustee at or before the
ensealing and delivery hereof and for other good and valuable considerations,
the receipt whereof is hereby acknowledged, the Company hereby covenants and
agrees to and with the Trustee and its successors in the trusts under the
Indenture, for the equal and pro rata benefit of all present and future holders
of all Bonds issued and to be issued under the Indenture, without any
preference, priority or distinction whatsoever, as follows:
ARTICLE ONE
MORTGAGE OF PROPERTY
S1.01. The Company in order to better secure the principal of
and interest (and premium, if any) on all Bonds of the Company at any time
outstanding under the Indenture according to their tenor and effect and the
performance of and compliance with the covenants and conditions in the Original
Indenture and all supplemental indentures thereto contained, does hereby grant a
security interest in and does hereby grant, bargain, sell, convey and mortgage
unto the Trustee, and to its successors in said trust, forever, all of the
property, rights and franchises acquired or constructed by the Company since
March 1, 1983, the date of the Seventh Supplemental Indenture, except property
of the character specifically excepted from the lien of the Indenture, in trust,
nevertheless, for the same purposes and upon the same conditions as are set
forth in the Indenture.
ARTICLE TWO
SERIES I BONDS
S2.01. Designation, Amount, Rate and Form. There is hereby
created a series of Bonds to issued under the Indenture, limited to the
aggregate principal amount of $3,000,000, which shall be designated "9.05% First
Mortgage Bonds, Series I, due May 1, 2000." The Series I Bonds shall be issued
only as registered bonds without coupons. The Series I Bonds initially issued
shall be dated as of and bear interest from the date of issuance thereof; shall
mature May 1, 2000; shall bear interest at the rate of 9.05% per annum, payable
semiannually on May 1 and November 1 in each year until the principal thereof
shall have become due and payable; and shall bear interest on any overdue
principal and on any overdue interest at the rate of 10.05% per annum, so far as
the same may be legally enforeable, from the due date thereof until fully paid.
Interest shall be computed on the basis of a 360-day year composed of twelve
30-day months. The Series I Bonds shall be substantially in the form set forth
in Exhibit A hereto. Series I Bonds issued upon transfer or exchange for
different denominations or in substitution for lost, stolen, destroyed or
mutilated Series I Bonds shall be dated so that no gain or loss of interest
shall occur.
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There shall be no sinking fund for the Series I Bonds and the
Series I Bonds may not be redeemed prior to their maturity date.
S2.02. Authentication of Series I Bonds. After the execution
and delivery of this Eighth Supplemental Indenture and upon compliance with the
provisions of the authenticate and deliver to or upon the written order of the
Company, Series I Bonds in an aggregate principal amount not to exeed
$3,000,000.
ARTICLE THREE
MISCELLANEOUS
S3.01. Counterparts. This Eighth Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, WARWICK VALLEY TELEPHONE COMPANY, party of
the first part, has caused these presents to be signed in its corporate name by
its President or a Vice President and its corporate seal to be hereunto affixed
and attested by it Secretary or an Assistant Secretary, and THE BANK OF NEW
YORK, party of the second part, has caused these presents to be signed in its
corporate name by one of its ___________ or _______________ and its corporate
seal to be hereunto affixed and attested by one of its _________________, all
as of the day and year above written.
WARWICK VALLEY TELEPHONE COMPANY
By (signed) Fred M. Knipp
Its President
(Corporate Seal)
Attest:
By (signed) Philip S. Demarest
Its Secretary
THE BANK OF NEW YORK
By (signed) Walter N. Gitlin
Its Assistant Vice President
(Corporate Seal)
Attest:
By (signed)
Its Assistant Vice President
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STATE OF NEW YORK )
) SS
COUNTY OF ORANGE )
On this 25th day of June, 1990, before me, personally came
Fred M. Knipp, to me known, who, being by me duly sworn, did depose and say that
he resides at the Village of Warwick, New York; that he is the President of
WARWICK VALLEY TELEPHONE COMPANY, the corporation described in and which
executed the above instrument; that he knew the seal of said corporation; that
the seal affixed to said instrument was such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
(signed) Bonnie A. Jackowitz
Notary Public
BONNIE A. JACKOWITZ
Notary Public, State of New York
No. 4802628 Certified in Orange County
Commission Expires May 31, 1992
STATE OF NEW YORK )
) SS
COUNTY OF ORANGE )
On this 26th day of June, 1990, before me, personally came
Walter N. Gitlin, to me known, who, being by me duly sworn, did depose and say
that he resides at 101 Daniel Low Terrace, Staten Island, NY 10301 New York;
that he is the Assistant Vice President of THE BANK OF NEW YORK, the corporation
described in and which executed the above instrument; that he knew the seal of
said corporation; that the seal affixed to said instrument was such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
(signed) Virginia Barazotti
Notary Public
VIRGINIA BARAZOTTI
Notary Public, State of New York
No. 41-4734647
Qualified in Queens County
Certificate filed in New York County
Commission Expires November 30, 1991
85
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(Form of Registered Bond of Series I)
No. $
WARWICK VALLEY TELEPHONE COMPANY
9.05% First Mortgage Bond, Series I
Due May 1, 2000
WARWICK VALLEY TELEPHONE COMPANY, a New York corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to
or registered assigns
on May 1, 2000
the principal amount of
DOLLARS ($ )
and to pay to the registered owner hereof interest hereon from the date hereof
at the rate of nine and five-hundredths percent (9.05%) per annum, semiannually
on the first day of May and on the first day of November in each year until the
principal hereof shall become due and to pay interest on any overdue principal
and overdue interest at the rate of ten and five-hundredths percent (10.05%) per
annum so far as legally enforceable.
Both principal of and interest on this bond will be paid in
any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts, at the
office of the Trustee in New York, New York, under the Indenture mentioned
below.
This bond is one of the bonds, of the above designated series,
of an authorized issue of bonds of the Company known as First Mortgage Bonds,
all issued or issuable in one more series under the equally secured (except
insofar as any sinking fund, replacement fund or other fund established in
accordance with the provisions of the Indenture hereinafter mentioned may afford
additional security for the bonds of any specific series) by an Indenture of
Mortgage dated as of November 1, 1952, executed and delivered by the Company to
the First National Bank of Warwick, which has been succeeded by The Bank of New
York, as Trustee (herein called the "Trustee"), to which Indenture of Mortgage
and all indentures supplemental thereto (hereinafter collectively referred to as
the "Indenture") reference is hereby made for a description of the property
mortgaged and pledged as security for said bonds, the nature and extent of the
security, and the rights, duties and immunities hereunder of the Trustee, the
rights of the holders of said bonds and of the Trustee and of the Company in
respect of such security, and the terms upon which said bonds may be issued
thereunder.
This bond may not be redeemed prior to its maturity.
Exhibit A
(to the Eighth Supplemental Indenture)
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than 75% in principal
amount of the bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more than one series of
bonds shall be at the time outstanding, not less than 60% in principal amount of
each series affected, to effect, by an indenture supplemental to the Indenture,
modifications or alterations of the Indenture and the rights and obligations of
the Company and of the holders of the bonds and coupons; provided, however, that
no such modification or alteration shall be made without the consent of the
registered owner hereof which will (a) extend the maturity of this bond or
reduce the rate or extend the time of payment of
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interest hereon or reduce the amount of the principal hereof or reduce any
premium payable on the redemption hereof, or (b) permit the creation of any
lien, not otherwise permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal of the bonds upon the
consent of the holders of which modifications or alterations may be made as
aforesaid.
This bond is transferable by the registered owner hereof in
person or by his duly authorized attorney, at the office of the Trustee in New
York, New York upon surrender of this bond for cancellation and upon payment, if
the Company shall so require, of the charges provided for in the Indenture, and
thereupon a new registered bond of the same series of like principal amount will
be issued to the transferee in exchange therefor.
The registered owner of this bond at his option may surrender
the same for cancellation at said office and receive in exchange therefor the
same aggregate principal amount of registered bonds of the same series of other
authorized denominations, upon payment, if the Company shall so require, of the
charges provided for in the Indenture and subject to the terms and conditions
therein set forth.
By its acceptance hereof, the registered owner of this bond
agrees that, in the absence of the registration of this bond under the
Securities Act of 1933, as amended, it will only transfer this bond in
accordance with any available exemption from the requirements of Section 5 of
the Securities Act of 1933, as amended, and in any event, in accordance with any
applicable state securities laws.
If a default as defined in the Indenture shall occur, the
principal of this bond may become or be declared due and payable before maturity
in the manner and with the effect provided in the Indenture. The holders,
however, of certain specified percentages of the bonds at the time outstanding,
including in certain cases specified percentages of bonds of particular series,
may in the cases, to the extent and under the conditions provided in the
Indenture, waive past defaults thereunder and the consequences of such defaults.
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No recourse shall be had for the payment of the principal of
or the interest on this bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, against any incorporator, stockholder,
director or officer, past, present or future, as such, of the Company or of any
predecessor or successor corporation, either directly or through the Company or
such predecessor or successor corporation, under any constitution or statute or
rule of law, or by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders and officers, as such, being
waived and released by the holder and owner hereof by the acceptance of this
bond as provided in the Indenture.
This bond shall not become or be valid or obligatory for any
purpose until the authentication certificate hereon shall have been signed by
the Trustee.
IN WITNESS WHEREOF, WARWICK VALLEY TELEPHONE COMPANY, has
caused these presents to be executed in its corporate name by its President, or
one of its Vice Presidents under corporate seal or a facsimile thereof, and
attested by its Secretary or one of its Assistant Secretaries, and this bond to
be dated June __, 1990.
WARWICK VALLEY TELEPHONE COMPANY
By
Its
Attest:
By
Its Secretary
(Form of Trustee's Authentication Certificate)
This is one of the bonds, of the series designated therein,
described in the within mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By
Its
88
HIGHLIGHTS
1995 1994
Total Revenues $14,969,872 $13,570,409
Net Income $2,153,372 $1,749,450
Earnings per Share $3.45 $2.82
Book Value $23.06 $21.23
Cash Dividend per
Common Share $1.74 $1.68
Access Lines in Service 22,132 21,126
Cellular Subscribers 809 575
Online Subscribers 964 ---
REVENUES
Where the Dollar Comes from... Where the Dollar goes...
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Long Distance Wages & Benefits
Access
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Other
Operating Expenses
Local Service xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Taxes
WV Long Distance xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Depreciation
Cellular xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Dividends
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Other Revenue Retained Earnings
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Cost of Goods Sold
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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PRESIDENT'S SUMMARY
1995 was an exciting year at Warwick Valley Telephone Company.
In July we introduced online services for computer
users, including access to the Internet. To emphasize
our local community orientation we are now marketing the
[President's service as Warwick Online, Vernon Online and Middletown
Photo Online. Development of the service, planning the deployment,
here] designing the hardware and software configurations, marketing,
and development of the ordering, billing, and support
functions involved almost everyone in the Company. We had to
learn new skills, new concepts, and for some of us, we had to
develop a new vocabulary. The service has, in my opinion, been
extremely successful. We now have over 1,600 customers. With
this activity we have also changed the horizons of the Warwick
Valley Telephone Company, in terms of both geography and
products. Over half of our Online customers are outside our
telephone service area, and we have now established that we
are not only a telephone or even telecommunications company;
we are an Information Services Company.
Financially this has been a great year. Revenues reached another new
high and earnings jumped up dramatically. The new services introduced in the
past two years are now past their start-up costs and are making a significant
contribution to our earnings. Warwick Valley Long Distance led the way producing
almost 10% of our 1995 earnings. Caller ID, Return Call, Repeat Call, Call
Trace, Toll Control and Voicemail also continued to grow and contribute to our
profits. Our Cellular services are recovering from the extensive fraud losses of
last year and their earnings are also recovering.
ACCESS LINES INCOME PER SHARE
(Bar Graph here) (Bar Graph here)
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Quality Service to our local customers has been and must continue to
be the hallmark of Warwick Valley Telephone Company. We think our size is an
advantage; we're big enough to provide good service and not too big to be
impersonal. We continually try to measure our service quality and improve it.
This is also a continual challenge as our services become more varied and more
complex. The people of this Company are dedicated and skilled; they continue to
improve with both internal and external training programs. Our labor relations
continue to be quite good and we completed new 3 year labor agreements in 1995
with both our labor union groups, the Warwick Valley Telephone Company
Employees' Association and IBEW Local 503.
Looking forward, we expect good growth in all lines of our business
and we expect the most growth in new Information Services. We are of course
concerned about the government action to "deregulate" the telephone industry
which inserts considerable uncertainty into our business prospects. A new
federal Telecommunications Act was enacted in February and we expect all new
competitive rules from the New York Public Service Commission, and perhaps new
competitive rules from the New Jersey Board of Public Utilities this year. The
impact of these changes on this Company cannot be assessed until the details and
implementing orders are known. The thrust, however, is clear. Telephone service
in this country has been regulated as monopoly service embodied in the
Communications Act of 1934. Telephone service in the future will be competitive
and regulated by the marketplace. The transition will be managed by government
agencies and will encourage new competitors by handicapping the existing local
exchange companies like the Warwick Valley Telephone Company. Adjusting to this
new competitive market is clearly our biggest challenge, but I am confident that
we can meet that challenge and continue to be a successful information services
company.
Fred M. Knipp (signature)
President and Chief Executive Officer
March 1, 1996
DIVIDENDS PER SHARE BOOK VALUE
(Bar Graph here) (Bar Graph here)
91
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MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS - 1995 vs. 1994
The Company's net income from all sources increased $403,923 (or 23.1%) for the
twelve-month period ended December 31, 1995 as compared to the same period in
1994.
Telephone operating revenues increased $1,037,992 (or 8.5%) to $13,315,940 for
the year ended December 31, 1995 as compared to $12,277,948 for 1994, primarily
as a result of increases in interstate access revenues of $401,200,
miscellaneous revenues of $295,451 (including directory, pole space rental,
operator services and non-regulated revenues), and local revenues of $249,808
(primarily from newly-marketed services).
Telephone operating expenses increased $367,511 (or 4.2%) to $9,217,733 at
December 31, 1995 as compared to $8,850,222 at year-end 1994. Wage and benefit
increases of $327,984 (or 6.0%) accounted for most of the overall increase.
Non-operating income decreased to $305,200 in 1995 from $326,392 in 1994.
Decreases in interest charged during construction, interest income and other
non-operating income (expense) were offset by increased net income from
subsidiaries and decreased non-operating federal income taxes.
RESULTS OF OPERATIONS - 1994 vs. 1993
The Company's net income from all sources increased $106,811 (or 6.5%) to
$1,749,450 for the twelve-month period ended December 31, 1994, as compared to
the same period in 1993.
Telephone operating revenues increased $1,115,709 (or 10.0%) to $12,277,948 for
the year ended December 31, 1994, as compared to $11,162,239 for 1993, primarily
as a result of the $952,900 (or 15.0%) increase in toll and access revenue. This
increase resulted primarily from increased interstate access revenues of
$591,440, increased New Jersey State Toll Revenue of $152,176, and a decrease of
$112,103 in contributions to the New York Access Settlement Pool. Local revenues
increased $92,495 (or 3.9%), primarily as a result of an increase in the number
of customers and increased use of newly marketed services. Miscellaneous
revenues increased $70,314 (or 2.5%), primarily as a result of increased
operator services revenues due to the start-up of the Company's long distance
subsidiary in late 1993.
Telephone operating expenses increased $919,197 (or 11.6%) to $8,850,222 at
December 31, 1994, as compared to $7,931,025 at year-end 1993. An increase in
wages and benefits of $552,867 (or 11.0%) and an increase in depreciation
expense of $352,869 (or 24.4%) accounted for most of the increase. Approximately
$136,000 of the increase in wages and benefits was the result of increased
medical insurance costs. Approximately $184,000 of the increase in depreciation
expense was the result of increased depreciation rates approved and effective
January 1, 1994.
Nonoperating income increased to $326,392 in 1994 from $259,658 in 1993. This
increase resulted largely from an increase in net income received from the
Company's 7.5% interest in the Orange-Poughkeepsie Cellular Partnership, which
increased by $49,551.
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MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company ended 1995 with working capital of $1,255,242 as compared to
$888,381 at December 31, 1994. This difference was largely due to an increase in
accounts receivable, largely offset by increases in accounts payable, current
maturities - long term debt and notes payable.
The Company issued 5,553 shares of its common stock on April 1, 1995 to
employees participating in retirement savings plans at $34.94 per share (a 15%
discount from the appraised price of $41.10). Additional sales to employees are
anticipated during 1996 and subsequent years. Purchases of shares for the
treasury are possible although none are planned at this time.
Pursuant to a NYSPSC order, the tax savings due to the general reduction in
income tax liability of the Company made possible by the Tax Reform Act of 1986
attributable to New York State operations have been deferred. These tax savings
were applied during 1995, and will continue to be applied in subsequent years,
as an offset against the costs of funding retiree health benefits. Reduced rates
to reflect the tax savings were ordered in New Jersey beginning July 1, 1987.
The Company holds a 7.5% limited partnership interest in the cellular mobile
telephone partnership which is licensed to operate as the wire-line licensee in
both Orange and Dutchess Counties, New York. Since the inception of the
partnership, the Company has made capital contributions of $249,750. No further
capital contributions are currently scheduled. A wholly-owned subsidiary of the
Company, Warwick Valley Mobile Telephone Company (WVMT), resells cellular
telephone service to the Company's subscribers as well as to others. WVMT also
sells and installs cellular telephone sets. The Company has invested
approximately $337,000 in WVMT since its operations began on April 1, 1989.
A second wholly-owned subsidiary, Warwick Valley Long Distance Company, Inc.
(WVLD), began business in December 1993 in New Jersey and in May 1994 in New
York. WVLD resells toll service to customers of Warwick Valley Telephone. WVLD
achieved positive retained earnings prior to the end of 1994.
Another wholly-owned subsidiary, Warwick Valley Networks, Inc. (WVN), was
established during 1994. WVN is a partner in the New York State Independent
Network (NYSINET), which was created by the independent telephone companies of
New York to build and operate its own data connections network. NYSINET will
make it unnecessary for its member companies to rely on outside companies for
these services and may also offer services to companies who are not members,
creating a potential source of additional revenue. The NYSINET network is
expected to be in operation during 1996.
An additional wholly-owned subsidiary, Hometown Online, Inc. (Online) was
established during 1995. It is the entity through which WVTC offers connectivity
to the Internet as well as local and regional information services to personal
computer users. Service is offered within WVTC's service area as well as nearby
areas in New York, New Jersey and Pennsylvania. The Company has invested
approximately $478,000 in Online since its operations began in July 1995.
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<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
ASSETS December 31, 1995 1994
<S> <C> <C>
CURRENT ASSETS:
Cash $ 482,049 $ 422,037
Accounts receivable - net of
reserve for uncollectibles (Note 4) 3,659,990 2,647,053
Refundable income taxes 0 42,034
Materials and supplies (Note 1) 1,516,358 1,293,091
Prepaid expenses 317,085 285,819
5,975,482 4,690,034
NONCURRENT ASSETS:
Unamortized debt issuance expense 75,170 41,686
Other deferred charges 140,327 162,616
Investments (Note 1) 1,286,646 779,806
1,502,143 984,108
TELEPHONE PLANT - AT COST: (Notes 1, 2 and 5)
Telephone plant in service 32,131,186 30,666,549
Telephone plant under construction 1,032,206 839,392
33,163,392 31,505,941
Less: Depreciation reserve (Notes 1 and 3) 11,222,994 9,522,504
21,940,398 21,983,437
TOTAL ASSETS $29,418,023 $27,657,579
</TABLE>
The accompanying notes are an integral part of the financial statements.
94
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 1995 1994
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities-long-term debt $ 370,000 $ 120,000
Notes payable (Note 6) 950,000 900,000
Accounts payable 2,359,341 1,766,777
Advance billing and payments 206,986 202,358
Customer deposits 173,717 257,226
Accrued taxes 108,409 31,426
Accrued interest 84,573 84,285
Other accrued expenses 467,215 439,581
4,720,241 3,801,653
LONG-TERM DEBT: (Note 5) 7,000,000 7,370,000
DEFERRED CREDITS: (Notes 1 and 7)
Accumulated deferred federal income taxes 2,250,073 1,973,117
Unamortized investment tax credits 312,517 372,606
Other deferred credits 390,980 640,961
2,953,570 2,986,684
STOCKHOLDERS' EQUITY: (Notes 5, 12, 13 and 14)
Preferred stock - 5% cumulative; $100 par value;
Authorized 7,500 shares;
Issued and outstanding 5,000 shares 500,000 500,000
Common stock - no par value;
Authorized shares: 720,000
Issued 644,757 (1995) and 639,263 (1994) 2,281,238 2,089,642
Retained earnings 12,738,174 11,684,800
15,519,412 14,274,442
Less: Treasury stock at cost, 25,800 shares 775,200 775,200
14,744,212 13,499,242
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $29,418,023 $27,657,579
</TABLE>
The accompanying notes are an integral part of the financial statements.
95
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
Years ended December 31, 1995 1994 1993
<S> <C> <C> <C>
OPERATING REVENUES:
Local network service $ 2,698,483 $ 2,448,677 $ 2,356,182
Network access and long distance
network service 7,448,838 6,956,102 6,003,202
Miscellaneous (Note 1) 3,168,620 2,873,169 2,802,855
13,315,941 12,277,948 11,162,239
Less: Provision for uncollectibles (59,956) (25,144) (28,718)
Total operating revenues 13,255,985 12,252,804 11,133,521
OPERATING EXPENSES:
Plant specific 2,128,966 1,926,005 1,758,650
Plant non-specific:
Depreciation 2,031,864 1,801,722 1,448,853
Other 580,838 742,732 589,940
Customer operations 2,780,319 2,651,856 2,385,226
Corporate operations 1,695,746 1,727,907 1,748,356
Total operating expenses 9,217,733 8,850,222 7,931,025
OPERATING TAXES:
Federal income taxes (Note 7) 584,466 312,507 376,224
Property, revenue and payroll 960,718 1,023,023 964,882
Total operating taxes 1,545,184 1,335,530 1,341,106
Operating income 2,493,068 2,067,052 1,861,390
NONOPERATING INCOME (EXPENSES) -
NET: (Note 11) 305,200 326,392 259,658
Income available for fixed charges 2,798,268 2,393,444 2,121,048
FIXED CHARGES:
Interest on funded debt 593,756 619,064 333,223
Other interest charges 31,790 16,367 136,623
Amortization 19,350 8,563 8,563
Total fixed charges 644,896 643,994 478,409
NET INCOME 2,153,372 1,749,450 1,642,639
PREFERRED DIVIDENDS 25,000 25,000 25,000
INCOME APPLICABLE TO
COMMON STOCK $ 2,128,372 $ 1,724,450 $ 1,617,639
NET INCOME PER AVERAGE SHARE
OF OUTSTANDING COMMON
STOCK (Note 12) $ 3.45 $ 2.82 $ 2.66
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING (Note 12) 617,584 612,248 607,301
</TABLE>
The accompanying notes are an integral part of the financial statements.
96
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1995, 1994 and 1993
Treasury Preferred Common Retained
Stock Stock Stock Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 ($775,200) $500,000 $1,767,230 $10,367,817 $11,859,847
Net income for the year ----- ----- ----- 1,642,639 1,642,639
Dividends:
Common ($1.64 per share) ----- ----- ----- (996,286) (996,286)
Preferred ($5.00 per share) ----- ----- ----- (25,000) (25,000)
Sale of Common Stock ----- ----- 155,117 ----- 55,117
Purchase of Treasury Stock 0 ----- ----- ----- 0
Balance, December 31, 1993 (775,200) 500,000 1,922,347 10,989,170 12,636,317
Net income for the year ----- ----- ----- 1,749,450 1,749,450
Dividends:
Common ($1.68 per share) ----- ----- ----- (1,028,820) (1,028,820)
Preferred ($5.00 per share) ----- ----- ----- (25,000) (25,000)
Sale of Common Stock ----- ----- 167,295 ----- 167,295
Balance, December 31, 1994 (775,200) 500,000 2,089,642 11,684,800 13,499,242
Net income for the year ----- ----- ----- 2,153,372 2,153,372
Dividends:
Common ($1.74 per share) ----- ----- ----- (1,074,998) (1,074,998)
Preferred ($5.00 per share) ----- ----- ----- (25,000) (25,000)
Sale of Common Stock ----- ----- 191,596 ----- 191,596
Balance, December 31, 1995 ($775,200) $ 500,000 $2,281,238 $12,738,174 $14,744,212
</TABLE>
The accompanying notes are an integral part of the financial statements.
97
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended December 31, 1995 1994 1993
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 2,153,372 $ 1,749,450 $ 1,642,639
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,051,214 1,811,191 1,458,323
Deferred income tax and investment
tax credit (33,114) (16,238) (164,619)
Interest charged to construction (32,372) (123,482) (103,569)
Income from partnership (290,250) (293,500) (243,949)
Change in assets and liabilities:
(Increase) Decrease in accounts receivable (970,903) (243,517) (134,406)
(Increase) Decrease in materials and supplies (223,267) (252,651) (107,466)
(Increase) Decrease in prepaid expenses (31,266) 23,312 24,174
(Increase) Decrease in deferred charges 22,289 (74,011) (34,430)
Increase (Decrease) in accounts payable 592,564 93,104 149,032
Increase (Decrease) in customers' deposits (83,509) 57,665 (18,577)
Increase (Decrease) in advance billing and payment 4,628 15,497 ----
Increase (Decrease) in accrued expenses 77,271 (211,188) 261,596
Increase (Decrease) in other liabilities 27,632 283,133 (2,050)
Net cash provided by operating activities 3,264,289 2,818,765 2,726,698
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,988,826) (4,143,323) (3,221,750)
Interest charged to construction 32,372 123,482 103,569
Distribution from partnership 0 202,500 258,750
Changes in other investments (216,589) (2,345) (5,000)
Net cash used in investing activities (2,173,043) (3,819,686) (2,864,431)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (Decrease) in Notes Payable 50,000 900,000 (2,100,000)
Repayment of long-term debt (120,000) (120,000) (120,000)
Proceeds from issuance of long-term debt ---- ---- 4,000,000
Dividends (1,099,998) (1,053,820) (1,021,286)
Sale of Common Stock 191,596 167,295 155,117
Increase in unamortized debt issue expense (52,832) ---- ----
Net cash provided by (used in) financing activities (1,031,234) (106,525) 913,831
Increase (Decrease) in cash and
cash equivalents 60,012 (1,107,446) 776,098
Cash and cash equivalents at
beginning of year 422,037 1,529,483 753,385
Cash and cash equivalents at
end of year $ 482,049 $ 422,037 $ 1,529,483
</TABLE>
The accompanying notes are an integral part of the financial statements.
98
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is an independent telephone company providing telephone service
to customers in the Towns of Warwick and Goshen, New York and the Townships
of Vernon and West Milford, New Jersey. Its services include providing
local telephone service to residential and business customers, access and
billing and collection services to interexchange carriers and the sale and
leasing of telecommunications equipment.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements, and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from those estimates.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All material intercompany transactions
and balances have been eliminated in the consolidated financial statements.
DEPRECIATION
Depreciation is based on the cost of depreciable plant in service and is
calculated on the straight-line method using estimated service lives of the
various classes of telephone plant. Depreciation as a percent of average
depreciable telephone plant was 6.47%, 6.25%, and 5.56%, for the years
1995, 1994 and 1993, respectively.
CAPITALIZATION OF CERTAIN COSTS AND EXPENSES
The Company has consistently followed the practice of capitalizing certain
costs related to construction, including payroll and payroll related costs
and significant costs of capital incurred during construction. The income
which results from capitalizing interest during construction is not
currently realized but, under the regulatory rate-making process, is
recovered by revenues generated from higher depreciation expense over the
life of the related plant.
FEDERAL INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes ("SFAS 109"), as of January 1, 1993. Under
SFAS 109 deferred income taxes arise from temporary differences resulting
from differences between the financial statement and tax basis of assets
and liabilities. Deferred taxes are classified as current or non-current,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse. The Company's deferred taxes result principally from differences
in depreciation methods for financial reporting and tax reporting.
Investment tax credits have been normalized and are being amortized to
income over the average life of the related telephone plant and other
equipment.
99
<PAGE>
<TABLE>
<CAPTION>
INVESTMENTS
Investments consisted of the following at December 31: 1995 1994
<S> <C> <C>
Investment in cellular partnership $ 1,054,485 $ 764,235
Other investments 232,161 15,571
$ 1,286,646 $ 779,806
</TABLE>
The partnership investment represents the Company's 7.5% interest as a
limited partner in a cellular telephone operation and has been recorded on
the equity method. The other investments are recorded at cost.
CASH FLOW STATEMENT
Cash and cash equivalents consists principally of demand deposits and are in
accounts which are insured by the Federal Deposit Insurance Corporation
(F.D.I.C.) up to $100,000 at each financial institution. As of December 31,
1995 the amount of cash in excess of these F.D.I.C. insured limits was
approximately $489,500. The following is a list of interest and federal
income tax payments for each of the three years in the period ending
December 31, 1995:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Interest $ 625,259 $ 613,969 $ 448,733
Federal Income Taxes $ 615,000 $ 717,037 $ 462,635
</TABLE>
MATERIAL AND SUPPLIES
New and reusable materials are carried at average original cost, except that
specific costs are used in the case of large individual items. As of December
31, 1995 and 1994 the Material and Supplies inventory consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Inventory for outside plant construction $ 301,022 $ 329,998
Inventory for central office equipment 544,109 234,778
Inventory of deregulated equipment held for sale
or lease (principally PBX and station equipment) 671,227 728,315
$ 1,516,358 $ 1,293,091
</TABLE>
RETIREMENT AND/OR DISPOSITION OF PROPERTY
When depreciable property is retired, the amount at which it is carried plus
the cost of removal is charged to the depreciation reserve and any salvage
is credited thereto. Expenditures for maintenance and repairs are charged
against income; renewals and betterments are capitalized.
MISCELLANEOUS REVENUES
Miscellaneous revenues consisted of the following for each of the three years in
the period ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Directory advertising revenue $ 784,365 $ 738,231 $ 723,899
Rent revenue 193,310 178,585 148,804
Billing and collection revenue 1,105,198 1,109,344 1,123,500
Deregulated revenues 441,352 428,693 427,904
Other operating revenues 644,395 418,316 378,748
$ 3,168,620 $ 2,873,169 $ 2,802,855
</TABLE>
100
<PAGE>
<TABLE>
<CAPTION>
2. TELEPHONE PLANT IN SERVICE
Telephone plant in service, at cost, consisted of the following at
December 31:
1995 1994
<S> <C> <C>
Land $ 164,981 $ 164,981
Buildings and improvements 1,979,310 1,924,228
Equipment 29,199,788 27,817,135
Vehicles 787,107 760,205
$ 32,131,186 $ 30,666,549
3. DEPRECIATION RESERVE
Depreciation reserve consisted of the following at December 31:
1995 1994
Buildings and improvements $ 385,685 $ 331,099
Equipment 10,401,991 8,815,326
Vehicles 435,318 376,079
$ 11,222,994 $ 9,522,504
</TABLE>
4. ACCOUNTS RECEIVABLE
The Company uses the reserve method to record uncollectible accounts. The
reserve for uncollectibles was $65,155 as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
5. LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
1995 1994
Redemption Price Redemption Price
Amount Plus Premium Amount Plus Premium
<S> <C> <C> <C> <C>
First Mortgage Bonds
9.50% Series "F" $ 260,000 100.00% $ 270,000 100.39%
(due 09/01/1996)
8.75% Series "G" 110,000 100.00% 220,000 100.87%
(due 12/15/1996)
9.05% Series "I" 3,000,000 N/A 3,000,000 N/A
(due 05/01/2000)
7.05% Series "J" 4,000,000 N/A 4,000,000 N/A
(due 12/01/2003)
7,370,000 7,490,000
Less: Current maturities
of Long-Term Debt 370,000 120,000
Total Long-Term Debt $7,000,000 $7,370,000
</TABLE>
101
<PAGE>
5. LONG-TERM DEBT (continued)
Telephone properties have been pledged as collateral on the first mortgage
bonds. Under provisions of the bond indentures, as amended, the payment of
dividends or a distribution of assets to stockholders to the extent of 75%
of the Company's net income earned during the calendar year will be
allowed, providing "net operating income" equals interest expense 1.5
times.
Maturities and sinking fund requirements for the five years subsequent to
1995 for long-term debt outstanding as of December 31, 1995 are as follows:
1996................................................. $ 370,000
1997 ................................................ -----
1998................................................. -----
1999................................................. -----
2000................................................. $3,000,000
At the option of the Company, the first mortgage bonds, except for the
Series "I" and "J" bonds, which may not be redeemed prior to their maturity
date, may be redeemed in whole or in part before maturity at par plus
various declining premium rates as stated above.
6. NOTES PAYABLE
The Company has an unsecured line of credit with the Warwick Savings Bank,
which expires in April, 1996. Any borrowings under this line of credit are
on a demand basis and are without restrictions, at a variable lending rate.
The total credit available at December 31, 1995 was $1,550,000. The
balances outstanding as of December 31, 1995 and 1994 were $950,000 and
$900,000 respectively, bearing interest rates of 8% and 5.50%.
7. FEDERAL INCOME TAXES
The following tabulation is a reconciliation of the federal income tax
expense as reported in these financial statements with the tax expense
computed by applying the statutory federal income tax rates to pre-tax
income. The statutory tax rate of 34% applies to all three years.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Operating federal income taxes:
Current portion $ 601,448 $ 345,433 $ 576,101
Deferrals, net of reversals:
Depreciation 100,984 153,538 (6,252)
Cost of removal 2,928 (11,768) (11,594)
Tax savings due to TRA of 1986 (89,760) (89,760) (126,745)
Other 19,866 (33,936) (4,286)
Investment tax credit, net of amortization (51,000) (51,000) (51,000)
(16,982) (32,926) (199,877)
Operating F.I.T. expense 584,466 312,507 376,224
Nonoperating federal income taxes:
Current portion 89,917 102,417 88,735
Deferrals, net of reversals: (9,089) (3,875) (3,875)
Nonoperating F.I.T. expense 80,828 98,542 84,860
F.I.T. included in income (loss) of subsidiary 45,947 115 (10,322)
Total F.I.T. expense, as reported 711,241 411,164 450,762
</TABLE>
102
<PAGE>
<TABLE>
<CAPTION>
7. FEDERAL INCOME TAXES (continued)
1995 1994 1993
<S> <C> <C> <C>
Reversals of deferred taxes 177,968 202,255 162,793
Tax savings of TRA of 1986, net 89,760 89,760 126,745
Other (5,001) 31,430 (28,544)
FEDERAL INCOME TAX AT
STATUTORY RATE $ 973,968 $ 734,609 $ 711,756
</TABLE>
The following components comprise the net deferred tax liability reported
as of December 31:
1995 1994
Deferred tax liabilities $2,406,384 $2,155,700
Deferred tax assets 156,311 182,583
Net deferred tax liability $2,250,073 $1,973,117
The deferred tax liability consists principally of temporary differences
due to differences in depreciation methods for financial reporting and tax
reporting. The deferred tax asset is due to the unamortized investment tax
credit being deemed a temporary difference in the basis of the related
assets.
The adoption of SFAS 109, Accounting for Income Taxes, has required certain
reclassifications of deferred tax balances and the establishment of
regulatory assets and liabilities. This is due to the ratemaking treatment
of deferred taxes and unamortized investment tax credits, whereby future
reversals can be expected to be recovered or returned to customers through
future rates. Any existing excess deferrals, generated from a change in tax
rates, which will be passed on to customers of the Company's regulated
operations in the future, have been reclassified as regulatory liabilities.
The balance of unamortized investment tax credits is a temporary difference
and a deferred tax asset has been established for this. The offsetting
regulatory liability associated with this reflects the future amounts due
to customers as reversals of these balances occur. These regulatory
liabilities are included in other deferred credits and amounted to $202,170
and $355,348 as of December 31, 1995 and 1994, respectively. As reversals
of the deferred tax balances occur in the future, these regulatory
liabilities will also decrease.
8. PENSION PLANS
DEFINED BENEFIT PENSION PLAN - The Company has two defined benefit pension
plans covering all management and non-management employees who are at least
21 years of age and have completed one year of service. Benefits are based
on years of service and the average of the employee's three highest
consecutive years' base compensation. The Company's policy is to fund the
minimum required contribution disregarding any credit balance arising from
excess amounts contributed in the past. Contributions to the plan for 1995,
1994 and 1993 were $329,807, $80,309, and $323,861 respectively.
103
<PAGE>
8. PENSION PLANS (continued)
DEFINED BENEFIT PENSION PLAN (continued)
The following table sets forth the combined plans' funded status and
amounts recognized in the Company's statement of financial position as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation: vested benefit $ 6,019,582 $ 4,806,189
non-vested benefit 4,528 6,061
$ 6,024,110 $ 4,812,250
Projected benefit obligation for service rendered to date $(7,602,508) $(6,271,045)
Plan assets at fair value (bonds, real estate, mortgages and stocks) 6,429,016 5,153,449
Projected benefit obligation in excess of plan assets (1,173,492) (1,117,596)
Unrecognized net loss (gain) from past experience different from
that assumed and effects of changes in assumptions 265,103 101,692
Prior service cost not yet recognized in net periodic pension cost 348,167 398,778
Unrecognized net transition obligation 319,582 372,845
Prepaid (accrued) pension cost $ (240,640) $ (244,281)
</TABLE>
Net periodic pension cost for the years 1995, 1994 and 1993 includes the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned during
the period $ 168,557 $ 161,479 $ 168,540
Interest cost on projected benefit
obligation 506,037 474,519 430,840
Actual return on plan assets (1,100,756) (30,662) (482,013)
Net amortization and deferral 752,328 (226,140) 207,964
Net periodic pension cost $ 326,166 $ 379,196 $ 325,331
</TABLE>
A discount rate of 8.5% and 7.5% and a rate of increase in future
compensation levels of 6.5% and 5.5% were used in determining the actuarial
present value of the projected benefit obligations for 1995 and 1994,
respectively. The expected long-term rate of return on assets was 9.0% and
8.0% for 1995 and 1994, respectively.
There may be differences in the amount of pension expense as stated above
and that recorded in these financial statements due to regulatory
requirements. This difference would be recorded as a regulatory asset or
liability and will be disposed of by the regulators at a future date.
DEFINED CONTRIBUTION PLAN - The Company also has a Defined Contribution
401(K) Profit Sharing Plan covering substantially all employees. Under the
plan, employees may contribute up to 15% of compensation, subject to
certain legal limitations. The Company contributes a matching contribution
up to 3.0% of an eligible participant's compensation for management,
clerical traffic, and plant employees.
The Company contributed and expensed $82,551, $70,606 and $62,912 for the
years ended December 31, 1995, 1994 and 1993, respectively.
104
<PAGE>
9. POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS
The Company has adopted SFAS 106, "Employers' Accounting for Postretirement
Benefits other than Pensions," which requires the cost of these benefits to
be recognized over the service life of employees. The Company sponsors a
non-contributory, defined benefit postretirement medical benefit plan that
covers all employees that retire directly from active service on or after
age 55 with at least 10 years of service or after age 65 with at least 5
years of service. The projected unit credit actuarial method was used in
determining the cost of future benefits. The Company's funding policy is to
contribute the maximum allowed under current Internal Revenue Service
regulations. Due to regulatory requirements the Company is allowed to
expense the amount actually funded, with any difference between the funding
amount and the SFAS 106 expense amount being deferred as a regulatory asset
or liability. Assets of the plan are held in various tax exempt funding
vehicles and are invested principally in a bond mutual fund.
The following table sets forth the plan's funded status reconciled with the
amounts shown in the Company's balance sheet at December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Accumulated postretirement benefit obligation: 1995 1994
<S> <C> <C>
Retirees $ (364,378) $ (402,196)
Fully eligible active plan participants (278,966) (199,790)
Other active plan participants (833,257) (779,694)
$(1,476,601) $(1,381,680)
Plan assets at fair value 456,361 275,702
Accumulated postretirement benefit
obligation in excess of plan assets (1,020,240) (1,105,978)
Unrecognized net loss (gain) 103,494 152,222
Unrecognized transition obligation 875,428 926,924
Prepaid (Accrued) postretirement benefit cost $ (41,318) $ (26,832)
</TABLE>
Net periodic postretirement benefit costs for 1995, 1994 and 1993 includes
the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 44,963 $ 42,975 $ 33,691
Interest cost on accumulated
postretirement benefit obligation 102,387 95,370 77,244
Actual return on plan assets (52,234) (11,513) --
Amortization of transition obligation
over 20 years 51,496 51,496 51,496
Net amortization and deferral 32,211 2,078 --
Net periodic postretirement benefit cost $ 178,823 $ 180,406 $ 162,431
</TABLE>
For measurement purposes, a 11% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1996; the rate was
assumed to decrease gradually (1% per annum until 1997 and .5% from
1998-2006) to 5% at 2007 and remain at that level thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1995 by approximately $260,000 and
the aggregate of the service and interest cost components of postretirement
expense for the year then ended by approximately $32,000.
The weighted-average discount rate and the rate of compensation increase
used in determining the accumulated postretirement benefit obligation was
7.5% and 5.0% for both 1995 and 1994, and the expected long-term rate of
return on plan assets was 7.5% for both years.
105
<PAGE>
10. RELATED PARTY TRANSACTIONS
The Company expended approximately $204,565, $187,036 and $164,586 during
1995, 1994 and 1993, respectively, in insurance premiums for required
insurance coverage. These expenditures were made to an insurance agency in
which a member of the Board of Directors has a financial interest. Two
Board of Director members are also trustees of the Warwick Savings Bank, at
which the Company has its principal bank accounts and temporary
investments.
11. NONOPERATING INCOME AND EXPENSES
Nonoperating income (expense) for the years ended December 31, are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Interest charged to construction $ 32,372 $ 123,482 $ 103,569
Interest income 513 17,082 3,570
Income from cellular partnership 290,250 293,500 243,949
Net income (loss) from subsidiaries 89,193 225 (20,037)
Other nonoperating income (expense) (26,300) (9,355) 13,467
Nonoperating federal income taxes (80,828) (98,542) (84,860)
$ 305,200 $ 326,392 $ 259,658
</TABLE>
12. EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
outstanding of 617,584, 612,248 and 607,301 for the years ended December
31, 1995, 1994 and 1993, respectively.
13. TREASURY STOCK
The Company accounts for treasury stock using the cost method of
accounting.
14. PREFERRED STOCK
The preferred stock may be redeemed by the Company on any dividend payment
date at par plus accumulated dividends. Preferred stock ranks prior to the
common stock both as to dividends and on liquidation, but has no general
voting rights. However, if preferred stock dividends are in default in an
amount equal to six quarterly dividends, the holder of preferred stock
shall have the right to elect a majority of the Board of Directors and such
voting rights would continue until all dividends in arrears have been paid.
15. COMMITMENTS
The Company is required to make certain contributions to national and state
associations as part of the industry practice of pooling revenues and
redistributing to members based on cost to provide services or some other
method. Due to recent changes in the structure of these pools, the
Company's responsibility is to contribute certain fixed amounts during a
transition period, after which time the amounts may change. Payments to the
National Exchange Carrier Association during 1995 were $54,000 and the
contribution for 1996 is expected to be $75,000. Effective October 1, 1992,
the New York State Settlement Pool was restructured, resulting in the
Company being obligated to contribute $220,000 in 1996 through September
30th. Contributions after that date are not known at this time. The amounts
paid to these pools are considered part of the cost of providing access
service to inter-exchange carriers and are included in the rates charged to
them.
106
<PAGE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents approximates fair value
due to the short maturity of the instruments. The fair value of the
Company's long-term debt, after deducting current maturities, is estimated
to be $7,460,000 at December 31, 1995, compared to a carrying value of
$7,000,000. The fair value estimates were based on rates currently
available from debt instruments with similar terms and maturities. The fair
value of all other financial instruments is estimated by management to
approximate the carrying value.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors February 8, 1996
Warwick Valley Telephone Company
P.O. Box 592
Warwick, New York 10990
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheets of Warwick
Valley Telephone Company as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. 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 consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated 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
Warwick Valley Telephone Company as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Bush & Germain, P.C. (signature)
Bush & Germain, P.C.
Syracuse, New York
February 8, 1996
107
<PAGE>
<TABLE>
<CAPTION>
BOARD OF DIRECTORS AND OFFICERS
(page of photos)
<S> <C> <C>
Philip S. Demarest Howard Conklin, Jr. Earl V. Barry
Board Director, Chairman of the Board of Board Director,
Vice President, the Company, Chairman of Retired, Former Vice
Secretary & Treasurer of the Board, Conklin & President of the
the Company Strong, Inc., Warwick, N.Y. Company
Henry L. Nielsen, Jr. Fred M. Knipp Victor J. Marotta
Vice Chairman of the Board Director, Board Director,
Board of the Company, President & C.E.O. of Director of Tri-States Tankers
President, Nielsen the Company of New York, Inc.
Construction Co., Inc., Slate Hill, N.Y.
Warwick, N.Y.
Wisner H. Buckbee Joseph E. DeLuca, M.D. Corinna S. Lewis
Board Director, Board Director, Board Director,
President, Wisner Farms, Inc., Physician, Vernon Urgent Care Retired Public Relations
Warwick, N.Y. Center, Vernon, N.J. Consultant
Herbert Gareiss, Jr.
Vice President of
the Company
</TABLE>
108
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS
For years ended or at December 31, 1995 1994 1993 1992 1991
SELECTED FINANCIAL DATA
<S> <C> <C> <C> <C> <C>
Total revenues * $14,969,872 $13,570,409 $11,817,981 $10,949,082 $11,047,247
Telephone operating revenues 13,315,940 12,277,948 11,162,239 10,377,034 10,680,840
Total expenses * 11,022,037 10,165,019 8,351,512 7,692,276 7,464,253
Telephone operating expenses 9,217,733 8,850,222 7,931,025 7,290,612 7,129,700
Net income 2,153,372 1,749,450 1,642,639 1,401,753 1,608,155
Total assets 29,418,023 27,657,579 25,792,681 23,010,828 21,546,013
Current assets 5,975,482 4,690,034 5,324,625 4,330,829 3,496,242
Current liabilities 4,720,240 3,801,653 2,663,442 4,373,441 2,919,135
Long-term obligations 7,000,000 7,370,000 7,490,000 3,610,000 3,961,000
Percentage of debt to
total capital 36.07 38.3 37.6 31.2 30.8
Shareholders' equity 14,744,212 13,499,242 12,636,317 11,859,847 11,446,525
COMMON STOCK DATA
Income applicable to
common stock 2,128,372 1,724,450 1,617,639 1,376,753 1,583,155
Income per share 3.45 2.82 2.66 2.27 2.63
Book value 23.06 21.23 19.96 18.70 18.18
Cash dividends per
common share 1.74 1.68 1.64 1.60 1.50
Shareholders of record 607 591 590 584 574
Shares outstanding 617,584 612,248 607,301 607,491 602,016
GENERAL
Access lines in service 22,132 21,126 20,312 19,514 18,900
Carrier access minutes 134,534,480 125,081,670 115,645,770 88,039,170 78,528,858
</TABLE>
* Including cellular shown as part of nonoperating income (expenses) on
statement of income.
109
<PAGE>
CONCERNING THE COMPANY'S COMMON STOCK
Although private sales are made by holders of the Company's common stock
from time to time, there is no established public trading market for the
Company's common stock, and the Company is unable to say whether one will
develop. At March 1, 1996, there were 607 holders of the Company's common stock.
The Company has paid consecutive cash dividends on its common stock
quarterly since April 1, 1931 and semi-annually from July 1, 1907 until December
31, 1930. The practice of the Company has been to reinvest a substantial portion
of its earnings in its capital plant. While the present intention of the Board
of Directors is to continue declaring cash dividends, future dividends will
necessarily depend on the Company's earnings, capital requirements, developments
in the telephone industry and general economic conditions, among other factors.
In 1994, the Company paid a dividend on its common stock of $1.68 per share. In
1995, the common stock dividend was $1.74 per share.
110
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 21,940,397
<OTHER-PROPERTY-AND-INVEST> 1,286,646
<TOTAL-CURRENT-ASSETS> 5,975,482
<TOTAL-DEFERRED-CHARGES> 140,327
<OTHER-ASSETS> 75,170
<TOTAL-ASSETS> 29,418,023
<COMMON> 2,281,238
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 12,738,174
<TOTAL-COMMON-STOCKHOLDERS-EQ> 15,019,412
0
500,000
<LONG-TERM-DEBT-NET> 6,630,000
<SHORT-TERM-NOTES> 950,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 370,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,578,610
<TOT-CAPITALIZATION-AND-LIAB> 29,418,023
<GROSS-OPERATING-REVENUE> 13,255,984
<INCOME-TAX-EXPENSE> 1,545,184
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 9,217,773
<OPERATING-INCOME-LOSS> 2,493,067
<OTHER-INCOME-NET> 305,200
<INCOME-BEFORE-INTEREST-EXPEN> 2,798,267
<TOTAL-INTEREST-EXPENSE> 644,896
<NET-INCOME> 2,153,372
25,000
<EARNINGS-AVAILABLE-FOR-COMM> 2,128,372
<COMMON-STOCK-DIVIDENDS> 1,074,998
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 3,264,289
<EPS-PRIMARY> 3.45
<EPS-DILUTED> 0
</TABLE>
