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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, 1997
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,
1998 - (no organized market exists)
Common shares outstanding, March 20, 1998 - 1,800,816
DOCUMENTS INCORPORATED BY REFERENCE
Name Incorporated Into
Annual Report to Shareholders for the year
ended December 31, 1998 Parts II and IV
Proxy statement for the 1998 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 117.
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<PAGE>
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
Main Street, Warwick, New York 10990 (Tel. No. 914-986-8080).
The Company is an independent telephone company with 15,568 access lines in
New York State and 9,219 in New Jersey at December 31, 1997. 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 (10,737 access lines), Florida (3,331 access
lines) and Pine Island (1,500 access lines), New York and Vernon (6,490 access
lines) and Upper Greenwood Lake (2,729 access lines), New Jersey. The Company's
service area is primarily rural and has an estimated population of 50,000.
In 1997, 23,429,091 toll calls were made on the Company's system,
representing an increase of 5.1% from 22,297,227 in 1996. Business customers
represent 21.4% 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 within 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 Mobile),
and the other limited partners are Frontier 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 1998. The partnership began offering cellular service
in both counties in February 1988. The partnership's pre-tax income for the year
ended December 31, 1997 was $8,637,000, and the Company's share of that pre-tax
income was $647,775.
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, 1997, WVMT had a
pre-tax profit of $63,296. 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 1997 of $373,679. 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 makes 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 was in operation
during 1997 although not all members have become part of the system to date.
NYSINET had a net loss of $306,000 during 1997, of which Warwick Valley
Networks' share was $12,590.
<PAGE>
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 in nearby areas in New York, New Jersey
and Pennsylvania. Online, which began business in July, 1995, had a pre-tax
profit of $389,009 in 1997.
The Company has recently filed an application to have its Common Stock
listed on the NASDAQ National Stock Market. The application is pending
currently. Approval and listing are anticipated during the second quarter of
1998.
The Company expects to incur costs during 1998 and 1999 to address the
impact of the so-called Year 2000 problem on its information systems. The Year
2000 problem, which affects most corporations to varying degrees, concerns the
inability of information systems, primarily computer software programs, to
properly recognize and process date sensitive information as the year 2000
approaches. This inability results largely from the use in earlier software of
two, rather than four digits to identify years. The Company has completed an
assessment of its systems and has developed a specific work plan to address this
issue. The Company currently believes it will be able to modify or replace its
affected systems in time to minimize any detrimental effects on operations.
In addition, the Company has communicated with others, such as switching
manufacturers, software vendors, credit card processors and security system
companies, with whom it does significant business, to determine their Year 2000
compliance readiness and the extent to which the Company is vulnerable to any
third party Year 2000 issues. However, there can be no guarantee that the
systems of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with the Company's systems, would not have a material adverse
effect on the Company.
The total cost to the Company of these Year 2000 compliance activities has
not been and is not anticipated to be material to its financial position or
results of operations in any given year. These costs and the date on which the
Company plans to complete the Year 2000 modification and testing processes are
based on management's best estimates, which were derived utilizing numerous
assumptions of future events including the continued availability of certain
resources, third party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved and actual results could
differ from those plans.
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 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. WVMT competes against Bell
Atlantic Mobile Communication Retail Company, Orange County Cellular Telephone
Corporation and others offering either cellular service or the sale and
installation of cellular equipment.
The Telecommunications Act of 1996 (the 'Act')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 affected first have been the regional toll areas in both states.
Regional toll competition was implemented in New York on January 1,
2
<PAGE>
1997 and in New Jersey in May 1997. The competition in these areas has had the
effect of reducing Warwick's revenues. The extent of such reductions has been
relatively small. 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 has taken steps
such as establishing subsidiaries described above, 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.
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
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 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 rapid
growth. Whether growth and pricing levels can be maintained depends, in part, on
the actions of existing competitors, the possible entry into the market of new
competitors, the rate of technological change and the level of demand for
services.
Should NYSINET offer services to non-members, WVN will indirectly be
competing against Bell Atlantic 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 62.8% 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 was obligated to make
contributions to a long-term support fund of the National Exchange Carrier
Association. During 1997, the Company paid approximately $68,000 to that fund.
Beginning January 1, 1998, a new funding mechanism has begun, whereby all
carriers contribute to a Universal Service Fund established by the FCC to cover
high cost areas, low income customers, schools, libraries and rural health care
providers. The Company's obligation to this fund is approximately $46,000 in the
first six months of 1998. Updated information will result in a recalculation of
required contributions for the remainder of 1998. Management does not currently
expect that the amount contributed by the Company will change significantly.
3
<PAGE>
Also as of January 1, 1998, the Company began receiving substantial funds
from the Universal Service Fund. As a result of the FCC order establishing the
Fund, all local exchange carriers were required to reduce access charges billed
to toll carriers. To offset this revenue reduction, the high cost portion of the
Universal Service Fund provides payments monthly to carriers satisfying the
characteristics set forth in the order. At the current level of support, the
Company will receive approximately $2.3 million during 1998.
The Company also receives access charges from toll carriers for all
intrastate toll usage. 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 $285,000 to the NYSASP on
an annual basis. A current proceeding before the NYSPSC will determine the
future of the NYSASP and the Company's obligation to make further contributions.
In the Company's two New Jersey exchanges, intrastate toll revenues are
retained by 33 toll carriers of which the Company is one. The associated access
charges are retained by the Company. Revenues resulting from traffic between the
Company and Bell Atlantic and United Telephone are adjusted by charges payable
to each company for terminating traffic.
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 partly regulated in New
York and fully regulated in New Jersey. The regulated services are provided
under tariff. Some carriers provide their own billing and collection services.
EMPLOYEES
The Company has 109 full-time and part-time employees, including 87
non-management employees. Sixty (60) 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-seven (27) non-management employees (primarily plant employees) are
represented by Local 503 of the International Brotherhood of Electrical Workers
(IBEW). A new five-year contract between the Company and Local 503 effective May
1, 1998 has been agreed to and signed. The agreement provides increases in
wages, benefits and for certain changes in working conditions.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position and Period Served
Fred M. Knipp 67 President since 1988
Philip S. Demarest 61 Vice President since 1989;
Secretary since 1972; Treasurer since 1989
Herbert Gareiss, Jr. 52 Vice President since 1989;
Assistant Treasurer 1989-1997;
Assistant Secretary 1980-1997
Barbara Barber 55 Assistant Secretary since 1997
Robert A. Sieczek 54 Assistant Treasurer since 1997
There are no arrangements between any officer and any other person pursuant
to which he was selected an officer.
4
<PAGE>
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 44.6%; connecting lines and related equipment, 37.2%;
telephone instruments and related equipment, 3.3%; land and buildings, 6.0%; and
other telephone plant, 8.9%. A substantial portion of the Company's properties
is subject to the lien of the Company's Indenture or Mortgage.
Item 3. LEGAL PROCEEDINGS
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. (1)
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 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, 1997, the relevant pages of which are incorporated by reference
herein.
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 1998 Annual Meeting of Shareholders, to be filed pursuant to
Section 14(a) of the Securities Exchange Act of 1934.
5
<PAGE>
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, 1997, are incorporated herein by reference:
Reference Pages
Annual Report
On Form 10-K
Consolidated Statement of Income - Years
Ended December 31, 1997, 1996 and 1995 105
Consolidated Balance Sheet - December 31,
1997 and 1996 104
Consolidated Statement of Stockholders'
Equity - Years Ended December 31, 1997,
1996 and 1995 106
Consolidated Statement of Cash Flows - Years
Ended December 31, 1997, 1996 and 1995 107
Notes to Consolidated Financial Statements 108 - 113
2. Financial Statement Schedules:
Report of Independent Certified
Public Accountants on Financial
Statement Schedules 114
Schedules:
VIII. Valuation and Qualifying Accounts 10
6
<PAGE>
3. Exhibits:
Exhibit No. Description of Exhibit Reference
3(a) Articles of Incorporation, Filed herewith
as amended
3(b) By-Laws Filed herewith
4(a) Form of Common Stock Filed herewith
Certificate, as amended
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 1995
dated November 1, 1952,
including form of 9.05%
First Mortgage Bond,
Series I, Due May 1, 2000
4(e) Ninth Supplemental Filed herewith
Indenture, dated as of
October 1, 1993, to the
Indenture of Mortgage,
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, 1996, 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, 1997.
7
<PAGE>
SIGNATURES
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 ____, 1998 By: /s/ FRED M. KNIPP
----------------------------
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, 1998.
Signature Title
/s/ FRED M. KNIPP
- --------------------------------------- President and Director
Fred M. Knipp (Principal Executive Officer)
/s/ PHILIP S. DEMAREST
- --------------------------------------- Vice President, Treasurer,
Philip S. Demarest Secretary and Director
(Principal Financial
and Accounting Officer)
/s/ EARL V. BARRY
- --------------------------------------- Director
Earl V. Barry
/s/ WISNER H. BUCKBEE
- --------------------------------------- Director
Wisner H. Buckbee
/s/ HOWARD CONKLIN, JR.
- --------------------------------------- Director
Howard Conklin, Jr.
/s/ JOSEPH E. DELUCA
- --------------------------------------- Director
Joseph E. DeLuca
/s/ CORINNA S. LEWIS
- --------------------------------------- Director
Corinna S. Lewis
/s/ VICTOR J. MAROTTA
- --------------------------------------- Director
Victor J. Marotta
/s/ HENRY L. NIELSEN, JR.
- --------------------------------------- Director
Henry L. Nielsen, Jr.
8
<PAGE>
WARWICK VALLEY TELEPHONE COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996 and 1995
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 1997 $65,154 $46,289 $53,124 $99,412 $65,155
Year 1996 $65,154 $35,085 $15,695 $50,780 $65,154
Year 1995 $65,155 $59,956 $18,509 $79,466 $65,154
(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.
9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page
3 (a) Articles of Incorporation, as amended 12
3 (b) By-Laws 82
4 (a) Form of Common Stock Certificate,
as amended 91
4 (c) Indenture of Mortgage, dated November 1,
1952, and all indentures supplemental
thereto, except the Eighth Supplemental
Indenture
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
4 (e) Ninth Supplemental Indenture, dated as of
October 1, 1993, to the Indenture of Mortgage,
dated November 1, 1952, including form of
7.05% First Mortgage Bond, Series J, Due
October 1, 2003. 92
13 Annual Report to Shareholders for the year
ended December 31, 1997 99
23 Consent of Independent Auditor
27 Financial Data Schedule
Exhibit 4(c) is incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form 10 (File No. 0-11174), dated April 29, 1983.
Exhibit 4(d) is incorporated by reference to Exhibit 4(d) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995. 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.
10
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
<PAGE>
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.
13
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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, case 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
this 15th day of August, 1927. (signed) George H. Strong
(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, case 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
this 15th day of August, 1927. (signed) George H. Strong
(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
this 16th day of June, 1928. (signed) George H. Strong
(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 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 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 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:
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
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
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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 event of any reclassification
(including any reverse stock split), recapitalization, reorganization,
self tender offer or any similar transaction which has the effect of
reducing the number of outstanding common shares, 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
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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 720,000 common shares without
par value into 2,160,000 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
2,167,500, to consist of 7,500 preferred shares having a par value of
$100.00 each and 2,160,000 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 631,256, and the number of authorized, but unissued common
shares without par value is 88,744. 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 1,893,768 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 1,893,768 common shares without par value
outstanding after the split has been effectuated. Upon the effectuation of
the 3-for-1 split, 266,232 authorized but unissued common shares without
par value will remain. The stated capital with respect to such remaining,
unissued 266,232 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 25, 1997, 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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IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment this 2nd day of May, 1997.
(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
2nd day of May, 1997.
(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, 1998
81
EXHIBIT 3B
BY LAWS
WARWICK VALLEY TELEPHONE COMPANY
ARTICLE I.
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Company shall be
located in the Village of Warwick, County of Orange, State of New York.
Section 2. ADDITIONAL OFFICES. The Company may also have offices and places
of business at such other places, within or without the State of New York, as
the Board of Directors may from time to time determine.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 1. TIME AND PLACE. The annual meeting of the shareholders and all
special meetings of the shareholders may be held at such time and place within
or without the State of New York as shall be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETING. The annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held each year on the last
Friday in April (if not a legal holiday, and if a legal holiday then on the next
succeeding business day), or on such other business day as the Board of
Directors shall determine prior to the date for serving notice of such meeting.
Section 3. SPECIAL MEETINGS. Except as otherwise provided by law or by the
certificate of incorporation, special meetings of the shareholders, for any
purpose or purposes set forth in the notice of meeting, may be called by the
President or the Board of Directors, and shall be called by the President at the
request in writing of the holders of record of at least twenty-five percent
(25%) of the outstanding shares of a class of stock of the Company entitled to
vote on the proposals to come before the meeting. Such request shall state the
purpose or purposes of the proposed meeting.
Section 4. NOTICE OF MEETING OF SHAREHOLDERS. Written notice of a meeting
of shareholders, stating the place, date and hour of the meeting, and for
meetings other than annual meetings, stating by or at whose direction and for
what purpose or purposes the meeting is called, shall be given personally or by
mail to each shareholder entitled to vote thereat, not less than ten (10) nor
more than fifty (50) days prior to the meeting. If mailed, such notice shall be
directed to each shareholder at his address, as it appears on the records of the
shareholders of the Company, or if he shall have previously filed with the
Secretary of the Company a written request that notices to him be mailed to some
other address, then directed to him at such other address. If, at any meeting,
action is proposed to be taken which would, if taken, entitle shareholders
fulfilling the requirements of Section 623 of the New York Business Corporation
Law to receive payment for their shares, the notice of such meeting shall also
include a statement to that effect and shall be accompanied by a copy of Section
623 or an outline of its material terms.
Section 5. NO NOTICE REQUIRED. Notice of any meeting need not be given to
any person who may become a shareholder of record after the mailing of such
notice and prior to the meeting, or to any shareholder who attends such meeting,
in person or by proxy, or to any shareholder who, in person or by proxy, submits
a signed waiver of notice either before or after such meeting. Except as
otherwise provided by statute, notice of any adjourned meeting of shareholders
need not be given if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken.
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Section 6. QUORUM. Except as otherwise provided by the certificate of
incorporation, the holders of record of a majority of the shares of the Company
issued and outstanding and entitled to vote thereat upon a specified item of
business, present in person or represented by proxy, shall be necessary to and
shall constitute a quorum for the transaction of such specified item of business
at any meeting of the shareholders.
If, however, as to any item or items of business noticed to come before any
meeting of shareholders such quorum shall not be present or represented at such
meeting, the shareholders entitled to vote thereon present in person or
represented by proxy shall have power to adjourn the meeting as to such item or
items of business for which a quorum is not present from time to time, until a
quorum for the transaction of such item or items of business shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally noticed.
The chairman of any meeting of shareholders shall, at the beginning of such
meeting, determine whether a quorum is present for the transaction of each item
of business noticed to come before such meeting. A quorum for the transaction of
any item of business, once present, shall not be broken by the subsequent
withdrawal of any shareholders or their representatives.
Section 7. VOTING. At any meeting of the shareholders every shareholder
having the right to vote shall be entitled to vote in person, or by proxy.
Except as otherwise provided by law or the certificate of incorporation, each
shareholder of record shall be entitled to one vote for each share of stock
standing in the shareholder's name on the books of the Company. All elections
shall be determined by a plurality vote, and, except as otherwise provided by
law or the certificate of incorporation, all other matters shall be determined
by vote of a majority of the shares present or represented at such meeting and
voting on such questions.
Section 8. PROXIES. Every proxy must be executed in writing by the
shareholder or by his attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof, unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except in those cases where an irrevocable proxy is
permitted by law.
ARTICLE III.
DIRECTORS
Section 1. DUTIES; POWERS. Except as otherwise provided herein or in the
certificate of incorporation, the Board of Directors shall manage the business
of the Company.
Section 2. NUMBER; QUALIFICATION. The number of directors which shall
constitute the entire Board of Directors shall not be less than three (3) nor
more than ten (10), the actual number to be established at the annual meeting of
shareholders. Each director shall be at least eighteen years of age.
Section 3. ELECTION; TERM. Directors shall be divided into three classes,
and no class shall include fewer than three directors. The terms of office of
the directors initially classified shall be as follows: that of the first class
shall expire at the next annual meeting of the shareholders, the second class at
the second succeeding annual meeting and the third class at the third succeeding
annual meeting. Except as provided in Section 5 of this Article III, directors
shall be elected at each annual meeting after such initial classification to
replace those whose terms expire at such annual meeting to hold office until the
third succeeding annual meeting. Each director shall hold office until the
expiration of the term for which he is elected, and until his successor has been
elected and qualified.
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Section 4. RESIGNATION; REMOVAL. Any director may resign at any time by
giving written notice to the President or the Secretary. Such resignation shall
take effect at the time stated therein. The Board of Directors may, by majority
vote of all directors then in office, remove a director for cause. A notice of
intention to take action to remove a director stating the date, time and place
action is to be taken shall be mailed to the director at the director's address
of record on the books of the Company at least twenty (20) days prior to the
time such action is to be taken. The shareholders entitled to vote for the
election of directors may remove a director for cause.
Section 5. VACANCIES. If any vacancy should occur in the Board of Directors
by reason of the death, resignation, retirement or disqualification of any
director, or the removal from office of any director, all of the directors then
in office, although less than a quorum, may, by majority vote, choose a
successor or successors to fill the vacated directorship, and any director so
chosen to fill an existing vacancy shall hold office until the next annual
meeting of the shareholders and until his successor shall be duly elected and
qualified.
ARTICLE IV.
MEETINGS OF THE BOARD
Section 1. PLACE. The Board of Directors of the Company may hold meetings,
both regular and special, either within or without the State of New York.
Section 2. FIRST MEETING. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be announced at the
annual meeting of the shareholders, and no further notice of such meeting to the
newly elected directors shall be necessary in order to constitute the meeting,
provided a quorum shall be present. In the event of the failure to so announce
the time and place of such first meeting of the newly elected Board of
Directors, or in the event such meeting is not held at the time and place so
announced, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a duly executed waiver of notice thereof.
The first order of business shall be to elect a Chairman of the Board and a
Vice-Chairman of the Board and the officers of the Company for the ensuing year.
The Chairman and Vice-Chairman shall be Directors of the Company who are not
employees of the Company. The Chairman shall preside at all meetings of the
Board of Directors and shareholders and shall consult with the officers as
needed. The Vice-Chairman shall assume the responsibilities of the Chairman in
his absence.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of Directors may
be held at such time and at such place as shall from time to time be determined
by the Board.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by the Chairman of the Board on two days' notice to each director.
Special meetings shall be called by the President or Secretary on like notice at
the written request of two directors.
Section 5. QUORUM. At all meetings of the Board of Directors a majority of
the entire Board shall constitute a quorum for the transaction of business, and
the vote of a majority of the directors present at the time of the vote if a
quorum is present shall be the act of the Board of Directors, except as may be
otherwise specifically provided by law or by the certificate of incorporation.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present. Notice of any such adjournment shall be given to any
directors who were not present and, unless announced at the meeting, to the
other directors.
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Section 6. MEETINGS BY TELEPHONE; ACTION WITHOUT MEETING. Any one or more
members of the Board of Directors may participate in a meeting of such Board by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Prior notice of such meeting shall be furnished to each director.
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting if all members of the Board consent in writing to the
adoption of a resolution authorizing the action. The resolution and the written
consents thereto by the members of the Board shall be filed with the minutes of
the proceedings of the Board.
Section 7. COMPENSATION. Directors, as such, shall not receive any stated
salary for their services, but by resolution of the Board of Directors a fixed
fee and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board or of any committee of the Board,
provided that nothing herein contained shall be construed to preclude any
director from serving the Company in any other capacity and receiving
compensation therefor.
ARTICLE V.
COMMITTEES OF THE BOARD
Section 1. DESIGNATION. The Board of Directors, by resolution adopted by a
majority of the entire Board, shall elect from among its members an Audit
Committee, an Officer's Compensation Committee and such other committees, each
consisting of three or more directors, as it shall deem appropriate. No such
committee shall have authority as to any of the following matters:
(a) the submission to shareholders of any action as to which share
holders' authorization is required by law;
(b) the filling of vacancies in the Board of Directors or on any
committee;
(c) the fixing of compensation of any director for serving on the
Board or on any committee;
(d) the amendment or repeal of these By-Laws or the adoption of new
By-Laws; or
(e) the amendment or repeal of any resolution of the Board which by
its terms shall not be so amendable or repealable.
The Board may designate one or more directors as alternate members of any
such committee who may replace any absent member or members at any meeting of
such committee.
Section 2. AUDIT COMMITTEE. The Board of Directors shall designate an Audit
Committee to consist of not fewer than three and not more than five directors as
the Board may from time to time determine, elected by the affirmative vote of a
majority of the whole Board or if the majority of the Board is unable to elect
such directors, the Chairman of the Board shall appoint them. The members of the
Audit Committee (and alternates, if any) shall be directors who are not officers
or employees of the Company. At least annually, the Audit Committee shall
nominate the independent auditors of the Company to be appointed by the
shareholders at the annual meeting or any special meeting. In addition, the
Audit Committee shall from time to time discuss the audit work with the auditors
appointed to perform the audit.
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Section 3. OFFICERS' COMPENSATION COMMITTEE. The Board of Directors shall
designate an Officers' Compensation Committee to consist of not fewer than three
and not more than five directors as the Board may from time to time determine,
elected by the affirmative vote of a majority of the whole Board or if the
majority of the Board is unable to elect such directors, the Chairman of the
Board shall appoint them. The members of the Officers' Compensation Committee
(and alternates, if any) shall be directors who are not officers or employees of
the Company. The Committee shall meet annually or at such other times as may be
required by the Board to review the current compensation of the officers of the
Company and to establish the annual compensation of the officers for the coming
twelve-month period or such other time period as may be appropriate.
Section 4. MEETINGS BY TELEPHONE; ACTION WITHOUT MEETING. Any one or more
members of any committee of the Board of Directors may participate in a meeting
of such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Any action required or permitted to be taken by any committee of the Board
of Directors may be taken without a meeting if all members of the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the committee
shall be filed with the minutes of the committee.
Section 5. TENURE; REPORTS. Each committee shall serve at the pleasure of
the Board of Directors. It shall keep minutes of its meetings and report the
same to the Board of Directors.
ARTICLE VI.
NOTICES
Section 1. FORM; DELIVERY. Notices to directors and shareholders shall be
in writing and may be delivered personally or by mail or telegram. Notice by
mail shall be deemed to be given at the time when deposited in the United States
mail, with postage thereon prepaid, and addressed to directors or shareholders
at their addresses appearing on the records of the Company.
Section 2. WAIVER. Whenever a notice is required to be given by any
statute, the certificate of incorporation or these By-Laws, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice. In
addition, any shareholder attending a meeting of shareholders in person or by
proxy without protesting prior to the conclusion of the meeting the lack of
notice thereof to him, and any director attending a meeting of the Board of
Directors without protesting prior to the meeting or at its commencement such
lack of notice shall be conclusively deemed to have waived notice of such
meeting.
ARTICLE VII.
OFFICERS
Section 1. OFFICERS. The officers of the Company shall be a President, one
or more Vice-Presidents, a Secretary, an Assistant Secretary, a Treasurer and an
Assistant Treasurer. Any two or more of the foregoing offices, except those of
President and Secretary, may be held by the same person.
Section 2. AUTHORITY AND DUTIES. All officers, as between themselves and
the Company, shall have such authority and perform such duties in the management
of the Company as may be provided in these By-Laws, or, to the extent not so
provided, by the Board of Directors.
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Section 3. ELECTION; TERM OF OFFICE; REMOVAL. All officers shall be elected
by the Board of Directors and shall hold office at the pleasure of the Board or
for such term as may be prescribed by the Board. Any officer elected or
appointed by the Board may be removed with or without cause at any time by the
Board.
Section 4. COMPENSATION. The compensation of all officers of the Company
shall be fixed by the Board of Directors, and the compensation of agents shall
either be so fixed or shall be fixed by officers thereunto duly authorized.
Section 5. VACANCIES. If an office becomes vacant for any reason, the Board
of Directors shall fill such vacancy. Any officer so appointed or elected by the
Board shall serve only until such time as the unexpired term of his predecessor
shall have expired unless reappointed or reelected by the Board.
Section 6. THE PRESIDENT. The President shall be the Chief Executive
Officer of the Company; he shall be ex officio a member of all standing
committees except the Audit Committee and Officers' Compensation Committee;
shall have general and active management and control of the business and affairs
of the Company subject to the control of the Board of Directors, and shall see
that all orders and resolutions of the Board are carried into effect.
Section 7. VICE-PRESIDENTS. The Vice-Presidents (who may have such
designations, if any, as the Board of Directors may determine) in the order of
their seniority or in any other order determined by the Board, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President, and shall generally assist the President and perform
such other duties as the Board of Directors or the President shall prescribe.
Section 8. THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholders and
special meetings of the Board of Directors, and shall perform such duties as may
be prescribed by the Board of Directors or President, under whose supervision he
shall act. He shall keep in safe custody the seal of the Company and, when
authorized by the Board, affix the same to any instrument requiring it and, when
so affixed, it shall be attested by his signature or by the signature of the
Treasurer or an Assistant Secretary or Assistant Treasurer. He shall keep in
safe custody the certificate books and shareholder records and such other books
and records as the Board may direct and shall perform all other duties incident
to the office of the Secretary.
Section 9. ASSISTANT SECRETARIES. The Assistant Secretaries, if any, in
order of their seniority or in any other order determined by the Board of
Directors shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors or the Secretary shall prescribe.
Section 10. THE TREASURER. The Treasurer shall have the care and custody of
the corporate funds, and other valuable effects, including securities, and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the Company and shall deposit all moneys and other valuable effects in the
name and to the credit of the Company in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the Company
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the President and the Board, at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
Treasurer and of the financial conditions of the Company. If required by the
Board of Directors, the Treasurer shall give the Company a bond for such term,
in such sum and with such surety or sureties as shall be satisfactory to the
Board for the faithful performance of the duties of his office and for the
restoration to the Company, in case of his death, resignation, retirement or
removal from office,
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of all books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Company, the charge for such
bond to be at the Company's expense.
Section 11. ASSISTANT TREASURERS. The Assistant Treasurers, if any, in the
order of their seniority or in any other order determined by the Board, shall in
the absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Directors or the Treasurer shall prescribe.
Section 12. ADDITIONAL OFFICERS. In addition to the officers provided by
these By-Laws, the Board of Directors may, from time to time, designate and
appoint such other officers as may be necessary or convenient for the
transaction of the business and affairs of the Company. Such other officers
shall have the powers and duties which may be assigned to them by resolution of
the Board of Directors.
ARTICLE VIII.
SHARE CERTIFICATES
Section 1. FORM; SIGNATURE. The certificates for shares of the Company
shall be in such form as shall be determined by the Board of Directors and shall
be numbered consecutively and entered in the books of the Company as they are
issued. Each certificate shall exhibit the registered holder's name and the
number and class of shares, and shall be signed by the President or a Vice
President and the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, and shall bear the seal of the Company or a facsimile
thereof. Where any such certificate is countersigned by a transfer agent, or
registered by a registrar, the signature of any such officer may be a facsimile
signature. In case of any officer who signed, or whose facsimile signature or
signatures were placed on any such certificate shall have ceased to be such
officer before such certificate is issued, it may nevertheless be issued by the
Company with the same effect as if he were such officer at the date of issue.
Section 2. LOST CERTIFICATES. The Board of Directors or an officer or
officers duly authorized thereunto by the Board may direct a new share
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have been lost,
destroyed or wrongfully taken upon the making of a sworn affidavit of that fact
by the person claiming the certificate to have been lost, destroyed or
wrongfully taken. When authorizing such issue of a new certificate or
certificates, the Board of Directors or any authorized officer or officers may,
in its, his or their discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, destroyed or wrongfully taken
certificate or certificates, or his legal representative, to give the Company a
bond in such sum as may be directed as indemnity against any claim that may be
made against the Company with respect to the certificate alleged to have been
lost, destroyed or wrongfully taken.
Section 3. REGISTRATION OF TRANSFER. Subject to the provisions of the
Federal securities laws and to any contractual restriction which may be
evidenced by a legend upon the face of such certificate, upon surrender to the
Company or any transfer agent of the Company of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Company or such transfer
agent to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 4. REGISTERED SHAREHOLDERS. Except as otherwise provided by law,
the Company shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends or other
distributions, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or legal claim to or interest in such
share or shares on the part of any other person.
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Section 5. RECORD DATE. For the purpose of determining the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action affecting the interests of shareholders, the Board
of Directors may fix, in advance, a record date. Such date shall not be more
than fifty (50) nor less than ten (10) days before the date of any such meeting,
nor more than fifty (50) days prior to any other action.
In each such case, except as otherwise provided by law, only such persons
as shall be shareholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting and any adjournment thereof, or to
express such consent or dissent, or to receive payment of such dividend, or such
allotment of rights, or otherwise to be recognized as shareholders for the
related purpose, notwithstanding any registration of transfer of shares on the
books of the Company after any such record date so fixed.
ARTICLE IX.
GENERAL PROVISIONS
Section 1. DIVIDENDS. Subject to the applicable provisions of the
certificate of incorporation, if any, dividends upon the outstanding shares of
the Company may be declared by the Board of Directors at any regular or special
meeting, pursuant to law, and may be paid in cash, in property, or in shares of
the Company.
Section 2. RESERVES. Before payment of any dividend, there may be set aside
out of any funds of the Company available for dividends such sum or sums as the
Board of Directors from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Company, or for such other
purpose as the Board shall think conducive to the interest of the Company, and
the Board may modify or abolish any such reserve in the manner in which it was
created.
Section 3. INSTRUMENTS UNDER SEAL. All deeds, bonds, mortgages, contracts,
and other instruments requiring a seal may be signed in the name of the Company
by the President or by any other officer authorized to sign such instrument by
the President or the Board of Directors.
Section 4. CHECKS, ETC. All checks or demands for money and notes or other
instruments evidencing indebtedness or obligations of the Company shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Company shall, unless
otherwise fixed by the Board of Directors, begin on the 1st day of January and
end on the 31st day of December in each calendar year.
Section 6. SEAL. The corporate seal shall have inscribed thereon the words
'The Warwick Valley Telephone Company, Corporate Seal, Warwick, N.Y.' The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
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ARTICLE X.
INDEMNIFICATION AND INSURANCE
Section 1. INDEMNIFICATION. Any person made a party to an action by or in
the right of the Company to procure a judgment in its favor, or made, or
threatened to be made, a party to an action or proceeding other than one by or
in the right of the Company to procure a judgment in its favor, by reason of the
fact that he, his testator or intestate is or was a director or officer of the
Company, or while serving as a director or officer of the Company, is or was
serving, at the request of the Company, as a director, officer, or in any other
capacity, any other corporation, domestic or foreign, any partnership, joint
venture, trust, employee benefit plan or other enterprise or organization,
whether profit or nonprofit, shall be indemnified by the Company against the
reasonable expenses (including attorney's fees, judgments, fines, and amounts
paid in settlement) actually incurred by him as a result of such action or
proceeding, or any appeal therein, to the full extent permissible under the New
York Business Corporation Law.
Section 2. INSURANCE. The Company may purchase and maintain insurance to
indemnify the Company and its directors and officers to the extent permitted
under the New York Business Corporation Law.
Section 3. PRESERVATION OF RIGHTS. Neither the amendment or repeal of this
Article X, nor the adoption of any provision of these By-Laws inconsistent with
this Article X, shall eliminate or reduce the protection afforded by this
Article X to a director or officer of the Company in respect to any matter which
occurred or any action or proceeding which accrued or arose, prior to such
amendment, repeal or adoption.
ARTICLE XI.
AMENDMENTS
Section 1. POWER TO AMEND. The Board of Directors shall have the power to
amend, repeal or adopt By-Laws at any regular or special meeting of the Board;
provided, however, that any By-Law adopted by the Board may be amended or
repealed by vote of the holders of shares entitled at the time to vote for the
election of directors; provided, further, that any amendment or repeal of
Article III, Section 3, or this Article XI, Section 1, of these By-Laws, or any
part of either thereof, shall in each event require ratification by the vote of
the holders of seventy percent (70%) of the combined voting power of the shares
of the corporation's capital stock entitled at the time to vote for the election
of directors; and provided, further, that the Board of Directors shall not amend
the By-Laws unless notice thereof, containing a statement of the proposed
amendment, shall have been given at a prior meeting of the Board.
Section 2. AMENDMENT AFFECTING ELECTION OF DIRECTORS; NOTICE. If any By-Law
regulating an impending election of directors is adopted, amended or repealed by
the Board, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors the By-Law so adopted, amended or
repealed, together with a concise statement of the changes effected by such
adoption, amendment or repeal.
November 3, 1988
90
NUMBER EXHIBIT 4A SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK
WARWICK VALLEY TELEPHONE COMPANY
TOTAL AUTHORIZED ISSUE 2,167,500 SHARES
7,500 SHARES PREFERRED STOCK 2,160,000 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
91
EXHIBIT 4E
WARWICK VALLEY TELEPHONE COMPANY
TO
THE BANK OF NEW YORK,
AS TRUSTEE
NINTH SUPPLEMENTAL INDENTURE
Dated as of October 1, 1993
Supplementing the Indenture of Mortgage
Dated as of November 1, 1952
and creating
7.05% First Mortgage Bonds, Series J,
Due December 1, 2003
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NINTH SUPPLEMENTAL INDENTURE, dated as of October 1, 1993, 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 Ninth 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 eight 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 7.05%
First Mortgage Bonds, Series J, due December 1, 2003 (hereinafter referred to as
the 'Series J Bonds'), limited in aggregate principal amount to $4,000,000, and
(ii) to mortgage and convey additional properties acquired or constructed by the
Company since the date of the Eighth Supplemental Indenture.
D. All acts and things necessary to make the Series J 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 this Ninth
Supplemental Indenture and the issue of the Series J 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 Ninth 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:
93
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ARTICLE ONE
MORTGAGE OF PROPERTY
1.01. 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 May 1, 1990, the date of
the Eighth 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 J BONDS
2.01. Designation, Amount, Rate and Form. There is hereby created a series
of Bonds to be issued under the Indenture, limited to the aggregate principal
amount of $4,000,000, which shall be designated '7.05% First Mortgage Bonds,
Series J, due December 1, 2003.' The Series J Bonds shall be issued only as
registered bonds without coupons. The Series J Bonds initially issued shall be
dated as of and bear interest from the date of issuance thereof; shall mature
December 1, 2003; shall bear interest at the rate of 7.05% per annum, payable
semiannually on June 1 and December 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 8.05% per annum, so far as
the same may be legally enforceable, 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 J Bonds shall be substantially in the form set forth
in Exhibit A hereto. Series J Bonds issued upon transfer or exchange for
different denominations or in substitution for lost, stolen, destroyed or
mutilated Series J Bonds shall be dated so that no gain or loss of interest
shall occur.
There shall be no sinking fund for the Series J Bonds and the Series J
Bonds may not be redeemed prior to their maturity date.
2.02. Authentication of Series J Bonds. After the execution and delivery of
this Ninth Supplemental Indenture and upon compliance with the provisions of the
Indenture, the Company may execute and deliver to the Trustee, and the Trustee
shall authenticate and deliver to or upon the written order of the Company,
Series J Bonds in an aggregate principal amount not to exceed $4,000,000.
ARTICLE THREE
MISCELLANEOUS
3.01. Counterparts. This Ninth 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.
94
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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 its 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 Assistant Vice Presidents and its corporate seal to
be hereunto affixed and attested by one of its Assistant Treasurers, 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) Robert F. McIntyre
Its Assistant Vice President
(Corporate Seal)
Attest:
By (signed) Marie E. Trimboli
Its Assistant Treasurer
95
<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF ORANGE )
On this 6th day of December, 1993, before me, personally came Fred M.
Knipp, to me known, who, being by me duly sworn, did depose and say that he
resides at 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, 1994
STATE OF NEW YORK )
) SS
COUNTY OF ORANGE )
On this 8th day of December, 1993, before me, personally came Robert F.
McIntyre to me known, who, being by me duly sworn, did depose and say that he
resides at Hoboken, New Jersey; 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) Robert Schneck
Notary Public
ILLEGIBLE SEAL
96
<PAGE>
(FORM OF REGISTERED BOND OF SERIES J)
No.
$
WARWICK VALLEY TELEPHONE COMPANY
7.05% First Mortgage Bond, Series J
Due December 1, 2003
WARWICK VALLEY TELEPHONE COMPANY, a New York corporation (hereinafter
called the 'Company'), for value received, hereby promises to pay to
or registered assigns
on December 1, 2003
the principal amount of
DOLLARS ($ )
and to pay to the registered owner hereof interest hereon from the date hereof
at the rate of seven and five-hundredths percent (7.05%) per annum, semiannually
on the first day of June and on the first day of December 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 eight and five-hundredths percent (8.05%)
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 or more series under and 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 Ninth 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 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.
97
<PAGE>
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 an 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.
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
December __, 1993.
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
By
Its
98
H I G H L I G H T S 1 9 9 7 1 9 9 6
Total Revenues $19,708,791 $17,946,698
Net Income $3,683,709 $3,095,481
Earnings per share $1.97 $1.65
Book Value $9.01 $8.96
Cash Dividend per
Common Share $.93 $.65
Access Lines in Service 25,154 23,719
Cellular Subscribers 837 933
Online Subscribers 10,625 5,590
WVLD Subscribers 7,929 6,328
WHERE THE DOLLAR COMES FROM . . . WHERE THE DOLLAR GOES . . .
GRAPH GRAPH
GOES GOES
HERE HERE
99
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Warwick Valley Telephone Company entered 1997 with considerable
uncertainty about the impact of the new regulatory environment
PRESIDENT'S established by the Federal Telecommunications Act of 1996. Early
in 1997, however, it became apparent that the implementing State
PHOTO and FCC regulations would leave things pretty much unchanged for
WVTC and its customers. Competition is to replace regulation in
HERE the telecommunications industry; however, we are already
competing well in many areas such as long distance and see little
attraction to competitors for WVTC local service with our very
low rates ($4.54 per month for most customers). Regulation and
regulators seem destined to survive; the FCC orders implementing
the act have exceeded 2,500 pages so far and the state orders are just
beginning. Some costly features of the new rules would require us to provide
new subsidies for telecommunications for schools, libraries and rural health
facilities and to provide complex services to our competitors. Because of these
cost increases it appears unlikely that the overall long-term cost of telephone
service will diminish. For now, there have been significant changes in revenue
allocations but the gain nearly balanced the losses and by midyear we could
start planning with less financial risk. One result was that we reduced the
amount of earnings we had been retaining for such contingencies and paid nearly
50% of our year's earnings in dividends. Dividends increased 43% from 1996.
The three-for-one stock split approved by the shareholders at our April
Annual Meeting was completed in November. We therefore now have over 1,800,000
shares of Common Outstanding. We have wanted our stock listed nationally and
since we now have more than one million shares outstanding we are eligible for
listing on NASDAQ. We have applied for such listing and soon the market price of
WVTC Common stock will be quoted daily and available in newspaper listings and
other forms. We believe these actions will improve the marketability of our
stock and hence improve its value on the market.
Earnings continued to grow handsomely with an increase of 19% over the
already very prosperous 1996 results. Revenue and profits improved in all areas
as our business grew and our costs were controlled. Warwick OnLine became
profitable and contributed over $250,000 to our net income. Warwick OnLine
continues to experience an amazing demand and we saw another doubling of
subscribers in 1997. We now have nearly 12,000 Internet 'surfers'. I believe we
are at the beginning of a totally new dimension in information exchange.
100
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Warnick Valley Long Distance provides national and international long
distance telephone service via bulk contracts with major carriers. The long
distance market seems very confusing to the consumer as AT&T, MCI, Sprint and
the others vie for subscribers with a continuous barrage of advertising
gimmicks. There are now about forty companies selling long distance service in
our area with many specialized calling plans. WVLD, which continues to avoid
these come-ons and accompanying rate changes, increased subscribers by nearly
25% in 1997. While the big carriers effectively raised rates last year, WVLD
continued to maintain its low price with no confusing special plans. Since WVTC
includes AT&T charges in its bills, many customers don't realize that they
aren't getting the savings of WVLD and that continues to present a
communications challenge. AT&T still holds a lead on our area but WVLD is in
firm control of second place and gaining.
We continue to expand and modernize our telephone plant. In 1997 we started
major cable rehabilitation in the downtown areas of Warwick and Florida and
extended fiber optic trunking to the Glenwood area of New Jersey. Our switching
network was able to accommodate the growth in subscribers and traffic, but
significant expansion is needed this year. The voicemail system became saturated
and was replaced with a larger system with better features.
All of this is accomplished by the people or Warwick Valley Telephone
Company. Our business growth has been achieved with very little increase of
personnel. We are all learning new skills and better work methods in order to be
more productive and to better serve our customers. We strive to keep WVTC as a
good place to work and to keep a healthy and safe work environment. Our
nonmanagement employees are represented by collective bargaining agreements. We
recently completed negotiation of a new 5 year contract with IBEW Local 503,
which represents our plant employees. The current agreement with the Warwick
Valley Telephone Company Employees' association, who represents the remainder,
expires in November and negotiations will soon begin. I believe our labor
relations are healthy and represent the respect we all have for each other.
Warwick Valley Telephone Company continues to demonstrate its ability to
grow and to change as the demand for telecommunication and information services
grows and changes. While we operate in a very dynamic industry with intense
technological, regulatory and market pressures, this company is responding well
and continues to prosper.
President and Chief Executive Officer
March 1, 1998
(Signed) Fred M. Knipp
101
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
Results of Operations - 1997 vs. 1996
The Company's net income from all sources increased $588,228 (or 19.0%) to
$3,683,709 for the twelve-month period ended December 31, 1997, as compared to
the same period in 1996.
Telephone operating revenues increased $428,582 (or 2.8%) to $15,590,455 for the
year ended December 31, 1997, as compared to $15,161,873 for 1996, primarily as
a result of a $459,323 (or 5.1%) increase in toll and access revenue. This
increase resulted primarily from increased state toll revenue in New York of
$1,394,484 as a result of the Company becoming the intralata toll carrier in its
service area on January 1, 1997, offset by reduced state access revenue of
$933,353 previously received from NYNEX, who had been the New York toll carrier.
Local revenues, including inside wire, increased $180,398 (or 6.0%), primarily
as a result of an increase in the number of access lines and increased use of
newly marketed services. Miscellaneous revenues, excluding inside wire,
decreased $210,939 (or 6.8%), primarily as a result of the loss of $360,000 of
NYNEX Operator Services revenue beginning January 1, 1997, when the Company
became the intralata toll carrier in its service area. This was partially offset
by increases in directory revenue ($82,000) and public telephone revenue
($41,000). (Inside wire revenue of $478,000 and public telephone revenue of
$43,000 were ordered deregulated and relocated to Miscellaneous Revenues during
1997. Prior to that time both were considered part of Local Network Service
Revenue.)
Telephone operating expenses increased $319,761 (or 3.3%) to $10,081,196 for the
year ended December 31, 1997, as compared to $9,761,435 for the previous year.
An increase in wages and benefits of $233,664 (or 3.7%) and an increase in
depreciation expense of $165,371 (or 7.7%) were the main factors in the
increase.
Nonoperating income increased to $1,024,697 in 1997 from $487,382 in 1996. This
increase resulted largely from an increase in net income of Hometown Online, the
Company's internet subsidiary, which earned $256,746 in 1997 as compared to a
net loss of $250,805 in 1996 (in both cases after federal income tax).
Results of Operations - 1996 vs. 1995
The Company's net income from all sources increased $942,109 (or 43.8%) to
$3,095,481 for the twelve-month period ended December 31, 1996, as compared to
the same period in 1995.
Telephone operating revenues increased $1,855,932 (or 13.9%) to $15,161,873 for
the year ended December 31, 1996, as compared to $13,315,940 for 1995, primarily
as a result of a $1,631,781 (or 21.9%) increase in toll and access revenue. This
increase resulted primarily from increased state and interstate access revenues
of $1,397,767, increased federal subscriber line charges to end user customers
of $79,087, and an increase in toll revenue of $88,401. Local revenues increased
$286,322 (or 10.6%), primarily as a result of an increase in the number of
access lines and increased use of newly marketed services. Miscellaneous
revenues decreased $72,171 (or 2.3%), primarily as a result of a non-recurring
revenue settlement received during 1995.
Telephone operating expenses increased $543,702 (or 5.9%) to $9,761,435 for the
year ended December 31, 1996, as compared to $9,217,733 for the previous year.
An increase in wages and benefits of $438,686 (or 7.5%) and an increase in
depreciation expense of $118,376 (or 5.8%) accounted for most of the increase.
Nonoperating income increased to $487,382 in 1996 from $305,200 in 1995. 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 $248,243 after federal income tax. This was
102
<PAGE>
FINANCIAL CONDITION & RESULTS OF OPERATIONS
partially offset by an increase in the operating loss of Hometown Online, Inc.
which lost $250,805 during its first full year of operation as opposed to a loss
of $132,002 during 1995, when it commenced doing business.
Liquidity and Capital Resources
The Company ended 1997 with working capital of $1,417,166 as compared to
$2,053,934 at December 31, 1996. This difference was largely due to an increase
in notes payable of $750,000.
The Company issued 9,485 shares of its common stock on April 1, 1997 to
employees participating in retirement savings plans at $53.64 per share (a 15%
discount from the appraised price of $63.10). Additional sales to employees are
anticipated during 1997 and subsequent years. Purchases totaling 30,984 shares
for the treasury took place during 1997 at $63.10 per share. No additional
purchases are planned at this time. Subsequent to these transactions, a
three-for-one stock split took place on November 10, 1997.
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 $284,000 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 makes 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 was in operation
during 1997, although not all members have been added to the network. WVN has
invested approximately $40,000 in NYSINET to date. Moderate additional
investment requirements are anticipated during 1998.
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 in
nearby areas in New York, New Jersey and Pennsylvania. The Company has invested
approximately $1,400,000 in Online since its operations began in July 1995.
Online reached positive cash flow during 1997.
103
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
ASSETS December 31, 1997 1996
CURRENT ASSETS:
<S> <C> <C>
Cash $ 482,534 $ 728,520
Accounts receivable - net of
reserve for uncollectibles 3,965,360 3,290,714
Materials and supplies 1,133,637 1,451,858
Prepaid expenses 338,417 306,532
5,919,948 5,777,624
NONCURRENT ASSETS:
Unamortized debt issuance expense 48,710 61,378
Other deferred charges 217,575 227,699
Investments 1,664,582 1,354,390
1,930,867 1,643,467
PROPERTY, PLANT & EQUIPMENT: (Notes 1, 2 and 5)
Plant in service 37,374,440 34,578,033
Plant under construction 824,595 1,444,982
38,199,035 36,023,015
Less: Depreciation reserve
(Notes 1 and 3) 14,661,854 13,200,526
23,537,181 22,822,489
TOTAL ASSETS $ 31,387,996 $30,243,580
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 6) 1,600,000 850,000
Accounts payable 1,751,739 1,600,944
Advance billing and payments 163,882 188,865
Customer deposits 168,465 153,143
Accrued taxes 126,864 275,241
Accrued interest 75,829 75,829
Other accrued expenses 616,003 579,669
4,502,782 3,723,691
LONG-TERM DEBT: (Note 5) 7,000,000 7,000,000
DEFERRED CREDITS: (Notes 1 and 7)
Accumulated deferred federal
income taxes 2,301,418 2,313,224
Unamortized investment tax credits 201,427 252,427
Other deferred credits 179,230 243,690
2,682,075 2,809,341
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: 2,160,000 2,948,438 2,439,663
Issued 1,974,168(1997) and
1,945,713 (1996) 16,534,991 14,596,085
Retained earnings 19,983,429 17,535,748
Less: Treasury stock at cost,
173,352 (1997) and
80,400 (1996) shares 2,780,290 825,200
17,203,139 16,710,548
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $31,387,996 $30,243,580
</TABLE>
The accompanying notes are an integral part of the financial statements.
104
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
Years ended December 31, 1997 1996 1995
OPERATING REVENUES:
<S> <C> <C> <C>
Local network service $ 2,686,637 $ 2,984,805 $ 2,698,483
Network access and long distance
network service 9,539,942 9,080,619 7,448,838
Miscellaneous (Note 1) 3,363,876 3,096,449 3,168,620
15,590,455 15,161,873 13,315,941
Less: Provision for uncollectibles (46,289) (35,085) (59,956)
Total operating revenues 15,544,166 15,126,788 13,255,985
OPERATING EXPENSES:
Plant specific 2,241,742 2,339,213 2,128,966
Plant non-specific:
Depreciation 2,315,611 2,150,240 2,031,864
Other 590,825 590,210 580,838
Customer operations 3,203,075 2,970,626 2,780,319
Corporate operations 1,729,943 1,711,146 1,695,746
Total operating expenses 10,081,196 9,761,435 9,217,733
OPERATING TAXES:
Federal income taxes (Note 7) 988,705 1,152,084 584,466
Property, revenue and payroll 1,187,461 947,105 960,718
Total operating taxes 2,176,166 2,099,189 1,545,184
Operating income 3,286,804 3,266,164 2,493,068
NONOPERATING INCOME (EXPENSES)-NET:(Note 11)
1,024,697 487,382 305,200
Income available for fixed charges 4,311,501 3,753,546 2,798,268
FIXED CHARGES:
Interest on funded debt 553,500 575,581 593,756
Other interest charges 61,624 68,692 31,790
Amortization 12,668 13,792 19,350
Total fixed charges 627,792 658,065 644,896
NET INCOME 3,683,709 3,095,481 2,153,372
PREFERRED DIVIDENDS 25,000 25,000 25,000
INCOME APPLICABLE TO
COMMON STOCK $ 3,658,709 $ 3,070,481 $ 2,128,372
NET INCOME PER AVERAGE SHARE
OF OUTSTANDING COMMON
STOCK (Note 12) $ 1.97 $ 1.65 $ 1.15
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING (Note 12) 1,853,298 1,865,091 1,852,752
</TABLE>
The accompanying notes are an integral part of the financial statements.
105
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1997, 1996 and 1995
Treasury Preferred Common Retained
Stock Stock Stock Earnings Total
<S> <C> <C> <C> <C> <C>
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 ($ .58 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
Net income for the year -- -- -- 3,095,481 3,095,481
Dividends:
Common ($ .65 per share) -- -- -- (1,212,570) (1,212,570)
Preferred ($5.00 per
share) -- -- -- (25,000) (25,000)
Sale of Common Stock -- -- 158,425 -- 158,425
Purchase of Treasury
Stock (50,000) -- -- -- (50,000)
Balance, December 31,
1996 ($825,200) $ 500,000 $ 2,439,663 $ 14,596,085 $ 16,710,548
Net income for the year -- -- -- 3,683,709 3,683,709
Dividends:
Common($ .93 per share) -- -- -- (1,719,803) (1,719,803)
Preferred ($5.00 per
share) -- -- -- (25,000) (25,000)
Sale of Common Stock -- -- 508,775 -- 508,775
Purchase of Treasury
Stock (1,955,090) -- -- -- (1,955,090)
Balance, December 31, 1997 ($2,780,290) $ 500,000 $ 2,948,438 $ 16,534,991 $ 17,203,139
</TABLE>
The accompanying notes are an integral part of the financial statements.
106
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended December 31, 1997 1996 1995
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 3,683,709 $ 3,095,481 $ 2,153,372
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,328,278 2,164,032 2,051,214
Deferred income tax and investment
tax credit (127,266) (144,229) (33,114)
Interest charged to construction (57,562) (25,272) (32,372)
Income from partnership (632,244) (666,375) (290,250)
Change in assets and liabilities:
(Increase) Decrease in accounts
receivable (674,646) 369,276 (970,903)
(Increase) Decrease in materials and
supplies 318,221 64,500 (223,267)
(Increase) Decrease in prepaid expenses (31,885) 10,553 (31,266)
(Increase) Decrease in deferred charges 10,124 (87,372) 22,289
Increase (Decrease) in accounts payable 150,795 (758,397) 592,564
Increase (Decrease) in customers'
deposits 15,322 (20,574) (83,509)
Increase (Decrease) in advance billing
and payment (24,983) (18,121) 4,628
Increase (Decrease) in accrued expenses (148,377) 158,088 77,271
Increase (Decrease) in other liabilities 36,334 112,454 27,632
Net cash provided by operating activities
4,845,820 4,254,044 3,264,289
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment (3,030,302) (2,822,600) (1,988,826)
Interest charged to construction 57,562 25,272 32,372
Distribution from partnership 337,500 393,750 --
Changes in other investments (15,448) (4,850) (216,589)
Net cash used in investing activities (2,650,688) (2,408,428) (2,173,043)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (Decrease) in Notes Payable 750,000 (100,000) 50,000
Repayment of long-term debt 0 (370,000) (120,000)
Dividends (1,744,803) (1,237,570) (1,099,998)
Sale of Common Stock 508,775 158,425 191,596
Purchase of Treasury Stock (1,955,090) (50,000) --
Increase in unamortized debt issue
expense -- -- (52,832)
Net cash provided by (used in)
financing activities (2,441,118) (1,599,145) (1,031,234)
Increase (Decrease) in cash and
cash equivalents (245,986) 246,471 60,012
Cash and cash equivalents at
beginning of year 728,520 482,049 422,037
Cash and cash equivalents at
end of year $ 482,534 $ 728,520 $ 482,049
</TABLE>
The accompanying notes are an integral part of the financial statements.
107
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
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, toll
and cellular telephone service to residential and business customers, access and
billing and collection services to interexchange carriers, the sale and leasing
of telecommunications equipment, paging and internet access.
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 intercompany transactions and balances have
been eliminated in the consolidated financial statements except for the billing
of certain intercompany expenses, which have not been eliminated in order to
accurately state the income from the telephone company and subsidiary
operations.
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 6.66%, 6.53%, and 6.47%, for the years 1997,
1996 and 1995, 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 records deferred taxes according to Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ('SFAS 109'). 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.
Investments
Investments consisted of the following at December 31:
1997 1996
Investment in cellular partnership $1,637,386 $1,327,110
Other investments 27,196 27,280
$1,664,582 $1,354,390
The partnership investment represents the Company's 7.5% interest as a limited
partner in a cellular telephone operation. 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, 1997
the amount of cash in excess of these F.D.I.C insured limits was approximately
$377,000. The following is a list of interest and federal income tax payments
for each of the three years in the period ending December 31, 1997:
1997 1996 1995
Interest $ 615,124 $ 635,528 $ 625,259
Federal Income Taxes $1,776,178 $1,343,151 $ 615,000
108
<PAGE>
Material and Supplies
New material and reusable materials are carried at average original cost, except
that specific costs are used in the case of large individual items. During the
year ending December 31, 1997 there was a write down of the inventory valuation
for deregulated equipment of approximately $430,000. Since this was related to
equipment previously salvaged from retired plant, the write off was charged to
the depreciation reserve and has no effect on the income statement. As of
December 31, 1997 and 1996 the Material and Supplies inventory consisted of the
following:
1997 1996
Inventory for outside plant construction 335,206 $ 322,440
Inventory for central office equipment 521,842 431,946
Inventory of deregulated equipment held for sale
or lease (principally PBX and station equipment) 276,589 697,472
$1,133,637 $1,451,858
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:
1997 1996 1995
Directory advertising revenue $ 936,787 $ 854,940 $ 784,365
Rent revenue 201,575 199,021 193,310
Billing and collection revenue 1,138,323 1,153,032 1,105,198
Deregulated revenues 1,012,399 467,669 441,352
Other operating revenues 74,792 421,787 644,395
$3,363,876 $3,096,449 $3,168,620
2. PROPERTY, PLANT AND EQUIPMENT
Plant in service, at cost, consisted of the following at December 31:
1997 1996
Land, buildings, furniture and office equipment $ 4,254,257 $ 4,172,633
Vehicles and work equipment 1,103,446 1,104,873
Central office equipment 16,111,391 14,824,564
Customer premise equipment 1,187,939 1,260,294
Outside plant equipment 13,428,360 12,402,005
Other equipment 1,289,047 813,664
$37,374,440 $34,578,033
3. DEPRECIATION RESERVE
Depreciation reserve consisted of the following at December 31:
1997 1996
Buildings, furniture and office equipment $ 1,983,607 $ 1,644,932
Vehicles and work equipment 725,489 653,551
Central office equipment 7,259,737 6,348,878
Customer premise equipment 687,033 1,171,241
Outside plant equipment 3,553,306 3,249,002
Other equipment 452,682 132,922
$14,661,854 $13,200,526
4. ACCOUNTS RECEIVABLE
The Company uses the reserve method to record uncollectible accounts. The
reserve for uncollectibles was $65,155 as of December 31, 1997 and 1996
respectively.
109
<PAGE>
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consisted of the following at December 31:
1997 1996
Redemption Price Redemption Price
Amount Plus Premium Amount Plus Premium
<S> <C> <C> <C> <C>
First Mortgage Bonds
9.05% Series "I"
(due 05/01/2000) $3,000,000 N/A $3,000,000 N/A
7.05% Series "J"
(due 12/01/2003) 4,000,000 N/A 4,000,000 N/A
7,000,000 7,000,000
Less: Current maturities
of Long-term debt 0 0
Total Long-term debt $7,000,000 $7,000,000
</TABLE>
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" exceeds interest expense 1.5 times.
Maturities and sinking fund requirements for the five years subsequent to 1997
for long-term debt outstanding as of December 31, 1997 are as follows:
1998 ----- 2001 -----
1999 ----- 2002 -----
2000 $3,000,000
The first mortgage bonds, Series 'I' and 'J' bonds, may not be redeemed prior to
their maturity date.
6. NOTES PAYABLE
The Company has an unsecured line of credit with the Warwick Savings Bank, which
expires in April, 1998. Any borrowings under this line of credit are on a demand
basis and are without restrictions, at a variable lending rate. The total unused
line of credit available at December 31, 1997 was $900,000. The balances
outstanding as of December 31, 1997 and 1996 were $1,600,000 and $850,000
respectively, bearing interest rates of 7.5% and 7.75%.
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 rate of 34% to pre-tax income.
<TABLE>
1997 1996 1995
Operating federal income taxes:
<S> <C> <C> <C>
Current portion $ 1,123,278 $ 1,301,825 $ 601,448
Deferrals, net of reversals:
Depreciation (22,352) (18,393) 100,984
Cost of removal 2,037 1,275 2,928
Tax savings due to TRA of 1986 (45,494) (89,760) (89,760)
Other (17,764) 8,137 19,866
Investment tax credit, net of
amortization (51,000) (51,000) (51,000)
(134,573) (149,741) (16,982)
Operating F.I.T. expense $ 988,705 $ 1,152,084 $ 584,466
Nonoperating federal income taxes:
Current portion $ 217,386 $ 228,956 $ 89,917
Deferrals, net of reversals: -- (9,090) (9,089)
Nonoperating F.I.T. expense 217,386 219,866 80,828
F.I.T. included in income of subsidiary 280,835 4,418 45,947
Total F.I.T. expense, as reported 1,486,926 1,376,368 711,241
Reversals of deferred taxes 74,029 122,917 177,968
Tax savings of TRA of 1986, net 45,494 89,760 89,760
Other 151,567 (68,617) (5,001)
FEDERAL INCOME TAX AT
STATUTORY RATE $ 1,758,016 $ 1,520,428 $ 973,968
</TABLE>
110
<PAGE>
The following components comprise the net deferred tax liability reported as of
December 31:
1997 1996
Deferred tax liabilities $2,405,183 $2,443,262
Deferred tax assets 103,765 130,038
Net deferred tax liability $2,301,418 $2,313,224
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. 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 $103,765 and $130,038 as of December 31,
1997 and 1996, 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 1997, 1996 and 1995 were $216,086, $328,598,
and $329,807, respectively.
The following table sets forth the combined plan's funded status and amounts
recognized in the Company's statement of financial position as of December 31,
1997 and 1996:
1997 1996
Actuarial present value of benefit obligations:
Accumulated benefit obligation: Vested benefit $ 6,742,162 $ 6,006,210
Non-vested benefit 24,584 9,650
$ 6,766,746 $ 6,015,860
Projected benefit obligation for service
rendered to date $(8,385,536) $(7,505,941)
Plan assets at fair value (bonds, real estate,
mortgages and stocks) 8,739,040 7,460,136
Projected benefit obligation in excess of plan assets 353,504 (45,805)
Unrecognized net loss (gain) from past experience
different from that assumed and effects of changes
in assumptions (1,092,999) (807,762)
Prior service cost not yet recognized in net
periodic pension cost 246,945 297,556
Unrecognized net transition obligation 213,056 266,319
Prepaid (accrued) pension cost $ (279,494) $ (289,692)
Net pension cost for the years 1997, 1996 and 1995
include the following components: 1997 1996 1995
Service cost-benefits earned during
the period 200,862 $ 210,213 168,557
Interest cost on projected benefit
obligation 558,396 524,866 506,037
Actual return on plan assets (1,302,715) (962,583) (1,100,756)
Net amortization and deferral 749,344 605,154 752,328
Net periodic pension cost $ 205,887 $ 377,650 $ 326,166
A discount rate of 7.5% and 7.0% and a rate of increase in future compensation
levels of 5.5% were used in determining the actuarial present value of the
projected benefit obligations for 1997 and 1996. The expected long-term rate of
return on assets was 8.0% and 7.75% for 1997 and 1996, 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. In 1997 the Company made a matching contribution up to 5.0% of an
eligible participant's compensation for management, clerical and traffic
employees, and up to 3.0 % for plant employees.
The Company contributed and expensed $180,255, $135,386 and $82,551 for the
years ended December 31, 1997, 1996 and 1995, respectively.
111
<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. During 1996 the plan was redesigned which caused a
significant decrease in future benefit obligations. 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 invested in common stocks and a money market 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, 1997 and 1996.
Accumulated postretirement benefit obligation: 1997 1996
Retirees $(170,920) $(140,947)
Fully eligible active plan participants (624,371) (558,425)
$(795,291) $(699,372)
Plan assets at fair value 875,892 680,072
Accumulated postretirement benefit
obligation in excess of plan assets 80,601 (19,300)
Unrecognized net (loss) gain 303,308 246,758
Unrecognized prior service costs 451,365 472,859
Unrecognized transition obligation (772,436) (823,932)
Prepaid (Accrued) postretirement benefit cost $ 62,838 $(123,615)
Net periodic postretirement benefit costs for 1997, 1996 and 1995 includes the
following components:
1997 1996 1995
Service cost $ 43,425 $ 65,873 $ 44,963
Interest cost on accumulated
postretirement benefit obligation 55,367 138,186 102,387
Actual return on plan assets (119,010) (85,331) (52,234)
Amortization of transition obligation
over 20 years 51,496 51,496 51,496
Net amortization and deferral (33,832) 4,557 32,211
Net periodic postretirement
benefit cost $ (2,554) $174,781 $178,823
For measurement purposes, a 10% annual rate of increase in the per capita cost
of covered health care benefits were assumed for 1997. 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, 1997 by approximately $80,000 and the aggregate of the service and
interest cost components of postretirement expense for the year then ended by
approximately $4,500.
The weighted-average discount rate used in determing the accumulated
postretirement benefit obligation was 7.0% and 7.5% and the expected long-term
rate of return on plan assets was 10.0% and 8.5% for 1997 and 1996,
respectively.
10. RELATED PARTY TRANSACTIONS
The Company expended approximately $170,731, $193,976 and $204,565 during 1997,
1996 and 1995, 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:
1997 1996 1995
Interest charged to construction $ 57,562 $ 25,272 $ 32,372
Interest income 474 462 513
Income from cellular partnership 632,244 666,375 290,250
Net income (loss) from subsidiaries 545,151 44,660 89,193
Other nonoperating income (expense) 6,652 (29,521) (26,300)
Nonoperating federal income taxes (217,386) (219,866) (80,828)
$1,024,697 $ 487,382 $ 305,200
112
<PAGE>
12. COMMON STOCK
Earnings per share are based on the weighted average number of shares
outstanding of 1,853,298, 1,865,091 and 1,852,752 for the years ended December
31, 1997, 1996 and 1995, respectively. Effective November 10, 1997, there was a
3-for-1 stock split, increasing the number of shares authorized to 2,160,000 and
the number issued to 1,974,168. All references in the accompanying financial
statements to the number of shares and per-share amounts have been restated to
reflect the stock split.
The following schedule summarizes the changes in the number of shares issued of
capital stock for the year ended December 31, 1997:
Treasury Preferred Common
Stock Stock Stock
Balance, January 1, 1997 80,400 5,000 1,945,713
Additional shares issued ---- ---- 28,455
Treasury stock purchased 92,952 ---- ----
Balance, December 31, 1997 173,352 5,000 1,974,168
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 1997 were $68,241 and the contribution for
1998 is expected to be $0. Effective October 1, 1996, the Company's contribution
to the New York State Access Settlement Pool was frozen at $23,805 per month
until the New York Public Service Commission determines a new method of
providing support for universal service in rural, high cost areas of the state.
A decision is anticipated during 1998. The Company will contribute to the
Universal Service Administrative Co. approximately $43,000 for the first six
months of 1998. Semi-annual updates will then modify the amounts contributed.
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.
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 approximates the carrying value of $7,000,000 due to the short maturity of
the debt. The fair value of other financial instruments is estimated by
management to approximate the carrying value.
113
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
February 6, 1998
To the Board of Directors
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 31,1997 and 1996, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. 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, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
(Signed) Bush & Germain, P.C.
Bush & Germain, P.C.
Syracuse, New York
February 6, 1998
114
<PAGE>
BOARD OF DIRECTORS AND OFFICERS
(page of photos)
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 & Strong, President of the
the Company Inc., Warwick, N.Y. Company
Henry L. Nielsen, Jr. Fred M. Knipp Victora J. Marotta
Vice Chairman of the Board Director, Board Director,
Board of the Company, President & C.E.O. Director of Tri-State
President, Nielsen of the Company Tankers of New York,
Construction Co.,Inc., Inc., Andover, N. J.
Warwick, N. Y.
Wisner H. Buckbee Joesph E. DeLuca, M.D Corinna S. Lewis
Board Director, Board Director, Board Director,
President, Wisner Farms, Physician, Vernon Retired Public
Inc., Warwick, N. Y. Urgent Care Center, Relations Consultant
Vernon, N. J.
Herbert Gareiss, Jr. Barbara Barber Robert A. Sieczek
Vice President of Assistant Secretary Assistant Treasurer
the Company of the Company of the Company
115
<PAGE>
PERFORMANCE HIGHLIGHTS
For years ended or at December 31,
1997 1996 1995 1994 1993
SELECTED FINANCIAL DATA
Total revenues * $19,708,791 $17,946,698 $14,969,872 $13,570,409 $11,817,981
Telephone operating
revenues 15,590,455 15,161,873 13,315,940 12,277,948 11,162,239
Total expenses * 13,395,702 12,406,565 11,022,037 10,165,019 8,351,512
Telephone operating
expenses 10,081,196 9,761,435 8,217,733 8,850,222 7,931,025
Net income 3,683,709 3,095,481 2,153,372 1,749,450 1,642,639
Total assets 31,387,996 30,243,580 29,418,023 27,657,579 25,792,681
Current assets 5,919,948 5,777,625 5,975,482 4,690,034 5,324,625
Current liabilities 4,502,782 3,723,691 4,720,240 3,801,653 2,663,442
Long-term
obligations 7,000,000 7,000,000 7,000,000 7,370,000 7,490,000
Percentage of debt to
total capital 33.3 31.96 36.07 38.3 37.6
Shareholders'
equity 17,203,139 16,710,548 14,744,212 13,499,242 12,636,317
COMMON STOCK DATA
Income applicable to
common stock 3,658,709 3,070,481 2,128,372 1,724,450 1,617,639
Income per share** 1.97 1.65 1.15 .94 .89
Book value** 9.01 8.69 7.69 7.08 6.65
Cash dividends per
common share** .93 .65 .58 .56 .55
Shareholders of record 616 612 607 591 590
Shares
outstanding** 1,853,298 1,865,091 1,852,752 1,836,744 1,821,903
GENERAL
Access lines in
service 25,154 23,719 22,132 21,126 20,312
Carrier access
minutes 138,984,054 150,708,737 134,534,480 125,081,670 115,645,770
* Including cellular shown as part of nonoperating income (expenses) on
statement of income.
**Adjusted for 3-for-1 common stock split in 1997.
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, 1998, there were 616 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 1996, the Company paid a dividend on its common stock of $.65 per share. In
1997, the common stock dividend was $.93 per share.
116
BUSH & GERMAIN, PC
CERTIFIED PUBLIC ACCOUNTANTS
901 LODI STREET
SYRACUSE, NEW YORK 13203
PHONE: (315) 424-1145
CONSENT OF INDEPENDENT AUDITORS
February 9, 1998
We consent to the incorporation by reference in this Annual Report (Form 10-K)
for the year ended December 31, 1997 of Warwick Valley Telephone Company of our
report dated February 8, 1997, included in the 1997 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, 1998 with respect to the consolidated financial
statements of Warwick Valley Telephone Company incorporated herein by reference
and our report dated February 8, 1998 with respect to schedules of Warwick
Valley Telephone Company included in this Annual Report (Form 10-K) for the year
ended December 31, 1997.
Bush & Germain, P.C.
Syracuse, New York
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